October 2, 2000 12:00am 

Source: Knight Ridder Business News 

Sunday Business, London via NewsEdge Corporation : Sep. 24--The race to win the world's single largest military contract has stepped up a gear with the first flight last week of a prototype Boeing fighter. 

The futuristic looking aircraft, the X-32A, is a key element of Boeing's efforts to win the competition to design and build the Joint Strike Fighter, 3,000 of which are expected to be ordered by the world's air forces over the next 30 years. 

While the X-32'as short flight above California was in itself undramatic, it signalled the start of the final phase of a titanic four-year struggle between Boeing and its fellow US aerospace giant, Lockheed Martin, to win the JSF mandate. Lockheed's demonstrator aircraft, the X-35A, is expected to make its first flight within the next couple of weeks. 

The stakes are extraordinarily high: not only can the winner look forward to at least $200 billion worth of business, but the loser may be forced to withdraw altogether from the lucrative but high-risk fighter aircraft game. 

The JSF programme is an ambitious US-UK initiative to come up with a machine versatile enough to replace a number of different aircraft from the countries' respective airforces. It, or versions of it, will be stealthy -- difficult to detect by air defences -- supersonic, able to take off and land like a normal aircraft, perform short take-offs and vertical landings like a Harrier jump-jet and operate from aircraft carriers. 

The JSF will also be relatively cheap -- about $35 million each -- and be an integral part of the hi-tech forces to be fielded by the two countries. Large numbers are likely to be bought by the US Air Force, Navy and Marines, while the UK is line to buy about 150 for the RAF and Navy to replace the venerable Harrier. Export orders, particularly to Nato nations, are expected to be considerable. 

Boeing and Lockheed are working under a "concept-demonstration" contract to prove that such a versatile and cheap aircraft can be built. The X-32A and X-35A will undergo five months of flight tests and be joined in the test programme next year by two short take-off and vertical landing demonstrators. 

Industry executives say the choice between the rival Boeing and Lockheed designs may swing on the different approaches the contractors have taken to providing the downward thrust necessary for short take-offs and vertical landings. 

Boeing has gone for a system similar to that employed by the Harrier, with hot exhaust air from the jet engine rerouted to blast out under the aircraft's fuselage. Lockheed has designed a new solution that involves a shaft running forward from the jet engine to drive a fan at the front of the aircraft. Sources at each company say the other's solution is a weak point and much interest will centre on the flights of the short take-off demonstrators next year. 

Industry executives expect the selection of the winning contractor will take place around October next year, six months later than first thought. While the Clinton administration has stuck to its guns and insisted the competition will be "winner takes all", many expect that the new president may revisit the issue next year. 

US aerospace industry analysts say that the Pentagon may decide to broker some type of work-share arrangement to produce the winning design to ensure that more that one US fighter aircraft manufacturer stays in business. 

No matter which contender comes up with a winning design, British industry looks set to benefit. Most of the UK's leading aerospace companies, including Rolls-Royce, Dowty, Smiths Industries, and TI Group, are suppliers to one or both JSF programmes. BAE Systems is, with Northrop Grumman, a full partner in the Lockheed team, but is also a key supplier of aircraft systems to the Boeing effort. 

The UK government is expected shortly to commit to the next phase of the JSF programme so that it can play a full role in the selection of the winning aircraft. This will require British taxpayers to fork out around $2 billion to pay for a share of the funding for the next phase of the programme, the so-called "engineering, manufacturing and development" (EMD) contract. 

A UK commitment to EMD will almost certainly mean that the UK will choose the JSF as the aircraft for its new carrier fleet. Two groups, one lead by BAE Systems and the other by Thomson-CSF, are vying for a UKpound 2 billion contract to build two new aircraft carriers.