Dogfight over $200bn air contract

Boeing's X-32 is the underdog in the bidding

The future of air warfare and the aerospace industry will be decided on Friday, when the Pentagon announces who will build the $200bn Joint Strike Fighter.

JSF Specs

Cost/plane: up to $30m

Weapons payload: 6 tons

Weight: 10 tons

Range: 600 nautical miles

All versions supersonic

Vertical take-off optional

First delivery: 2008

Locked in a dogfight for what is considered a "make-or-break" contract are two giants of the aerospace industry, Boeing and Lockheed Martin, but whoever wins there will be big benefits for British firms.

The US government wants up to 3,000 Joint Strike Fighters (JSFs) over the next 40 years to replace nearly all fighter jets currently in use: the F-16, the A-10 attack jet, the AV-8 Harriers and eventually the F-18.

The UK, the only country to be awarded "full-partner" status, wants 150 planes for the Royal Air Force and Navy, and has already contributed $2bn to the development costs.

US Secretary of Defense Donald Rumsfeld will announce the winner at 2100 GMT.

Aerospace dogfight

For five years, Boeing and Lockheed have been developing their planes to win a contract that will have military, business and economic consequences for decades to come.

Boeing JSF relies on technology developed for the Harrier jump jet

"It's huge for us," said Lockheed spokesman John Kent.

The plane must be able to take off quickly, land vertically and on carrier decks, have radar stealth capabilities.

"It is a revolutionary aircraft," Boeing spokesman Chick Ramey said.

"There are a lot of technologies here that have never been done before, a lot of manufacturing techniques we'll use that will never have been done before," he said.

Revolutionary design

Lockheed's X-35 and its more compact rival Boeing's X-32 are strikingly different.

Lockheed's JSF is tipped by many to win

The X-32 is a sleek Delta-winged aircraft with a gaping air intake at the front, while the leaner X-35 looks more like a conventional aircraft.

The version for the US Marines, the Royal Air Force and British Navy will be able to land vertically like the Harrier jumpjet, while US Air Force and Navy versions would land conventionally.

"It is incredible to watch. It's not often you see a supersonic plane hovering, not ever, because it's never been done before," said Mr Kent.

Big business

The huge development cost means the winner would likely be the last to make manned combat jet, as such planes in the future could be piloted by remote control.

Even though Lockheed Martin is strongly tipped to be awarded the deal, no matter who wins both firms are expected to profit.

The Pentagon supports subcontracting as it benefits from the knowledge of the loser in the final development of the plane.

Boeing and Lockheed have both been heavily promoting their aircraft

Lockheed Martin has estimated that the project would create 8,200 jobs and revenue of $690m during the eight-year development phase, while Boeing expects the creation of 8,000 jobs.

The contract being awarded on Friday involves refining the design, building, testing and evaluating the JSF, but does not include the actual orders.

Over the 30-year production period, the final contract would create about 23,600 jobs, generating gross annual revenues of $1.7bn, Lockheed said.

Analysts predict over 2,000 export orders on top of those from the US and Britain, which with after-sales support over several decades could take spending to $1 trillion.

British "full-partner" status

As US government's staunch ally, Britain is the only nation to be granted "full-partner" status in the contract and has committed $2bn in development funds.

British companies dominate the lists of non-US contractors on both bids which could create 8,000 jobs for the UK and £27bn in orders.

Martin Baker is building ejector seats for both bidders

Britain's BAE Systems, Rolls-Royce and others will share in the profits whichever US bidders is chosen.

BAE has about 15% stake in the Lockheed programme and an estimated 10% of the Boeing bid.

"A Boeing win would not be as good for BAE as a Lockheed win, but it would be quite substantial," said Bank of America aerospace analyst Nick Fothergill.

The BAE division that would work with Lockheed is its prestigious combat-aircraft facility at Warton in northwest England.

A 40% stake in the GE engine that will power all JSF versions assures Rolls-Royce production work and decades of lucrative after-sales service.

The British-based Messier-Dowty unit of French state-owned firm Snecma, would build the Boeing jet's landing gear, a substantial and expensive part of any aircraft.

Smiths Industries is guaranteed about $1m in production work per plane, electronics group Cobham's is supplying fuel-systems, and privately owned Martin Baker would supply both bidders with ejection seats, in which it has long been the world leader.

Critics attack

The program has many critics, including the General Accounting Office, Congress' investigative arm, and the Center for Strategic and Budgetary Assessments.

The GAO has issued two reports urging Congress to delay the project, warning of technological problems and massive cost overruns.

Critics have recommended only carrier versions be built

The Pentagon has said it conducted an independent review that found the technologies are adequate to go ahead as planned.

The Center for Strategic and Budgetary Assessments said in a draft of a report to be published next month that all but vertical-landing versions of the JSF should be scrapped.

"In a future conflict, enemy missile forces numbering in the thousands could hold the in-theatre bases, upon which the bulk of US air power relies, at risk for the duration of hostilities," said the draft made available to Reuters.

The report said unmanned combat drones that could be launched from carriers and new Lockheed F-16 fighters could fill tactical aviation gaps if the Joint Strike Fighter were scrapped.

It also recommends buying 40 more long-range B-2 bombers, and more funding for unmanned aircraft such as the General Atomics' Predator and Northrop Grumman's Global Hawk.