The Air Force chose Lockheed Martin Corp. and McDonnell Douglas Corp. yesterday for a runoff to build a versatile and inexpensive new generation of booster rockets.
Each company will get $60 million to test and refine its proposals for the next 17 months, with one selected for the $1.6 billion final prize in 1998.
The choice of those two companies -- bypassing proposals from Boeing Co. and Alliant Techsystems Inc. -- keeps the rocket business in the same hands that build the three types of boosters being replaced.
Lockheed Martin, headquartered in Bethesda, builds the medium-lift Atlas and heavy Titan rockets. St. Louis' McDonnell Douglas builds the medium-lift Delta rocket.
"Well, you know, Merry Christmas; no surprise," said analyst Byron Callan of Merrill Lynch in New York. "Both were kind of the tried and true contractors. For Lockheed Martin, the big surprise would have been if they had lost."
Of course, the choice also sets the stage for one of the first big competitions of the newly reconfigured defense industry: Boeing recently announced plans to purchase McDonnell Douglas, creating an aerospace superpower whose only peer would be Lockheed Martin. Experts have widely praised Lockheed Martin's entry in the rocket race. It features a tough, proven main engine built in Russia that is said to be better than anything produced in the United States.
McDonnell Douglas is taking the riskier route of designing a new engine, which some experts say could increase costs on a program that places a premium on economy.
The Air Force wants to save between 25 percent and 50 percent in future launch costs by switching to a single family of boosters from the cumbersome menu of three, with their separate armies of scientists, launch pads and assembly lines.
"It's a little sentimental, but we have actually been the major launch provider for the United States Air Force with the Atlas and Titan for 40 years; we want to continue to be their contractor," said Gary Flora, vice president of Advanced Launch Systems at Lockheed Martin Astronautics in Denver. Flora said he expects a stiff battle with Boeing to keep that work with the new generation of rockets, called the Evolved Expendable Launch Vehicle.
"McDonnell Douglas and Boeing both are very formidable competitors, so we've got our work cut out for us," Flora said.
Officials at McDonnell Douglas Aerospace in Huntington Beach, Calif., said they expect their pursuit of the rocket contract to be unchanged by the impending acquisition.
"My understanding is that in the long term the program will continue here at Huntington Beach, and we don't see any major changes at all," said David Schweikle, the company's EELV program manager.
McDonnell Douglas is working with Rocketdyne on its new main engine, an evolution of the engine on current Delta rockets. Rocketdyne is part of the Rockwell International defense unit that also was purchased recently by Boeing.
More than just military contracts are at stake in the competition to build the new family of rockets.
The winning booster will also be the nation's primary offering in the wildly expanding commercial launch market.
"Once the manufacturer has sold the government all its rockets, the rockets it will be able to sell on the commercial market are going to be significantly cheaper," said John Pike of the American Federation of Scientists.
The Air Force plans to hold the first test launch of a medium-lift EELV booster in 2001, with the first payloads going up the following year.
Pub Date: 12/21/96