Cancellation looms for giant F-22 and B-2 projects; loss of contracts would sting Lockheed and Northrop.

Less than a year after the huge F-22 aircraft contract was awarded to Lockheed Corp., the project could now be in jeopardy as the Pentagon and Congress look for ways to cut military spending in response to the "new world order" and demise of the Soviet Union.

During the next six weeks, President Bush and the Pentagon are expected to submit their 1993 budget proposal. Among the possible cuts being bandied about Washington is a reduction in the number of planned F-22s (advanced tactical fighters), or even an outright cancellation of the gigantic project, valued at upwards of $95 billion.

Neither the White House nor the Pentagon would confirm that the future of the high-tech fighter aircraft is in doubt, but industry sources said government officials are now questioning the military, economic and political viability of the aircraft.

In addition to the F-22, other major weapons programs may be in jeopardy, including the controversial B-2 "stealth" bomber, which is produced in Los Angeles County by Century City-based Northrop Corp. The future of the B-2 has been debated for years but 1993 could be the year the project is formally terminated.

A proposed project that could also be on the endangered list is the AX fighter aircraft for the Navy, which several area contractors have submitted plans for as part of design and manufacturing teams.

"Projects like the F-22 and the AX are particularly vulnerable because they are still largely paper projects and aren't in production. There isn't a lot of employment involved, which makes it easier to cut," said one Washington source who specializes in defense matters.

"My prediction is that by March or April the 1990 budget agreement that said defense funds cannot be diverted to domestic uses will be tossed out and that's going to affect many projects," said an anonymous source, who is an aide to a high-ranking government official.

After four years of development and testing, a team of contractors, led by Calabasas-based Lockheed, last April was awarded the Air Force contract to produce the F-22.

The Lockheed team beat a group of contractors led by Northrop for the program to produce as many as 750 F-22s worth up to $95 billion.

Though the F-22 project received $1.6 billion in the federal government's 1992 defense budget, the project has already been scaled back from its original plan. The number of planned F-22s has been reduced to less than 650 and a proposal to build 450 of the aircraft for the Navy, with a value of about $40 billion, has been cancelled.

Any dramatic reduction of the F-22 project, or outright cancellation, would undoubtedly hurt Lockheed, which, since winning the contract, has been elevated to one of the strongest defense contractors in the country, said financial analysts.

"It would certainly change Lockheed's long-term outlook and would be a major crimp in their picture," said Paul Nisbet, an industry analyst at Prudential Bache in New York. "Instead of growing in the next five years as a manufacturer of combat aircraft, they would go back to where they were before the (F-22)."

Lockheed officials were unavailable for comment last week because the company was closed for its annual holiday season hiatus.

The loss of the F-22 project, or a dramatic curtailment, would not affect Southland defense industry workers, however, because when and if it goes into full production, the aircraft will be assembled at the company's Marietta, Ga., facility.

Because the AX attack aircraft project is still in its early stages, industry experts said it too is vulnerable to cuts or outright cancellation. Among the area contractors competing for the AX project are Lockheed, Northrop, Rockwell International Corp., based in Seal Beach, and McDonnell Douglas Corp., which operates Douglas Aircraft Co. in Long Beach.

Because it will be easier politically to cut big-ticket items, industry sources predicted 1993 could be the year the Northrop-produced B-2 is terminated. However, there are officials who are still fighting for the B-2, including Sen. John Seymour, D-Calif. "The state simply cannot afford to lose its last combat aircraft production line," said Seymour in a recent letter to President Bush.

Industry experts expect political changes in the Soviet Union to force Congress to cut deeper into the defense budget than the planned 25 percent reduction over the next five years.