Douglas Aircraft proposes to build more C-17s.

Boeing, Lockheed also want to get plane pacts

Douglas Aircraft Co. in Long Beach last week submitted a proposal to build another 80 C-17 cargo aircraft for the United States military.

The multibillion-dollar proposal sets up a direct competition with two other big aviation and defense firms - Boeing Co. and Lockheed Martin Corp. - that want the Pentagon to choose their respective bids to produce cargo aircraft.

A Douglas spokesman would not release cost details of the company's proposal and declined to comment on whether it had lowered the per-plane cost of the C-17 in order win the competition.

The current fly-away cost of a C-17 is between $270 million and $290 million each. But there has been much speculation in the industry that Douglas, in its proposal for the 80-aircraft order, has reduced that to about $190 million.

As of last week, 21 C-17s have been delivered to the U.S. Air Force and another 19 have been ordered and are in production. As more C-17s have been built, the cost has come down. The Air Force has said that the average per-plane delivery cost of its 40-aircraft order is $323 million.

Including costs for development and service, the Air Force has said that so far it has spent $21.3 billion for the 40-aircraft C-17 order from Douglas.

Jobs on the line

At stake in the competition is thousands of Southland jobs. Right now, there are about 8,500 workers on the C-17 program in Long Beach. Nationwide, Douglas, a division of McDonnell Douglas Corp., has about 12,000 workers employed on the program.

The C-17, a big, four-engine jet transport, is designed to carry up to 78.5 tons of troops and equipment. Its primary selling point is that it can land and take off on short (3,000 feet), dirt air strips. Big, four-engine jet aircraft usually require at least 6,000 feet of paved runway.

Before the end of November, the Defense Acquisition Board, a government commission, is supposed to decide on future Pentagon orders for cargo aircraft. The order will be for existing cargo aircraft and not for development of a new plane.

What the commission will decide is not whether another order for cargo planes is necessary but how many, and what type, of aircraft are needed.

The commission could decide on one order of one type of aircraft or a mix of the three competing transports.

In addition to the Douglas bid for the C-17, Boeing has submitted a bid for its 747 aircraft that previously has been used primarily for commercial purposes. Lockheed Martin has also submitted a bid for its C-5 transport, which is no longer in production.

Boeing builds the 747 at its facilities near Seattle, Wash., and Lockheed, if it wins the bid, would likely build any more C-5s in Georgia.

Lockheed is considered a long shot in the competition and most defense experts say the bidding will likely come down to a contest between the C-17 and 747. And because of its short-field capability, the C-17 is the front runner, said the experts.

However, the 747 does have one big advantage and that is cost. The average flyaway cost of a commercial 747 is between $150 million and $155 million each, said Randy Harrison, a Boeing spokesman.

Harrison would not reveal details of Boeing's bid for the cargo plane order. Specifically, Boeing made the bid last month to build the 747-400, a version of the standard 747, for the military.

Mixed fleet advocated

"We recognize that other aircraft may have unique capabilities, but we are saying that the requirement for short fields is just a small part of the overall mission of a cargo transport," said Harrison. "We think using a mixed fleet that includes the 747 would enable the Air Force to meet its air lift requirements at an earlier date and at a greatly reduced price."

Jim Ramsey, a spokesman for Douglas in Long Beach, said all the Air Force needs is the C-17. "The C-17 meets all the requirements of the military," he said. "If there is a need for additional air lift, it is readily available through leasing aircraft through the commercial air reserve." Commercial air reserve are commercial aircraft made available to the military in times of emergencies.

Douglas is currently producing eight C-17s a year but, with a new order, the production rate would likely be increased to between 12 and 15, said Ramsey.

If Douglas wins the new order and the production rate increases, the per-copy price of the C-17 would decline and the company may have to hire more workers, said Ramsey. "The level of employment would depend on the order and the rate of production," he said.