Funds for new Air Force jet could be months late.

Funds for new Air Force jet could be months late

Production funds for the Advanced Tactical Fighter, a highly prized project that is being sought by two Southland defense contractors, could be delayed for several months, the contractors said.

The multibillion dollar contract is still expected to be awarded late next spring but funding may not be available for several months later, the contractors said. They also reported that the delay could cause staffing and financial problems at the company that wins the award.

"The project has already slipped three months and it could slip more if there are further delays in Congress in releasing the funds," said Northrop Corp. spokesman Jim Taft. "The project could slip into October 1991 and that means there will have to be bridge (interim) funding to keep the team intact."

Northrop, based in Century City, is leading a team of contractors that includes McDonnell Douglas Corp., whose Douglas Aircraft division is based in Long Beach.

The other team is headed by Calabasas-based Lockheed Corp. and includes Seattle-based Boeing Co. and St. Louis-based General Dynamics Corp.

The contract could be worth up to $130 billion for 750 of the aircraft for the Air Force, as well as another 450 ATFs for the Navy. In addition to the revenues, thousands of Los Angeles-area jobs are at stake. If the Northrop team is awarded the contract, final assembly will take place in Southern California. Lockheed, which is abandoning its Burbank manufacturing plant to move to Marietta, Ga., has reported that if it wins the contract, final assembly of the aircraft will be done in Georgia.

Originally both Lockheed and Northrop officials said initial production was expected to begin within a few weeks of the contract award but it has now been pushed back at least three months.

"The total number of aircraft has not changed but the per-year production schedule probably will. Production is probably going to be in a different time frame," said Lockheed spokesman Richard Stadler.

Neither company could estimate to what extent production delays could effect operations or staffing, but all the contractors involved in the competition have already risked hundreds of millions of dollars. Each team has spent between $700 million and $1 billion to develop ATF prototypes.

Each team has designed, manufactured and is currently testing two prototypes of the aircraft for evaluation by the Air Force. The money spent by the two teams on the ATF prototypes excludes development funds from the government.

Mike Wallace, a spokesman for the Air Force, said so far the government has given each team about $650 million. Wallace said he was uncertain how long the project will be delayed from its original time schedule.

In previous big-ticket defense contracts, companies have been able to recover most of their development costs.

"This contract is unique in that you have teams competing and also that you have cost sharing by the contractors with the government, which means it is a very high risk project for them (the contractors)," said Jacques Gansler, a former Defense Department official who is now a Washington, D.C.-based industry researcher. "It's highly unusual for a defense contractor to put up this amount of money when there is no guarantee that they will get anything in return."

However, despite big cutbacks in other defense programs during the past 18 months that have hurt Los Angeles-area contractors, there are no indications that the ATF program is in jeopardy, said Gansler.

"There are some programs that are clearly going ahead and some that are clearly going to be canceled. The ATF is in the category of going ahead," said Gansler. "The Air Force really wants this aircraft. It's an expensive program and most likely there are going to be funding delays spread out over a longer period of time. Fewer might be ordered but this program has a very high priority and it will go ahead."

In addition to the cost sharing for development, Gansler said the ATF project is one of the few programs for which defense contractors have formed teams to win a contract.

"With the high cost of developing big defense contracts, you will probably see more teams if this project is successful," said Gansler.

Lockheed and Northrop said several hundred people had been working on the design and manufacture of the prototypes, but there have not been sizable furloughs since the prototypes were completed and put into their testing phase.

Gansler said Northrop's troubled history, including calls to ban the company from future government contracts, could effect the decision on the ATF contract. But, he said, because the ATF is such a high priority project, the decision will come down to performance of the prototypes.

"Politics (usually) play a bigger role in getting a project going. At this point it is going to play a secondary role because the decision on who gets the project is up to the Department of Defense and the Air Force, not Congress," Gansler explained. "On a project of this size they are going to be looking to see if the plane does what its supposed to."

The Advanced Tactical Fighter is supposed to be capable of eluding radar detection and is being designed with an emphasis on maneuverability for air-to-air combat.