Northrop stalks unmanned aircraft market with Pegasus demo. (Media & Technology).

Boeing Co. beat out Northrop Grumman Corp. and its partners four years ago on a contract to create an unmanned combat aerial vehicle for the Air Force.

Not wanting to cede a developing market that could turn out to be substantial, Northrop shelled out more than $40 million to develop a similar plane, without the sponsorship of any Defense Department agency.

Now, with the Navy expected to spend billions on its own UCAV fighter, Northrop has positioned itself to compete.

The company just completed successful takeoff, flight and landing tests of its X-47 Pegasus, a scaled-down version of the plane Northrop hopes to eventually produce in large quantities.

Officials at the Defense Advanced Research Projects Agency have yet to determine when they will award funding for the construction of demonstrator Navy UCAV models, how much funding will be available or whether contracts will be awarded to one or both contractors, sources said.

But in general, Defense Secretary Donald Rumsfeld's plans to transform military weaponry include creating a more competitive environment to keep costs down, and placing a greater emphasis on unmanned aerial vehicles. President Bush's fiscal 2004 defense budget proposal calls for a record $1.3 billion for unmanned aerial vehicles.

"These are very high-technology programs," said Philip Coyle, a senior advisor with the Center for Defense Information, a Washington research and policy group. "The companies are putting their best people on them. They recognize that this is a new direction in defense."

He projected production contracts for unmanned aerial vehicles will ultimately total in the billions of dollars for each.

The Pegasus, which in its current version is stealthy in appearance, weighs 5,500 pounds fully fueled and can fly up to 195 miles per hour.

"The whole idea of developing the Pegasus was to demonstrate for the Navy the technology feasibility of a UCAV that could support flight operations on an aircraft carrier," said Brooks McKinney, a Northrop spokesman.

The company began designing and building the technology demonstrator at its El Segundo plant in 2000. As many as 110 people are employed on the project at a given time.

Northrop officials refused to reveal the capabilities of the production model being developed, citing competition from Boeing.

But the DARPA officials said the UCAV would be capable of striking enemy ground and plane targets with missiles, and conduct surveillance missions with a built-in sensor package.

Boeing's Navy UCAV technology demonstrator is also undergoing testing.

Northrop has had success in the unmanned aerial vehicle market with its Global Hawk surveillance plane, a program that began in 1995. Northrop has received more than $1.6 billion in contracts for design, development and production of the Global Hawk, and the Air Force has ordered 51 production vehicles through 2010.

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X-47 Pegasus

Type: Technology demonstrator for Navy unmanned combat aerial vehicle (UCAV).

Developer: Northrop Grumman Corp.

Competition: Boeing Co.

Funding agency: Defense Advanced Research Projects Agency

Projected Timeline: Government-funded R&D could begin in 2007; production begins in 2011.

Cost goal: One-third of Joint Strike Fighter, or $12.4 million to $16.1 million, based on current JSF cost estimates.