Many Area Programs Appear Intact in Defense Budget Study

A Clinton Administration study of U.S. military needs is apparently good news for some Southern California aircraft programs of McDonnell Douglas Corp. and Northrop Corp. but a mixed bag for Calabasas-based Lockheed Corp.

The study, ordered by Defense Secretary Les Aspin, is a thorough “bottom-up review” of U.S. defense spending priorities in the face of budget reductions. Due to be released Wednesday, the plan is expected to cut some projects but overall is said to propose only a modest scaling back of current programs.

Although Pentagon officials have declined to comment until the plan is unveiled, military and industry officials knowledgeable about the plan’s contents said upgraded versions of McDonnell’s F/A-18 Navy fighter jet continue to enjoy strong Pentagon support.

About 40% of the jet is built by Northrop in El Segundo, and final assembly is done by McDonnell in St. Louis. Reports that Aspin wants the Navy to have 12 aircraft carriers (instead of the 10 that President Clinton had sought) also would augur well for McDonnell because it might mean more sales of the F/A-18.

Pentagon officials also appear inclined to continue McDonnell’s C-17 transport-plane program, despite major budget and technical problems. But the future of the C-17, which is built in Long Beach, is also tied to a review by the Pentagon’s Defense Acquisition Board, which should announce its proposals within weeks.

Meanwhile, a Lockheed executive said the Aspin report could be a “a mixed bag” for the company. Lockheed is disappointed that the review will propose canceling development of a Navy radar-evading AFX attack jet; the company reportedly spent $100 million as a member of four teams bidding for the program.

Lockheed did win continued support for its F-22, a radar-evading advanced tactical fighter it is developing with Boeing. But rising costs and budget worries are prompting the Air Force to cut orders.