Military: Contracts Battle to Defend the Skies

For three years Northrop has been seeking a buyer for its F-20 Tigershark plane. Developed at a cost of $850 million, the jet fighter has consistently been spurned by the U.S. and foreign governments in favor of General Dynamics' larger F-16 Fighting Falcon. Adding to the Tigershark's woes, two of its three prototypes have crashed since last October.

Northrop has refused to give up. In April the California contractor offered the Air Force 396 Tigersharks for $15 million a plane, vs. the $19.5 million that General Dynamics was asking for the F-16.

General Dynamics last week struck back. The St. Louis-based company, which forfeited $22.5 million in defense contracts in May after disclosures that it had padded expense claims, offered a stripped-down version of the Fighting Falcon for $9.7 million apiece. General Dynamics estimated that the Air Force could save $1.4 billion over the next four years by buying a combination of 720 regular and modified F-16s. The price war was welcomed by both the Pentagon and Congress, which are seeking to contain weapons costs. A House bill calls for the winning plane to be chosen next year after Air Force tests of the rival jets.