The U.S. Air Force last month narrowed to two the field of companies vying for the right to develop the Evolved Expendable Launch Vehicle (EELV).

Following a 15-month process, Lockheed Martin Corp. [LMT] and McDonnell Douglas Corp. [MD] each won $60 million contracts to continue the preliminary work they have done to develop EELV concepts. In 1998, Pentagon officials will select one of the two concerns for the $1.6 billion project, aimed at slicing as much as 50 percent off the cost of placing payloads into orbit.

The next-generation EELV will supplant the current Delta, Atlas and Titan launchers with a single. modular family of rockets.

Two other companies that also had prepared proposals for developing an EELV–Alliant Techsystems Inc. [ATK] and Boeing Co. [BA]–were passed over when the Pentagon announced its decision Dec. 20. But Boeing’s recently announced plan to merge with McDonnell Douglas means the aerospace giant still will be involved in the EELV competition.

Alliant President and CEO Richard Schwartz said in a statement the company, while disappointed, remains upbeat about opportunities to profit from the growing space business. For example, the company–the smallest aerospace concern involved in the EELV competition–will build composite liquid hydrogen tanks for Lockheed Martin’s Venturestar reusable launch vehicle (RLV), to be built for NASA.

Winning the final EELV contract is seen by both Lockheed Martin and McDonnell Douglas as highly lucrative. Although the new rocket is to be designed for military requirements, it also will be available to the commercial sector. That means the Pentagon essentially will pick up the hefty tab of developing a next-generation, low-cost commercial launcher, resulting in a huge cost savings for the company chosen to take on the EELV project.

At least one company already is guaranteed to have a presence in the production EELV. Rocket engines from Pratt & Whitney, a unit of United Technologies Corp. [UTX], will power both winning companies’ EELV candidates.

The first EELV flight with a working government payload is set for fiscal year 2002. The first test flight will occur in fiscal year 2001.