Big Deal for Lockheed

It took more than three years of negotiations and, finally, a contractual stipulation that there had been "no bribery offered to a Canadian government official in connection with this program." With that disclaimer, Lockheed Aircraft Corp. and Canadian officials last week signed, on the second try, a $697 million deal under which Canada will buy 18 Orion-type planes for North Atlantic patrol and antisubmarine warfare. The sale is the biggest ever made in export markets by the floundering American manufacturer, and provides a badly needed boost to Lockheed's order book and its morale. For Canada, it is the first step in an overdue effort to strengthen its military contribution to NATO.

The new contract is a compromise version of one that was aborted last May. Lockheed failed then to meet Canada's requirement that it come up with $375 million to finance initial tooling costs in Canada. Now, with a Saudi order for three TriStar jets also in hand, Lockheed has managed to borrow the $50 million needed to cover reduced startup costs. The Canadian government accepted a later delivery schedule (the first plane will arrive in May 1980) and less instrumentation on board the aircraft, which in Canada will be called the Aurora. Lockheed also agreed to place with Canadian firms $414.6 million in subcontracting work (not all of it connected with the Aurora) and to transfer to Canada the production of $168 million worth of components for other Lockheed customers.

The deal was once considered crucial to Lockheed's survival, in the dark days when the bribery scandals were causing foreign buyers to shy away from the company. A refinancing of Lockheed's debt and substantial orders from elsewhere have lessened the urgency, but the contract still is needed proof that overseas markets are open to the aerospace giant.

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