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Boeing ( BA ) and Lockheed vying for F-22 replacement contract

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New sixth-generation fighter to battle alongside drones

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Winner could eventually receive hundreds of billions of

dollars

in orders

(Adds context, and details on the program and its stakes)

By Mike Stone

WASHINGTON, March 20 (Reuters) - The Pentagon is set to

announce its decision on a next-generation fighter jet contract

initially worth more than $20 billion as soon as Friday, despite

earlier concerns about budget constraints and shifting

priorities, sources briefed on the plan said.

The Next Generation Air Dominance (NGAD) program will

replace Lockheed Martin's ( LMT ) F-22 Raptor with a fighter

built to battle alongside drones.

Lockheed and Boeing ( BA ) are competing head to head for

the winner-take-all engineering and manufacturing development

phase contract worth more than $20 billion.

An Air Force spokesperson and Boeing ( BA ) and Lockheed

representatives did not immediately respond to requests for

comment.

The winner of the high-stakes contest will receive hundreds

of billions of dollars in orders over the contract's lifetime,

underpinning their businesses for decades.

NGAD was conceived as a "family of systems" centered

around a sixth-generation fighter jet that aims to provide the

United States with advanced air dominance capabilities to

counter near-peer adversaries like China and Russia.

Under President Donald Trump's administration, which took

office in January, the program has moved forward after a period

of uncertainty that cast doubt on the future of the

next-generation fighter jet.

Last year, the program faced potential delays or scaling

back due to budget pressures and cost overruns in other Air

Force programs. There were also discussions about reconsidering

fundamental design elements or shifting resources to unmanned

drone programs.

The anticipated announcement signals designs that were

finalized last year will be chosen for NGAD.

Boeing ( BA ) has suffered headwinds for both its commercial and

defense businesses. A win would be a shot in the arm for its St.

Louis, Missouri, fighter jet production businesses, while a loss

would add to Boeing's ( BA ) woes.

Lockheed was recently eliminated from the competition to

build the Navy's next-generation carrier-based stealth fighter.

If it loses the NGAD contract, it will likely double down on its

F-35 fighter jet program and international sales of its F-16

jets.