The Star Wars Sweepstakes

By Charles P. Alexander

Not since John F. Kennedy launched a crash effort to put a man on the moon has the U.S. undertaken a public venture so ambitious or expensive. The Administration calls the program the Strategic Defense Initiative, the press has dubbed it Star Wars, and the hundreds of companies and universities competing to work on the project could easily rename it Star Bucks. Experts estimate that fulfilling President Reagan's vision of building an impregnable defensive shield against nuclear attack, if it is possible at all, could ultimately cost anywhere from $400 billion to $1.2 trillion. It would thus become the biggest bonanza ever for American businesses and educational institutions.

Thousands of applications for research grants have inundated the 70-member staff of the Government's new Strategic Defense Initiative Organization. Thrown together hastily last year, SDIO still occupies temporary headquarters in a dingy Washington office building, which also houses an Interior Department group that regulates fish hatcheries. Soon the Star Warriors will move to a new building complex in suburban Virginia near the Pentagon. So far, SDIO administers some 1,000 contracts worth $1.1 billion for studies aimed at developing such products as lethal laser beams and lightning-quick battle computers.

The top contract winners include Boeing ($131 million), TRW ($57 million), Lockheed ($33 million) and Rockwell ($25 million). Scores of other star-struck companies, from giant IBM to tiny General Research of Santa Barbara, Calif., have also pushed onto the SDIO payroll. Says Wolfgang Demisch, an analyst at the First Boston investment firm: "SDI is the future of the defense industry. No competitive high-tech company can afford not to be a part of SDI."

But corporations face risks even as they reap the rewards of Star Wars. The program could be scaled back or scuttled by the next Congress or President. "Companies can get geared up for a letdown," says Paul Nisbet, who follows the defense business for Prudential-Bache Securities. Also worrisome is the mounting opposition to SDI at the universities where much of the basic research will be done. Campus critics, including many scientists, argue that Star Wars is technologically unworkable and wasteful: a pie in the sky and a pork barrel on the ground.

For economic reasons, Star Wars has become vulnerable to efforts to trim the federal deficit. Congress has tentatively cut the President's SDI budget for 1986, from $3.7 billion to $2.75 billion. Nonetheless, the Administration is still shooting for $21 billion in Star Wars funds over the next four years.

The companies in the program are pursuing several avenues of research. Boeing, TRW, Lockheed, Hughes Aircraft and Grumman are among the many firms working on satellite surveillance and tracking systems to detect enemy missiles on launch, discriminate decoys from actual warheads and verify that the targets are destroyed by the Star Wars defense. Another crucial task is developing the weapons that would be used to blast attacking missiles and warheads out of the sky. TRW, Lockheed and Rockwell are studying the feasibility of so-called directed energy weapons, including lasers and particle beams. Lockheed, McDonnell Douglas and Teledyne are considering how conventional rockets and other projectiles, informally known as "smart rocks," might be used to knock down ICBMs. Finally, Star Wars will require an ultrapowerful new computer system to manage the missile defense. Among the leaders in this area of research are IBM, Rockwell and GTE.

The most difficult task will be to come up with an overall plan for how the various parts of a Star Wars defense will work together. Last year SDIO challenged companies to enter what it called a horse race to devise the best Star Wars blueprint. A herd of 300 firms submitted initial applications, but SDIO narrowed the field to five, each of which will receive a $5 million grant to work on its designs. They include three major defense contractors --Rockwell, TRW and Martin Marietta--and two small electronics companies, Sparta of Huntsville, Ala., and Science Applications of La Jolla, Calif. Though their current grants are small, these firms expect to be out front if the big money starts to flow. Says Rockwell President Donald Beall: "Getting in early can give you a big leg up. Latecomers will have to play catch-up, and they might find they can't even get in at all."

Perhaps the most conspicuous loser so far in the Star Wars sweepstakes is AT&T, which has been eager to help develop a battle-management computer system. Says an official at a competitor company: "AT&T can't buy a contract. They've done everything short of camping out at the door of the SDI office." Admits an AT&T executive: "It's important to us. There's a lot of pressure on us from the chairman to get involved in this, but so far it's been disappointing." Industry analysts speculate that AT&T has done poorly in the bidding because of its efforts to reorganize itself in the wake of the court- ordered divestiture of its telephone-operating companies.

Besides lining up for Government money, companies are digging into their own coffers. "The price of admission to this game is much higher than usual," says Stanley Moran, who heads GTE's Star Wars effort. "If you want to be competitive, you have to be prepared to spend accordingly." GTE normally lays out between $100,000 and $1 million to develop a bid for a research grant, but it has spent about $3 million on Star Wars proposals.

Executives have to be concerned that their investments could fizzle like misfired rockets. Rockwell's Beall painfully remembers how his company spent $400 million to rev up for large-scale production of the B-1 bomber, only to have the program dropped during the Carter Administration. It has been restarted under Reagan. "There is the risk that it could happen again," he says. "But in this business you have to take chances. The real risk is in not taking any risks at all." Beall believes that even if his Star Wars business goes sour, the research will lead to improvement in other products, like infrared detection devices. In any case, SDI spending currently represents only a tiny part of the company's budget.

The risk can be greater for a small firm. At General Research in Santa Barbara, SDI contracts accounted for more than 8% of revenues in fiscal 1985, and that percentage is likely to grow rapidly. Nonetheless, says Leslie Wells, an assistant to the company's president, "we're not putting all our eggs in the SDI basket. It's not something that's going to cause the company to come to a screeching halt if it's discontinued."

Many of the scientific breakthroughs that businesses will need in order to make Star Wars a reality may come from university laboratories. SDIO has awarded $19 million to a five-member consortium made up of Auburn, Polytechnic Institute of New York, the State University of New York at Buffalo, Texas Tech and the University of Texas at Arlington. Their mission: to develop a power system for Star Wars weaponry. SDIO also approved a $9 million grant to a group of scientists at nine universities and other research institutions, including Carnegie-Mellon, Caltech, M.I.T. and Stanford. They will try to develop superfast optical computers, in which signals would be carried by light waves instead of electric currents.

At many universities, Star Wars has generated echoes of the 1960s protests against campus military research. This time, however, the dissension is led not by radical leftist undergraduates but by professors and graduate students. Anti-Star Wars petitions are circulating on at least 48 campuses, from the University of Utah to Princeton. At the University of Illinois at Champaign- Urbana, 53 of the 70 full professors in the physics department, which is the second largest in the U.S., have pledged not to seek SDI funds and signed a statement that calls the program "deeply misguided, dangerous and enormously expensive." About half the engineering and physics faculty members at Cornell have signed a similar denunciation of SDI. The professors argue that deployment of a Star Wars system could provoke the Soviet Union to build up its offensive arsenal in an effort to stay ahead of U.S. defensive capabilities.

University scientists engaged in Star Wars research staunchly defend their work, noting that the Soviets are building their own missile defenses. Says Wayne Anderson, a professor of electrical engineering at the State University of New York at Buffalo: "If we don't compete, we're in trouble." Other Star Wars supporters contend that the program need not lead to an escalation of the arms race. "We could offer to share our technology for stability and tie that to an arms build-down," says Robert McCrory, director of the Laboratory for Laser Energetics at the University of Rochester.

Besides objecting to Star Wars on political and strategic grounds, many university scientists maintain that the whole idea is technically infeasible. One report says that the computers needed to manage a missile defense, for example, would have to be up to a million times as powerful as current machines. A program to run the Star Wars computers would be so complex that no human could comprehend it, and only other computers could write it. Furthermore, say SDI opponents, the computer system might be full of bugs because it could not be tested until an actual nuclear attack was under way.

Star Wars supporters point out that only a few decades ago, some scientists were skeptical about the possibility of creating nuclear weapons or reaching the moon. SDI advocates contend that much of the opposition is more a knee- jerk political reaction than a genuine scientific critique. Indeed, some of the attacks on Star Wars come from scientists whose work has nothing to do with space technology. Contends James Ionson, the astrophysicist who heads SDIO's Innovative Science and Technology Office: "The only ones who complain about money being thrown around are those who are not in the way of the money."

Some opponents contend that SDI will hurt the civilian economy and the U.S. position in world trade. Says Hans Bethe, a Cornell physicist and Nobel laureate: "The best engineers will go into SDI because the technical problems are fascinating. Meanwhile, we can't make an auto to compete with the $ Japanese. It's less exciting to design a better auto."

In response, advocates say that SDI research, like the space program, will have spin-offs that benefit private industry. The knowledge gained through Apollo flights helped scientists develop a multitude of products, from miniature computer chips to the cordless Dustbuster vacuum cleaner. Says John Rittenhouse, executive vice president of the aerospace and defense division at RCA: "We're not banking on SDI reaching production. We're banking on the fallout to commercial and consumer areas for the payoff." Technology spawned by SDI could conceivably be used to build better communications equipment, air-traffic-control systems or industrial robots. High-speed computers developed for SDI could have thousands of practical uses.

While scientists and politicians debate the merits of SDI, companies are plunging fearlessly ahead with their Star Wars research. Says Gaynor Kelley, president of Perkin-Elmer, a high-tech firm based in Norwalk, Conn.: "We see SDI as a chance to generate hundreds of millions of dollars in business over the next five to ten years." Such payoffs are far from a sure thing, but it is a business opportunity too great to ignore.

CHART: TEXT NOT AVAILABLE.

With reporting by Cathy Booth and Thomas McCarroll/New York