With priorities urgently revised because of the United States's involvement in a new war, the US Defence Department yesterday rushed through the biggest military contract in history, a $20 billion (€22.4 billion) engineering and manufacturing development order to Lockheed Martin for a new fighter plane.

Along with Britain, which has committed $2 billion to development, the US plans to buy a combined total of 3,002 war planes for their air forces, navies and marines over 10 years. The total value of the contract will eventually be more than $200 billion, according to the US Congressional Budget Office. The $20 billion contract was rushed out at the urging of a panel appointed by US Defence Secretary Mr Donald Rumsfield, and begins a new era of defence spending, benefiting sub-contractors throughout the United States and Britain.

Lockheed Martin and Boeing, the number one and number two defence contractors in the US, competed fiercely for the manufacture and development of the Joint Strike Fighter. This is a high-performance, low-cost, stealth aircraft designed to evade radar and to replace Lockheed's F-16, the most popular fighter with US allies around the world. A spokesman for Lockheed told The Irish Times that equipment in the US armed forces was ageing, and pointed out that the planes flying strikes over Afghanistan had been used in the Gulf War more than a decade ago.

Before the September 11th attacks, Washington had planned to increase the US defence budget of $302 billion by 5 per cent. Analysts said it could now go up by 25 per cent.

Initial production of the Joint Strike Fighter was due to begin in 2005 but this is likely to be accelerated now that the US has embarked on a new military campaign. Even without the contract, Lockheed Martin raised its forecast for full-year earnings growth. Before the war, the company has laid off 10,000 of its 140,000 workers since April because of the economic slowdown.