On 29 August 1981 the US Air Force announced that McDonnell Douglas had been selected as prime contractor to develop a new C-17 long-range cargo aircraft, following the evaluation of three designs entered for its C-X competition. The C-X programme is for a long-range, heavy-lift air-refuellable cargo transport, intended primarily to provide inter-theatre airlift of outsize loads, including tanks and infantry fighting vehicles, directly into airfields in potential conflict areas. One of the design requirements was therefore outstanding STOL (Short Take-Off and Landing) performance.
The C-X is, however, only one gradient of an Air Force airlift improvement plan that also includes enhancement of current aircraft capabilities, and expanded cargo-carrying capability for the Civil Reserve Air Fleet. Therefore, selection of the McDonnell Douglas C-17 did not represent an Air Force commitment to build at that stage, since the USAF was still evaluating alternative ways of overcoming the present shortfall in airlift capability. One of these alternatives included the purchase of an additional batch of Lockheed C-5 Galaxies and/or off-the-shelf commercial transport aircraft. Award of a C-17 contract was therefore dependant upon Defense Department approval of the Air Force's overall plan for satisfying its airlift requirements.
In January 1982 the Air Force stated that it did not plan full-scale developement and production of the C-17 at that time. However, nearly half a year later, on 26 July 1982 McDonnell Douglas announced an award worth $31.6 million for a modestly paced research and development programme, to include those C-17 technologies that would also benefit other airlift programmes, and preserving the option to proceed to full-scale engineering development of the C-17 if eventually deemed appropriate. The technologies to be investigated include flaps on a swept supercritical wing, winglets tailored to the supercritical wing design, and an engine core thrust reverser.
The McDonnell Douglas C-17 makes use of technology developed for its earlier YC-15 advanced medium STOL transport prototypes that would be able to airlift outsize combat equipment which at that time could only be carried by the Lockheed C-5 Galaxy, and offer a short field performance only offered by the C-130 Hercules.