Negotiations for development of the new design, known as Vega Model V-134-1, began in March of 1942 and a contract was signed on July 10. The project was considered sufficiently different from the stock B-17E that a new series number was assigned--XB-38. The ninth production B-17E (serial number 41-2401) had been turned over to Vega for study during the initial formation of the B.V.D. manufacturing pool, and this plane was selected for the first XB-38 conversion.

The basic airframe of the XB-38 was essentially that of the B-17E, with a few revisions necessitated by the installation of the new powerplants. For example, the oil coolers of the B-17E were mounted in the leading edges of the wings, but they were moved to positions underneath the propellers in the XB-38. Also, the coolant radiators for the Allisons were mounted in the wing leading edges between each pair of engine nacelles.

The XB-38 made its first flight on May 19, 1943. As a result of the increased power of the Allison engines, the XB-38 was slightly faster than its radial-powered B-17E counterpart. However, the XB-38 prototype was destroyed on June 16, 1943 as a result of an engine fire which could not be extinguished, and a full comparison with the Wright-powered B-17E could never be made. In any case, the performance improvement offered by the XB-38 was only marginal, and since the liquid-cooled Allisons were in great demand for the P-38 Lightning and P-40 Warhawk fighters, the USAAF decided to abandon further work on the XB-38, and plans for two additional XB-38 conversions were cancelled.

Specification of Boeing XB-38:

Four Allison V-1710-89 liquid-cooled V-12 engines, rated at 1425 hp at 25,000 feet.

Maximum speed 327 mph at 25,000 feet.

Cruising speed 226 mph.

Service ceiling 29,700 feet.

Range 2400 miles with 3000 pounds of bombs, 1900 miles with 6000 pounds of bombs.

Maximum range 3600 miles.

Dimensions: Wingspan 103 feet 9 3/8 inches, length 74 feet 0 inches, height 19 feet 2 inches, wing area 1420 square feet.

Weights: 34,748 pounds empty, 56,00 pounds gross, 64,000 pounds maximum.

Armament was the same as that of the standard B-17E, namely one 0.30-inch machine gun which could be mounted on any one of six ball-and-socket mounts in the extreme nose, one Sperry No. 645473E power turret in the dorsal position with two 0.50 Browning M2 machine guns with 500 rounds per gun, a remotely-controlled power turret in ventral position with two 0.50-inch Browning machine guns with 500 rounds per gun, one 0.50-inch Browning M2 machine gun is each of the two waist windows, 400 rounds per gun, and two 0.50-inch M2 Browning machine guns in the tail position, with 500 rounds per gun.