Defense firms to compete on satellites

Defense firms to compete on satellites

	Published : Fri, 23 Feb 2007 21:45 By : Agencies Print this Story

WASHINGTON (AP) - Lockheed Martin Corp. and Boeing Co. will vie this spring for a multibillion-dollar contract to supply the Air Force with up to 32 next-generation global positioning satellites.

The Air Force will replace 24 satellites in orbit with a new system, dubbed Global Positioning System III, that is intended to improve navigation by air, land and sea, and be more difficult for enemies of the U.S. military to disable. Both Lockheed and Boeing already supply the Air Force with satellites in use.

The Pentagon is expected to seek bids for the first phase of the contract in mid-to-late March and announce a single winning team by late August, Candrea Thomas, a spokeswoman for the Air Force's Los Angeles-based Space and Missile Systems Center, said Friday.

The first phase of the contract, according to the Air Force, will be for eight satellites to be delivered by 2013. The second phase is for another eight satellites by 2016, and the third phase is for another 16 satellites by 2019.

The overall cost of the new satellite system has yet to be determined. However, based on the Bush administration's proposed budget for fiscal years 2008-2013, roughly $4.26 billion has been designated to GPS III for research and development funding. That figure excludes procurement funding.

Both Lockheed and Boeing have already received roughly $85 million from the Air Force for initial planning and development for the first phase of the contract, according to Maj. Regina Winchester, a Pentagon-based spokeswoman for the Air Force. The department will complete its cost evaluation this spring.

The Air Force has yet to say whether it will seek two contractors for its next-generation satellite system. However, the department is expected to pick one contractor for the deal.

Loren Thompson, defense analyst for the Virginia-based Lexington Institute, said both companies are likely to seek language in a contract that would ensure that the winner of the first phase of the deal would be set to lead the second and third phases of the program.

The Lockheed-led team includes IIT Industries and General Dynamics Corp.

Shares of Lockheed dropped 57 cents to $102.12 in afternoon trading on the New York Stock Exchange, while shares of Boeing dropped 21 cents to $90.37.