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US: Lockheed beats Boeing to win $3.57 bln GPS contract

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Lockheed Martin Corp beat out Boeing Co to win an Air Force contract worth up to $3.57 billion (€2.31 billion) to build as many as 12 next-generation global positioning satellites, the Pentagon said on Thursday.

The deal is the first of three awards to supply a total of 32 satellites for the Pentagon’s new GPS III system. As the manufacturer of the first block of satellites, Lockheed will be in a strong position to win the two follow-on contracts. Col Dave Madden, commander of the Air Force’s Global Positioning Systems Wing, said the Air Force hopes to work with the same company on all 32 satellites. Pentagon officials declined to speculate on how much all three awards could ultimately be worth.

The military relies on GPS systems to provide precision timing and navigation signals used to help pilot aircraft, guide bombs and missiles, direct troops, map battlefields, conduct mine sweeps and perform other operations critical to modern warfare. GPS technology also provides the backbone for a number of consumer services, including car navigation systems and automatic teller machines.

The first GPS III satellites are scheduled for launch in 2014, with all 32 satellites in orbit by 2022. The new GPS III network will have a more powerful military signal resistant to enemy jamming and a stronger commercial signal. It will also feature a cross-linked command and control system that will allow simultaneous upgrades of the entire GPS constellation from a single ground station and will be interoperable with Europe’s Galileo GPS system.

Boeing and Lockheed both already hold satellite contracts for the military’s existing GPS II constellation, but Boeing’s part of that program has suffered technical problems, delays and cost increases. Those troubles may have contributed to its loss in the GPS III contest, said Loren Thompson, a defense industry consultant based in Virginia. Thompson consults for Lockheed, among other aerospace companies, but not on the GPS III program. In a statement, Lockheed said it is “honored that our government customer has entrusted our team to build this vital system, which will provide improved GPS accuracy and assured availability for military and civilian users worldwide.” The GPS III deal is the latest in a series of big contract losses for Boeing in recent months.

In February, Northrop Grumman Corp. and European Aeronautic Defence and Space Co. beat out Boeing to win a $35 billion (€22.62 billion) Air Force order for 179 aerial refueling tankers. That deal is the first of three Air Force awards worth as much $100 billion (€64.62 billion) to replace its entire fleet of nearly 600 tankers over the next 30 years. Boeing has filed a formal protest of the contract with Governmental Accountability Office, which is expected to issue a ruling by June 19.

In March, Lockheed defeated Boeing to grab a $766.2 million (€495.15 million) Defense Department contract to design and build a radio system that can connect aircraft, ships and ground stations across the military. That deal could lead to the installation of tens of thousands of radios and ultimately be worth billions.

And in April, Northrop Grumman beat out both Boeing and Lockheed for a $1.16 billion (€750 million) Navy contract to design and develop an unmanned aircraft to patrol coastlines and open ocean. The deal could ultimately be worth billions as the Navy plans to buy 68 of the planes. Lockheed is protesting that award.

In a statement, Boeing said it is disappointed by the loss of the GPS III contract and looks forward to a debriefing from the Air Force. Madden stressed that the Air Force intends to take a very active role in managing the GPS III program, working closely with the contractor and issuing precise guidelines for the design of the satellites. John Young, undersecretary of defense for acquisition, technology and logistics, has directed the Air Force to tie payments to the contractor to “specific program accomplishments,” not to adjust the scope of the program or change its technical specifications and to “consider solutions which lower cost or risk to deliver within or below budget.” (The Economic Times)

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