3-Company Team Gets $2.5-Billion Satellite Contract
The three aerospace companies building the Pentagon’s troubled Milstar communications satellite system were awarded a team contract Tuesday to develop the next generation of satellites intended to succeed Milstar.
Lockheed Martin Corp., Hughes Electronics Corp. and TRW Inc. were awarded a $2.5-billion contract to develop and build the Advanced Extremely High Frequency system, which is intended to provide secure, jam-proof communication between U.S. military commanders and troops in the field.
The Defense Department initially planned to have the companies compete for the program, with one team headed by Lockheed Martin and TRW vying against another led by Hughes.
But the Pentagon ultimately dropped the competition in favor of a “national team” that enables all three companies to contribute to the Advanced EHF, which calls for five satellites to be built starting next year. The program’s first satellite is set for launch in late 2004. The contract was awarded by the Air Force’s Space and Missile Systems Center at the Los Angeles Air Force Base.
The change came after the third of the six Milstar satellites--valued at $800 million--failed after launch a year ago when it entered a lopsided orbit thousands of miles too low. Two other Milstar satellites are operating, and the last three are expected to be launched over the next 2 1/2 years.
The companies said their team setup on the Advanced EHF “will help bridge the gap in military communication coverage caused by the loss of the third Milstar satellite,” by accelerating the new program’s development by 18 months.
The Federal Trade Commission said this month that it wouldn’t oppose the companies’ working together on the project, such as on anti-competitive grounds.
It’s unclear how much the Advanced EHF program will boost employment at the companies, because each is expected to move some workers--such as those still involved on Milstar--over to the new system as it gears up.
Still, the new system is likely to create a few hundred jobs overall over the next three years at the contractors’ Milstar facilities, all of which are in California, they said. Lockheed Martin’s site is in Sunnyvale, Hughes’ is in El Segundo and TRW’s is at its space plant in Redondo Beach.
Lockheed Martin is the program’s prime contractor, and it will contribute its ground-systems and satellite expertise. TRW will make the satellites’ processing subsystems, which control all on-board switching and processing of messages, along with the anti-jamming systems. Hughes not only will be in charge of the total payloads, it will make the antennas and certain electronic systems.
The companies said the Advanced EHF program will provide 10 times more communications capacity than Millstar and have higher data-transmission rates that will allow for more sophisticated transmissions, such as real-time video.
Lockheed Martin stock closed up 69 cents at $24.75, Hughes rose $2.88 to $97.75 and TRW gained 6 cents to $48.06. All trade on the New York Stock Exchange.
