Lockheed, Raytheon Sweat DoD Deal

Two industry leaders are counting down the days until one of them wins what is believed to be the biggest military pact available to satellite manufacturers for the next two years. The victor will sign a $6.2 billion, 20-year contract to provide narrowband satellite communications to the global U.S. military.

With a current paucity of commercial satellite contracts available, the military satellite arena is becoming an increasingly important market for U.S. aerospace companies of all sizes. The $6.2 billion contract includes the satellite system, the ground equipment, the launch vehicle and two decades worth of operating expenses. Despite federal budget cuts that trimmed military spending on this particular program by $110 million for FY05, the contract will be decided between Sept. 16 and Oct. 1.

Two competing teams, one led by Lockheed Martin [LMT] and the other by Raytheon [RTN], submitted their bids, and each is waiting for the call from the U.S. Navy, the military branch that manages the procurement process for the U.S. Department of Defense (DoD).

The next-generation narrowband service will be deployed in 2010, replacing the capacity-constrained UFO (UHF Follow-On) communications network now used by the DoD and its troops. However, the U.S. military really could use the enhanced narrowband communications capability years sooner to better serve as many as 30,000 ultra-high frequency (UHF) terminals now in the field, said Steven David, a spokesman for the U.S. Space & Naval Warfare Systems Command (SPAWAR).

Under the government’s specifications, two in-orbit satellites would cover the same geographic area of potential hot spots, such as the Afro-Eurasian landmass that encompasses the Middle East, Pakistan, Afghanistan and India, while a second geographic requirement would include the Korean Peninsula area.

“The number of satellites proposed by both teams is a closely guarded secret,” said Pat Luna, deputy program manager for Raytheon’s network-centric systems. “The number of satellites would tip the hand of each side about the technical solution and the price. There clearly is a need for more than two satellites but the total number definitely will be less than dozens.”

More than half of the U.S. military’s satellite communications users rely on the existing narrowband UHF system for service due to its reliability and ability to overcome rain fade, foliage and urban obstructions between the terminal and the satellites orbiting the Earth. The current throughput of the UFO system between 2 Mbps and 4 Mbps, while the new “mobile user objective system (MUOS)”would provide throughput of almost 40 Mbps.

The current system is estimated to be handling between 250-percent and 300-percent more demand from users than it was designed to transmit, industry sources said. That lack of capacity now causes lower-priority users, including ground troops who may be in hostile environments, to sometimes wait until they are able to communicate. If immediate help is needed, the consequences for soldiers who lack the technical capability to communicate in a timely manner could be dire.

The next-generation MUOS would provide narrowband services topping 64 Kbps via satellite to support mobile and fixed-site terminal users worldwide. The Navy operates the UHF system for all branches of the military.

The Competitors

“We have put together a technical proposal that is a breakthrough for the warfighter and is flexible enough to grow with their emerging requirements over the next two decades,” said Len Kwiatkowski, vice president of Lockheed Martin Space Systems, in an exclusive interview. His company leads a team that includes aerospace giants General Dynamics [GD] and Boeing [BA]. “Each one of us brings proven experience to the party,” he added.

General Dynamics built the military gateway for the Iridium mobile satellite service. As a result, it has experience with worldwide installations and relationships with the mobile telecommunications community that would be leveraged in a potential deployment of service by the team.

“That is a very strong piece of our partnership,” Kwiatkowski said. “Getting network integration system operating properly is the most technically challenging part of the system.”

Boeing would assist in providing the team with space segment links. It already has a “long-standing relationship” with Lockheed in collaborating successfully in the DoD’s Milstar program, Kwiatkowski said. In addition, Boeing’s role in providing narrowband communications to the DoD includes its construction of the UFO satellite system now in use. “Boeing will provide the legacy components we need to be backward compatible,” Kwiatkowski said.

The team also includes Lockheed Martin Commercial Space, a business unit that manufactures the A2100 model satellites that would be the foundation for the space segment offering.

David Ryan, president of Boeing Satellite Systems International, told Satellite News in an exclusive interview that he expected his company’s experience with the UHF follow-on program to be a big boost to the Lockheed bid. “Heritage” technology used in the UHF follow-on program would be combined with “digital” capabilities to improve the next-generation MUOS payload, Ryan said.

More Mobility Needed

The next-generation narrowband system needs greater mobility, more access and better quality of service, Raytheon’s Luna said. Large, mechanized divisions in Iraq have outrun their communications support and left the forward fighting units fragmented from their communications.

“The Iraq war showed that soldiers did not have a good mobile communications capability,” Luna said. That shortcoming was apparent among U.S. troops in urban areas where buildings impair communications, he explained, adding, “This [MUOS] system would address the problem.”

In its bid, Raytheon focused on interoperability as one of its key themes. The company has significant experience in the terminal market. Its officials understand the cost associated with replacing the communication systems in the field and they know care must be taken in designing a system that is fully interoperable with the current legacy system.

“The users are not just foot soldiers but ships, airplanes and various other platforms,” Luna said. “We support not only the Navy, but the Army, Air Force and Marines. In fact, the Army will be the biggest user of the system.”

The Raytheon proposal would provide a 10-fold increase in communications capacity and capability compared to the current UFO system as soon as the first satellite is launched, Luna said. The change should be seamless to the user, except for the immediate availability of a robust communications system.

(Steve Tatum, Lockheed Martin, 401/742-7531; Pat Luna, Raytheon, 727/302-2683; Steven Davis, Space and Naval Warfare Systems Command, 619/524-3432)

What $6.2 Billion Buys

Phase One – A five-year, cost-plus-award fee contract, called Risk Reduction and Design Development, would cover the initial two satellites, the ground equipment, software development, system integration and launch.

Phase Two – A fixed-price-plus-incentive fee contract, called Acquisition and Operation Support, calls for the Navy to buy the remaining satellites for the constellation. This phase also covers the cost of operating the system. The full constellation would be deployed in 2014.