Lockheed Eyes Space Plane Contract

The high stakes competition to determine the builder of the U.S. government’s multi-billion dollar Orbital Space Plane (OSP) has led Lockheed Martin [NYSE: LMT] to take the unusual move of opening a demonstration center just outside Washington to influence key U.S. government decision-makers.

The center, based in Crystal City, Va., is just across the Potomac River from Washington, D.C., where administration officials and lawmakers who will decide whether to fund the OSP work. The center is intended to highlight the accomplishments of human space flight by showing the concepts and operational qualities of NASA’s next space transportation system using simulators and interactive graphics.

The OSP will be compatible with U.S. Evolved Expendable Launch Vehicle systems (EELVs), Lockheed Martin’s Atlas V and Boeing’s [NYSE: BA] Delta IV. The space plane is intended as a vehicle to rescue International Space Station crew in an emergency and to transport them between there and Earth. The OSP would be launched on the top of either the Atlas V or the Delta IV outside the fairing of the launch vehicle. Since the OSP would be hardened to protect it during reentry to the Earth, it would be designed to withstand the rigors of launch while still protecting the astronauts who would be carried inside on trips to and from the International Space Station.

The EELV rockets would need to undergo some modifications to meet the standards for human flight and to provide a means for the astronauts to escape during a launch mishap, industry officials said.

Lockheed Martin is the lead company in a consortium bidding for the OSP contract that includes Northrop Grumman [NYSE: NOC] and Orbital Sciences [NYSE: ORB]. They are teaming up to bid on the contract rather than compete against each other and risk ending up empty-handed at a time when revenues from traditional satellite businesses are in short supply.

The OSP contest will no doubt involve a rival proposal from Boeing [NYSE: BA]. The mammoth size of that potential contract is spurring companies that have been stalwarts in the satellite industry to redirect their interests to manned space activities.

While federal funding for OSP is still being debated, the project’s prospects received a boost recently when the Columbia Accident Investigation Board concluded that the space plane needs to be built as an alternative form of transportation to the shuttle for trips to the International Space Station.

Current plans call for the space plane to provide rescue capability by 2008 and two-way transfer capability for a crew no later than 2012. The OSP only would carry people, not cargo, experiments or satellites.

“For example, the shuttle put the Hubble telescope into orbit,” said Julie Andrews, communications manager for Lockheed Martin Space Systems. “The space plane would not be able to do that or anything comparable.”

The demonstration center, exhibits and hardware are evidence of Lockheed Martin’s readiness to press forward with building the plane, said G. Thomas Marsh, executive vice president-Lockheed Martin Space Systems. The plane would support the space shuttle’s mission and significantly increase astronaut crew safety on trips to and from the International Space Station, he explained.

The construction of a demonstration center is highly unusual, but it was used successfully by the company when it was vying against Boeing to win a lucrative contract to build the Joint Strike Fighter. The initial order was worth $25 billion to build 22 aircraft. But the total program value could reach $200 billion. It is intended to be a cornerstone of future defense capability for the United States and its allied partners. Plans call for more than 3,000 aircraft over the life of the program to replace the A-10, the AV-8 Harrier, F-16 and the F/A-18.

The expense of building a demonstration center is not insignificant but it is a good investment when a huge federal contract is on the line, Andrews said.

The Lockheed Martin-led group is performing studies to identify the optimum configuration for the space plane. The team will refine its final concept in time to submit a proposal in March 2004. The National Aeronautics and Space Administration currently plans to choose the winning contractor for the project in August 2004.

Lockheed Martin recently chose to beef up its planned bid by adding the capabilities of Northrop Grumman and Orbital to the plane’s design and construction planning.

Michael Coats, Lockheed Martin’s vice president of advanced space transportation, said, “Collectively, we have expertise in large-scale systems integration, space systems engineering, launch vehicles, military aircraft and autonomous flight.” All those skills will be showcased at the company’s new demonstration center.

Northrop Grumman Integrated Systems, the division that would work on the space plane should the Lockheed Martin team win, designs, develops, produces and supports network- enabled integrated systems and subsystems for government and civil customers worldwide. Integrated Systems delivers products and services that support NASA, military and homeland defense missions in the areas of intelligence, surveillance and reconnaissance; battle management command and control and integrated strike warfare.

The other member of the team, Orbital Sciences, of Dulles, Va., develops and manufactures small space systems for commercial, civil government and military customers. The company’s products are satellites and launch vehicles, including low-orbit, geostationary and planetary spacecraft for communications, remote sensing and scientific missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense boosters that are used as interceptor and target vehicles. Orbital also offers space- related technical services to government agencies and develops and builds satellite-based transportation management systems for public transit agencies and private vehicle fleet operators.

“The strengths of the companies are complementary and [it is] better to join forces than compete with each other,” said Jim Hart, communications manager for Northrop Grumman Integrated Systems. “We think that working with Lockheed Martin is the best use of our capabilities for NASA’s Orbital Space Plane. Our capabilities include large-scale systems integration, vehicle management systems and experience with autonomous flight. In addition, Northrop has experience in the design and manufacture of composite materials.”

Barry Beneski, vice president of communications and investor relations at Orbital, said, “We have been working on the Orbital Space Plane for four or five years. We have made a lot of contributions to the program and we plan to continue to do so.”

–Paul Dykewicz

(Julie Andrews, Lockheed Martin, 321/853-1567; Barry Beneski, Orbital Sciences, 703/406-5528; Brooks McKinney, Northrop Grumman, 310/331-6610)