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Lockheed Pushes Into New Area With $4 Billion – $8 Billion CEV Contract

By | September 18, 2006

      Lockheed Martin Corp. [LMT] broadens its portfolio as it strides into a new business area with a surprise win for the $4 billion to $8 billion multi-year contract to design and build the next-generation NASA spacecraft, called Orion, which will transport humans to the moon, Mars and beyond.

      The surprising win over a team of Northrop Grumman Corp. [NOC] and The Boeing Co. [BA] represents a new growth area for Lockheed, according to analysts.

      “This decision may come as somewhat of a surprise, given BA’s and NOC’s previous experience in manned space flight,” observed Merrill Lynch analysts.

      However, NASA announced Friday that it chose Boeing to design and develop thermal protection systems for Orion. Boeing will provide a lunar direct return-capable heat shield for Orion, under the program. Boeing received a hybrid firm fixed-price and cost-plus-fixed-fee contract that has a 16-month period of performance, with a maximum value of approximately $14 million, including all priced options.

      The heat shield will protect the spacecraft and crew during atmospheric reentry following missions to the moon or the International Space Station. The heat shield attached at the base of the spacecraft will reject the majority of the heat generated during re-entry into Earth’s atmosphere, much as was seen on some early space capsules.

      Returning from missions to the station, Orion will re-enter at speeds similar to those experienced by the space shuttle, 16,700 miles an hour. Returning from the moon, Orion will reenter the atmosphere at speeds of about 25,000 miles an hour and experience heating about five times as extreme as missions returning from the station.

      NASA’s Constellation Program is developing Orion as NASA’s primary vehicle for future human space exploration. Orion will carry astronauts to the station by 2014, with a goal of landing astronauts on the moon no later than 2020.

      The present Phase II contract with Boeing is a continuation of an earlier Phase I NASA effort that evaluated phenolic impregnated carbon ablator (PICA), as well as four other candidate materials using extensive testing and analysis. Boeing has been selected to provide PICA, a proprietary material manufactured by its subcontractor, Fiber Materials Inc. of Biddeford, Maine, for continued testing and evaluation.

      Boeing’s deliverables for this contract include a full-scale 16.5-foot (5-meter) heat shield manufacturing demonstration unit.

      NASA’s Ames Research Center, Moffett Field, Calif., is the agency’s lead center for thermal protection systems and will use its thermal, structural and environmental facilities to conduct extensive testing and evaluation of the PICA deliverables.

      Lockheed Gains A Bonus

      According to analysis at financial giant UBS, the Lockheed win of the overall Orion contract represents another market share gain outside core areas for Lockheed. Further, “additional NASA work should help LMT offset decelerating defense growth driven by flat-to-down aeronautics business,” according to UBS Investment Research. Grasping the contract, “represents another example of LMT taking share outside what has been its core markets (helicopters and ships previously),” the research paper noted.

      It isn’t the first time recently that Lockheed has pushed into new areas. For example, Lockheed, a builder of aircraft, won a Navy nod to build Littoral Combat Ships, coastal fighters that will be assembled for Lockheed by smaller shipbuilding subcontractors.

      As well, the company, which never built presidential Marine One transports, won a Navy contract to build a new fleet of White House choppers. Lockheed is using subcontractors for actual construction of the copters, such as AgustaWestland, an Italian-U.K. firm. Sikorsky aircraft, a unit of United Technologies Corp. [UTX] that has built every Marine One helo for half a century, was rejected for the new contract.

      Hopefully, Orion will be far safer than the current fleet of space shuttles, although it won’t be able to carry nearly the payload into space that the shuttles lift right now. (Please see full story on Space Shuttle Atlantis in this issue.)

      Until substantial safety improvements were made to the external fuel tanks on the shuttle fleet, there was a danger that foam insulation that was applied to the exterior of the tanks, instead of to the inside of the shell, could break off and hit the orbiter, damaging it.

      During ascent, that is what occurred in 2003 with Space Shuttle Columbia, with a sizable hunk of foam punching a hole in the Lockheed-built heat-shielding protection on a wing that led to loss of the orbiter vehicle and crew in the blazing heat of reentry.

      Tank insulation was needed because of the super-cold liquid oxygen and hydrogen fuel in each external tank. The massive tank, in turn, was required because the shuttles had to lift enormous components of the International Space Station into orbit for assembly, a construction job that must be finished by 2010, when government officials want to stop flying the expensive shuttle fleet.

      Also, in an earlier incident in 1986, Space Shuttle Challenger and crew were lost when an O ring failed in a booster, causing an explosion shortly after liftoff from Kennedy Space Center.

      The Orion system, in contrast, won’t have an external fuel tank. It is to be produced by a team led by Lockheed and including Honeywell, Orbital Sciences Corp., United Space Alliance and Hamilton Sundstrand, a unit of UTX.

      It will have a crew transport vehicle on top of a multi-stage Ares I launch vehicle, in an arrangement reminiscent of space assets decades ago, in the early phases of the U.S. space program.

      Lockheed hopes to seize that lifter contract, too, when NASA awards it next year. That contractor team includes Alliant Techsystems [ATK], Lockheed, and Pratt & Whitney Rocketdyne. Pratt is a unit of UTX. Should they win the contract, the upper stage propulsion unit would be built at Huntsville, Ala., home to the Marshall Space Flight Center.

      In the Orion program, Lockheed clearly has a huge win, but analysts questioned whether it will be funded at expected levels, or whether appropriations might be less than planned, or dragged out over more years.

      NASA already faces a fiscal bind, as government leaders provide limited funding for the space agency that already has forced it to decide to cut space science and research programs funding so as to free money to pay for Orion, Ares I and the rest of the planned journeys beyond low Earth orbit.

      President Bush called for manned missions to the moon, Mars and beyond, but didn’t provide separate funding to realize his vision.

      New Space Vehicle

      According to Lockheed, this is what the company and its team mates intend to provide in the Orion space vehicle:

      Orion, an advanced crew capsule design, is a key element of NASA’s Vision for Space Exploration, and will succeed the Space Shuttle in transporting a new generation of human explorers to and from the International Space Station, the Moon, and eventually to Mars and beyond.

      “We are honored by the trust that NASA has placed in the Lockheed Martin team for this historic and vital step forward in human space exploration,” said Bob Stevens, Lockheed chairman, president and CEO.”

      “Orion will transport up to six crew members to and from the International Space Station, and up to four crew members for lunar missions” he noted. “The new crew vehicle is designed to be an order of magnitude safer, more reliable, more affordable and more operationally efficient than previous human space flight systems.”

      The Lockheed Orion program office is in Houston, Texas, co-located with Johnson Space Center, providing support in the areas of program management, requirements development, software development, avionics, human factors, and system qualification testing.

      Large structures and composites will be built at the NASA Michoud Assembly Facility in New Orleans. Final assembly, checkout and acceptance testing of Orion for both the Crew Module and Service Module will be performed in the Operations and Checkout (O&C) facility at Kennedy Space Center.

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