Contracts

Lockheed Martin Wins $1.463 Billion Air Force GPS III Contract

The Air Force as expected gave Lockheed Martin Corp. [LMT] the coveted GPS III next-generation military-civilian navigation-satellites contract, the Department of Defense announced.

That pact is worth $1.463 billion.

The new constellation of satellites will be acquired in three blocks: GPS IIIA, GPS IIIB and GPS IIIC, according to the Pentagon.

"GPA IIIA will evolve existing capabilities, introduce a new L1C civil signal, increase Earth coverage M-Code power for authorized military users, provide a graceful growth path to achieve full capabilities development document threshold requirements, and continue support for the Nuclear Detonation Detection System mission," according to the Pentagon announcement.

The initial contract acquires two GPS IIIA research and development satellites, and a capability risk reduction and maturation effort to evolve capabilities for GPS IIIB and GPS IIIC, a GPS satellite simulator, and a bus real time simulator.

It also includes options for ten additional GPS IIIA production satellites.

Lockheed, the largest defense contractor, bested The Boeing Co. [BA], the No. 2 contractor, in a hard-fought GPS III contract competition, adding to what has been a tough few months for Boeing.

For example, Boeing lost out to Northrop Grumman Corp. [NOC] in seeking a $40 billion aerial refueling tanker contract. Northrop offered a modified Airbus A330 aircraft, made by European Aeronautic Defence and Space Co., while Boeing offered a modified 767 airliner. Boeing is protesting that Air Force tanker contract award.

Boeing did, however, win a contract to produce combat search and rescue helicopters, although Lockheed and Sikorsky Aircraft, a unit of United Technologiex Corp. [UTX], are protesting that award.

Attempts to contact Boeing sources immediately after the Air Force contract award announcement were unsuccessful.

The GPS III system would provide more accurate, more powerful, less easily jammed navigation signals, an advance from the latest GPS II iteration.

GPS is used widely by both military and civilian, business and individual users.

However, many existing GPS satellites, aside from offering dated technology, are nearing the end of their design lives. GPS III satellites wouldn’t go into service for another four or five years.

The Air Force didn’t immediately explain its reasoning for selecting Lockheed. Both Boeing and Lockheed have extensive experience with satellites, and with launch rockets for placing satellites into orbit.

"Lockheed Martin is proud to be selected … to build the next-generation Global Positioning System Space Segment program, known as GPS III," Lockheed stated, in a comment for news media. "This win represents an important achievement for the corporation and our industry teammates, which include" ITT [ITT] and General Dynamics Corp. [GD].

The new satellite constellation "will provide improved GPS accuracy and assured availability for military and civilian users worldwide," according to the Lockheed statement.

GPS military uses include not only ship and aircraft navigation, but also help to give precision-guided munitions (smart bombs) their accuracy.

The Air Force is pressing ahead with the U.S. navigation system update, even as competing global navigation satellite systems are planned by Europe (Galileo), Russia (Glonass, or Global Navigation Satellite System) and China (Baidu). The first satellite of the European system, Giove-B, was launched into orbit on a Soyuz rocket from Baikonur Cosmodrome last month. (Please see Space & Missile Defense Report, Monday, April 28, 2008.)

Development of those competing systems may be driven in part by concern that the United States could, at will, choose to switch off GPS III over a given geographical area.

Lockheed Pays $10.5 Million To Settle Charges It Manipulated Billings

Lockheed Martin Corp. [LMT] will pay the federal government $10.5 million, due Wednesday, to settle charges by Air Force and Department of Defense auditors that it manipulated billings on the Titan IV rocket launches program in 1998 to 2001, according to U.S. Attorney Thomas P. O’Brien, in the Central District of California.

Lockheed Martin Space Systems Co. submitted invoices for payment it was not entitled to receive on a multi-billion dollar contract, according to O’Brien.

He explained that after an October 2004 audit by the Defense Contract Audit Agency into the contract to provide launch vehicles and services for the Titan IV program, Lockheed conducted an internal audit and discovered that it should not have requested certain interim payments, known as progress payments.

So Lockheed disclosed the improper payments to the government, and an investigation found Lockheed wasn’t entitled to millions of dollars of progress payments it received prematurely on the contract, according to O’Brien.

The settlement figure represents approximately double the amount of interest Lockheed would have received by holding the premature payments, according to O’Brien.

Lockheed obtained the excessive progress payments by manipulating its billings on the complicated contract in two ways:

• First, Lockheed changed its methodology for calculating its cost of items delivered on progress payment requests without notifying the government, O’Brien stated. Consequently, from October 1998 to December 2001, Lockheed received more progress payments than it was entitled to receive.
• Second, in August 2000, Lockheed presented an invoice to the government that improperly claimed the government owed it millions of dollars in extra progress payments due to the lowering of the contract’s liquidation rate, which determined how much money the government would not have to pay to Lockheed upon delivery of an item in order to repay (or liquidate) the previously paid progress payments.

The United States Attorney’s Office in Los Angeles coordinated an investigation of Lockheed for alleged violations of the federal False Claims Act.

The government investigative team included agents and auditors from the Air Force Office of Special Investigations and the Defense Contract Audit Agency.

Lockheed cooperated with the investigation and will pay $10.5 million to settle the matter, but didn’t acknowledge wrongdoing.

In October 2006, the Department of Justice formed the National Procurement Fraud Task Force to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force — chaired by Assistant Attorney General Alice S. Fisher for the Criminal Division — includes U.S. Attorney Offices, the FBI, the U.S. Inspectors General community, and a number of other federal law enforcement agencies.

Lockheed Bids On Air Force Space Situational Awareness Program

Lockheed Martin Corp. [LMT] bid for the Air Force Self-Awareness Space Situational Awareness (SASSA) program, which will help to detect threats to U.S. space assets.

Under a $30-million contract scheduled to be awarded late this year, SASSA will consist of a technology demonstration payload that will provide tactical space situational awareness.

SASSA is being developed to demonstrate the ability to build a standardized threat warning system and communicate relevant information to operators on the ground.

The bid was submitted to the Space Superiority Systems Wing of the Air Force Space and Missile Systems Center at Los Angeles Air Force Base.

Ares Corp. Gains $25.7 Million NASA Contract Extension

NASA gave Ares Corp. a $25.7 million, one-year extension of its contract to continue developing and operating the International Space Station.

The original contract with Ares, of Houston, was awarded in January 2004, with the latest extension to begin Oct. 1, pushing the total contract value to $151.8 million.

Another one-year optional extension is possible under the contract.

Major subcontractors include Booz Allen Hamilton Inc. in Colorado Springs, Colo., and Barrios Technology, in Houston.

Boeing Gains Air Force Missile Fuzing Contract

The Air Force Research Laboratory gave The Boeing Co. [BA] a $5.2 million contract to demonstrate effectiveness of Guidance Integrated Fuzing (GIF) for use in the Joint Dual Role Air Dominance Missile (JDRADM).

That technology is developed under the Seeker Integrated Target Endgame Sensor (SITES) program.

"This fuzing capability for SITES will reduce weight and save space in the JDRADM," said David Moos, Boeing program manager for SITES. "Doing so will make JDRADM that much more effective in carrying out its dual roles."

JDRADM is an advanced missile combining air-to-air and air-to-ground mission capability in a single weapon.

The 33-month Task 2 contract allows Boeing to use modeling and simulation capabilities, algorithm-development history, and field-test experience.

That Task 2 contract was competitively awarded to Boeing after a two-contractor, $600,000 Task 1 effort was awarded in October.

The SITES contract followed a $4.2 million contract awarded a year ago for the Dual Role Air Dominance Missile – Technology (DRADM-T) program, which focused on the missile’s propulsion and control systems.

Task 2 work begins in July at Boeing’s Huntington Beach, Calif., facilities. Boeing designed the GIF approach and will lead a team including Science Applications International Corp. and Applied Research Associates in refining and evaluating GIF in lab and field tests.

Boeing won the JDRADM Multi-Role Responsive Ordnance Kill Mechanism (MRROKM) warhead technology thrust program in 2006. The company is executing the program’s Phase 2 design and development efforts for MRROKM and DRADM-T at its weapons facility in St. Charles, Mo.

Raytheon Gains $61 Million Navy Phalanx Contract

The Navy gave Raytheon Co. [RTN] a $61.1 million contract for radar upgrade kits and other spare parts for the Phalanx Close-In Weapon Systems.

Sixty- eight radar kits will be procured for use with the sea-based Phalanx and the Centurion Land-Based Phalanx Weapon System.

Phalanx is a rapid-fire, computer-controlled radar and 20 mm gun system that automatically acquires, tracks and destroys enemy threats. More than 850 sea-based systems have been built and deployed in the navies of 25 nations. Twenty-two land-based systems have been delivered to the Army.