Lockheed Martin Defeats Raytheon to Win $915 Million Air Force Space Fence Contract

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The Department of Defense awarded eight defense contracts in its Monday evening announcement of contract awards. The total value of contracts awarded was $1.34 billion, but just one company captured more than two-thirds of the money: Lockheed Martin (NYSE: LMT).

Lockheed Martin’s award, a $914.7 million contract, hires the company to perform engineering, manufacturing and development, production and deployment work for the U.S. Air Force’s Space Fence program. Over the next 52 months, Lockheed Martin will work to erect a system of sensors stretching from Moorestown, N.J., to Kwajalein Atoll in the Marshall Islands. Once operational, their mission will be to track and categorize upward of 500,000 pieces of so-called space junk orbiting the Earth, debris including everything from jettisoned pieces of satellite launch rockets to busted up scraps of Chinese satellite left over from that country’s demonstration of its anti-satellite missile prowess in 2007. Traveling at speeds in excess of 22,000 mph, even microscopic pieces of such junk pose a danger to orbiting satellites. Current technology, however, is only capable of detecting the largest hunks of junk — about 5% of the debris in orbit.

Lockheed’s win spells defeat for rival Raytheon (NYSE: RTN), which had been bidding against Lockheed Martin for the Space Fence contract.

Among the other contracts announced Monday:

  • Raytheon won the second-biggest award of the day. Worth $298 million, it took the form of a modification of an existing contract to begin Low-Rate Initial Production (LRIP) and later Full-Rate Production (FRP) of Family of Advanced Beyond Line of Sight Terminals (FAB-T) Command Post Terminals (CPT) for the U.S. Air Force. Under Phase 2 of this contract, FAB-T CPT-Only Terminals (used for satellite communication) may be produced at LRIP and FRP rates, and Raytheon will also provide support for the devices upon completion of an unspecified Milestone C. No specific completion date for the work was stated in the press release, but the Pentagon indicated that the funds covered by this modification will be used through at least 2019.
  • L-3 Communications (NYSE: LLL) benefited from an undefinitized (final price not set) contract action worth up to $41.5 million, to supply the government of Yemen with four Intelligence, Surveillance and Reconnaissance aircraft, spare parts, and trainingfor use in “counterterrorism efforts in Yemen.”Delivery is due Sept. 30, 2015.
  • Northrop Grumman (NYSE: NOC) was awarded a $7 million contract modification to supply the U.S. Army with Rocket, Artillery, Mortar (RAM) Warn Equipment for use by the 2nd Battalion of the 44th Air Defense Artillery Regiment, in sufficient quantity to equip six platoons. Delivery is due Nov. 3, 2014.
  • General Dynamics (NYSE: GD) won two awards: a $20.7 million contract modification awarded to its National Steel and Shipbuilding Co. subsidiary, funding maintenance and upgrades being performed on the amphibious assault ship USS Boxer (LHD 4) in port in San Diego through December 2015; and a $13.2 million contract modification awarded to its Electric Boat Corp. subsidiary, funding the supply of Common Missile Compartment materials needed for the Ohio (ballistic missile submarine) Replacement Program. This latter contract will now run through December 2017.

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