Lockheed beats Boeing to win US military radio deal

Sat, Mar 29 05:22 AM

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Lockheed Martin Corp on Friday beat out Boeing Co to win a $766 million contract to develop a next-generation radio system for aircraft, ships and ground stations, the Pentagon said.

"The Lockheed Martin offering was low price, low risk and higher technical," Dennis Bauman, joint program executive officer for the Joint Tactical Radio System (JTRS), told Reuters. "This was a best value determination."

Pentagon acquisition chief John Young approved the start of development of the Airborne Maritime and Fixed Station segment of the JTRS program on Monday, paving the way for the award.

Defense analysts say a later production contract could translate into business deals for Lockheed valued at $10 billion or more over the long term.

"This is a very big victory for Lockheed because it means they will be at the center of military communications for at least the next 30 years," said defense analyst Loren Thompson of the Virginia-based Lexington Institute.

The new radio system is a family of advanced software-based communications that will replace current radios throughout the U.S. military. It will provide secure Internet-like capabilities and networking for voice, text, audio, and video.

The ambitious multibillion-dollar radio program ran into problems several years ago, prompting a restructuring in 2005. Since then, the program has delivered over $300 million worth of small handheld radios to troops and is testing others.

Bauman said the five-year AMF contract is the "final major hardware development" in the development phase of the radio system, which also includes work on the underlying software, and of handheld and backpack-sized radios.

Under the contract, Lockheed will design a modular radio system that can operate on several different waveforms currently in use by the armed forces, but which is also adaptable to future waveforms and vehicles.

The company will build 42 engineering development models of small radios for airplanes and helicopters, and initial models for use on Navy destroyers and in ground stations.

The contract includes an option for low-rate production of 104 airborne sets and 45 maritime or ground station sets.

Bauman said he was aware of protests against other recent big Pentagon contracts, but expressed confidence the award to Lockheed was handled fairly, openly and in accordance with the law, and that he hoped Boeing would not protest the decision.

Speaking in a telephone interview with Reuters, Bauman said it was Boeing's right to protest if it chose, but any protest would slow delivery of the new radios to troops. "I hope it doesn't happen; I want to get on with the program," he said.

Lockheed welcomed the contract win, and said its technology would give troops access to affordable, open, network-enabled communications on the battlefield, improving their combat readiness.

Thompson said Boeing's uneven performance on a separate contract to develop the underlying software for the overall radio system may have cost it the AMF contract.

Bauman said Boeing's performance on that contract was "not a determining factor" in the award. He said he had offered to provide Boeing with a detailed briefing as early as next week.

Lockheed's team includes BAE Systems Plc, General Dynamics Corp, Raytheon Co and the Northrop Grumman Corp unit that works on communications equipment for F-22 and F-35 fighter jets.

Boeing's team has Harris Corp, L-3 Communications Holdings Inc, and Rockwell Collins Inc.

Initially, the AMF equipment is due to be installed on Army Apache and CH-47 helicopters, Navy E-2C reconnaissance planes, C-130 aircraft used by special operations forces, Navy aircraft carriers and other warships, plus unmanned fixed radio sites.

The Pentagon's fiscal 2009 budget request includes $203.8 million for the AMF program, up from $106.7 million in fiscal 2008. Funding is expected to rise steadily as the program nears low-rate initial production in 2012.

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