washingtonpost.com  > Technology > Washtech

Quick Quotes

Air Force May Jettison One Satellite Contract

Use of Two Launch Firms Questioned

By Renae Merle
Washington Post Staff Writer
Tuesday, June 22, 2004; Page E05

The Air Force is studying whether it still needs two companies to launch government satellites, raising the prospect that Lockheed Martin Corp. or Boeing Co. could be pushed out of the market.

The study was prompted in part by congressional criticism of the Air Force's "assured access to space" policy, which aims to keep two contractors in the launch business. The Air Force continues to support the policy of having two launch contractors, but wants to address the concerns, said Peter Teets, Air Force undersecretary for space.

_____BOEING CO_____
(BA) Stock Quote and News
Historical Chart
Company Description
Analyst Ratings
_____Lockheed Martin Corp_____
(LMT) Stock Quote and News
Historical Chart
Company Description
Analyst Ratings
_____Government IT News_____
Microsoft's Homeland Security Efforts (Live Online, Aug 31, 2004)
Air Force Awards Tablet PC Project (The Washington Post, Aug 30, 2004)
Contractors and the Law (The Washington Post, Aug 27, 2004)
More Government IT News
_____Free E-mail Newsletters_____
• TechNews Daily Report
• Tech Policy/Security Weekly
• Personal Tech
• News Headlines
• News Alert

The study will be conducted by retired Air Force Gen. Tom Moorman and should be completed by the end of the year, Teets said in a briefing with reporters yesterday.

Changing the policy could be an expensive blow to Chicago-based Boeing or Bethesda-based Lockheed, currently the military's primary launch providers. Lockheed declined to comment. Boeing spokesman Dan Beck said the company would support the study.

Both companies have complained that they lose money on government launches because prices were set in the late 1990s when many expected a robust commercial satellite market to offset the cost of the Pentagon programs. But the commercial business failed to materialize, adding substantially to the companies' costs for launching government satellites.

Teets has previously said the Air Force would increase the amount it pays for government satellite launches to offset the collapse of the commercial market. Having two contractors increases productivity, fosters competition and ensures that the military will have an alternative if one company is unable to provide a launch, he said.

The House Appropriations defense subcommittee argued in a report released last week that the Air Force may not need two contractors. "Fully funding one contractor may be a wiser approach to assured access than the current approach of underfunding two contractors," the report said.

The subcommittee recommended focusing on ensuring the reliability of the launches instead of sustaining a backup provider. By "maintaining two 'standing armies' without adequate funding, the government could inadvertently be motivating the contractors to cut corners in a way that could hurt launch reliability," the report said.

"Most countries only have one supplier, so it's not that unusual," said Jim Lewis, director for technology and public policy, Center for Strategic and International Studies.

The Air Force is operating with only one launch provider since it suspended Boeing last year for having stolen proprietary Lockheed documents. The suspension probably will not be lifted until the end of the year, Teets said. "I know that Boeing has taken this matter seriously. . . . They have put in place a lot of strong actions to correct the situation," Teets said. A U.S. attorney's investigation into Boeing's actions continues.

Meanwhile, Teets said a Lockheed program aimed at putting satellites in place to provide early warning of incoming missiles continues to face technological problems. The Space Based Infrared-High satellite program was restructured earlier this year, and its costs have increased by $1.5 billion, to $9.9 billion, he said. The Air Force is studying alternatives to the program, but "I am not real optimistic that there is going to be an alternative," Teets said.

Lockheed said the program is on schedule based on its revised timetable, which calls for the first satellite to be delivered later this year. "There are considerable technical challenges never before attempted" in this program, said company spokesman Tom Jurkowsky. "The program is extraordinarily complex but definitely executable."


© 2004 The Washington Post Company