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Lockheed, Northrop clinch massive missile defense deals as Boeing is passed over

The Pentagon has finalized its first defense procurement under the Biden administration. (Carlos Barria/Reuters)

The Defense Department on Tuesday finalized deals worth up to $7.5 billion with two teams of defense contractors for a new interceptor that can shoot incoming missiles out of the sky, marking the first major defense procurement finalized under President Biden.

The two research and development contracts, awarded separately to Lockheed Martin and a Northrop Grumman-Raytheon team, are part of a broader set of investments to ensure the United States can deal with a nuclear first strike from a hostile nation such as Russia or China. The announcement comes just days after North Korea fired several short-range missiles in an early challenge to the Biden administration.

The contract awards finalized Tuesday will initially assign a combined $1.6 billion of research and development funding to the two competing teams through 2022. The deal includes options to expand those development efforts to $3.6 billion for Lockheed and $3.9 billion for the Northrop-Raytheon collaboration. Then, pending years of observation and weapons testing, the Missile Defense Agency could issue a larger contract to produce the interceptor in large numbers.

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In a statement, Missile Defense Agency Director Vice Adm. Jon Hill said this approach will allow the Pentagon to get the best technology for the best possible price.

“By planning to carry two vendors through technology development, MDA will maximize the benefits of competition to deliver the most effective and reliable homeland defense missile to the warfighter as soon as possible,” Hill said in a statement.

The decision passes over a separate proposal from Boeing, which has led the Pentagon’s missile defense efforts for roughly six decades, primarily from a manufacturing facility in Huntsville, Ala. Boeing was awarded a $6.6 billion contract to develop a new interceptor in 2018, only for the contract to be canceled because of unspecified technical problems.

A Boeing spokesman declined to speculate on whether the company would raise a bid protest.

“Boeing is disappointed the U.S. Missile Defense Agency (MDA) did not advance our team to the next phase of competition in the development of the Next Generation Interceptor (NGI) competition,” the company wrote in a statement.

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Executives from Raytheon and Northrop Grumman struck a celebratory tone in a Tuesday evening interview. It is the second time in recent years that Northrop has bested Boeing in its specialty area; late last year, Northrop was awarded a $13 billion opportunity to build the Air Force’s next ballistic missile.

Although the next-generation interceptor is not meant to replace the existing missile defense system, it is designed to counter new missile threats that are not covered by existing defense systems.

The new interceptor “will address threats that the current system cannot,” said Scott Lehr, the vice president for launch and missile systems at Northrop Grumman. Bryan Rosselli, the vice president for strategic missile defense at Raytheon, said the team expects the threat to continue to evolve as the interceptor is in development over the next few years. The two executives declined to offer specifics, noting that the program details are classified.

Lockheed Martin plans to build a new research and development team in Huntsville, according to Sarah Reeves, the company’s vice president for the next-generation interceptor program.

“We are excited and proud the MDA entrusted Lockheed Martin to lead the development of this game-changing system that will greatly improve our nation’s security for decades to come,” Reeves said in a statement.