Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Lockheed Martin Corporation    LMT

LOCKHEED MARTIN CORPORATION

(LMT)
  Report  
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Why the Pentagon Got Just One Bid to Build Next-Generation GPS Satellites -- Update

share with twitter share with LinkedIn share with facebook
share via e-mail
0
04/26/2018 | 01:37pm EDT

By Andy Pasztor

Lockheed Martin Corp. will remain the sole producer of Global Positioning System satellites after two main rivals decided against bidding, reflecting new Air Force acquisition strategies that favor incumbent contractors on some big-ticket space programs.

The decisions by Boeing Co. and Northrop Grumman Corp. this week to forgo competing for the multibillion-dollar business reflect efforts by Air Force brass to reduce long-term costs and accelerate production of GPS satellites. The outcome underscores the Pentagon's broader drive to transform acquisition of space technology -- satellites, rockets, missile warning systems -- into a less expensive and more nimble process.

The U.S. military, which already has committed to buy up to 10 GPS III satellites from Lockheed Martin, has been advised by procurement experts inside and outside the Air Force that the best way to streamline the program is to stick with the existing supplier, say people familiar with the details.

The GPS supports a range of widely used devices from navigation aids to signals that keep cash-dispensing machines used by bank customers operating. The Air Force has run the GPS program for decades, providing services to both government and commercial users.

The changes are being implemented against a backdrop of heightened threats to U.S. space technology from Russia and China. Military and intelligence experts warn that U.S. national-security satellites, for example, could be blinded or damaged by hostile forces using lasers, antisatellite weapons and other types of weapons.

Air Force leaders also are under congressional pressure to show progress in overhauling the acquisition of space hardware. Some House GOP leaders advocate a separate branch of the armed services dubbed a space corps.

With development steps largely paid for and 22 additional next-generation GPS III satellites slated for procurement, the goal is to shift toward faster, more commodity-style assembly, according to one person involved in discussions. "The Air Force realizes it needs to dramatically squeeze costs while ratcheting up the pace of production," this person said.

There are currently 31 GPS satellites in orbit, including spares. The latest models feature greater power, accuracy and jam-resistant capabilities. The first Lockheed Martin-built GPS III satellite, with a longer lifespan than its predecessors, is scheduled to launch this fall at the earliest.

In the past, the Air Force's sprawling acquisition bureaucracy balked at favoring speed over competitive bidding to get the best price. But now, the focus is on moving quickly and in other programs, building prototypes to swiftly demonstrate cutting-edge technologies before committing to long-term production.

The restructuring aims "to put large amounts of hardware on orbit now, at the lowest possible cost," according to industry consultant Jim McAleese. Such moves "are critical for the Air Force at all levels," he said in an interview Wednesday.

Boeing, which built a previous version of GPS satellites, declined to comment, except to point to a statement earlier this month explaining it didn't bid because the Air Force's request, in part, emphasized the importance of uninterrupted production over creating new GPS features and capabilities.

Northrop spokesmen couldn't be reached for comment, but the company has indicated it didn't submit a bid because it didn't make financial sense. Last year, Northrop surprised aerospace industry analysts by not bidding on some larger Pentagon contracts, including an unmanned tanker aircraft program for the Navy and an Air Force training aircraft.

A Lockheed Martin spokesman also declined to comment. When it submitted its bid, the company said modular design envisioned "insertion of modern technologies and new Air Force requirements in a low-risk manner."

For Lockheed, which faces the end of production on its premier Pentagon communications and missile-warning satellite constellations, retaining GPS business is particularly important. The company also has invested heavily in recent years to shake up its commercial satellite-making operations, and industry officials said some of those efficiencies could give it a distinct price advantage over Boeing and Northrop Grumman.

Lockheed went over budget on its initial GPS production, but company officials have said the program is back on track. The Pentagon now says the unit costs for each satellite will be less than 6% higher than initially projected, though cost overruns for development were significantly larger.

Based on current prices, the anticipated fixed-price contract, excluding potential incentive payments, could total more than $12 billion.

At a space conference in Colorado last week, Air Force officials declined to discuss specifics of GPS bidding procedures, but said rigorous cost estimating would be used if the service ended up receiving only one bid. They also spelled out the scope and reasoning behind the new direction in space contracting.

Future satellite fleets will have to be "more defensible and resilient systems," said Lt. Gen John Thompson, head of the Air Force's Space and Missile Systems Center in suburban Los Angeles. He said future requests for bids would "take advantage of similarities between programs," noting that "we have so much redesign work to do" regarding SMC's structure and acquisition policies.

Write to Andy Pasztor at andy.pasztor@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BOEING COMPANY (THE) -0.49% 347.16 Delayed Quote.8.17%
BOEING COMPANY (THE) 0.00% 330 Delayed Quote.3.18%
LOCKHEED MARTIN CORPORATION 0.30% 350.14 Delayed Quote.33.72%
NORTHROP GRUMMAN CORPORATION 0.59% 309.43 Delayed Quote.26.35%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on LOCKHEED MARTIN CORPORATIO
06/14LOCKHEED MARTIN : Chinese-Owned Company Makes Parts for F-35 Stealth Fighters -S..
DJ
06/14LOCKHEED MARTIN : Pentagon, Lockheed agree to 'historic' $34B F-35 deal
AQ
06/13Lockheed Martin says F-35 cost cuts a year ahead of plan
RE
06/13Sweden's Saab backs out of Swiss fighter jet test flights
RE
06/13LOCKHEED MARTIN : SMi Release 8 Key Reasons to Attend Air Missile Defence Techno..
AQ
06/12LOCKHEED MARTIN : Sikorsky to Begin Presidential Helicopter Production Under $54..
AQ
06/12LOCKHEED MARTIN : Sikorsky Receives Contract To Build Presidential Helicopters; ..
AQ
06/12LOCKHEED MARTIN : Develops Advanced Visualization Training Tool For Apache Fligh..
AQ
06/12LOCKHEED MARTIN : Delivers GPS III Contingency Operations Ground System Upgrade ..
AQ
06/12HARRIS CORPORATION : Delivers Navigation Payload for U.S. Air Force's Seventh GP..
AQ
More news
Financials ($)
Sales 2019 57 983 M
EBIT 2019 8 184 M
Net income 2019 5 802 M
Debt 2019 11 350 M
Yield 2019 2,52%
P/E ratio 2019 17,32
P/E ratio 2020 14,46
EV / Sales 2019 1,93x
EV / Sales 2020 1,81x
Capitalization 100 B
Chart LOCKHEED MARTIN CORPORATION
Duration : Period :
Lockheed Martin Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends LOCKHEED MARTIN CORPORATIO
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 373 $
Spread / Average Target 5,0%
EPS Revisions
Managers
NameTitle
Marillyn A. Hewson Chairman, President & Chief Executive Officer
Rodney A. Makoske SVP-Corporate Engineering, Technology & Operations
Bruce L. Tanner Chief Financial Officer & Executive Vice President
Nolan Don Archibald Lead Independent Director
Joseph W. Ralston Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
LOCKHEED MARTIN CORPORATION33.72%97 354
UNITED TECHNOLOGIES CORPORATION17.21%109 390
NORTHROP GRUMMAN CORPORATION26.35%52 118
RAYTHEON15.50%49 313
GENERAL DYNAMICS9.37%47 129
HARRIS CORPORATION40.98%22 427