GPS III satellite. SOURCE: USAF  

Lockheed Wins GPS Satellite Contract Worth Up to $7.2 Billion

(Bloomberg) -- Lockheed Martin Corp. has received a contract valued at as much as $7.2 billion from the U.S. Air Force to produce as many as 22 additional Global Positioning System III satellites.

A fixed-price award was announced Friday for two satellites. The award may eventually bring to 32 the number of advanced GPS III satellites that Lockheed, the No. 1 defense contractor, could have on contract if options for all 22 are exercised. The initial 10 satellites were awarded under cost-plus agreements that require the Air Force to absorb a greater share of cost overruns.

Lockheed was the sole source because Boeing Co. and Northrop Grumman Corp. decided against bidding when the Air Force -- openly unhappy about Lockheed’s four years of delivery delays for the initial satellites -- decided to open for competition the next group of satellites.

Launch of the first GPS III satellite -- originally planned for April 2014 -- is now scheduled for December. The satellite program’s cost under Bethesda, Maryland-based Lockheed increased by about $600 million due to technical problems, primarily with the navigational payload, that appear to have stabilized.

The new GPS satellites promise increased accuracy for navigation, a signal compatible with similar European satellites and improved security against cyberattacks. GPS navigation is widely used by the military as well as for civilian purposes such as street-by-street driving directions on mobile phones.

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