Air Force Confident of `Fair' Price for Lockheed GPS Satellites

(Bloomberg) -- The U.S. Air Force’s top space acquisition official says he’s confident the service can agree to “fair” prices from Lockheed Martin Corp. for up to 22 more GPS III satellites, even though the company is now the only bidder on the long-troubled project.

The Air Force late last year announced a contest worth as much as $10 billion to supply the next batch of Global Positioning System satellites, which do everything from helping soldiers navigate in the battlefield to getting drivers through traffic.

A myriad of problems during the program’s early phase, in which Lockheed was the contractor, led to more than $600 million in added program costs and a four-year slip in delivery of the first satellite that’s now scheduled to be launched around October. Nevertheless, the service and the company say those problems are behind them.

No matter how many bidders there are on a project, there are regulations and techniques in place to ensure “that we get a fair and reasonable price,” Lieutenant General John Thompson, head of the Air Force Space and Missile Systems Center, said in an interview Friday. “I’m not concerned at all.”

Boeing Co. and Northrop Grumman Corp. were expected to bid on the latest contract, but they unexpectedly decided for internal business reasons not to do so. That left Lockheed as the sole source going forward.

Asked if he was surprised that Boeing and Northrop didn’t bid, Thompson said the companies “have their own reasons for submitting a bid or a proposal or not and we respect those decisions” as there are “lots of different reasons why they might or might not” bid.

Some of the production issues on the GPS III satellites in the past included problems with the navigation payload, cracked capacitors and a subcontractor gaffe in 2016 that resulted in the wrong part being tested.

Of Lockheed Martin quality improvements since then, Thompson said, “I think they’ve made tremendous strides in terms of quality, particularly on the GPS” production line.

©2018 Bloomberg L.P.