Lockheed Martin [LMT] has won the Navy’s competition to modernize the Aegis Combat System, outdueling Raytheon [RTN] and
Boeing [BA] to strengthen its grip on a program potentially worth billions of dollars in the decades ahead.
The contract award announced by the Navy yesterday keeps Lockheed Martin as the prime contractor for the Aegis system that has been the cornerstone of air theater combat for the Navy’s fleet of Arleigh Burke-class (DDG-51) destroyers and Ticonderoga-class (CG-47) cruisers for decades. The contract includes a baseline amount of $100.7 million that runs through May 2018.
The Navy, as part of efforts to save money and avoid frowned-upon sole source contracting, decided to reopen the Combat System Engineering Agent (CSEA) contract to the competitive process and accepted bids from Lockheed Martin and rivals Raytheon and Boeing in December 2011 (Defense Daily, Dec. 15, 2011).
“The CSEA contract is a prime example of the Navy’s commitment to competition and providing cost effective solutions to the taxpayers,” Rear Adm. Joe Horn, the program executive officer for Integrated Weapons Systems (PEO IWS), said in a statement. “By openly competing the Aegis CSEA contract, the Navy will benefit from improved systems at a lower cost, which is absolutely critical in light of our budget challenges.”
The Navy said it plans to stage another competition for modernizing Aegis when the newly issued contract expires in five years, opening the door for Raytheon, Boeing or other defense companies to once again contend for Aegis.
The advanced combat command and control system harnesses radar tracking to guide weapons to airborne targets, and has also been modified for ballistic missile defense.
The contract calls on Lockheed Martin to develop, integrate and test future versions, as well as perform ship integration, operational testing, training and logistics. The work will begin with the Advanced Capability Build (ACB) 16 and related technology insertion.
Losing the competition would have been a major blow to Lockheed Martin and its Moorestown, N. J., facility that anchors its Aegis team. The Navy had been expected to issue the contract award late last year, but it was delayed as Naval Sea Systems Command (NAVSEA) continued to evaluate proposals.
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“Our team met the Navy’s challenge to reduce costs and drive innovation into Aegis CSEA by increasing productivity, utilizing automated testing and analysis and increasing the role of small businesses,” Dale P. Bennett, vice president of Lockheed Martin’s Mission Systems and Training, said.
Aegis is also at the heart of the Navy’s sea-based ballistic missile defense and the service and Missile Defense Agency has begun integrating the Aegis Ballistic Missile Defense system with the Aegis Combat System.
Boeing said despite losing the competition it planned to continue working with the Navy on ballistic missile defense, including on a contract awarded in April 2011 for the integration of the SM-IIB missile.
“While this decision is a disappointment, we remain committed to supporting the U.S. Navy’s ballistic missile defense mission, including integration of the SM-3 IIB missile, which is currently in the concept development and design phase,” spokesman Scott Day said.
“Boeing possesses world-class system engineering capabilities and extensive experience with complex combat systems, missile defense systems and sensors,” he added. “This expertise is ideally suited to support the Navy’s ballistic missile defense mission.”
Raytheon did not immediately respond to a request for comment.
NAVSEA had also asked bidding companies to address the challenges associated with integrating the Air and Missile Defense Radar (AMDR) into Aegis. AMDR is a new, more powerful radar planned at least initially for the DDG-51s.
The Navy is expected to announce a winner for the AMDR program sometime this year. Lockheed Martin, Raytheon and Northrop Grumman [NOC] are the firms vying for AMDR, which will replace Lockheed Martin’s AN/SPY-1 radar.
Lockheed Martin inherited Aegis when it acquired Martin Marietta in 1995.