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Rocky Mountain News November 15, 2005

Lockheed striving to salvage spy plane contract

Offers Army options to put troubled jet back on track

By Roger Fillion

Lockheed Martin Corp. is scrambling to hang on to an $8 billion contract to build a next-generation spy plane for the U.S. military - a deal that is being managed from Jefferson County.

Lockheed officials met with a top Army official Monday to go over three alternatives to its original plan, which had centered around a Brazilian-made jet that proved too small to haul the electronics gear. The alternatives are reported to include a new aircraft.

In September, the Army ordered Lockheed to stop working on the so-called Aerial Common Sensor plane and to develop a workable scheme within 60 days.

"I'd have to think they're in pretty hot water," said analyst Paul Nisbet of JSA Research in Newport, R.I.

The Army could scrap the entire ACS program amid budget pressures, analysts said.

Alternatively, if the Army opted to go with a significantly different Lockheed plan, rival Northrop Grumman Corp. - which lost out on the contract last year - could cry foul.

"I'm sure (Northrop) would take a crack at it and see if they could pry anything loose," said John Pike, director of GlobalSecurity.org.

Lockheed is managing the ACS program from its Deer Creek facilities. About 250 employees have been working on the program, with most at Deer Creek.

Work here has involved the development and integration of the plane's surveillance electronics.

When Lockheed won the ACS contract in August 2004, industry experts estimated it could generate 500 to 600 jobs here over the course of the 20-year program.

Lockheed spokeswoman Judy Gan declined Monday to discuss the company's new proposals, saying only "we put forward a number of options" to the Army.

Army spokeswoman Maj. Desiree Wineland said the company laid out three aircraft "platform" recommendations. The Army has 30 days to review and assess the options.

Wineland said in a statement the service remains "committed to developing a viable solution that ensures the Army is able to continue its responsibility for airborne signals intelligence."

Company officials met with Claude Bolton, assistant secretary of the Army for acquisition, technology and logistics.

Analyst Loren Thompson of the Lexington Institute in Arlington, Va., said Lockheed proposed a range of options, including two aircraft different from the original Brazilian jet, the Embraer EMB-145.

Thompson, an expert on military technology with close ties to senior Pentagon officials, also said Lockheed proposed continuing work on the electronics without making a commitment to a particular jet.

The Wall Street Journal reported Monday that Lockheed was touting a Canadian-built aircraft, Bombardier Inc.'s Global Express business jet. The newspaper cited industry and government officials.

The Journal also reported that as a backup to the Bombardier plane, Lockheed could propose using the initial Embraer EMB-145 jet - but with less electronics gear on board.

The new spy plane is supposed to replace two Army spy planes and one the Navy operates. Both the Army and Navy are slated to use the unarmed ACS plane. Each jet would be equipped with state-of-the-art sensors to detect enemy communications, radar and troop movements.

Last week, the Navy's head of acquisition said his service may end its participation in the program.

The Navy was on tap to buy 19 of the planes at a price tag exceeding $2 billion. The Army had agreed to purchase 38 aircraft.

Design snag scrambles process

The contract: Aerial Common Sensor spy plane

Potential price tag: $8 billion

The problem: Brazilian jet Lockheed first planned to use proved too small to carry the electronics gear

Latest development: Hoping to keep the contract, Lockheed proposed three alternatives to the Army. They reportedly included using a different aircraft.

What's next: Army has until Dec. 14 to review and assess the options

Where Lockheed is managing the program: Deer Creek facilities in Jefferson County, where most of the approximately 250 Lockheed employees involved in the program work


Copyright 2005, Rocky Mountain News