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The Los Angeles Times September 01, 2006

A Surprise Liftoff for the Manned Moon Program

Lockheed unexpectedly gets the space contract, beating out a team from Northrop and Boeing.

By Peter Pae

Aerospace companies with major operations in Southern California saw their lunar dreams turn to dust Thursday when they lost out on a multibillion-dollar contract to send humans back to the moon.

In a decision that surprised industry observers as well as the losing parties, NASA announced that it had chosen Lockheed Martin Corp. to build Orion, an Apollo-like capsule that would succeed the current space shuttles and return humans to the moon as a steppingstone to a manned mission to Mars.

Lockheed, the nation's largest defense contractor, beat out the team of Northrop Grumman Corp. and Boeing Co. for the contract, potentially worth $8.1 billion over about a dozen years, to build Orion.

Lockheed, based in Bethesda, Md., plans to do most of the work in Texas, Louisiana and Florida.

Northrop of Century City and Chicago-based Boeing had planned to perform much of the initial design and development work locally. The companies maintain large space-related workforces in the region, with sprawling satellite-making facilities in Redondo Beach and El Segundo, respectively, and rocket design shops in Azusa and Huntington Beach.

The entire exploration project, dubbed Constellation, is expected to cost $104 billion.

Although similar in shape to the Apollo vehicles that flew three-man crews to the moon from 1968 to 1972, Orion would be three times larger, carrying as many as six astronauts.

The new capsule will be built with proven technology that would allow it to be used as many as 10 times.

The Northrop-Boeing team was widely expected to win the contract, based on the previous experience they and predecessor companies had in leading the development of the Apollo program.

"So much for conventional wisdom," said Paul H. Nisbet, aerospace analyst for JSA Research Inc.

"You just can't count Lockheed out of any big space and defense competition. They're big and powerful," Nisbet said.

But some analysts said the blow might not be so severe because the contract could itself be pared, given the many pressing budget items competing for federal dollars.

The big question, analysts said, was whether the new project could survive longer term, considering the costs of the Hurricane Katrina cleanup, the war in Iraq and other fiscal constraints that could leave the space agency strapped for funds.

"You have to be concerned that you could end up at the end of the decade with no space shuttle and no follow-up vehicle because there will not be enough money," said John Pike, director of GlobalSecurity.org, a defense and space policy research firm.

NASA wants to retire the space shuttle fleet in 2010 after nearly 30 years of service during which the program suffered the Challenger and Columbia disasters.

The shuttles would be replaced by Orion, which would initially be used to resupply and transfer International Space Station crews before taking humans back to the moon, perhaps as early as 2018.

The initial contract is valued at $3.9 billion and calls for the design and development of the first spacecraft by 2011; an additional $3.5 billion would pay for production of the vehicles that would carry astronauts to the moon. NASA estimates that it will spend $700 million for follow-on engineering work.

Space agency officials declined to detail the reasons for Lockheed's selection, pending post-competition meetings with the companies.

The officials said only that Lockheed's proposal came within the criteria the agency set for the program, such as cost, past performance and design requirements. "We feel we have an achievable design" in the Lockheed proposal, said Doug Cooke, the space agency's deputy associate administrator for exploration. "We know this can be built."

Lockheed executives said in a statement that they were "humbled and excited" by the win.

A Northrop spokesman said the company was "obviously disappointed" with the decision but was "encouraged by its continuing dialogue with NASA regarding other aspects of the space exploration program."

Thursday's contract was the first in the ambitious blueprint for Constellation. Other pending contracts include those for building the lunar lander and the launch vehicles that would carry Orion into orbit.

Privately, Northrop representatives said key executives were stunned by the announcement. Winning the competition was considered a priority for the company, and it had pulled together some of its top talent to work on the project.

Analysts said Lockheed might have gained a political advantage through the way it proposed to allocate the work geographically and the financial support it received from the targeted states.

Florida, for instance, put together a package of tax breaks and other incentives totaling more than $200 million, specifically directed at bringing the program to the state, said Ken Dozier, executive director of the Western Research Application Center at USC's Viterbi School of Engineering.

In the days leading up to the decision, Dozier warned in published reports that "unfortunately, at this point, other states are simply moving faster than we are to secure the CEV," or crew exploration vehicle, as the Orion capsule is generically known.

In an interview Thursday, Dozier said the loss should be viewed as a wake-up call for California officials: "I think anybody that says there isn't some politics in the economic decision is oversimplifying the problem. We can't assume by default that we will continue to be a world leader in aerospace."

Copyright 2006, Los Angeles Times