Air Force, Lockheed Negotiating Satellite Failure Cost

Lockheed Martin Corp. may pay for a failure on its first Advanced Extremely High Frequency satellite that led to the $1.7 billion spacecraft not reaching its orbit, U.S. Air Force officials said today.

A blocked fuel line caused the failure and the Air Force is in negotiations with Bethesda, Maryland-based Lockheed on the penalty, Air Force officials, including Erin Conaton, the undersecretary of the service, said.

“We are in the midst of active negotiations,” Conaton told reporters today in the Pentagon. “We are looking at the operational and the financial implications.”

“We have had conversations directly with Lockheed about how we ended up with this particular anomaly and getting reassurances from them about what this means for” the second and third satellites getting prepared for launch.

Lockheed spokesman Stephen Tatum said the company “was focused on achieving mission success.” He declined to discuss the negotiations or quality mistake.

The first of six planned satellites in the Advanced Extremely High Frequency communications program was launched August 14th aboard an Atlas V booster rocket, also built by Lockheed. It was supposed to use its smaller thrusters to reach geosynchronous orbit of 22,236 miles altitude in three months.

Due to a problem with its propulsion system, the satellite is moving into position more slowly than planned. It isn’t expected to reach its final orbit before August, at least nine months late, according to the Air Force’s Space and Missile Systems Center in Los Angeles, California.

Tatum said the “orbit raising process is on track.”

Air Force ‘Lucky’

The Air Force has four of the Advanced EHF satellites on contract and has included in the fiscal 2012 budget the initial $975 million needed for the fifth and sixth satellites. The service wants to buy the satellites under a new “block” buy approach rather than one each in consecutive years to save as much as 10 percent. The new approach must be approved by congressional defense committees also reviewing the orbit failure.

Air Force was “very lucky the thing didn’t end up having a catastrophic failure. This is a serious issue for us and one that we are spending a huge amount of time on,” Conaton said.

Conaton praised the “ingenuity and creativity” of Air Force personnel and said the Lockheed has been “very helpful” in the process of trying to figure out “once the problem happened, how to get this thing safely into orbit.”

‘Quality Mistake’

“It should not have happened,” Deputy Under Secretary of the Air Force for Space Programs Richard McKinney said. “It was a quality mistake and we took steps to make sure it does not happen again,” he said. “It was obviously a very serious error.”

“It appears that there was a blockage in one of the fuel lines,” McKinney said. Lockheed thinks “it was caused by some cleaning material that was used in a line that was not properly vacated when they went through production.”

Since then “we’ve gone through all the spacecraft that have gone the same sort of process” and Lockheed is clearing them for launch, McKinney said.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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