Boeing and Lockheed Are Heading Toward a GPS Bidding War

  • Draft request for proposals seeks industry input on contest
  • Boeing vows to challenge Lockheed’s hold on troubled program

Kenyan Maasai warriors track lions via GPS.

Photographer: Tony Karumba/AFP via Getty Images

The Air Force is taking the final step toward a probable multibillion-dollar competition that would give Boeing Co. a second shot against incumbent Lockheed Martin Corp. for as many as 22 new Global Positioning System III satellites.

The service has scheduled an “industry day” in El Segundo, California, on July 20 to solicit company input, according to a new draft Request For Proposals. The draft and the industry day “will inform” a final request, Captain AnnMarie Annicelli, an Air Force spokeswoman, said in an email.

The prospect of a face-off between the two biggest U.S. defense contractors stems in part from cost, schedule and performance problems with the first satellite built by Lockheed. That prompted the Air Force in 2015 to initiate the first phase of what’s now a two-year process deciding whether to put the next block of satellites up for competition.

It would be a rematch because Lockheed beat Boeing in 2008 for an initial $1.6 billion contract for the first 10 satellites in a program that could have included all 32 that are planned. The service, which said in 2015 that the eventual inventory of 32 satellites could be valued at about $7.6 billion, hasn’t issued an updated cost estimate.

Smartphones, Bombs

The Global Positioning System developed by the U.S. military provides turn-by-turn directions on the smartphones of drivers and hikers as well as coordinates for bombs hitting Islamic State targets in Syria and Iraq. New GPS III satellites promise increased accuracy for navigation, a signal compatible with similar European satellites and improved security against cyberattacks.

The Air Force’s initial review of the marketplace “has determined that viable, low-risk, high-confidence sources exist to conduct a full and open competition” for a second phase starting in fiscal 2018, according to the draft.

The Air Force issued the draft as the House Appropriations Committee pressed the service to make a decision on whether to conduct a competition or stick with Lockheed because the panel “understands the Air Force continues to research the efficacy of recompeting the existing contract.” The committee raised the issue in the report accompanying its fiscal 2018 defense spending bill, saying that in any case the service should continue to make block buys of the satellites rather than purchasing them individually.

“Boeing is competing for Phase 2 and will offer a complete lower cost, resilient GPS III solution that will feature advanced digital payload technology to meet evolving mission needs,” Enrico Attanasio, executive director of Boeing defense and civil satellites, said in an email.

Lockheed spokesman Chip Eschenfelder said in an email the company will offer “our flexible, evolutionary GPS III design” that contains a search-and-rescue payload.

The Air Force was supposed to take formal delivery earlier this year of the first GPS III satellite, valued at $528 million -- and that was about 34 months late because of a series of now-resolved problems with the navigation payload, cracked capacitors and a subcontractor gaffe last year that resulted in the wrong part being tested. 

Instead, the satellite was put in storage in February at a Lockheed facility pending the results of an unrelated review of the propulsion systems used to boost military satellites into orbit.

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