Monday October 26, 03:24 PM
UPDATE 1-Lockheed says $1 bln contract shows demand for Aegis
By Andrea Shalal-Esa
WASHINGTON, Oct 26 (Reuters) - Lockheed Martin Corp (NYSE: LMT - news) on Monday said a $1 billion five-year
U.S. Missile Defense Agency contract it won last week underscores the growing importance of its Aegis ballistic missile defense system.
Under the contract for continued development and evolution of the Aegis system, which runs through Dec. 31, 2014, Lockheed will design, develop, integrate, test, deliver and install further Aegis BMD capability for the U.S. and allied navies.
'This contract will both continue the spiral development of Aegis BMD capability to meet expanding global security threats and increase the number of BMD-capable ships at sea,' said Orlando Carvalho, vice president and general manager of the Lockheed Martin business completing the work.
'This further supports the increasing demand for Aegis BMD capability worldwide, especially in light of the administration's recent shift in policy in European Missile Defense,' he said.
Currently 21 Aegis BMD-equipped warships -- 19 in the U.S. Navy and two in Japan's -- can engage ballistic missiles and perform long-range surveillance and tracking missions. The U.S. Navy is modifying two additional U.S. East Coast-based Aegis-equipped ships to perform ballistic missile defense.
There are a total of 92 Aegis-equipped ships in use around the world, including Australia, Japan, Norway, South Korea and Spain, but many are looking to add the ballistic missile defense capability given growing concern about that threat and especially China's work on developing maneuvering warheads.
Defense analyst Loren Thompson said the contract was a further rebuff to Raytheon Co (NYSE: RTN - news) , which has tried to stake out a larger role for the rival combat system it developed for the U.S. Navy's DDG-1000 destroyers. 'The Navy has not proven all that eager to let Raytheon into the work,' said Thompson.
'Lockheed developed the Aegis system, it owns much of the intellectual property, and the Navy doesn't believe other companies understand the system as well as Lockheed,' he said.
Rapid development of ballistic missiles by China made the Navy's need for rapid upgrades even more urgent, Thompson said. 'It really doesn't have time to bring other contractors up to speed before it acts,' he said.
The Navy does plan to open up work on the Aegis combat system to Raytheon and other interested companies in 2012, but every contract awarded to Lockheed in the interim could make it more difficult for those companies to compete.
Lockheed shares were trading nearly half a percent lower at $71.82 in morning trading. Raytheon shares were nearly 1 percent higher at $46.85.
(Reporting by Andrea Shalal-Esa, editing by Dave Zimmerman) Keywords: LOCKHEED AEGIS/
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