Spy satellite contract challenged

August 09, 1994|By Paul Sloan | Paul Sloan,Bloomberg Business News

WASHINGTON -- Continuing a tug-of-war over a multibillion-dollar spy-satellite program, TRW Inc. has challenged the government's decision to take away the contract it won last year, according to people familiar with the program.

The federal government gave the top-secret contract for next-generation signals-intelligence satellites to Martin Marietta Corp. two weeks ago after the company successfully protested the award to TRW.

TRW's appeal to the government's General Accounting Office halts the contract for the satellites, which will eavesdrop on electronic signals over sea and land.

Estimated to be worth at least $2 billion initially and more than $5 billion over its life, the classified military program will mean thousands of jobs well into the next decade. In the competitive post-Cold War defense industry, that has made it the focus of an unusual, drawn-out fight among TRW, Martin Marietta and Lockheed Corp., which also bid on the program.

Bethesda-based Martin Marietta, which previously held the spy-satellite contract, has aggressively sought to position itself as one of the winners as the space industry consolidates. The company, a builder of spy satellites and the Titan 4 rocket boosters used to launch them, broadened its product line in the past year by acquiring the satellite business of General Electric and the launch vehicle unit of General Dynamics.

Still, employment at Martin Marietta's space division has dropped to 10,300 from 14,000 five years ago, said spokesman Evan McCollum. The figure includes 3,100 former General Electric workers.

Martin Marietta's space operations are in Denver, East Windsor, N.J., and Valley Forge, Pa.

TRW and Lockheed, meanwhile, have both seen setbacks to their space businesses during the past few years. TRW's Space & Electronic Group laid off thousands of workers in its Redondo Beach, Calif., space complex during the past five years as some major programs were canceled.

The filing of an appeal halts the award of a contract until the GAO makes a ruling, said John Melody, assistant general counsel with the GAO's procurement law division.

The GAO must rule on appeals within 90 working days. Among the things reviewed by the office's investigators are the procurement method and whether the winning company's bid was consistent with the terms of the solicitation.

A company could in theory protest a contract repeatedly, but the process makes multiple protests unlikely, Mr. Melody said.

"If you protest on one ground and get a decision, you can't just protest on another ground that you could've raised originally," he said. "Very rarely do we sustain two protests against a procurement, but it's happened."

Officials from Cleveland-based TRW and Lockheed Corp., based in Calabasas, Calif., declined to comment. Martin Marietta didn't immediately comment.

The National Reconnaissance Office, the agency that buys satellites for the Pentagon and the Central Intelligence Agency, awarded the contract to TRW just over a year ago.

Martin Marietta and Lockheed protested that the original bidding was incomplete because the government never asked the companies for their "best and final offer," a person familiar with the appeal said.

The GAO, Congress' investigative arm, ordered the companies to redo their bids this year. People familiar with the contract said TRW filed its appeal last week.

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