Air Force may subsidize satellite-launcher jobs Lockheed, Boeing vying for $2 billion contract



The Air Force reportedly has decided to partially subsidize efforts by both Boeing and Lockheed Martin to develop the next generation of launch vehicles to hurl military and civilian satellites into space at half the cost of today's rockets.

The two defense giants have been locked in a fierce winner-take-all competition for a $2 billion Air Force contract to build what is known as the Evolved Expendable Launch Vehicle, or EELV.

If the report that both will share the contract is true, it means that the Boeing Co. is guaranteed a significant share of the booming international satellite launch market well into the next century.

The Air Force is supposed to award the EELV contract in June.

In recent weeks, there has been growing industry speculation that Boeing and Lockheed Martin would both emerge as winners in the race to develop a cheaper rocket.

Thursday, Space Business News reported that, even though it will not publicly say so, the Air Force has decided to award both companies development contracts.

"The EELV contract is important for the entire commercial space launch business in the United States," an unidentified source told Space Business News. "The military and the Clinton administration know that, and that's why two contracts will be awarded."

Boeing and Lockheed Martin have known for months that the Air Force will fund both EELV efforts, Space Business News reported.

The change in acquisition plans must still be approved by Defense Secretary William Cohen, but he is likely to agree, the article said.

An Air Force spokesman declined Thursday to comment on the report.

David Schweikle, director of the Boeing's EELV project at Huntington Beach, Calif., would not comment on the story by Space Business News.

"That's something to talk to the Air Force about," he said, adding that Boeing is still working on the assumption that the military will select only one company to build the EELV.

The Air Force has not officially changed its EELV acquisition strategy, he said.

In September, Boeing announced that it would begin work later this year on a $400 million EELV production facility in Decatur, Ala. That was seen as a signal that Boeing had decided that the market for a new and cheaper launch vehicle is so rosy that it planned to go ahead with production of its EELV even if it did not win the Air Force contract.

In December, it appeared that Boeing had lost out on the EELV contract when the Air Force selected Lockheed Martin and McDonnell Douglas as the finalists and awarded each $60 million for pre-engineering studies. Boeing and Alliant Techsystems were eliminated. But Boeing jumped back into the competition when it acquired McDonnell Douglas in a merger.

Pub Date: 11/01/97

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