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Lockheed/Embraer win US military spy plane deal, Value ...

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Aircraft manufacturer beats out Northrop Grumman for contract, valued at $8B over next two decades.August 3, 2004: 8:31 AM EDT WASHINGTON (Reuters) - Lockheed Martin Corp. beat out Northrop Grumman Corp. to win a multibillion-dollar competition to build the U.S. military's next-generation spy plane, the Army said in a statement Monday. Lockheed won an initial $879 million contract to develop the joint Army-Navy airborne intelligence, surveillance and reconnaissance system during the next five and a half years, said the Army, which is leading the joint project. Bethesda, Md.-based Lockheed (LMT: Research, Estimates) is using the ERJ-145 regional jet built by Brazil's Embraer SA as a platform for the new Aerial Common Sensor airplane, or ACS. Los Angeles-based Northrop (NOC: Research, Estimates) based its design on the G450 business jet built by General Dynamics Corp.'s (GD: Research, Estimates) Gulfstream unit. "We are extremely proud to partner with the U.S. government in the development of ACS," said Stan Sloane, Lockheed executive vice president for integrated systems. "With ACS, warfighters can see and act first with greater speed and accuracy." The plane, which will replace existing Army surveillance planes as well as the Navy's aging EP-3E aircraft, is valued at up to $8 billion during the next two decades, according to industry sources. "This is a great success for Lockheed Martin because it shows that they understand network-centric warfare and information operations, which is the core of future war fighting," said Loren Thompson, director of the Virginia-based Lexington Institute. Risk paid off"Lockheed knew it was taking a chance in bidding a Brazilian airplane, but they were convinced they had the right combination of technology and price," Thompson said. ACS will carry a variety of sensors to detect, identify, locate, track and rapidly disseminate data on enemy communications, radar and troop movements to warfighters, according to an Army information paper. Meant to be one of the first systems to reach a fight, ACS will provide intelligence that could help shape the early stages of a battle, Army officials said. The plane will also link up with other ACS aircraft, unmanned aerial vehicles and ground stations through a network of communications systems. Northrop said it was disappointed it lost the contract and believed its proposal would have significantly reduced risk to the program's schedule and budget by using mature subsystems and a plane that required no modifications. But company spokesman Randy Belote said he would refrain from further comment until after a debriefing by the Army. He declined to say if his company would formally challenge the contract with the Government Accountability Office. Acting Pentagon acquisitions chief Michael Wynne signed a memorandum approving the formal start of the plane's development on July 29, paving the way for the contract. He also authorized low-rate initial production of seven aircraft. The Army expects to receive its first plane in fiscal 2009, with complete replacement of its current eavesdropping fleet due by 2017. The Navy would get its first ACS in 2012. Lockheed stock rose to $53.95 a share in after-hours trading on the INET electronic brokerage after closing at $53.75 a share on the New York Stock Exchange -- before word of the contract decision. P99 145 AEW&C at Lockheed Martin - Embraer Win Spy Plane Contract ][/font

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