* New approach would use block buys to save money
* Initial preliminary talks with Congress
* Air Force also taking more hands-on approach
By Andrea Shalal-Esa
WASHINGTON, Feb 15 The U.S. Air Force on Tuesday said it could generate savings of at least 10 percent if Congress approves a new procurement approach aimed at shoring up the fragile U.S. space industrial base.
Undersecretary Erin Conaton said the Air Force is requesting a small increase in funding for the unclassified space budget to $8.7 billion in the fiscal year beginning Oct. 1, up from $8 billion requested for fiscal 2011.
As part of the plan, the Air Force is asking Congress to let it buy two Advanced Extremely High Frequency (AEHF) satellites built by Lockheed Martin Corp (LMT.N) starting in fiscal 2012, and two Space Based Infrared System (SBIRS) satellites, also built by Lockheed, the following year.
The new approach is aimed at ending years of chronic cost overruns and schedule delays on major satellite programs, and could eventually be used for other satellite programs. It is part of the Pentagon's overall drive to become more efficient.
If approved, the Air Force would use block buys of satellites, fixed-price contracts and predictable research and development funding to generate cost savings and ensure more stability for defense companies, Conaton said.
The Air Force had held some "first very preliminary discussions" with Congress about the revamped acquisition approach, said Conaton, who worked as a key aide to the House Armed Services Committee before moving to the Air Force job.
She said the new approach was based on a year's worth of legislative requests and reports urging the Air Force to "do space acquisition differently.
She said there was a "unity of effort at the conceptual level" but the devil was always in the details.
"If we don't get approval for this, it'll return to a business as usual approach to buying satellites," she said.
The new approach would allow the Air Force to reinvest any savings in research and development, ensuring continued employment and stability for prime contractors and their suppliers instead of the peaks and valleys of funding that occurred when one expensive satellite was bought at a time.
Major General John Hyten, who heads space programs for the Air Force acquisitions office, said the service was also taking a more hands-on approach to managing programs that includes closer ties to suppliers used by big satellite manufacturers.
He said the Air Force was sure it could save at least 10 percent on the initial programs but could see even greater savings of up to 20 percent.
Conaton said the Air Force, together with the National Reconnaissance Office and NASA, were also committed to buying more Evolved Expendable Launch Vehicle rockets built by a joint venture of Boeing Co and Lockheed.
Making commitments for steady purchases in coming years would help lower the cost per booster rocket and contribute to to a more stable market for suppliers, she said. (Reporting by Andrea Shalal-Esa; Editing by Gary Hill)