By Andrea Shalal-Esa
WASHINGTON (Reuters) - The Pentagon will restructure an $11 billion Lockheed Martin Corp. (LMT.N: Quote, Profile, Research, Stock Buzz) satellite program to warn of enemy missile attacks, tying future funding to the performance of two initial satellites already under contract, a defense official and an industry analyst said on Friday.
As reported last week, officials had already decided to keep alive the Space Based Infrared System (SBRIS) High program, for which Northrop Grumman Corp. (NOC.N: Quote, Profile, Research, Stock Buzz) is designing advanced infrared sensors, given the lack of backup plans.
Pentagon acquisitions chief Kenneth Krieg backed a "restructuring plan" for the troubled space program at a meeting on Wednesday, although he has not formally signed it, said one defense official, who asked not to be named.
"They can't get rid of it. It's considered to be a national asset," Frank Lanza, chief executive of L-3 Communications Holdings Inc. (LLL.N: Quote, Profile, Research, Stock Buzz), a supplier to Lockheed on the program, told the Reuters Aerospace and Defense Summit in Washington.
"My view is that they're going to continue the program, but they will scale it back somewhat," Lanza said, noting the program had repeatedly overrun its budgets, requiring the Pentagon to justify to Congress the need for the program.
SBRIS was initially expected to cost $3 billion.
Defense officials must submit a restructuring plan, which also calls for tighter Pentagon oversight, to Congress by a December 13 deadline under congressional oversight law.
Pentagon spokeswoman Cheryl Irwin confirmed that Krieg met with Air Force officials this week to discuss how to proceed with the program. She declined comment on the restructuring. Continued...
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