UPDATE 2-Pentagon approves development start for new radios
(Adds comment from program office)
WASHINGTON, March 26 (Reuters) - The Pentagon said on Wednesday that it had approved the start of development of a next-generation radio system for aircraft, ships and ground stations, paving the way for a huge contract award soon to either Boeing Co (BA.N) or Lockheed Martin Corp (LMT.N).
Pentagon acquisition chief John Young signed a document approving the next phase of the Joint Tactical Radio System program late on Monday, a spokesman for him said.
Defense analysts say the contract for system design and development of the Airborne Maritime and Fixed Station segment of the program will total $800 million to $1.2 billion. A later production contract could translate into business deals valued at $10 billion or more over the long term, they say.
Steven Davis, spokesman for the Joint Tactical Radio System program office, said a contract award was expected by the end of March.
The tactical radio system is a family of advanced software-based communications that will replace current radio equipment throughout the U.S. military. It will provide secure Internet-like capabilities and networking for voice, text, audio and video.
The contract will be the final piece of the Joint Tactical Radio System program, which also includes development of the underlying software and of handheld and backpack-sized radios.
In a document approving the start of the system design and development phase of the Airborne Maritime and Fixed Station segment, Young also designated it as an "Acquisition Category 1D" program.
That means it is a "high interest" joint major acquisition weapons program and Young's office has the final say over major acquisition decisions.
Boeing and Lockheed each were awarded an $81 million contract in December 2004 for preliminary design work on the radio system, which will be integrated into more than 150 airborne, shipboard and fixed stations.
Boeing's team includes Harris Corp (HRS.N), L-3 Communications Holdings Inc (LLL.N), and Rockwell Collins Inc (COL.N).
Rival Lockheed is competing for the contract with a team that includes BAE Systems Plc (BAES.L), General Dynamics Corp (GD.N), Raytheon Co (RTN.N) and the Northrop Grumman Corp (NOC.N) unit that works on communications equipment for F-22 and F-35 fighter jets.
Initially, the Airborne Maritime and Fixed Station equipment will be installed on Army Apache and CH-47 helicopters, Navy E-2C reconnaissance planes, C-130 aircraft used by special operations forces, Navy aircraft carriers and other warships, plus unmanned fixed radio sites.
The Pentagon's fiscal 2009 budget request includes $203.8 million for the Airborne Maritime and Fixed Station program, up from $106.7 million in fiscal 2008. Funding is expected to rise steadily as the program nears low-rate initial production in 2012. (Reporting by Andrea Shalal-Esa; Editing by Carol Bishopric)
