* More work needed to finalize agreement -Air Force
* Government playing 'hardball' -analyst
WASHINGTON Dec 20 The U.S. Air Force is
unlikely to reach an agreement with Lockheed Martin Corp
before the end of the year on a multibillion-dollar purchase of
new military communications satellites, a top Air Force
acquisition official said.
Lieutenant General Charles Davis, the top military official
in charge of Air Force acquisition, said the two sides still had
"a little bit of work to go in negotiations" about the fifth and
sixth Advanced Extremely High Frequency (AEHF) satellites,
making it unlikely that a deal could be struck before year-end.
"We will not obligate the funds until we are sure ... that
we have a fair deal for us and Lockheed," Davis told Reuters in
an interview. "I don't think the plans get us to an award on
that before the end of the year."
Air Force officials had hoped to sign a fixed-price,
incentive fee contract with Lockheed for the next two AEHF
satellites this summer, with an eye to reaping savings of well
over 10 percent over earlier contracts.
But the two sides have not yet reached agreement on the
terms of the contract, which is valued at nearly $2.6 billion.
Once the two sides reach agreement, senior Pentagon
officials must still sign off on the deal, Davis said.
Lockheed spokesman Michael Friedman said negotiations with
the Air Force were continuing.
"We are working closely with the Air Force to finalize a
contract for these critical national security satellites in a
timely fashion," he said.
Already in orbit are two AEHF satellites designed to ensure
that military communications continue among top military
commanders and the White House in the event of a nuclear war, as
well as provide transmission of more routine communications such
as targeting data and video data feeds.
Defense consultant Loren Thompson, who has close ties to
Lockheed and other weapons makers, said the government was
pressing Lockheed to accept fairly aggressive contract terms,
especially in the absence of major new military threats.
"The contract will eventually get signed, but the government
is going to play hardball on terms and conditions," Thompson
said. He said the military could meet some of its communications
needs by using cheaper service offered by commercial and other
military satellites, although the AEHF satellites would still be
needed for future large-scale conflicts.