Northrop Grumman Corp (NOC.N) and Lockheed Martin Corp (LMT.N) won separate contracts to design the next-generation interceptor for the U.S. missile defense network, the Pentagon announced on Tuesday.
The Northrop deal is worth up to $3.9 billion and the Lockheed contract could be valued at up to $3.7 billion.
The next-generation interceptor program could be worth as much as $10 billion to $12 billion over its lifetime as the contractor works to make the technology capable of defeating current ballistic missile threats and future technological advances from countries including North Korea and Iran.
Attention on U.S. missile defenses was heightened this week after North Korea test-fired two short-range missiles over the weekend. read more
The new interceptors would be a part of the Ground-based Midcourse Defense (GMD) system, a network of radars, anti-ballistic missiles and other equipment designed to protect the United States from intercontinental ballistic missiles.
In 2019, the Pentagon scrapped work on a Boeing Co (BA.N) contract for a "kill vehicle", the tip of an interceptor that detaches in space and "kills" the incoming warhead, due to technical design problems after spending $1.2 billion on the project. The United States then decided to restart the contract process to gather bids on designing the whole interceptor including the "kill vehicle."
Boeing, which had bid on the interceptor contract, was knocked out of the competition on Tuesday.
The Pentagon said by awarding this phase of the competition to two lead contractors it "increased competition by funding two designs while remaining flexible to align with evolving Defense Department strategies and priorities."
The U.S. Missile Defense Agency, which is responsible for the GMD system, awarded Tuesday's contracts, saying the initial program funding limitation for both contracts combined is $1.6 billion through fiscal-year 2022.
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