U.S. Air Force budget sets stage for GPS satellite competition

By Andrea Shalal

By Andrea Shalal

WASHINGTON (Reuters) - The U.S. Air Force's fiscal 2016 budget plan earmarks $7.1 billion for space programs, including a 10th Global Positioning System III satellite by Lockheed Martin Corp, and sets the stage for future competition for such satellites.

Lockheed won the contract to build GPS-III satellites in 2008, beating out Boeing Co, which had built earlier GPS satellites. The program has since run into delays due to technical challenges with a key sensor built by Exelis Inc.

The Air Force had no immediate details on the potential competition, how many satellites it would include, or when the process would begin.

Lockheed said it would review the budget in the coming weeks to understand the specific impact to its business. "We are completely focused on the execution and performance on our existing contract," said spokesman Chip Eschenfelder.

Boeing had no specific comment on the prospect of a GPS competition, but said it remained focused on improving productivity and lowering the cost of weapons systems.

The GPS system provides worldwide, 24-hour position, navigation and timing information for military and civilian users. The Air Force plans to buy a total of 27 GPS III satellites.

The fiscal 2016 budget for the GPS program includes $673 million in research and development funding, and $265 million in procurement funding for a total of $938 million, down from $1.02 billion in fiscal 2015.

If approved by Congress, the 2016 budget request would pay for GPS III satellite 10, and continue work on a next-generation ground control system being built by Raytheon Co. The Raytheon program was restructured last year, doubling its cost.

The program is due to be reviewed by the Pentagon's chief arms buyer this month.

No comment was immediately available from Lockheed or Boeing about the potential competition.

The Air Force space budget also funds five launches under the Evolved Expendable Launch Vehicle program, of which three would be set aside for competition, according to an Air Force spokeswoman.

The United Launch Alliance, a joint venture of Lockheed and Boeing, is the only provider of launches under the EELV program at the moment, but the Air Force has said it expects to certify privately held Space Exploration Technologies, or SpaceX, to compete for EELV contracts by mid-year.

The budget also begins funding for an effort aimed at ending U.S. reliance on a Russian-built engine now used to power the Atlas 5 rocket built by United Launch Alliance.

(Reporting by Andrea Shalal; Editing by Andrew Hay and Alan Crosby)