Lockheed wins potential $3.6 bln US GPS satellite deal

By Jim Wolf

WASHINGTON (Reuters) - Lockheed Martin Corp (LMT.N: Quote, Profile, Research) won a potential $3.6 billion contract to start building a new generation of global positioning satellites that will boost accuracy for worldwide users, the Air Force said Thursday.

Lockheed, the Pentagon's No. 1 supplier by sales, beat Boeing Co (BA.N: Quote, Profile, Research), the No. 2 supplier, to supply the first batch of satellites in the new Global Positioning System, known as GPS III.

GPS satellites, in one of six Earth orbits, circle the globe every 12 hours beaming precision navigation and timing signals. They are used for everything from mapping to business transaction authentication to precision weapons.

The system is operated by the Air Force Space Command for the U.S. Defense Department, which makes the signal available worldwide for free.

The first of the new GPS III satellites is scheduled for launch in early 2014, Col. Dave Madden, head of the Space Command's Global Positioning System wing, said in a teleconference. Ultimately, the new network is due to include 32 satellites.

Lockheed's initial contact was for two "research and development" craft valued at $1.46 billion, the Air Force said. If the government exercises its options to buy 10 more, the deal would be worth roughly $3.6 billion, Madden said.

The Air Force plans to stick with Lockheed as the supplier of future GPS III satellites but retains the option to hold a new competition for two follow-on batches, he said.

GPS III satellites will feature greater signal power than previous configurations, boosting resistance to jamming, perceived as a growing threat.