GMD Contract Biggest Missile Defense Prize on the Horizon

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WASHINGTON — With no new major U.S. program starts in missile defense slated for 2010, the industry’s biggest players are gearing up for the competition for a massive contract for development as well as operations and sustainment of the nation’s primary strategic missile shield.

Boeing Integrated Defense Systems of St. Louis has been the prime contractor on the Ground-based Midcourse Defense (GMD) system since its inception in 1998, responsible for both system development and operations, and sustainment of missile defense installations in Alaska and California. While the U.S. Missile Defense Agency (MDA) had always planned to put the operations and sustainment contract up for bids, in November the agency announced it would also hold a competition for ongoing development work.

The combined contract is expected to be worth around $600 million a year, government documents show. Lockheed Martin Space Systems of Sunnyvale, Calif., Northrop Grumman Corp. of Los Angeles and Raytheon Integrated Defense Systems of Tewksbury, Mass., have all said they will challenge Boeing for the contract. A request for proposals is expected in the coming months, with an award to be made in early 2011.

Meanwhile, Lockheed Martin and Raytheon will be the primary beneficiaries of the Pentagon’s shift to focus more on near-term and shorter-range missile threats in 2010. The MDA in its 2010 budget request terminated several developmental missile defense programs and curtailed spending on GMD, while increasing funding for two of its main theater ballistic missile defense systems.

Congress fully funded the agency’s $1.44 billion request for further development of the Lockheed Martin-led Aegis Ballistic Missile Defense system, and an additional $226 million was appropriated to procure more of the system’s Raytheon-built Standard Missile-3 interceptors. Congress also fully funded the agency’s $720 million request to further develop the Lockheed Martin-built Terminal High Altitude Area Defense system and  $420 million for missile and fire unit procurement.

Both companies stand to benefit even more in coming years with the Defense Department’s change in course last year to use the Aegis system for European missile defense. Previous plans had called for developing a variant of the GMD interceptor for Europe’s defense.