— The U.S. Air Force is preparing to extend Boeing and Lockheed Martin’s study contracts for the Transformational Satellite (T-Sat) communications system as the service continues its work to revise requirements for the scaled-back system, according to sources familiar with the program.

The extensions likely will be awarded soon – the current contracts expire in January – and will be similar to previous extensions, with each worth $75 million over six months, the sources said. Lockheed Martin Space Systems of Sunnyvale, Calif., and Boeing Space and Intelligence Systems of Seal Beach Calif., have been doing risk reduction and system development work since 2004. The Air Force had intended to select one company for the prime contract in 2008, but instead twice extended the studies with contracts totaling $300 million.

In October, U.S. Deputy Secretary of Defense Gordon
decided to move to a less capable version of the system known as T-Sat Digital Core. John Young, undersecretary of defense for acquisition, technology and logistics, in an undated memo directed the Air Force to restructure the program in accordance with
‘s decision to allow for a phased approach to the system with capacity for growth that would begin launching by September
2019. A
copy of the memo was obtained by Space News, after being reported first by Inside the Pentagon.

In a handwritten note at the bottom of his memo, Young said: “This time, act immediately on this direction in order to make progress on T-Sat and stop poorly using taxpayer dollars.” Pentagon spokesman Chris Isleib confirmed the authenticity of the memo and the handwritten note.

While technical specifications of the T-Sat Digital Core still are being worked out, the initial capability, known as Block 10, will include four satellites on orbit with one ground spare, according to one source. The T-Sat Digital Core will lose the satellite-to-satellite laser links, the Ka-band intelligence, surveillance and reconnaissance support for aerial vehicles, and some of the on-board processing capability the original system would have included.

“There is no desire by the government to reduce the system’s capability in the long term,” the source said.

According to the source, the decision to scale back T-Sat was based on its expected high price tag and developments with programs that would have relied on T-Sat: the Air Force-National Reconnaissance Office Space Radar program, which was killed early this year; and the U.S. Army’s Future Combat Systems, whose future is uncertain.

With new requirements, a new request for proposals will have to be issued prior to a prime contract award. Taking into account all of the steps the government must take, an award could take place as early as mid-2009, but experience suggests that late 2009 is more likely, the source said.

Boeing and Lockheed Martin, meanwhile, have not been officially notified by the Air Force of any changes to the T-Sat program.

“Boeing continues to work within the scope of the current Risk Reduction and System Definition contract for T-Sat,” Boeing spokesman Eric Warren said in an e-mail. “Boeing will continue to work with our Air Force customer as the acquisition proceeds, and we look forward to an award decision.”

“We are continuing our progress on our current T-Sat Risk Reduction and System Definition contract,” Lockheed Martin spokesman Steve Tatum said in an e-mail. “Our team, which includes Northrop Grumman, Juniper Networks, Inc. and ViaSat as well as suppliers across the country, has worked in partnership with our customer on system definition and has successfully demonstrated all the key technologies required for T-Sat.”