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[Satellite TODAY 12-18-12] The Air Force is set to award manufacturer Lockheed Martin with a military contract to procure and build the final two satellites of the six-spacecraft Advanced Extremely High Frequency (AEHF) communications constellation by the end of 2012, the Pentagon and Lockheed Martin confirmed Dec. 18. According to U.S. Air Force estimates, the deal may be worth as much as $2.6 billion under a fixed-price structure that would require Lockheed Martin to share the cost of overruns or material failures.
Air Force Spokesman Capt. Nick Plante also confirmed that Lockheed Martin has already received about $489 million in advance payments to start buying and developing hardware for the AEHF satellites. The contracts for the previous four AEHF satellites were based on a cost-plus structure that required the Air Force to pay all of the expenses.
Two of the total six AEHF satellites are currently in orbit, providing transmission of tactical communications, real-time video, battlefield maps and targeting data. The AEHF satellite program’s overall mission is to allow secure communications among top commanders, including the U.S. president.
The Air Force’s cost estimates are based on comments that Air Force Space Command Gen. William Shelton made to the U.S. House Armed Services Committee earlier this year, which included that buying the fifth and sixth satellites separately would cost as much as $1.95 billion each. “Bought together, the price would be $1.55 billion apiece, for a savings of about $800 million,” Shelton said in a written statement.
Lockheed Martin said the new contract structure aims to produce cost reduction for the U.S. military compared with contracts for the previous four satellites. The company also said it now has a better understanding of the technical and schedule-based risks associated with the AEHF program, which made the transition from a cost-plus to a fixed- price contract possible.
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