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December 26, 2012

AEHF Satellite Deal between Lockheed and U.S. Air Force Likely Won't Go Through in 2012

By Rory Lidstone, TMCnet Contributing Writer

It seems as though an outstanding multibillion dollar agreement between the U.S. Air Force and Lockheed Martin (News - Alert) Corp. is unlikely to close before year's end, according to top Air Force acquisition official Lieutenant General Charles Davis. The deal to purchase new military communications satellites is stuck in the negotiations phase.

Put simply by Davis, there is still "a little bit of work to go in negotiations," which will more than likely put off finalizing the deal until 2013. The goal is to establish a fair deal for both parties in the purchase of the Advanced Extremely High Frequency (AEHF) satellites, said Davis.

Air Force officials had apparently hoped to sign a fixed-price, incentive-free contract with Lockheead for its fifth and sixth AEHF satellites, for a savings of over 10 percent compared to earlier contracts, way back in the summer. But well into the winter, the two sides have been unable to reach a satisfactory agreement on the terms of the $2.6 billion contract.

According to Davis, even if satisfactory terms could be reached today, it's unlikely the deal would be closed in time for the new year as Pentagon officials must first sign off on the agreement.

Defense consultant Loren Thompson stated that the government is pressing "fairly aggressive contract terms," citing the absence of major new military threats.

"The contract will eventually get signed, but the government is going to play hardball on terms and conditions," added Thompson.

Lockheed Martin also handles commercial satellites, helping the Iridium NEXT constellation of global communications satellites complete a Critical Design Review in September, with the design ranking a "high level of maturity."

More recently, the company participated with Jet Propulsion Laboratory in de-orbiting two spacecraft onto the surface of the moon.

Other types of satellites currently in commission include astronomy satellites like the Hubble Space Telescope, atmospheric study satellites, navigation satellites such as Navstar and weather satellites like Meteosat.

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