Pentagon Eliminates Lockheed Martin From $85 Billion Missile Program
August 21 2017 - 7:13PM
Dow Jones News
By Doug Cameron
The Pentagon on Monday eliminated Lockheed Martin Corp. from an
$85 billion competition to update the nation's land-based
intercontinental ballistic nuclear missiles, one of the most
fiercely contested defense contracts this decade.
Lockheed said it was "disappointed" to be cut out of the running
to lead the Ground-Based Strategic Deterrent program, replacing 400
aging Minuteman III missiles deployed in silos across the Great
Plains.
The Pentagon's decision leaves Boeing Co. and Northrop Grumman
Corp. to vie for this piece of the three-pronged, $500 billion
update of the U.S. nuclear arsenal that has won backing from
President Donald Trump. The final contract, expected in 2020, could
bring the winning corporation business for 50 years.
The Pentagon doesn't immediately disclose its reasoning in such
contract awards but will brief the companies in the coming days.
Lockheed could appeal and dispute its exclusion. The company didn't
say whether it would do so.
Officials at all three companies have in recent months expressed
concerns that the Pentagon could choose the cheapest offering
rather than the one with the best technical merits. The Pentagon
several years ago introduced a system of awarding some contracts on
a so-called lowest price, technically acceptable basis that drew
widespread criticism from some companies that said rivals
deliberately underbid for deals. The Defense Department was then
left to pick up additional costs.
The department has since changed some of its buying practices,
focusing instead on securing "best value" as well as affordability.
Lawmakers are weighing reforms to the acquisition system.
The new missiles are part of a nuclear arsenal overhaul that
also includes a long-range bomber being built by Northrop Grumman
and new nuclear submarines now under construction by General
Dynamics Corp.
A joint bid by Boeing and Lockheed for the bomber deal lost to
Northrop's cheaper offering. Boeing has undertaken steps to improve
its competitiveness in securing big Pentagon deals, cutting
management layers and eliminating costs.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
August 21, 2017 19:58 ET (23:58 GMT)
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