Sun, Mar 17, 2002 - Page 11 News List

Lockheed competes against Raytheon for US$1bn contract

BLOOMBERG , WASHINGTON

Raytheon Co has won a chance to bid for an air-traffic control contract worth as much as US$1 billion that the Federal Aviation Administration once planned to give to Lockheed Martin Corp without competition.

"We are pleased the FAA has established a competitive acquisition," Raytheon spokeswoman Blanche Necessary said after the agency's announcement. "We do plan to submit a proposal."

Raytheon, the third-largest US defense contractor by sales, had protested the agency's decision a year ago to forgo bids for the contract.

Lockheed Martin, the largest US defense contractor, also plans to submit a proposal with a team of companies, including Computer Sciences Corp, Lockheed spokeswoman Judy Gan said.

The En Route Automation Modernization Program (ERAM) contract calls for improving the integration of software in the FAA's primary computer system. The computer is used in 20 air traffic-control centers that direct planes at high altitudes.

The FAA needs to have the upgrade in place by 2008 because the computer system it uses will no longer be compatible with other software the agency plans to use, the FAA has said.

The agency said a year ago it planned to give no-bid award to Lockheed because the company had years of experience with the project, which reduced the risk of technical, cost and scheduling problems.

The FAA reconsidered last June on the recommendation of a General Services Administration board judge and the aviation agency's Office of Dispute Resolution, which heard Raytheon's objections.

Companies now must submit initial plans by March 29, after which the agency will narrow the field to two competitors, agency spokeswoman Tammy Jones said. The two will submit initial designs by April 15 and compete for the final contract award in April 2003, Jones said.

Raytheon is known worldwide for developing the Patriot Missile Defense System which was first employed in the Gulf War. Taiwan has purchase the system to defend itself against a missile attack from China.

Raytheon shares rose US$1.35 to US$41 on Friday. Lockheed shares rose US$0.50 to US$57.81.

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