Northrop Grumman [NOC] and Loral Space & Communications [LORL] will work together in seeking government satellite contracts, the companies announced recently.

Loral Space is a unit of Space Systems/Loral (SS/L), which will gain expanded satellite manufacturing capacity by using Northrop test facilities and services in Redondo Beach, Calif.

While the new cooperative effort would have sizable assets, it enters a market field already dominated by the two biggest defense contractors on the planet, Lockheed Martin [LMT] and Boeing [BA].

In the Northrop-SS/L deal, each company stands to gain something from the other.

While SS/L gains access to Northrop facilities, rather than SS/L having to lay out substantial capital to build them on its own, Northrop will be able to use the SS/L 1300 satellite and other SS/L components when Northrop bids on satellite contracts.

As well, payloads that Northrop designs and builds can be included on SS/L commercial satellites.

There also will be collaboration between the Northrop Astro Aerospace unit in Carpinteria, Calif., producer of AstroMesh reflectors, with SS/L for future commercial satellite applications.

“The agreement with Northrop Grumman will allow SS/L to cost-effectively add capacity to address increased near-term commercial satellite opportunities,” said Pat DeWitt, chief executive officer, Space Systems/Loral. The team arrangement will permit the two firms to pursue both defense and commercial satellite contracts, he said.

Alexis Livanos, corporate vice president and president of Northrop Space Technology, detailed a plus in the arrangement.

“For some of our mission areas, we believe that assured access to SS/L’s 1300 bus and bus subsystems would improve our cost and delivery schedule competitiveness. In addition, hosted payloads hold the promise of providing us greater ability and flexibility to rapidly respond to our government customers’ evolving needs.”

Northrop also has formed bonds with Israel Aerospace Industries (IAI) to expand satellites offerings.

For example, last April, Northrop and IAI teamed to build and launch operational surveillance satellites in a responsive production cycle to provide U.S. government users with all-weather, day/night imaging capabilities. The initiative is a rapid response, low-risk and affordable space-based radar imaging system designed for 24-hour surveillance in all weather conditions from a low Earth orbit.

The system is planned as an operationally responsive space initiative that can deliver critical new capabilities to users about 28 months after authorization to proceed.

That move to offer rapid satellite creation and orbiting came just a few months after China, in January last year, proved it can demolish U.S. military and commercial satellites in orbit. China used a ground-based interceptor missile to demolish one of its own aging weather satellites. Too, China has used a ground-based laser to “paint” and disable a U.S. military satellite.

U.S. leaders are seeking ways to replace, swiftly, any satellites that may be destroyed in anti-satellite, or ASAT, attacks.