The Air Force has awarded Assurance Technologies and Lockheed Martin [LMT] each a $29 million contract for technology demonstration on the Self-Awareness Space Situational Awareness (SASSA) program, the Defense Department said.

Under the terms of the two-year deal, each company will develop a technology demonstration payload for tactical space situational awareness. The surveillance system would increase awareness of threats to U.S. satellites and demonstrate the capability to control and manage up to eight operational instruments, according to the award announcement.

Boeing [BA] had also bid on the contract.

The Air Force initiated the program last year after “recognizing an emerging need to protect vital defense satellite systems that ensure national security,” according to a Pentagon announcement released on Friday.

China’s January 2007 anti-satellite test apparently prompted an increase in the Air Force’s space situational awareness (SSA) spending request this year.

“Joint Functional Component Command for Space was certainly spurred to action by the Chinese ASAT, which revealed some significant capabilities gaps,” an Air Force official who spoke on condition of anonymity said yesterday. “There’s been enough concern that these programs are now getting a lot more attention.”

“It’s all about having good detection capability, especially if it’s something that’s threatening our spacecraft,” the official added.

SSA received a total of $240 million for research, development, test, and evaluation activities, as well as procurement–which amounts to more than half of the total Air Force space funding in this budget cycle, the official said. Counterspace received $104 million, while space control technology received $77 million.

According to budget documents, the largest chunk for SSA programs, $121 million, went toward the Space Based Space Surveillance Block 10 satellite, part of a future constellation expected to improve detection and tracking of objects in space. SBSS, built by Boeing, is scheduled to go into orbit next year, the official said.

About $60 million of the space control funds went to the SASSA technology demonstration.

Specifically, the demonstration entails threat-warning sensors that detect attacks, locate attackers and relay data to ground stations, according to Air Force documents describing the project. Simply put, according to the Air Force official, the service wants “smart” satellites that can provide information about an attacker’s identity.

SASSA does not entail any countermeasures or new types of defenses, according to documents, and the sensor package will be modular. In other words, different sensors will be placed on satellites, depending on their specific mission.

The Air Force official said SASSA will be “revolutionary.”

“Today, what you have is a lot of telescopes and radars on the ground,” the official explained. “We use those just to keep track of debris and ‘space junk’ and other satellites. Now we’re interesting in data about attacks and potential attacks on our satellites.”

Air Force documents describe SASSA as having the ability to provide “indications and warning of attack,” identify the source of attacks and perform “battle-damage assessment” on enemy satellites