Lockheed Martin [LMT] said this week it for the first time conducted an integrated test of the air and ballistic missile defense capabilities of the Aegis Combat System that was enabled by the development of a more powerful processor.

The company said the test validated the new multi-mission signal processor (MMSP) that effectively fuses the air defense and ballistic defense aspects of Aegis that will be installed on surface combatants as part of the baseline 9 upgrade.

“This test also marks the first time the Aegis system has used the multi-mission signal processor (MMSP) in a real-world environment where external aircraft are ‘jamming’ the system,” Lockheed Martin said.

The MMSP will be installed on Ticonderoga-class (CG-47) cruisers and Arleigh Burke-class (DDG-51) destroyers, the two classes of surface combatants that deploy Aegis.

Work began in April to bring the ninth baseline to USS Chancellorsville (CG-62), with modernization to begin later this year on USS John Paul Jones (DDG-53) and the USS Normandy (CG-60). The John Finn (DDG-113) will be the first ship to come out of production with the new capability.

The latest edition of Aegis will also be the cornerstone of the Obama administration’s plan to base a ballistic missile defense capability in Europe. The European Phased Adaptive Approach (EPAA) calls for the deployment of Aegis equipped ships to operate off the continent, but also includes a land-based component known as Aegis ashore.

Live fire testing of Aegis ashore at the Pacific Missile Range Facility in Hawaii is scheduled to begin in 2014 with the first deployment of the system to Romania set for 2015, Jeff Bantle, Lockheed Martin’s vice president for combat and missile defense systems, said in April.

Budget plans outline upgraded the fleet of cruisers and destroyers at a rate of two to three per year, Rear Adm. Jim Syring, the Navy’s program executive officer for integrated warfare systems, said earlier this year.

The Navy is in the middle of re-competing the Aegis Combat System within industry. Lockheed Martin has been the sole source contractor for Aegis, which has been in service for decades, since it acquired Martin Marietta in 1995.

Lockheed Martin, Raytheon [RTN] and Boeing [BA] submitted bids for the lucrative contract in December and the Navy is expected to announce the winner in October.