The Defense Department plans to hold an open competition to build the third generation of a medium-range missile defense system initially built for ship-based applications but now being altered for terrestrial deployment, the head of the department’s Missile Defense Agency (MDA) said yesterday.
The Aegis Ashore program, currently being derived by Lockheed Martin [LMT] from its destroyer-based system, is slated for initial deployment to Romania in 2015 and then Poland in 2018 under the Obama administration’s “phased-adaptive” approach to missile defense. The new land-based variant of the system is designed to be removable to support worldwide deployment, in Europe and beyond.
The company landed the contract through a sole-source arrangement with the agency because of the government’s urgency to field the system in short order, according to the agency’s chief.
“I approved a sole-source justification because of a need to deploy this system very quickly,” said Army Lt. Gen. Patrick O’Reilly. “Given where we are with the system, it made a lot of economic sense.”
However, O’Reilly said any such sole-source deal must be accompanied by a plan on how the government will compete a contract for a follow-on version of the technology. In the case of Aegis Ashore, the third follow-on contract for upgrades in 2020 would be decided in an open contest among multiple contractors.
“I will approve a sole-source deal only when we have a plan for competition going forward,” he said.
The general was speaking at a missile defense conference in Washington sponsored annually by the American Institute of Aeronautics and Astronautics.
Seeking to trim costs under Defense Secretary Robert Gates’ “efficiency initiative,” MDA is examining the possibility of opening $37 billion worth of contracts to industry competition. While the agency has been relying heavily on sole-source contracts for the past decade, O’Reilly said last year that the government is looking to compete and change many of those cost-plus deals to fixed-price arrangements.
O’Reilly has said his agency’s efforts to compete contract awards is “totally in line” with Gates’ fat-trimming exercise. For example, a follow-on $600 million competition for the Ground-Based Midcourse Defense (GMD) contract is forcing 10-year incumbent Boeing [BA] to battle against Lockheed Martin. And O’Reilly has said that the Standard Missile-3 Block IIB program and the Precision Tracking Space System (PTSS) satellite will also soon to be up for competition.
O’Reilly also said yesterday that another Lockheed Martin-built missile defense program, the Terminal High Altitude Area Defense (THAAD) system, will not be needed in an extended-range version. The agency last year conducted a business-case analysis on the next-generation system proposed by the company, and O’Reilly said the government has decided not to pursue the effort based on that study.
Further, the general said an extended-range THAAD would not provide the agency with the ability to expand the number of simultaneous shoot-downs possible with its missile defense architecture as a whole. As the Pentagon grows its architecture, one of the main goals is to add “multiple shot opportunities.” Specifically, O’Reilly said that by 2020 the agency wants the ability to “deal with fifty missiles in the air at once” under “seamless worldwide coverage.”
“That’s what it’s all about–how many chances do you have to intercept a missile in a joint architecture,” he said. “We are getting much more specific on which advanced technologies we need in order to achieve our objectives in each phase.”