Lockheed Martin Corp., the world's largest defense company, won a $3.9 billion NASA contract to build a spacecraft that will return U.S. astronauts to the moon, beating a Northrop Grumman Corp.-led team.
The win, announced by NASA yesterday at a Washington press conference, gives Bethesda, Maryland-based Lockheed its first lead role in U.S. manned space flight. The decision is a setback for Los Angeles-based Northrop, which had been given the edge by some analysts because of its longer history on manned space programs.
"Northrop wanted to be the prime contractor in manned space so this is a blow for them," said Robert Stallard, a New York- based analyst with Banc of America Securities. "It does put Lockheed's space franchise in the driver's seat for the next couple decades. Lockheed has done pretty well." He rates both stocks "neutral" and doesn't own any.
The new craft, called Orion, is the centerpiece of the National Aeronautics and Space Administration's $122 billion effort to return to the moon as early as 2018. The contract is valued at about $3.9 billion through September 2013 for two craft and the total may reach $8.15 billion by 2019 if more are ordered, NASA said.
Lockheed's team includes navigation and guidance-systems maker Honeywell International Inc.; booster-rocket maker Orbital Sciences Corp. and the Hamilton Sundstrand unit of United Technologies Corp., which makes space suits, life support and power management systems.
Lockheed will "definitely" achieve first manned spaceflight by 2013, a year ahead of schedule, said John Karas, Lockheed's vice president of space exploration.
Shares of Lockheed rose $1.55 to $84.15 in extended trading after the announcement. They closed at $82.60 in New York Stock Exchange composite trading.
Before yesterday's win, Lockheed's primary experience with manned space flight was a joint venture with Boeing Co. which helps maintain the space shuttle fleet. Lockheed also is the maker of Atlas rockets and the unmanned Viking Mars lander.
Northrop worked with Boeing on a bid for the Orion project, making that team the favorite to win the contract, five analysts surveyed by Bloomberg News said before the announcement. Northrop and Chicago-based Boeing have dominated manned space flight since the 1960s. Boeing made the space shuttle and much of the Apollo Saturn V rocket. Northrop made the first lunar module used 37 years ago to put the first man on the moon.
"We thought that Northrop and Boeing were in a better position to win this," Paul Nisbet, a Newport, Rhode Island- based analyst with JSA Research Inc., said in an interview. "It was a good one for Lockheed."
Doug Cooke, the NASA official in charge of making the selection, said at the press conference he couldn't provide exact details on the difference between the bids because the teams haven't been briefed yet.
"The competition was fierce and both proposals were strong," Mr. Cooke said.
Northrop's earlier experience may not pertain to the new craft, said Scott Horowitz, NASA's associate administrator for the exploration systems mission directorate.
"It's been 30 years since anyone built a human rated spacecraft," he said. "This is a new generation of engineers."
Northrop is "clearly disappointed" by the decision, spokesman Brooks McKinney said. The company still sees a role for itself in the manned space program, he said.
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