* More budget cuts would delay satellite programs, add costs
* Lockheed warns against short-sighted decisions
* Company trying to contain cost growth on GPS III
By Andrea Shalal-Esa
COLORADO SPRINGS, Colorado, April 17 (Reuters) – The U.S.
Defense Department is unlikely to kill major military satellite
programs even if it is forced to double $487 billion in spending
cuts already planned for the next decade, but cuts and delays
are a sure bet, a senior Lockheed Martin Corp executive
said.
“There’ll be cuts and slips, and it’ll be painful and it’ll
be disruptive to the supply chain and it’ll ultimately cost the
government more,” Joanne Maguire, executive vice-president of
Lockheed Martin Space Systems, told Reuters in an interview at a
space conference in Colorado.
Maguire said military space programs were so essential to
national security needs that they would likely survive the $500
billion in cuts, if Congress is unable to find alternate
deficit-reducing measures.
She said it was clear that those cuts would affect mainly
procurement and development programs, but there was no “quick
fix” that would minimise their impact.
Lockheed and other major U.S. defense contractors are
scrambling to shore up their weapons programs and find alternate
sources of revenue given an expected decline in defense spending
after a decade of sharp growth.
Industry executives and top U.S. military officials have
warned that hundreds of thousands of jobs and many critical
national security needs are in jeopardy if sequestration –
automated cuts to defense programs – is not averted.
Companies are feeling the pinch of cuts already being
implemented, but Maguire said the Pentagon’s move to make block
buys of larger numbers of satellites, and intense cost-cutting
measures by companies were starting to pay off.
She also welcomed the Air Force’s new plan to procure
launches of its big satellites using a block-buy approach.
Lockheed is in a joint venture with Boeing Co to provide
those launch capabilities.
She said Lockheed had a stake in nearly every corner of the
national security space market, as well as programs in human and
robotic space exploration, commercial remote sensing, and
commercial communications satellites.
“The good news is that gives us a pretty solid foundation.
The bad news is that means that they’re all being scrutinized
and so there’s stress across the waterfront,” she said.
Maguire said she was worried that the Pentagon was investing
too much in programs such as hosted payloads – which send
government sensors into orbit on commercial satellites – and not
enough in upgrades to existing major satellite programs.
“I’d love to see them leaning forward a bit more … on
evolution of these platforms,” she told Reuters. “I don’t think
we should have any illusions that there’s are any magic bullets
out there.”
She warned that cost-cutting efforts could lead to
short-sighted decisions, especially at NASA, which has retired
its space shuttles and is now counting on Space Exploration
Technologies, known as SpaceX, and Orbital Sciences Corp
, to keep the International Space Station stocked with
supplies and science experiments.
“They’ve gotten themselves into a place where they’re really
overextended,” Maguire said, noting that NASA was relying on
commercial launches while trying to continue funding human
exploration of space and cutting-edge scientific work.
Lockheed’s satellite programs – which run the gamut from
missile warning, advanced communications, weather and global
positioning systems – had largely passed the “critical
crossroads to success”, she said.
Maguire acknowledged that Lockheed had lost $70 million in
incentive fees on the Global Positioning System III satellite
program because of cost increases of 18 percent, but said the
company was focused on containing cost growth and earning other
fees still available on the program.
She said cost growth on the program was largely due to the
unexpected cost of tougher parts-testing rules, but it was
better to hit those “speed bumps early” and manage them instead
of allowing them to cascade into major program delays.
In addition to its focus on cutting program costs, Lockheed
was also seeking additional foreign orders and hoped to bid for
more commercial satellite communications orders, after passing
up bids in the past, Maguire said.
“We’re trying to think more strategically about keeping that
product line robust,” she said.
(Reporting By Andrea Shalal-Esa; Editing by Chris Lewis)
