Lockheed-Northrop Alliance Looks to Shake Up Military SATCOM Market

Pentagon procurement failures can be turned into business opportunities.
Such is the logic that led Defense Department contractors Northrop Grumman and Lockheed Martin to join forces in pursuit of the multibillion-dollar market for mobile satellite communications terminals. A third partner, TeleCommunication Systems Inc., later joined the team.
Mobile SATCOM systems are coveted items in combat, but always in short supply, especially encrypted terminals that are used to send and receive classified data. The ones that are currently available are too expensive for the Pentagon to afford in large numbers.
Executives from the three firms unveiled two new SATCOM terminals Sept. 26 at a news conference in Washington, D.C. One is the “protected communications on the move,” or P-COTM; and the other is a “protected SIPR/NIPR access point,” or P-SNAP.
Officials would not disclose how much the companies invested in this venture. But they promised they will cost a fraction of what the military pays today for comparable products.
The shortage of SATCOM systems has been a perpetual complaint heard from military commanders during the wars of the past decade, as troops demanded more capacity not just for voice communications but also to share imagery and video.
The Pentagon put significant efforts into building and launching new satellites, such as the Air Force’s Advanced Extremely High Frequency (AEHF) constellation, for secure communications. But there are not nearly enough terminals available to take advantage of the expanded capacity that these satellites provide, said John Miyamoto, vice president of advanced programs at Lockheed Martin’s military space business. The company is the AEHF program’s prime contractor.
One of the Pentagon’s most ambitious procurements of new terminals, the FAB-T, or family of advanced beyond line-of-sight, started in 2002 and has only produced246 prototypes at a cost of $14 million to $19 million a piece, according to the Government Accountability Office. In January, the Air Force informed Boeing that it intended to terminate FAB-T.Boeing counter offered with a firm fixed price “letter of commitment” to the Air Force to complete development of FAB-T and start production.
A growing unhappiness with SATCOM terminal programs that were becoming white elephants prompted Lockheed and Northrop officials in 2008 to strike up an alliance, and pool their corporate R&D dollars to build a system that would be “affordable.” Two years later, TCS was asked to join the team because of its incumbent role as the Army’s supplier of SNAP (SIPR/NIPR access point) terminals.
Michael Bristol, senior vice president and general manager of TCS, said the P-SNAP and P-COTM terminals should be available in the near future, assuming a favorable outcome of upcoming tests and National Security Agency certification, which can take up to a year.
He said the cost would be about one-tenth of what the Army currently pays for the Secure Mobile Anti-Jam Reliable Tactical Terminal (SMART-T), made by The Raytheon Co.
“The price point has the potential to drop much lower, potentially down to the $350,000 range, as the quantity of terminals procured increases,” TCS spokeswoman Meredith Allen told National Defense. 
Fred Ricker, vice president and deputy general manager of advanced products at Northrop Grumman, said the new terminals are not intended to displace existing “programs of record,” but added that if the Defense Department wants to “have a competition, we’re ready.” He said there is potentially a market for "several thousand" new terminals across the U.S. military.
The P-SNAP and P-CTOM would enter a market that is dominated by major players such as Boeing, Raytheon, L-3 and Harris Corp.
Raytheon makes the SMART-T and also the Navy multiband SATCOM terminal.
“We never had FAB-T in our sights when we started this project,” Ricker said. “But we saw an unsatisfied demand for tactical communications.”
Before pouring lots of money into the project, Lockheed and Northrop executives asked military officials to clearly explain what they needed, Ricker said. “Working with the government was important to understand requirements,” he said.
Miyamoto said the shortage of secure SATCOM systems was not just caused by FAB-T delays. The 2009 cancellation of the Transformational Satellite program also left unmet demands for mobile battlefield communications, he said.
Retired Navy Vice Adm. Lyle G. Bien, former deputy chief of U.S. Space Command, said there is ample manufacturing capacity in U.S. industry to make plenty of terminals, but their price tags are too high.
The misalignment between satellite capacity and users’ ability to access it has been a chronic malady in the military space business, Bien said. “There is a long history of the government having satellites on orbit but the war fighter can’t access them because of insufficient numbers of terminals,” he said. One of the reasons is that satellite and terminal programs are overseen by separate chains of command, usually by different services.
Bien said there is precedent for ventures such as the Northrop/Lockheed/TCS satellite communications terminal to succeed in the military market, despite the current budget crunch.
Troubled procurement programs such as the Joint Tactical Radio System are a case in point, he said. Harris Corp. funded the development of a military wideband radio, the AN/PRC-117G, which was ready to jump into the market when the JTRS variant was terminated due to cost overruns and delays. “When JTRS folded, suddenly this company-funded radio was being sold in large numbers,” Bien said. “Harris saved the government from themselves [because] it had a terminal that the government wasn’t capable of producing,” he said. “We are hoping for the same results here.”
Photo Credit: Northrop Grumman

Topics: Business Trends, Business Development, Doing Business with the Government, Space