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Boeing, Lockheed Martin to form joint venture to build U.S. military rockets


May 02, 2005 5:55 PM EDT
WASHINGTON - Two of the country's largest defense contractors, Boeing Co. and Lockheed Martin Corp., said Monday they have agreed to create a joint venture to produce rockets for the U.S. military.

If implemented, the surprise agreement would end a bitter rivalry and set the stage for the two aerospace giants to drop pending litigation involving the rocket business.

The joint venture, to be named United Launch Alliance, would be the sole provider of rocket launches for the U.S. Air Force, NASA and other government agencies.

Two months ago, the Air Force lifted a 20-month ban that kept Boeing from bidding on satellite launch contracts. The service said the Illinois-based company had corrected problems that led to accusations that it stole information from Lockheed Martin in 1998.

Boeing was suspended in 2003 and stripped of around $1 billion (euro780 million) in launch contracts after it was found in possession of thousands of sensitive documents that belonged to Lockheed.

A Boeing spokesman said the two companies can put past disputes behind them.

"Well, we think we can come together as a team," said Dan Beck, a Boeing spokesman. "These are consummate professionals in the rocket-launch business. We recognize that if we are going to meet the needs of government customers in the most cost-effective, reliable manner this is a step that needed to be taken."

Robert J. Stevens, Lockheed's chairman, president and chief executive officer, agreed.

"This combination will permit our national customers to achieve their mission objectives while reflecting current budget pressures and providing the government with full cost visibility," he said in a prepared statement.

Both companies have developed versions of the so-called Evolved Expendable Launch Vehicle in collaboration with the Air Force and have flown them successfully. The EELV is the Air Force's main system of putting satellites into orbit.

The deal would need approval of government regulatory agencies, including the Federal Trade Commission.

In a joint news release, the companies said United Launch Alliance would be based in Denver, Colorado, structured as a 50-50 venture. The new business would combine services currently provided separately by Boeing's integrated defense division and Lockheed's space systems company for launches of each company's rockets, Boeing's Delta and Lockheed's Atlas.

The companies said the joint venture would result in annual savings to the government of about $100 million (euro77.7 million) to $150 million (euro116.6 million).

Maj. Karen Finn, an Air Force spokeswoman, said the service supports efficient and innovative access to space.

"Providing reliable space launch for national security space at reduced cost to the nation is also critical," Finn said.

Under terms of the joint venture, the Delta and Atlas rockets would continue to be available as alternatives on individual launch missions.

Completion of the transaction could come by the end of 2005, he said.

Copyright 2005 Associated Press.