Pentagon Pays $1.9 Billion For Two Satellites From Lockheed Martin

The Pentagon awarded Lockheed Martin Corp a $1.9 billion contract to build two new satellites for military communication.

According to Reuters, the new deal will extend Lockheed Martin’s contract until 2022.

Mark Calassa, vice president of Lockheed Martin’s Protected Communications mission area, said:

“As protected and resilient satellite communications become increasingly vital to global security, the AEHF program has developed into an indispensable element of the nation’s military space architecture.”

The $1.9 billion will be used to build two more satellites, the fifth and sixth of the program.

Calassa said that the first two satellites from the program are working exceptionally well and that Lockheed was working with the Air Force to reduce costs on additional satellites. One change in the new contract is that Lockheed agreed to a fixed-price, with an incentive fee, instead of a cost-plus contract. This allowed the government to minimize their financial risk.

Another term, according to the Chicago Tribune, will protect funding for satellites from automatic cuts if lawmakers do not avoid the fiscal cliff on January 1.

The new satellites will allow the White House and military bases to communicate in the event of a nuclear war. They will also provide basic communication for Canada, the Netherlands and the United Kingdom.

Bloomberg reports that the Defense Department also awarded Lockheed a preliminary contract worth approximately 3.6 billion to build 31 additional F-35 jets. The details of the contract will be hammered out in 2013.