The Department of Defense is still reviewing Lockheed Martin and Boeing’s proposed rocket-launch joint venture, several weeks after the companies had initially hoped to close the deal, according to a senior Pentagon official.
The review is “a very active piece of work between us and the FTC,” said Kenneth Krieg, the undersecretary for acquisition, technology and logistics.
The venture requires approval from the Federal Trade Commission. The FTC asked for an opinion from the Defense Department since the military would be the principal customer for the joint venture, Krieg said during a press briefing Friday in Washington.
Lockheed and Boeing had hoped to win regulatory approval for the venture, announced in May, by the end of 2005.
Citing senior military officials, defense analyst Loren Thompson said today that the Pentagon has given preliminary approval to the alliance, and is working to resolve concerns raised by Northrop Grumman.
Northrop is worried that the joint venture would hurt its satellite business. Northrop competes against both Boeing and Lockheed in the manufacturing of satellites.
“The government says that it must have two separate families of rockets so that if one fails, the nation can still get into space,” said Thompson, an analyst with Lexington Institute in Arlington, Va. “If it’s going to meet that goal, it’s going to have to come up with some sort of special arrangement (for Lockheed and Boeing).
Thompson said the Defense Department is less concerned about issues raised by Space Exploration Technologies. The start-up rocket launch company said the joint venture would create a monopoly and hinder its ability to grow.
In response to a statement on Friday that the venture would create a monopoly, Krieg said that he has desire for competition, “but it’s got to be competition for which there is real competition.”
Lockheed and Boeing are proposing to combine their government rocket launch operations to cut costs. The joint venture, dubbed United Launch Alliance, would bring roughly 800 jobs to the state. It would be based at Lockheed’s Waterton Canyon plant in Jefferson County.
If the venture isn’t approved, either Boeing or Lockheed could be forced to shutter their rocket-launch business because of weaker-than-expected demand for commercial satellite launches, Thompson said.
“There just aren’t enough buyers out there to keep two families of rockets going,” Thompson said.
Marco Caceres, an aerospace analyst with Fairfax, Va.-based market research firm Teal Group, said Boeing would be more vulnerable because its commercial business is weaker than Lockheed’s.
But Caceres said he expects regulators to ultimately approve the alliance because Lockheed and Boeing’s launch vehicles “are too important to the national security of this country.”
Staff writer Andy Vuong can be reached at 303-820-1209 or avuong@denverpost.com.