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Regulators OK Rocket Alliance

Lockheed and Boeing receive permission to form a partnership to handle satellite launches for the government.

October 04, 2006|From the Associated Press

WASHINGTON — The Federal Trade Commission said Tuesday that it had approved a joint venture between Lockheed Martin Corp. and Boeing Co. to launch satellites for the government, removing a final barrier to the long-delayed proposal.

Although the commission concluded that the $1.06-billion partnership between the nation's two largest defense firms could unfairly muscle out competitors, it said that concern was outweighed by the national security demands for a reliable and cheaper way to send military and other satellites into space.

The so-called United Launch Alliance, or ULA, was proposed in May 2005 to resolve a long-standing dispute between Lockheed and Boeing, then the two major suppliers of rockets for government launches.

It also came after Boeing was stripped of $1 billion in launch contracts and suspended for 20 months from launches by the Air Force after accusations that it used thousands of sensitive documents stolen from Lockheed to gain an edge in the bitter rivalry.

Boeing later agreed to pay $615 million to end a Justice Department probe of the case.

The FTC decision "brings the ULA closer to the goal of meeting the government's need for reliable, lower-cost launch services for national security, civil and scientific payloads," Boeing spokesman Dan Beck said.

Lockheed spokesman Tom Jurkowsky, calling the decision good news, said the two companies still needed to complete reams of legal documents before the deal closes.

ULA will be a 50-50 venture between the two companies, each providing a $530.7-million stake. The approval would clear the way for much of Boeing's Delta rocket operations based in Huntington Beach to be moved to Colorado, where the joint venture will be headquartered.

The venture is expected to save about $150 million annually.

The government already had few contractors to choose from. Bethesda, Md.-based Lockheed and Chicago-based Boeing are the only domestic suppliers of medium to heavy rockets. Century City-based Northrop Grumman is the only other major competitor in the domestic space launch vehicle business, according to the FTC.

The FTC set conditions on the deal, such as requiring ULA to not favor Lockheed and Boeing on issues such as who makes the satellites that are launched and other contracting issues. It also requires ULA to guard trade secrets closely.

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