Lockheed Martin Challenges Contract to Raytheon

Lockheed Martin Corp (NYSE:LMT) on Wednesday said it had filed a formal protest with the U.S. Government Accountability Office (GAO) challenging the Air Force's decision to pick Raytheon Co (NYSE:RTN) to develop a new long-range radar.

"We believe that we offered the most affordable and capable solution for the program and have strong grounds for this protest," said Lockheed spokeswoman Rashi Ratan.

Lockheed's move follows a similar protest filed on Tuesday by Northrop Grumman Corp.

Chuck Young, spokesman for the GAO, the congressional arm that reviews federal contract issues, confirmed that Lockheed's protest had been received and said a decision was due no later than Jan. 30. The Northrop case requires a ruling by Jan. 29.

Lockheed officials declined to comment further on the case.

Raytheon earlier this month beat out Northrop and Lockheed to develop a replacement for the Air Force's current TPS-75 radar, which has been in service since the late 1960s.

The value of the Three Dimensional Expeditionary Long-Range Radar (3DELRR) contract is limited now, but could rise sharply in coming years, given the Air Force's plan to buy 30 of the new systems in coming years, plus orders from foreign militaries.

The Air Force issued a stop-work order to Raytheon on Tuesday after Northrop filed its protest.

Loren Thompson, chief operating officer of the Virginia-based Lexington Institute, said GAO would focus on the process the Air Force followed in deciding the competition, not the merits of the competing radar systems.

The GAO will be looking at issues such as whether the competing companies were treated equally and whether "the selection criteria were applied fairly," he said.

Elizabeth Kent, a senior Air Force contracting officer, told Reuters earlier this month that the award was based on a careful assessment of the technical characteristics of the radar and the risks involved, with an eye to making the procurement decision less subjective.

She said the Raytheon proposal beat out the rival bids because it was "technically acceptable with the lowest price."

(Reporting by Andrea Shalal; Editing by Bill Trott and Tom Brown)