Lockheed Missile-System Funds Are Withheld Until Program’s Fate Is Decided

MEADS

The Pentagon can’t spend more than 25 percent of the money it requested this fiscal year for a Lockheed Martin Corp. mobile missile defense system until it decides whether to terminate the $30 billion program, according to lawmakers.

The fiscal 2011 defense policy bill awaiting President Barack Obama’s signature directs the Pentagon to delay putting on contract $350.2 million of a requested $467 million for the Medium Extended Air Defense System, or Meads. Defense Secretary Robert Gates hasn’t made a final decision on whether the program will be canceled.

The system has grown in cost by about $1 billion and its overall schedule delayed an additional 18 months, according to the Senate Armed Services Committee in its version of the fiscal 2011 defense authorization bill, passed by Congress last month.

The U.S. contributes 58 percent of the funding for the seven-year-old Meads program, in partnership with Germany and Italy. It’s an anti-missile system designed to work within NATO’s command structure that uses the latest version of the Patriot developed by Lockheed Martin and Raytheon Co.

“Given the significant cost increases and schedule delays in the development program, there is considerable uncertainty in the future of the program,” House and Senate lawmakers wrote in their Joint Explanatory Statement posted online last week with the fiscal 2011 legislation.

Prudent Spending Needed

“It would not be prudent to spend fiscal year 2011 funds on a program unless the department decides to proceed in an fiscally sound manner in agreement with our allies,” said the statement.

Congress through June 30 has approved spending about $2 billion on the program of Patriot-3 missiles, launchers, radars and battle-management communications.

The program’s $4.2 billion development program is managed out of Orlando, Florida, under Meads International LLC, a joint venture of Lockheed, Lfk-Lenkflugkorpersysteme Gmbh of German and MBDA of Italy.

MBDA is the world’s second-largest missile maker. MBDA is jointly owned by BAE Systems Plc, European Aeronautic, Defence and Space Co. and Finmeccanica SpA. The military program office is in Huntsville, Alabama.

Lockheed Martin spokesman Craig Vanbebber said in an e- mail, “We recognize and appreciate the tough choices the secretary of defense and Congress must make.

‘‘We remain confident in the resolve of the three nations to complete Meads, which will support affordability and interoperability goals while also providing greater capability than’’ than the older systems it’s intended to replace, he said.

The program in August passed a Pentagon-sponsored design review and is scheduled for integration this year at the Army’s White Sands, New Mexico, missile range, Vanbebber said.

Lockheed Martin’s Missiles and Fire Control unit has scheduled a Wednesday media call to discuss the 2011 outlook for its weapons programs, including the Meads, Patriot-3, Terminal High Altitude Area Defense missile and Airborne Laser.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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