GPS III Endures Bad Press

Reports in daily news media such as the Washington Post and Denver Post that “Lockheed Martin will lose its entire fee of about $70 million to defray an 18 percent cost overrun” on GPS III satellites misconstrue the facts.

Don Jewell, contributing editor for GPS World, said after informal talks with key Lockheed executives, “This is a good story, but it has been sensationalized.” Lockheed Martin’s fee is 5 percent of the target cost, which includes one-time engineering tasks, test equipment and satellite assembly, according to the Air Force.

The first GPS III satellite remains on schedule to be available for launch in 2014, Lockheed Martin spokesman Michael Friedman said via e-mail. “While we have encountered challenges associated with higher standards for parts testing and first-time technical issues, the program is on firm footing and our cost estimate remains within the original Air Force budget,” Friedman stated, adding that the company doesn’t discuss specifics of fees.

“In [Lockheed’s] defense,” Jewell reports, “the program was initially identified as stable with no government change request allowed, to keep it on schedule and budget. The recent budget furor has introduced chaos into the requirements process and contributed significantly to the increased costs.”

Lockheed Martin is using a full-sized prototype to identify and solve many assembly issues “that would have cost more and presented more risk if they had been discovered later in production,” Lockheed’s Friedman said.

“We have identified tens of millions of dollars in cost savings for the production satellites and in some cases we are seeing 50 to 80 percent reductions in labor costs,” he added.