Lockheed Martin to Build NASA's Orion Spaceship
The Orion crew vehicle launches on board the Ares I launch vehicle in this artist rendering.
Credit: Lockheed Martin Corp.

This story was updated at 6:25 p.m. EDT.

WASHINGTON ?- NASA has selected Lockheed Martin as the prime contractor to design, develop and build the Orion Crew Exploration Vehicle (CEV), the planned replacement for the space shuttle that will become the backbone of the agency's human spaceflight program. Lockheed Martin beat out a rival bid from Northrop Grumman and Boeing to win a contract NASA said would be potentially worth $8.15 billion.

NASA made the long-awaited announcement Aug. 31, ending an intense competition whose roots go back to 2004, when U.S. President George W. Bush called for the development of a CEV to replace the space shuttle and eventually carry astronauts to the Moon.

"The competition was fierce and the proposals were strong," Doug Cooke, NASA deputy associate administrator for exploration systems, said during an Aug. 31 press conference announcing the selection. NASA Administrator Mike Griffin briefed industry CEOs on the decision at approximately 2:30 p.m. that day.

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Joanne Maguire, executive vice president of Lockheed Martin Space Systems Co. in Denver, said company employees were "humbled and excited" by the award. "Work already is under way and we are fully focused on the vital tasks that lie ahead to meet NASA's requirements for the program," she said in an Aug. 31 news release.

Lockheed Martin's stock, which opened the day at $81.85 a share and spent the morning trending downward, abruptly began rising just after 1:30 p.m. The stock closed at $82.60 a share, then rose in after-hours trading to $84.10.

Northrop Grumman's stock, meanwhile, had been climbing throughout the morning until just after 12:00 p.m., when the advance turned into a mild retreat. North Grumman opened at $66.84 and closed at $66.81, then dropped to $65.40 in after-hours trading.

"Clearly, Northrop Grumman is disappointed by today's announcement," Northrop Grumman spokesman Randy Belote said in an Aug. 31 telephone interview. "Orion is, however, merely the first of many significant space systems required to enable routine human space exploration beyond low Earth orbit. Northrop Grumman and its teammates are already helping NASA define the requirements for future elements and Northrop Grumman fully expects to play a significant role in the development and production of those systems."

NASA said in an Aug. 31 press release -- that went out even before the winner was announced during the press conference at agency headquarters -- that the initial contract is structured into separate schedules for design, development, testing and evaluation (DDT&E). The contract for the initial part of the project, known as Schedule A, is slated to start Sept. 8 and run through Sept. 7, 2013. Agency officials said that initial part of the contract would be worth $3.9 billion.

The contract also contains options for production of additional spacecraft and sustaining engineering.

If fully exercised, the options contained in Schedule B would be worth another $3.5 billion. The options for sustaining engineering contained in Schedule C could be worth as much as $750 million.

NASA said manufacturing and integration of the vehicle components will take place at contractor facilities across the country.

Lockheed Martin will perform the majority of the Orion vehicle engineering work at NASA's Johnson Space Center, Houston, and complete final assembly of the vehicle at the Kennedy Space Center, Fla. All 10 NASA centers will provide technical and engineering support to the project.

Lockheed Martin Space Systems announced earlier this year that if it won CEV, it would run the program from Houston, bringing 1,200 new jobs to the area.

Lockheed Martin has long dominated NASA's robotic planetary spacecraft business and now has the opportunity to do the same in human spaceflight.

Lockheed Martin's major Orion teammates include: United Space Alliance of Houston, the joint venture of Lockheed Martin and Boeing that operates the space shuttle; Orbital Sciences Corp. of Dulles, Va.; Honeywell Defense and Space Electronics Systems, Minneapolis; and Hamilton Sundstrand of Windsor Locks, Conn.

NASA said post-development spacecraft delivery orders could begin as early as Sept. 8, 2009, and run through Sept. 7, 2019, if all options are exercised. The agency said the estimated value of those orders will be negotiated based on future manifest requirements and knowledge gained through the DDT&E process.

Sustaining engineering work will be assigned through task orders. That work is expected to occur from Sept. 8, 2009, through Sept. 7, 2019.

"During DDT&E, NASA will use an end-item cost-plus-award-fee incentive contract. This makes the award fee subject to final determination after the contractor has demonstrated that it meets the technical, cost, and schedule requirements of the contract," the agency said in its release.

Orion will be capable of transporting four crew members for lunar missions and later supporting crew transfers for Mars missions, NASA said. Orion also will be able to carry up to six crew members to and from the international space station.

The first Orion launch with humans on board is planned for no later than 2014. A human Moon landing is expected to occur no later than 2020, the agency said.

Caras "Skip" Hatfield, NASA's Orion project manager, said that the current plan for the spacecraft's landing includes a primary land-based touchdown, with a water landing as a back-up option. But that decision is not finalized at this point, he said. "We're assessing and making sure that's the right answer," he said.

Hatfield said NASA is still determining what portions of the Orion spacecraft will be reusable, but noted that the heat shield that protects the vehicle during atmospheric re-entry will always be replaced after each flight.