Pentagon to pay for Boeing, Lockheed satellite plan

The Pentagon will pay Lockheed Martin Corp. and Boeing Co. most of the cost they incurred in creating a joint venture to launch U.S. military satellites.

Their company, Denver, Colorado-based United Launch Alliance, will get as much as $159.7 million of about $207 million in consolidation costs, said Pentagon and company officials. The rest will be paid by other U.S. government customers such as NASA, private customers and United Launch.

The Pentagon can't reimburse contractors for restructuring costs unless the projected savings are at least twice the cost of the merger. The Pentagon's Defense Contract Management Agency said this merger qualified, and John Young, the military's top weapons buyer, approved it last month, said Chris Isleib, Young's spokesman.

United Launch spokeswoman Julie Andrews, in an e-mailed statement, said, "We are confident the total savings will be more than $600 million."

Bethesda, Maryland-based Lockheed and Chicago-based Boeing, faced with a lagging commercial satellite market and an uncertain military schedule for satellite launches, combined their government rocket launching businesses in December 2006.

The joint venture of the world's two largest defense contractors provides Delta family and Atlas V booster rockets for Air Force, NASA and National Reconnaissance Office satellites.

The new company has launched 26 military and National Aeronautics and Space Administration satellites since it began operation, the most recent April 3 on an Atlas V from Cape Canaveral, Florida.