Army Terminates ACS Development Contract with Lockheed

March 23, 2006

The U.S. Army is terminating the $879M Lockheed Martin System Design and Development (SDD) contract for the Aerial Common Sensor (ACS).

"After carefully evaluating Lockheed's proposals, we decided that the prudent course of action at this time was to terminate the contract and bring the various players - industry, the acquisition and user communities, the Navy and Air Force - back to the drawing board to make sure we all have a firm understanding of what the requirements are and the various challenges we need to overcome to make this program succeed, " said Assistant Secretary of the Army for Acquisition Logistics and Technology Claude M. Bolton.

"We are not terminating the program," said Bolton. "The Army remains committed to building and fielding the next-generation reconnaissance aircraft for the war fighter."

The Army issued a stop-work order to Lockheed last September and gave them 60 days to propose options to resolve the program's execution issues while minimizing cost and schedule impacts.

As part of the program, Lockheed Martin originally proposed using the Embraer 145 airframe to carry the ACS electronics, but design engineering determined the aircraft was too small to carry the electronics load. Last year, Lockheed Martin recommended a switch from the Embraer jet to the larger Bombardier Global Express business jet.

The aircraft was an integral part of the overall program and a discriminator in the original contract competition. Since the Army better understood the system's requirements, it decided to terminate.

"After evaluating all of the alternatives including those proposed by Lockheed Martin, we found that we could not provide the value that the taxpayers and our war fighters would expect under the existing contract," said Lt. Col. Steven Drake, product manager for ACS.

The ACS contract was awarded in 2004 with an anticipated period of performance of fiscal years 2005 thru 2010. During that period, the Army planned to procure five aircraft, with the U.S. Navy purchasing two Research, Development, Test and Evaluation (RDT&E) aircraft.

The Army is the lead service for the joint service ACS, which was initiated in 2000. ACS capabilities remain a requirement for the Army and the Navy, but the current program is not meeting critical operational performance goals and cost and schedule constraints.

The ACS is planned to replace the Army's Guardrail Common Sensor and Airborne Reconnaissance Low (ARL) and the Navy's EP-3E Aries currently in use.

Source: U.S. Army Garrison Fort Monmouth.