Thursday April 30 7:32 AM EDT

Pentagon to award missile-defense contract

By Charles Aldinger

WASHINGTON (Reuters) - The Defense Department will announce Thursday the initial winner in a multibillion dollar aerospace industry battle to develop a space-age system to defend the United States against ballistic missile attack.

Boeing Co. is competing against a team headed by Lockheed Martin Corp. to design and perhaps one day deploy such a system. The initial contract is expected to be worth $1.5 billion over three years.

But the winner will grab the lead in an ambitious National Missile Defense (NMD) plan, pushed by Congress, that could be worth $10 billion in the next decade, including a separate competition to build a rocket-fired weapon to hit missile warheads in flight.

Lockheed, teamed with Raytheon Co. and TRW the United Missile Defense Co., is competing with Boeing to integrate weapons, radars and communications for NMD, which many experts say cannot be made foolproof against nuclear or other missile attack.

Indeed, the initial contract for design and integration of the system may never get past the development stage if the military and aerospace firms cannot build a weapon to shatter warheads that approach with eye-blink speed in space.

"There is no room for error. This thing has to work the first time (against an attack) or it's worth nothing at all," said John Pike, a skeptical analyst with the private Federation of American Scientists in Washington.

The idea, which grew from former President Ronald Reagan's more ambitious "Star Wars" program to protect U.S. cities from a massive Soviet nuclear attack, is now aimed at stopping a smaller attack or accidental launch by another country against the United States.

The United States has spent about $50 billion with little success on nuclear missile defense since Reagan suggested his plan more than a decade ago.

The U.S. military is also currently trying to develop an even more limited Theater Missile Defense (TMD) program to protect troops and bases from missile attack around the world.

But that program has suffered four successive failures by Lockheed Martin's proposed anti-missile weapon because of technical and other glitches.

The firms involved in the national defense program are betting with high stakes that they can solve major technical problems because the monetary rewards will be major.

Boeing and Raytheon are involved in a separate competition to develop an anti-missile weapon that could be fired using a ground-based rocket to hit warheads in space. That weapon, dubbed the "exo-atmospheric kill vehicle" (EKV), is still in the early stages of development.

The Clinton administration is moving carefully on a national missile defense program despite heavy pressure from Congress, which wants to deploy a system as quickly as possible.

The White House and Pentagon have promised to devote three years to development of NMD. They say that if it works, a decision could be made in 2000 or 2001 to deploy the defense within another three years.

But Pike and others say the odds are high against a foolproof system. They include a Pentagon panel of experts who recently said that the military and aerospace firms were pressing ahead too quickly with poorly-tested technology.

Aside from an anti-missile weapon itself, analysts say that coordinating radars and sensors to identify, track and discern actual warheads from "dummy" decoys in space is an extremely difficult task.

"The Lockheed weapon certainly has not been marred by success," Pike said in an interview with Reuters Wednesday.

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