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Boeing loses

option on $1.3 bn

satellite contract

LOS ANGELES: The Boeing Co. lost options to complete a 1.3 billion dollars project to build 33 global positioning satellites for the Air Force in a decision that could cost the company hundreds of millions of dollars.

Boeing will be allowed to build as many as 12 of the satellites, but others will be put out for competitive bidding, the Air Force said in a statement on Friday.

Under the terms of the 1997 deal, the Air Force agreed to buy six satellites from Boeing and held options for another 27.

The satellite system is used for navigation by military aircraft, ships, land forces and smart weapons. Signals from the satellites also are used by civilians to determine location.

The Air Force decided to re-bid the contract because of a need to update the satellites with new technologies that have emerged since Boeing was hired to do the work, according to a statement released through the Space and Missile Systems Centre at Los Angeles Air Force Base.

Those new technologies would include the capability to override enemy jamming signals.

"We're not trying to save money, we're just trying to make sure the most advanced method for global positioning is utilised," said Lt. Colleen Lehne, a spokeswoman for the centre.

Boeing is expected to bid on the project again, along with Lockheed Martin and Loral Space and Communications.ÑAP