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12 May 03. The U.S. Air Force said on Monday it plans to award this week a contract worth about $250m to a team led by Northrop Grumman Corp. (NYSE:NOC – News) for development of the next-generation E-10A reconnaissance plane.

Northrop will be the prime contractor for the weapons systems contract due to be awarded on Wednesday, responsible for system engineering, design and integration.

Northrop, Boeing Co. (NYSE:BA – News) of Chicago, and Raytheon Co.(NYSE:RTN – News) of Lexington, Massachusetts, said on Monday they had signed a teaming agreement to develop the E-10A, which will give the Air Force enhanced surveillance and cruise missile defense capability. Among Boeing’s responsibilities are major structural modification design, while Raytheon’s duties include radar and radome installation, the companies said.

Bobby Smart, deputy director of the Air Force acquisition directorate’s information dominance programs, said the E-10A Multi-sensor Command and Control Aircraft (MC2A) program could reach a value of over $1 billion in coming years, depending on how many of the new aircraft are eventually built.

No other industry team competed for this contract, which covers weapon systems integration for the E-10A.

“The MC2A fills a gap for a capability we do not currently have,” Smart said, noting that the new reconnaissance aircraft would be able to detect cruise missiles from the air.

The Air Force, which saw the program’s budget cut by half in fiscal year 2003, said it plans to have five of the E-10A planes operational by 2013, a year later than first planned. Smart said intelligence officials are predicting they will need as many as eight of the aircraft, a modified Boeing 767 that is expected to form the “hub” of the intelligence and communications aircraft the military uses in future wars.

Three industry teams led by Lockheed Martin Corp. (NYSE:LMT – News), Boeing and Northrop are competing for a second E-10A contract, expected to be valued at around $500m, which will cover the battle management system for the E-10A aircraft.

Air Force Maj. Henry Cyr said the Air Force expected to narrow the field of competitors this fall, with a final contract award expected in February 2004. Northrop and Raytheon have already been awarded another contract to build the next-generation sensors that will be used aboard the E-10A.

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