Martin Marietta Corp. has won government approval to begin work on a top-secret spy satellite program valued at more than $5 billion, according to industry sources.
The go-ahead from the General Accounting Office ends an 18-month tug-of-war between the Bethesda-based aerospace giant and TRW Inc., the Cleveland company that was originally awarded the lucrative contract last year to produce the next generation of spy satellites.
The government reversed its decision in late July after Martin Marietta filed a protest challenging the award. Martin Marietta and Lockheed Corp., another company vying for the pact, both argued that the government's bidding process was flawed.
They said it did not include a call for "best and final offers," which are normally a part of military contracts.
TRW filed its own protest with the GAO, the investigative arm of Congress, in August, challenging the award to Martin Marietta.
Lockheed, which is currently involved in a plan to merge with Martin Marietta to form the nation's largest defense contracting company, eventually dropped its protest.
Officials of both Martin Marietta and TRW were tight-lipped yesterday when asked about the highly classified spy satellite contract that is a part of the Pentagon's "black program."
"I can neither confirm nor deny the existence of the program," said Charles P. Manor, a spokesman for Martin Marietta at its corporate headquarters.
Brooks McKinney, a spokesman for TRW's space and electronics division in Redondo, Calif., said, "My only comment is that I can't confirm or deny the contract exists."
Government sources have estimated that the contract will be worth at least $2 billion to Martin Marietta initially, and more than $5 billion over its life.
The award also will safeguard thousands of jobs at Martin Marietta. It would also impact employment at Lockheed,
assuming that the government approves the proposed merger of the two defense and aerospace companies.
Paul H. Nisbit, president of JSA Research in Newport, R.I., which follows the aerospace industry, said it is difficult to evaluate the full impact of the contract on Martin Marietta because of the secrecy surrounding it.
"But," he added, "Martin has had a lot of business in that area in the past, and this will insure that it continues. My guess is that it represents between five and 10 percent of Martin's Marietta's total sales. It would be about the same for a combined Lockheed/Martin Marietta.
"It's a significant amount of business that they would very much like to have," Mr. Nisbit said, "but it's not an area where the company would sink or swim depending upon whether or not it won the contract."
Martin Marietta's space operations are in Denver, East Windsor, N.J., and Valley Forge, Pa.
Martin Marietta greatly expanded its operations in the satellite production industry last year when it acquired General Electric Corp.'s aerospace division for $3.05 billion. The proposed $10 billion merger of Lockheed and Martin Marietta has the Federal Trade Commission taking a new look at competition in the satellite production industry.