December 12, 2015 / 5:29 AM / in 3 years

UPDATE 4-Pentagon OKs next step in competition for Air Force spy planes

(Adds comment from companies)

By Andrea Shalal

WASHINGTON, Dec 11 (Reuters) - The Pentagon’s chief arms buyer has approved the next step in a long-awaited multibillion-dollar competition to replace the Air Force’s aging fleet of E-8 JSTARS spy and battle management planes.

Frank Kendall, undersecretary for acquisition, technology and logistics, this week signed a memorandum approving the start of the so-called Milestone A phase of the program, Pentagon spokeswoman Maureen Schumann said on Friday. That paves the way for funding of demonstrations of the new aircraft, said two sources familiar with the decision.

Three teams are competing for the work: Northrop Grumman Corp, which built the existing planes and is teaming with General Dynamics Corp ; Lockheed Martin Corp, which is working with Raytheon Co and Canada’s Bombardier ; and Boeing Co.

Additional details about the memorandum were not immediately available, but a source familiar with the decision said the Pentagon’s fiscal 2017 budget request would include funding for the program.

Representative Tom Graves, a Georgia Republican, welcomed the news, calling it a “significant step” toward replacing the aging fleet with next-generation aircraft.

“I am confident that the Defense Department understands JSTARS is a major priority for Congress and will complete the process of updating the JSTARS fleet in a timely manner,” Graves said.

Lockheed said it looked forward to helping assess the technical maturity of various subsystems, reducing risks involved with weapon system engineering and working to lower the cost of operating the new aircraft.

Boeing said it was ready to demonstrate its capabilities and was convinced that its 737-based solution was the “right-sized aircraft.”

Northrop declined comment.

The source familiar with the decision, who was not authorized to speak publicly, said the Pentagon had reviewed alternatives and ruled out the possibility of using unmanned aircraft.

Kendall met this week with Graves and other U.S. lawmakers, who have pressed the Pentagon to accelerate work on a replacement for its fleet of Joint Surveillance Target Attack Radar System aircraft, or JSTARS, which has flown over 100,000 combat hours and is approaching the end of its service life.

Graves and 59 other members of two key defense committees in Congress told Defense Secretary Ash Carter in a letter dated Nov. 20 that they were concerned about delays in the acquisition program since only half of the current fleet of 16 aircraft were combat ready at any given time because of maintenance.

“Replacing the existing fleet with next-generation aircraft is essential, which is why we want to ensure that the critical mission performed by the JSTARS team is not jeopardized by a lengthy acquisition process,” the lawmakers wrote. (Reporting by Andrea Shalal; Editing by Andrew Hay, Lisa Von Ahn and Steve Orlofsky)

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