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Last Updated: Friday, 13 January 2006, 10:32 GMT
Lockheed loses US spyplane order
A Lockheed EP-3 spyplane
Lockheed has built earlier generations of US spyplanes
US defence firm Lockheed Martin has lost an $879m (497m) contract to build a new spyplane for the US armed forces.

The company has had problems with the weight of the aircraft, something analysts put down to the fact it had to meet too many operational criteria.

Should the spyplane program have reached full production it could have been worth as much as $8bn.

Lockheed said it made four proposals to overcome the difficulties, but none were accepted by the Army.

"After carefully evaluating Lockheed's proposals, we decided that the prudent course of action at this time was to terminate the contract," said Claude Bolton, the Army's chief weapons buyer.

'Very different needs'

Analysts said that the main problem facing the company was that despite a number of redesigns, the plane was just too small and heavy to meet its operational requirements.

Observers said that Lockheed was faced with a complicated brief that may have led to problems from the start.

It would have produced a flying albatross
Loren Thompson, defence analyst at Lexington Institute

"The government should never have tried to develop one system to meet the very different needs of the Army and Navy," said Loren Thompson, a defence analyst with the Lexington Institute.

Ms Thompson explained that while the Navy wanted a plane to intercept communications, the Army wanted one to perform more specific missions such as locating radio transmissions on a battlefield.

"It would have produced a flying albatross," she said.

Lockheed, which won the contract over rival Northrop Grumman in 2004, had originally proposed using a plane built by Brazil's Empresa Brasileira de Aeronautica.

When the problems emerged, it was reported that the company had considered switching to a larger jet made by Canada's Bombardier.

The Army said it will continue to use other aircraft and radar planes in the meantime.

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