Lockheed Martin spent $300m on axed satellite project

The revelation was contained within previously unreleased documents compiled for senators that confirmed the federal government has “no liability” to compensate any of the businesses involved.

In total, it said Defence spent $102 million to consult industry and down-select potential solutions for the project, which was arguably the biggest in the local space sector.

First announced in 2017, JP9102 was the project name of the $3 billion plan to create a sovereign SATCOM capability that would have reduced Australia’s reliance on other countries’ satellites.

Lockheed Martin, which makes the F-35 Lightning II fighter, was named “preferred tender” in April 2023 – all but guaranteeing the deal – before it was abruptly dropped, along with scores of smaller firms, in November 2024.

Four months on, new briefing documents released under Freedom of Information laws have provided more background to the decision.

The documents said Lockheed Martin spent in excess of US $200 million ($316 million) on JP 9102 and that its proposal would generate 200 space jobs in Victoria alone.

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However, the federal government insisted that “no final contract had been negotiated” with the business and argued that workforce and supply chains were actually only in “the early stages of development”.

“The termination of the tender process is within the Commonwealth rights under the conditions of tender, and the conditions of tender provide to the extent permitted by law,” it read.

“The Commonwealth has no liability to compensate tenderers for participating in the tender activity.”

The rebuttal comes despite a swathe of senior industry figures previously hitting out at the decision and the lost time wasted on the project.

Av-Comm, which was working with Lockheed, revealed it had spent $3 million upgrading its organisation to be ready to deliver the contract, alongside overhauling its processes and workflows.

“It’s clear that the government sees defence spending as a cost and not an opportunity to invest in Australian capability, Australian businesses and the Australian people,” Michael Cratt, chief executive at Av-Comm, said.

Meanwhile, the Space Industry Association of Australia went further, with chairman Jeremy Hallett arguing the decision would make companies think twice about working with Defence in the future.

“While other OECD nations see sovereign space capability as critical to creating high-tech, high-value jobs and a military advantage, in our own backyard, we seem to be doing the exact opposite,” Hallett said.

While Lockheed didn’t criticise the decision, it previously announced it had leased office space in Melbourne’s CBD and appointed a senior executive as deputy director.

Other firms involved included Inovor Technologies, EM Solutions, Linfox, Shoal Group and Ronson Gears.

The Australian, which broke the story last year, claimed the decision to effectively cancel JP 9102 was due to a lack of budget.

The federal government, though, insisted it was because multiple low-Earth orbit satellites are more secure from attacks than a single geostationary spacecraft, as planned by Lockheed.

Later, Minister for Defence Industry, Pat Conroy, told Australian Aviation’s sister brand, Defence Connect, that the “money still resides” in JP 9102 and would be invested elsewhere.

“We were putting all our eggs in one basket, and that basket was exposed,” Minister Conroy said. “We’ve ceased the procurement activity, and we have focused on looking at other technology solutions, and that is, to be quite frank, because of the growing counter space threats.

“I’ve been frustrated and annoyed by some of the commentary out there, by people who just don’t have access to the classified briefings, who profess to be greater experts on this area than the ADF, who might be trying to sell their particular commercial technology or have a view.

“And some journalists have accepted that hook, line and sinker, and I find that frustrating.”

Opposition Leader Peter Dutton this month pledged to reinstate plans to purchase a fourth squadron of F-35s should the Coalition win the upcoming federal election.

The decision would take the RAAF’s fleet from 72 to 100 aircraft, with the federal opposition claiming negotiations on a new deal would begin “immediately” upon taking office.

Labor last year put on hold plans to buy a fourth squadron of F-35s and said it would instead redirect some of that investment towards long-range missiles.