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In a surprise move, Boeing and Lockheed Martin announced late Monday that the two companies planned to form a joint venture to build and launch rockets for the US government, reports Space Today.

The United Launch Alliance will be a 50-50 partnership between the two companies that covers the production, engineers, test, and launch operations of Atlas and Delta rockets for NASA and the US military. The venture will be headquartered at Lockheed’s Denver facilities, with most manufacturing to be consolidated at Boeing’s Decatur, Alabama factory.

An unspecified number of employees in the two companies will be laid off as a result. The alliance does not include commercial launches, nor the development of EELV-derived vehicles that may be used by NASA’s “Vision for Space Exploration”.

The two companies had been bitter rivals in recent years, in part because of allegations that Boeing employees accessed confidential Lockheed Martin documentation during the EELV bidding process in the late 1990s. Both companies agreed to dismiss claims against one another related to that dispute as one of the terms of the joint venture.

The merger would save the governnment about $100 million to $150 million a year, the companies said a joint statement.

Taxpayers are subsidizing both aerospace giants. That’s because both companies guessed there would be a commercial market for giant satellites.

There wasn’t.

Congressional leaders are asking how the government’s contribution to the EELV rocket project grew from $17 billion to almost $32 billion in a few years. The military’s new rocket program is $14.44 billion over budget and counting, raising questions about how long taxpayers can subsidize two of America’s biggest aerospace companies to keep them in the launch business, reports Florida Today.

The Air Force’s rocket overrun is about as much as NASA spends in a year for all its projects. It’s more money than President Bush asked Congress to provide to help Florida rebuild after four hurricanes. And it is three times what NASA has overspent so far on the International Space Station, something that drew cries of waste and mismanagement from Congress.

Related DailyWireless stories include Space Radar Launch, Space Balls, Space Mist, and Rocket Welfare.

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