LMT Lockheed Martin Corp

NASA has quietly eliminated Lockheed Martin Corp. from a pending multibillion-dollar competition to ship cargo to the international space station starting in roughly three years, according to people familiar with the details.

The decision, which hasn't been disclosed publicly, poses a potentially significant setback to Lockheed's plans to accelerate development of enhanced space-exploration capabilities. Company officials had hoped that a NASA contract would provide technical steppingstones—as well as a financial boost—for preliminary work on robotic vehicles, reusable space tugs and in-orbit refueling capabilities that ultimately will be needed for manned and unmanned missions deep into the solar system. Such technologies are expected to take decades to become operational.

The National Aeronautics and Space Administration made its decision during this past summer, according to the people familiar with the matter, and since then has been a topic of discussion in industry circles. NASA made the call largely on the basis of price, according to one of these people.

On Wednesday, officials of NASA and the aerospace giant declined to comment on the status of Lockheed Martin's bid. A company spokeswoman reiterated that its bid sketched out an "affordable, high-capacity space station resupply" option featuring a path forward "through technologies that will power future human deep-space missions."

Industry officials said Lockheed Martin is expected to continue pursuing many of those same long-term goals, though probably at a slower pace, while it seeks to snare other federal dollars or related commercial business.

Slated to be announced in early November, NASA's upcoming awards will be the next phase of cargo-delivery contracts currently totaling as much as $6 billion that the agency issued years ago to Elon Musk's Space Exploration Technologies Corp. and a predecessor company to Orbital ATK Inc.

Both of those companies remain in the running for additional commercial cargo awards, along with Boeing Co. and Sierra Nevada Corp.

NASA may decide to issue multiple contracts totaling a maximum of $14 billion, with launches scheduled to start in 2018. In future years, the agency has said it may need contractors to transport more than 20 tons of cargo annually.

Picking the winners has been postponed three times since the fall of 2014, while NASA officials weighed price and reliability issues.

Both SpaceX and Orbital ATK are rebounding from high-profile, unmanned launch failures that set back deliveries of essential supplies, experiments and other material to the orbiting international laboratory.

Lockheed and its team of Canadian and European partners submitted a proposal to NASA late last year that was substantially more complex and technically challenging than offers from the two incumbents, which already have operated rockets and capsules essentially designed to serve as bare-bones space resupply systems.

Lockheed's ultimate goals focus on creating durable habitats for astronauts or even space tourists; in-orbit servicing vehicles equipped with robotic arms; and autonomous spacecraft intended to remain in use for long periods and able to carry out a variety of missions. Such advances also could entail pre-positioning supplies of food, water, fuel and ultimately, parts that could be assembled to create a spacecraft in zero gravity.

At a conference in Pasadena, Calif., in August, a high-ranking Lockheed Martin space official stressed the long-term implications of such ambitious technologies.

Of the capabilities under development, the one most likely to be adopted first is using a space tug to keep aging satellites in their proper orbits after their fuel is depleted.

"We're now on the threshold," said David Markham, vice president of advanced programs for the company's space systems unit.

Write to Andy Pasztor at andy.pasztor@wsj.com

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(END) Dow Jones Newswires

October 01, 2015 15:35 ET (19:35 GMT)

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