UPDATE 2-Lockheed beats Boeing to win US military radio deal

(adds details, comments from program manager, byline)

By Andrea Shalal-Esa

WASHINGTON, March 28 (Reuters) - Lockheed Martin Corp (LMT.N) on Friday beat out Boeing Co (BA.N) to win a $766 million contract to develop a next-generation radio system for aircraft, ships and ground stations, the Pentagon said.

"The Lockheed Martin offering was low price, low risk and higher technical," Dennis Bauman, joint program executive officer for the Joint Tactical Radio System (JTRS), told Reuters. "This was a best value determination."

Pentagon acquisition chief John Young approved the start of development of the Airborne Maritime and Fixed Station segment of the JTRS program on Monday, paving the way for the award.

Defense analysts say a later production contract could translate into business deals for Lockheed valued at $10 billion or more over the long term.

"This is a very big victory for Lockheed because it means they will be at the center of military communications for at least the next 30 years," said defense analyst Loren Thompson of the Virginia-based Lexington Institute.

The new radio system is a family of advanced software-based communications that will replace current radios throughout the U.S. military. It will provide secure Internet-like capabilities and networking for voice, text, audio, and video.

The ambitious multibillion-dollar radio program ran into problems several years ago, prompting a restructuring in 2005. Since then, the program has delivered over $300 million worth of small handheld radios to troops and is testing others.