Boeing, Lockheed Martin and Northrop Grumman have been granted $5m (£3.45m, €4.38m) each by the US Air Force to demonstrate their ability in manufacturing the GPS 3 satellites. These next generation Global Positioning System (GPS) satellites would provide various services including positioning, navigation and timing, are expected to be launched in August 2017.

Lieutenant General Samuel Greaves, commander of the Air Force's Space and Missile Systems Center said, "Industry told us they were ready to compete for the GPS 3 space vehicles. We look forward to working with Boeing, Lockheed Martin, and Northrop Grumman to assess the feasibility of a follow-on, competitive production contract."

The US Air Force has said that these new satellites would not only come with the existing features of the current GPS 3 satellites, but would also have several upgrades. Some of them include, a redesigned nuclear detonation detection system, a search and rescue GPS feature, a laser retro-reflector and regional military protection capability.

The move is a precursor to the actual awarding of the GPS 3 contract which could be worth billions of dollars. The three companies would be given 26 months to prove that they are capable of building two "low-risk, high confidence" GPS satellites annually.

The US Air Force would eventually pick one winner and grant it a contract to manufacture up to 22 GPS 3 satellites. However a few industry officials have opined that the new contract could be for about eight to 12 satellites, which is similar to the previous GPS contracts.

All the three companies are experienced in building GPS satellites. While Northrop Grumman is a subcontractor on the GPS 3 programme, Boeing was involved in building the GPS IIF – an interim class of GPS satellite.

Also, Northrop and Boeing are said to be using their internal funds to research and develop new navigation payload – the carrying capacity of an aircraft or launch vehicle. Lockheed is also said to be doing the same, but with the help of Harris Corporation, an American defence contractor.

Chip Eschenfelder, a Lockheed Martin spokesman said, "With this contract award we intend to demonstrate how our design for GPS 3 can evolve to address the Air Force's future needs and incorporate new technologies as they become available in a low risk manner. It builds on our plan to drive costs down with increased efficiencies. Our design for GPS 3 is beyond production ready."