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Recently, Air Force Space Command indicated that the space fence will be discontinued on October 1.[source]

Due to resource constraints caused by sequestration, Air Force Space Command officials have directed the 21st Space Wing to prepare to discontinue operations at the Air Force Space Surveillance System by Oct. 1. Final decisions on all fiscal 2014 budget issues will be made over the next few weeks.

How will this decision affect contractors who are involved in the development and maintenance of the space fence?

I've read a lot of public information about contracts possibly getting canceled, but also about new systems possibly replacing the old ones. Has the Air Force released any plans for what new systems might be and how they will be divided between contractors?

More info on the space fence:

The AFSSS, which has been operational since 1961, is just one part of AFSPC’s global Space Surveillance Network. The system is designed to transmit a “fence” of radar energy vertically into space to detect all objects intersecting that fence. The operational advantage of the AFSSS is its ability to detect objects in an un-cued fashion, rather than tracking objects based on previous information. The disadvantage is the inherent inaccuracy of the data, based on its dated design. The new operating modes at Cavalier AFS and Eglin AFB will provide more accuracy than the AFSSS and still collect un-cued observations.

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As your source states, the Air Force Space Surveillance System (AFSSS, or "the Fence", formerly NAVSPASUR) will be shut down come October 1 (really September). This means that the Air Force will not renew the contract for operating the AFSSS, which belongs to Five Rivers Services. So, obviously, those employees will be adversely affected.

Now, the planned follow on (confusingly called Space Fence) is an entirely new and separate system. Lockheed Martin and Raytheon have been competing for this new contract, but recently the Air Force deferred this decision following a Pentagon review of all major acquisitions, instead saying they plan to issue a new request for proposals. This would delay initial operating capability of the new system to at least 2018, which is one reason the (old) fence shutdown is worrying a lot of people in the industry.

While the AFSSS shutdown is ostensibly due to Sequestration (budget problems), it is widely believed that it's actually to provide leverage when it comes to getting the new Space Fence funded (a belief that is only made stronger by the fact that Gen. Shelton, commander of Air Force Space Command, can't string two sentences together about the shutdown without mentioning the Space Fence). In this sense, Lockheed Martin and Raytheon are in an arguably better position, since this gaping hole in space surveillance capability highlights the need for the new system.

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