Raytheon Co (RTN.N) beat out Lockheed Martin Corp (LMT.N) and Northrop Grumman Corp (NOC.N) for a contract to build a next-generation long-range radar system for the U.S. Air Force, the U.S. Defense Department said on Monday.

The award marks another significant win for Raytheon in the radar market, a deal valued at around $1 billion, and kicks off the next phase of a program begun in 2009, when the Air Force funded work on full-scale prototypes by all three companies.

The new system will replace the Air Force's current TPS-75 radar, which has been in service since the late 1960s. It will serve as the Air Force's primary long-range, ground-based sensors for detecting and tracking aircraft and missiles. The Air Force said the new system would be more accurate, reliable and give air controllers a precise real-time view.

Raytheon's initial $19.5 million deal, which runs through Oct. 31, 2018, will cover continued development of the Three-Dimensional Expeditionary Long-Range Radar (3DELRR) program, and construction of three initial systems. The Air Force then plans to buy three more systems for a total of $72 million.

Over time, the value of the contract is likely to rise significantly since the Air Force is expected to order 30 more radar systems, and foreign militaries could soon follow suit since the system was designed from the start to allow exports.

Loren Thompson with the Lexington Institute said the contract was the latest in "Raytheon's impressive string of competitive wins" and marked the third setback in a row for Northrop. "Raytheon is steadily taking market share in the midst of a defense downturn," he said.

Air Force Secretary Deborah James said the new radar embodied concepts mapped out in a new strategic framework, including the need to design "exportability" into weapons early on to lower the cost of buying and maintaining weapons systems.

Raytheon welcomed the news, saying it had developed an "affordable, exportable radar" that would meet the requirements of many U.S. allies and could work together with older systems.

Raytheon said using gallium-nitride allowed the firm to improve the range, sensitivity and search capabilities of the radar without excessive cost. It also operates in the relatively uncongested C-band of the radio frequency spectrum.

"As the U.S. and other countries look to replace aging battlefield radars with low-cost yet cutting edge and highly capable systems, Raytheon's 3DELRR can meet that growing demand," said Andrew Hajek, who heads the program for Raytheon.

Hajek told Reuters the competition had been "tough but fair." He declined to give any financial details.

Lockheed said it was disappointed by the news, but said it was waiting for a briefing from the Air Force before deciding whether to protest with the congressional Government Accountability Office (GAO).

Northrop said it was disappointed also but declined to comment further.