The Boeing Co. beat out the Lockheed Martin Corp. to retain its position as the prime contractor for the U.S. long-range missile shield, the Pentagon said on Friday.

The U.S. Defense Department said it was awarding Boeing a $3.48 billion, seven-year contract to develop, test, engineer, and manufacture missile-defense systems.

A team led by Lockheed Martin and the Raytheon Co. had vied with Boeing to expand and maintain the Ground-based Midcourse Defense, or GMD, hub of layered antimissile protection.

Boeing partnered with the Northrop Grumman Corp. to retain the work.

We believe the government conducted a fair and open competition, making the right decision for the future of the program, Norm Tew, Boeing vice president and GMD program director, said in a statement.

Lockheed said it was honored to have participated on the bid, a company representative said in a statement on Friday.

The GMD contract's value to Boeing will have been about $18 billion from January 2001, when it formally became the system's prime contractor, through the end of this year, Boeing has said.

GMD uses radar and other sensors plus a 20,000-mile fiber optic communications network to cue interceptors in silos at Fort Greely, Alaska, and Vandenberg Air Force Base, Calif.

The shield has been shaped initially to guard against ballistic missiles that could be fired by Iran or North Korea. It is the only U.S. defense against long-range missiles that could be tipped with biological, chemical, or nuclear warheads.

(Writing by Patrick Temple-West; Reporting by Jim Wolf and Karey Wutkowski; Editing by Steve Orlofsky)