WASHINGTON (AP) -- Lockheed Martin Corp. is formally protesting a $1.16 billion Navy contract awarded to Northrop Grumman Corp. to design and develop an unmanned aircraft that can patrol coastlines and open ocean.

Los Angeles-based Northrop beat out Lockheed and Boeing Co. last month to develop a plane for the Navy's Broad Area Maritime Surveillance -- or BAMS -- program. The contract could ultimately be worth billions because the Navy plans to buy 68 of the planes. The president's 2008 budget request includes $2.3 billion for research, development, test and evaluation for the program plus an additional $780 million for procurement.

The Australian government, which has invested in the BAMS development program through a $15 million agreement with the U.S. Navy, is also expected to become a major customer for the new planes.

Lockheed, based in Bethesda, Md., filed a formal protest with the Government Accountability Office on Monday.

In a statement, the company said it decided to protest the contract because a Navy debriefing led it to conclude that ''we offered a technically compliant and awardable solution at significantly lower cost'' than Northrop Grumman.

Northrop won the competition with a version of its Global Hawk surveillance aircraft, which is primarily used by the Air Force. Lockheed had partnered with General Atomics, maker of the Predator unmanned aerial vehicle, to offer the Mariner, a version of the Predator with longer wings, more fuel and more capacity. And Boeing had partnered with General Dynamics Corp., maker of the Gulfstream corporate jet, to offer an unmanned version of the Gulfstream G550.

Northrop said it is confident that the BAMS award will be upheld. In a statement, the company said it is offering ''the most technically capable, lowest risk and best overall cost value system for our Navy customer and our nation's warfighters.''

For its part, the Navy said it is confident that it considered all three proposals fairly, equally and in full compliance with stringent federal procurement rules.
Chicago-based Boeing said it will not protest the Navy contract.

Lockheed's shares fell 31 cents to $106.62 Monday. Northrop's shares fell 56 cents to $74.44. Boeing's shares rose 23 cents to $85.92.