Boeing receives $605 million Air Force contract for WGS-11 communications satellite

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The WGS-11 satellite is being funded with money that Congress inserted into the fiscal year 2018 budget for satellites the Air Force never intended to buy.

WASHINGTON — Boeing received a $605 million contract for the production of the Air Force’s 11th Wideband Global Satellite Communication satellite that Congress funded more than a year ago. The WGS constellation provides broadband communications to the U.S. military and allies.

The deal announced on Friday is a modification to an existing WGS Block II follow-on agreement that brings the total value of Boeing’s WGS contracts to nearly $2.5 billion. Boeing has been the prime contractor since 2001. The first satellite was launched in 2007.

The contract for WGS-11 is a fixed-price agreement, and the work is expected to be completed by November 2023. The Air Force now is only obligating $300 million of the $605 million award.

The WGS-11 satellite is being funded with money that Congress inserted into the fiscal year 2018 budget for satellites the Air Force never intended to buy in the first place. The WGS-10 that was launched March 15 was meant to be the last of the constellation. The Air Force has been studying alternatives to replace WGS in the coming decade, such as buying commercial broadband services from the private sector. But Congress in March 2018 unexpectedly added $600 million for the procurement of WGS-11 and WGS-12.

The deal with Boeing comes after several months of back-and-forth between the government and the company to hammer out a strategy to acquire the satellites.

The announcement on Friday does not explain what happens with WGS-12. Congress inserted $600 million into the 2018 budget to pay for two satellites but appropriators did not add any funds for launches. WGS-10 alone cost $424 million. Launches cost on average $200 million to $300 million each. The Air Force has been working with appropriators on an option to double the capacity of WGS-11 and not have to procure WGS-12. The Air Force also is in negotiations with Boeing to deliver WGS-11 on-orbit, meaning that the company would be responsible for launching it and then turning it over to the Air Force. Boeing has done this for commercial customers but not for DoD.

According to a DoD source, Air Force leaders see WGS-11 as an opportunity for Boeing to apply commercial space industry practices to drive down costs. Under the one-satellite option that has yet to be finalized, Boeing would produce WGS-11 with twice of the capacity of previous WGS satellites, and would take care of the launch services. The Air Force also would require Boeing to assist in recruiting international partners to defray the cost of WGS-11 and launch services.

Eight nations today are WGS partners: Australia, Canada, Denmark, New Zealand, Netherlands, Luxembourg, Norway and the Czech Republic. The partners helped fund the procurement of WGS-6 and WGS-9.

Air Force officials in November 2018 briefed the House Appropriations Committee’s defense subcommittee on the one-satellite option. They argued that if WGS-11 can be built with double the capability of existing WGS satellites, the Air Force would not need to buy WGS-12.

“We have been working very, very closely with Boeing and our other industry partners and our warfighters to make sure that we adhere to the intent of Congress, but don’t do things the same old way we’ve always done with respect to procuring WGS satellites,” Air Force  Lt. Gen. John Thompson, the commander of the Air Force Space and Missile Systems Center, told reporters April 11 at the Space Symposium in Colorado Springs

Col. Steve Whitney, program executive officer for space production, said the Air Force asked Boeing for “a number of different options” for WGS-11. “We clearly understand the intent of Congress to provide this incredible capability for warfighters,” he said at the Space Symposium.