WASHINGTON — Boeing will be allowed to continue work on a multibillion-dollar U.S. military satellite terminal development program that has encountered big delays and cost overruns, even as the U.S. Air Force takes steps to find an alternative industrial supplier.
Frank Kendall, the acting undersecretary of defense for acquisition, technology and logistics, signed off April 5 on a new acquisition strategy for the Family of Advanced Beyond Line-of-Sight Terminals (FAB-T) effort under which Boeing’s contract will be restructured from a cost-plus to a fixed-price arrangement, Air Force spokeswoman Tracy Bunko confirmed April 11. The new contract structure essentially puts Boeing on the hook for any additional cost growth on the program.
The service also has clearance to release a request for proposals for bringing on an alternate contractor for the program as a hedge against continued poor performance from Boeing, Bunko said via email. The service plans to release the solicitation the week of April 16, she said.
The FAB-T terminals, to be used on the ground and aboard aircraft, are intended to work with the Air Force’s new Advanced Extremely High Frequency secure communication satellites, the first of which is undergoing on-orbit testing, as well as the legacy Milstar satellite systems. Boeing’s contract, originally awarded in 2002, had been marked for termination due to the company’s struggles.
Roger Krone, president of Boeing Network and Space Systems in El Segundo, Calif., said the company has submitted a cost estimate for continued work on the system development and demonstration phase, expected to last for two more years. Boeing officials have entered into negotiations for finalizing a new FAB-T contract, he said during an April 10 media roundtable in Arlington, Va.
“We are in this position because we do not have a terminal done that we can offer to the customer today,” Krone said. “We understand that. And this will put a competitor in the mix and we have about a year-and-a-half to perform and finish functional [qualification] test. One would argue so does the alternate.”
The Air Force notified Congress and Boeing Jan. 4 of its intent to terminate the company’s contract on the program. However, Boeing proposed Jan. 9 to change the contract from the current cost-plus structure to a fixed-price arrangement.
Boeing is in discussions with the Air Force Electronic Systems Center at Hanscom Air Force Base, Mass., and the service’s Space and Missile Systems Center at Los Angeles Air Force Base to work out the details of the new contract that the company hopes to sign very soon, Krone said.
Boeing’s latest contract proposal calls for developing capabilities that were not part of the original FAB-T requirements, Krone said.
The Air Force could award an alternate FAB-T contract by the end of the fiscal year, Maj. Gen. John Hyten, director of space programs for the office of the assistant secretary of the Air Force for acquisition, told reporters in February. The service posted a draft request for proposals for the program April 10 on the Federal Business Opportunities website.
The requirements for the alternate program are about 95 percent compete, Krone said. The Air Force will have the option to continue both programs or stop one of them at any time, he said. Bringing on an alternate contractor gives the Air Force a good opportunity to leverage competition, Krone said.
Krone admitted that the company’s work on the program has “not been outstanding.”
The Air Force stated in April that the program’s cost had grown from an estimated $3.1 billion in 2006 to $4.6 billion.
