Boeing Surprised by Air Force Cost Estimate for 2nd SBSS

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Boeing officials were surprised and perplexed by recent U.S. Air Force estimates that building a second model of the Space Based Space Surveillance (SBSS) system satellite to complement the satellite launched last September would cost as much, or even more, than the inaugural version, according to Craig R. Cooning, general manager of Boeing Space and Intelligence Systems.

El Segundo, Calif.-based Boeing and its partner, Ball Aerospace & Technologies of Boulder, Colo., built the original SBSS, whose program costs more than doubled to end up at more than $800 million by the time the satellite was launched into low Earth orbit.

In hopes of securing a sole-source contract for a second model, Boeing and Ball offered to submit a firm, fixed-price bid for a near-identical SBSS.

The U.S. Air Force at first rejected that offer in favor of a fresh competition for a second SBSS satellite. More recently, Air Force program managers have indicated that no second SBSS satellite will be built because of a tight Air Force budget and concerns that the second satellite would have a price tag approaching $1 billion.

“Knowing what we offered, I was stunned to see those estimates,” Cooning told reporters March 15. “I don’t see how they got there.”

Cooning said that even if Air Force officials add in the cost of a launch, satellite operations and maintenance charges, the final tally should still be far short of the cost of the first SBSS mission.

Cooning declined to say what price Boeing and Ball quoted to the Air Force, but recurrent-model satellites are typically at least 30 percent less expensive than the original models because contractors have already incurred the nonrecurring engineering charges.

In this case, the offer of a firm, fixed-price contract would have prevented the industrial contractors from passing on any cost overruns to their customer, thus protecting the Air Force from the kind of surprises that are an occasional feature of cost-plus contracts.

The SBSS satellite launched in September is healthy in orbit. Air Force program managers had said a second satellite operating at the same low Earth orbit but spaced 180 degrees distant from the first spacecraft would increase the program’s ability to monitor what is in orbit as part of the U.S. space surveillance program.

Cooning said Boeing officials have sought to determine the source of what the company views as substantially inflated figures, without success to date.

 

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