Boeing to lose fees for GPS overruns, delays, Air Force says
Boeing will be docked an undetermined amount in performance-based fees by the Air Force for cost overruns of at least $266 million and three years of delays on a Global Positioning System satellite contract, according to the program manager.
Boeing has exceeded its original $215.8 million development contract by about $80 million, or 37 percent, and its $195 million initial production contract by $186 million, or about 95 percent, Colonel Wesley Ballenger said Wednesday.
“It is a large overrun and we take that seriously,” Ballenger said. “The government is clearly holding Boeing accountable.” Air Force Under Secretary Ronald Sega also has communicated that message to Boeing, Ballenger said.
While the Air Force will have to pay for the overruns on the GPS satellite program because they occurred under so-called cost-reimbursable contracts, Boeing will lose award fees for failing to meet performance criteria, Ballenger said. The exact amount hasn’t been determined yet, he said.
Boeing, the second-biggest U.S. defense company, has contracts totaling about $2.5 billion to build the first 12 GPS IIF satellites and the ground stations that control the platform, Ballenger said. The satellites, which are used for civilian and military navigation, are being developed at Boeing’s El Segundo, Calif., facility.
Boeing spokeswoman Diana Ball declined to comment Wednesday on the potential award-fee reductions, instead repeating an earlier statement that the company “has taken aggressive steps to resolve technical issues on GPS IIF, issues that were not atypical for advanced spacecraft development projects.”
Boeing’s first GPS IIF satellite will be delayed almost three years from the original June 2005 date it was to have been available for the Air Force to launch, Ballenger said. The Air Force now anticipates the new date under the best scenario is May 2008, with January 2009 as the worst case, he said.
The Air Force said Tuesday that the first satellite is about 16 months late from a revised first launch date of January 2007 — not the date it was expected to be available.
“We track when a satellite will be available for launch,” such as when all testing is complete, Ballenger said. Against this benchmark, Boeing is at least three years late, he said.
The delays on the satellite program stem from “the complexity designing a new integrated circuit,” the “magnitude of the effort required for assembly, integration and testing,” and late deliveries of navigation hardware by subcontractor ITT, the Air Force said in a statement Tuesday.
The service said “management organization issues” also were to blame for the lapses.
“Boeing stepped up and made specific changes in program management and laid in a new program plan,” Ballenger said. “I am satisfied with the renewed senior management commitment to get the IIF program back on track. We’ve had a lot of dialogue.”
Boeing’s past performance will be scrutinized by the Pentagon during an upcoming competition for the GPS III program, Ballenger said. The first launch of the GPS III satellite is scheduled for 2013, he said.
There are 28 GPS satellites orbiting the earth, Ballenger said. The new IIF Boeing satellites will contain an extra channel for improved civilian accuracy.