[Satellite TODAY Insider 06-01-12] Boeing has agreed to alter the structure of its next-generation satellite communications terminal contract agreement with the Pentagon, the company announced May 31. The contract will be changed from its current cost-plus terms format to a lower-risk fixed-price structure.
Boeing will continue work on the U.S. Air Force’s Family of Advanced Beyond-line-of-sight Terminals (FAB-T) under the new structure. The U.S. Department of Defense nearly terminated the FAB-T program in January after development costs expanded from an originally projected $235 million price tag to $1.6 billion.
Boeing said it initiated contract alteration discussions with the Air Force earlier this year and offered a structure that included a guarantee not to exceed ceiling for the remaining development work on the FAB-T ground stations that would operate new Air Force communications satellites. Boeing won the original $235 million FAB-T contract to in September 2002.
Boeing Spokesman Matthew Billingsley said his company has already completed hardware qualification on the FAB-T program. “We expect to finish software development and systems integration on FAB-T this summer,” Billingsley said in a statement. “We look forward to entering system functional qualification testing in 2013.”
The U.S. Government Accountability Office (GAO) published a report in March that cited ongoing problems with the FAB-T program, noting that Pentagon officials believed it would not be completed until 2017 – nearly three years after military planned to begin using the Lockheed Martin Advanced Extremely High Frequency (AEHF) satellites for which the FAB-T terminals were being developed.
The Air Force’s fiscal 2013 budget proposal included $107.5 million in funding to continue work on the FAB-T program, which was less than half of the $231.2 million allocated in its fiscal 2012 budget proposal.
Since then, the Air Force has invited other companies to submit competitive bids for alternate systems as part of an effort to crack down on satellite program cost increases. Air Force officials confirmed that due date for alternate system bids is June 8 and that it expects to make its decision on the contract award in September.