US to revise troubled Raytheon satellite system contract

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US to revise troubled Raytheon satellite system contract

Following cost blowout and delays.

The US Air Force plans to revise its contract with Raytheon for a new ground control network for GPS satellites after officials decided last week to delay completion of the program until July 2022.

Major General Roger Teague, director of space programs for the Air Force's acquisition chief, said it was not clear how much the delay would add to the program, which was previously expected to cost US$3.6 billion.

He said the GPS program office would also review incentive fees associated with the contract to ensure they properly rewarded good performance and penalised the company if its performance did not improve.

Raytheon has said it was committed to meeting the Air Force's expectations for the program, but declined to give any further details.

Teague's comments followed a "deep dive" review last week by the Pentagon's chief arms buyer, Frank Kendall, of the troubled program, which was slammed as "a disaster" by General John Hyten, commander of Air Force Space Command.

Raytheon won a contract worth up to US$1.5 billion in 2010 to develop the GPS operational control system, or OCX, to operate the next-generation GPS 3 satellites being built by Lockheed Martin.

The project's cost had already more than doubled due to increased cyber security requirements and poor contractor performance, and now looks likely to rise further.

Teague confirmed that Air Force officials initially estimated a delay of 47 additional months.

He said Kendall opted for a shorter delay, coupled with aggressive oversight at all levels of the program, to ensure that the sorely-needed satellite control capability was delivered to the military.

Teague said a new cost estimate would be completed early next year, with Kendall and Raytheon chief executive Tom Kennedy to set meet for another quarterly "deep dive" review in early spring.

Teague said Lieutenant General Samuel Greaves, commander of US Space and Missiles Systems Centre, would now meet weekly with a Raytheon vice president about the program, while Lieutenant Arnold Bunch, the top Air Force officer in charge of acquisition, would participate on a bi-weekly basis.

Kendall decided not to restructure the contract as a fixed-price program because it would have reduced the government's oversight, Teague said.

"It's a team sport," he said. "We need to have government participation and oversight and insight."

Teague said the Air Force was focused on getting the Raytheon program completed, but would keep its options open in case the new approach failed to get the program back on track.

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