Break out the small violins for Boeing

Posted: May 3, 2011 in Songs of Space and Nuclear War
Tags: , , , , ,

Should we mourn for Boeing and for participating in what is (for them) a lousy contract?

…Boeing said ULA in March filed a complaint with the Armed Services Board of Contract Appeals to compel the Air Force to adjust the prices of three Delta 4 launch contracts signed in the late 1990s.

Or should we not mourn for Boeing?  After all, they signed up to the conditions of the contract and along the way, had a gruesome procurement integrity issue impacting the Boeing part of the EELV program.

Historically, the philosophy has been to encourage the contractor to earn a fair profit and for the government to pay a fair price.  Has that somehow changed?

“Look, you can say Boeing was drinking its own Kool-Aid in agreeing to prices based on a market that never materialized,” said one industry official whose company is not involved with Delta 4. “But you have to sympathize with them to the extent that their customer asked them to commit eight to 10 years in advance. This is a problem with the Air Force that ultimately leads to higher prices, because no one wants to make the same mistake Boeing did back then.”

OK, but was the Air Force holding a gun to Boeing’s head?  And what about this part of the issue which has to do with the Delta IVs in question being used to launch the GPS II-F satellites?  In this case, Boeing contractually agreed to launch the satellites, apparently without regard to the fact that each II-F satellites would require the addition of two-solids (to each Delta IV) in order to get them to space.

In a normal contract, that would be called a customer-ordered change of specification, which would automatically trigger a price renegotiation. For reasons that remain unclear, that was not the case in the Boeing Delta 4 contracts.

Industry officials said it was unclear whether the specific history of the GPS-2F satellite — the series is built by Boeing — played a role in the Air Force’s decision to hold Boeing to the original contract terms.

Let’s see: Boeing makes both the II-Fs and their ride to space.  Is it possible Boeing agreed to suck up the extra launch cost so as to avoid a different cost problem with the II-Fs and now they think (with the passing of several years) the government has quit paying attention? 

And don’t forget the procurement integrity problem.  Years ago, Boeing may have thought it would be useful to show remorse and stick with a great deal/great price simply to remain in the space launch game.  Since that time, Boeing has teamed with Lockheed to form the United Launch Alliance (reflecting a glut of space launch capacity and along the way, eliminating competition) and the EELV program itself still seems broke hard.

Queue the tiny radiation-hardened violins; I’m all outta love.

 

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  1. […] Break out the small violins for Boeing – Songs of Space & Nuclear […]

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