MDA Gives Boeing Contract Modification to Cover Delay in Awarding New Contract

by: Matthew Potter
July 20, 2011

Category: Boeing, Business Line, Companies, development program, missile defense, production program | RSS 2.0

The United States’ Missile Defense Agency (MDA) developed and deployed the Ground Based Missile Defense system over the last twenty years. This operates several interceptors in Alaska and utilizes sensors across the world. At one time it was to be expanded into Europe but the Obama Administration cancelled those plans and decided to invest in more ship based systems as well as shorter ranged Army programs.

Boeing (BA) has been the lead contractor on the program for most of its life. Once development and deployment was completed the company had a contract to maintain and operate the system. Last year MDA decided to put that contract out for renewal and bids were received from Boeing’s team and one made up of Raytheon (RTN) and Northrop Grumman (NOC).

The contract was supposed to have been awarded this summer but the MDA decided to delay the selection until early Fiscal Year 12. The contract is very large and both groups of bidders have worked hard to win it. Obviously Boeing as the incumbent does not want to lose this work.

Because of the delay in selecting a new vendor the MDA announced this week that they are awarding Boeing a contract modification to cover the delay. This is necessary as the system does need to be able to operate while the source selection continues. The value of the modification is almost $37 million and brings the total contract value to close to $700 million.

The U.S. will continue its investment into missile defense for the next several years. The current focus is on increasing the capability of the current AEGIS ship based system with newer radars and missiles. The Army has a version of the PATRIOT air defense missile and the larger THAAD system. The existing ground based system while it will not necessarily see the planned expansion will still be operated as well and the award of the support contract is eagerly awaited by the bidders.

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