Boeing Missile-Defense Plan Praised
Boeing Co. has improved its management of the U.S. ground-based missile-defense system, the Pentagon’s program manager says.
The progress was evident in the successful intercept July 14 that earned Boeing $36 million of the potential $41-million bonus for the test, said Army Maj. Gen. Willie Nance.
“I’m very pleased,” Nance said in an interview. “In the last year they have made significant strides in performance. They have brought new team members on. They have worked very hard to solve the quality and workmanship problems we saw with some of the earlier tests.”
The national missile-defense program is managed out of Boeing’s Anaheim-based Electronic Systems & Missile Defense unit, which is part of the company’s Space & Communications sector.
The endorsement comes from the same official who last year criticized Boeing’s performance and docked the company half its potential bonus. Boeing removed its program manager in August 2000 after a test failure that forced the Clinton administration to postpone a decision on whether to start deploying the system.
Boeing is the top contractor for the ground-based system of interceptors, radar, and command-and-control. The company is over cost and behind schedule on key components, including software for simulating thousands of missile attacks and the actual three-stage booster rocket that propels a Raytheon warhead into space.
The Pentagon’s plaudits are “good news but not anything likely to move the stock,” said Paul Nisbet, a defense analyst with JSA Research, of Nance’s assessment. Nisbet rates Boeing a “buy” and holds no Boeing stock.
Boeing is managing the program under a $6.4-billion, five-year contract that could go up to $7.39 billion, including a potential bonus of 15%. Of the bonus pool, $565 million is tied almost exclusively to successful flight tests, Nance said.
Shares of Seattle-based Boeing, the largest private employer in Southern California, rose $1.46 to $53.63, amid a strong rally on the New York Stock Exchange.
