WASHINGTON Dec 20 The U.S. Air Force said on
Thursday it has restructured a troubled air-to-air missile
program run by Raytheon Co, freeing $104 million in
immediate funding for the company and putting the program on
track to return to its original schedule by mid-2014.
Lieutenant General Charles Davis, the top Air Force official
in charge of acquisition issues, said the two sides reached
agreement last week on new contract terms that will pay Raytheon
for delivery of actual missile rounds rather than the
"performance-based" milestones used in the past.
"That gets us back to where we would have been ... roughly
in the middle of 2014," Davis told Reuters in an interview at
his Pentagon office.
He said the Air Force would continue to keep close tabs on
Raytheon's AIM-120 Advanced Medium-Range Air-to-Air Missile
(AMRAAM), which is used by Air Force fighter jets and Navy
planes that fly off carriers.
"At this point right now the only thing that's important ...
is the delivery of the missiles," Davis said, describing the Air
Force's decision to withhold funds from Raytheon "very prudent"
after repeated failures of the missile's rocket motors.
After years of delays in missile deliveries, the Air Force
announced in March that it was withholding $621 million in
payments from Raytheon until the company accelerated deliveries
of the advanced missiles.
On Thursday, the Air Force said it was resuming payments to
Raytheon after a 10-month pause from February to December 2012.
Spokesman Ed Gulick said no additional funding was being
withheld from Raytheon at this point.
The delays were caused by problems with solid rocket motors
supplied by Alliant Techsystems Inc (ATK) that power the
missiles, prompting Raytheon to switch to Norwegian ammunition
Raytheon Chief Executive William Swanson told an investor
conference at the end of November that the program should return
to "business as usual" and recover its production schedule by
mid-2013. He said the company had already received 125 rocket
motors from Nammo and production was expected to reach 100
motors per month in the first quarter.
Davis said Nammo's rocket motors had performed well in
tests, and the Norwegian company was now working to increase its
production rate to the level needed for the program.
He said ATK's future role on the program was unclear, given
that it could take the company around 18 months to reformulate
its rocket fuel and get it certified. The issue had developed
over time due to changes in the formulation of the fuel.
He said the problems with the AMRAAM contract underscored
the danger of relying on a sole producer of critical equipment,
and the Air Force viewed it as important to maintain more than
one supplier in the future.
But he said the projected purchase rates could raise
concerns in the future.
"It'll be something that we'll have to pay attention to in
the future," Davis said. "It's important that we try to keep
more than one (supplier), but sometimes at the rate we're buying
or the rate we're building it's not viable for two companies to
stay actively involved. It'll be something that we'll have to
pay attention to in the future."
Gulick said the revamped contract also called for Raytheon
to compensate the U.S. government and foreign militaries between
$27 million to $33 million for late rocket motor deliveries.
That compensation included no-cost labor to install a
variety of software upgrades for foreign countries harmed by the
late deliveries, warranty coverage and free repairs, Gulick
He said the Air Force also got warranty coverage for 325
AIM-120D missiles, and 40 no-cost repairs.