Bloomberg News

Boeing Army Radio Program Said to Face Termination for Cost

October 11, 2011

(Updates with Army manager comments starting in 10th paragraph.)

Oct. 11 (Bloomberg) -- The U.S. Defense Department’s acting chief weapons buyer is likely to terminate Boeing Co.’s top Army radio program and open it to competition, according to government personnel familiar with the decision.

Acting Undersecretary for Acquisition Frank Kendall is looking at cancellation of what was once a $19.5 billion program to produce over 86,000 “ground mobile radios,” according to four people who declined to be identified because the decision isn’t final.

The Pentagon’s notification to Congress is due by Oct. 14, and may come in the form of a letter from Kendall specifying whether continuing the program is vital to national security. Certification is required by law because the Army in May said the program’s unit cost had increased by 50 percent.

The Boeing radio is the most expensive model in the Joint Tactical Radio System, a family of digital radios conceived by the Army in 1997 and still in development. The program had repeated delays, cost overruns and performance shortfalls, according to government auditors.

Boeing Network and Tactical System spokesman Matthew Billingsley said the company won’t comment until it receives Pentagon notification. Kendall’s spokeswoman, Air Force Lieutenant Colonel Melinda Morgan, said his office had no immediate comment.

The radio program will be restructured and opened to competition with the intent to lower costs, said two of the officials who spoke on condition of anonymity.

Decreased Program

The Army in May decreased the number of Ground Mobile Radios it planned to buy to 10,293 from 86,209, citing cancellation of the service’s top land power program, the Future Combat System, who was by then Defense Secretary Robert Gates.

That reduction caused the radio’s unit price to rise by more than 50 percent, triggering the cost reporting law. The Army hasn’t released its most current assessment of the radio, which was scrutinized this year in a six-week Network Integration Evaluation field exercise at Fort Bliss, Texas, and White Sands Missile Range, New Mexico, with other JTRS radios.

In a systems integration test last year, the radio “continued to demonstrate deficiencies” it had in 2009, including difficulty establishing a network and low message completion rates, the Pentagon’s director of operational testing reported.

Army Brigadier General Michael Williamson, who heads the office that oversees the Boeing radio program and other joint radio systems, said he didn’t know of Kendall’s plans.

“It would be disingenuous for me to tell you that I’m not anxious to hear,” he said in an interview with Bloomberg News.

“We want the capability that radio delivers,” Williamson said. “But what we have a problem with is the cost per radio.”

--With assistance from Brendan McGarry in Washington. Editors: Steven Komarow, Jodi Schneider

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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