Bloomberg News

Raytheon Warhead Failure Costing Pentagon $1B

April 24, 2012

A model of the Patriot anti-missile system is seen at Raytheon's exhibition center. Photographer: Lefteris Pitarakis/AP Photo

A model of the Patriot anti-missile system is seen at Raytheon's exhibition center. Photographer: Lefteris Pitarakis/AP Photo

Test failures of Raytheon Co. (RTN:US)’s interceptors, the most advanced U.S. anti-missile warhead, will cost the Pentagon more than $1 billion to remedy, according to military data.

The cost estimate includes the two failed tests of the interceptor in January and December 2010, a board to review what went wrong, warhead redesign, further upgrades and at least two more flight tests to be carried out through 2013, according to the Missile Defense Agency. Congressional auditors estimate the cost may exceed $1.2 billion.

“It isn’t just the work” on the warhead, defense agency spokesman Rick Lehner said in an e-mail. The cost encompasses “everything else that goes along with the work plus all the additional tests to verify performance.” The failures were caused by a quality glitch and a separate guidance system design flaw that remained undetected in ground testing.

The Missile Defense Agency’s estimate of $1.16 billion is up from an earlier projection of $236 million, the Government Accountability Office said in an April 20 report. That compares with the missile agency’s $7.75 billion request for its total fiscal 2013 budget.

The Raytheon warhead is a non-explosive, hit-to-kill weapon, designed to pulverize an incoming ballistic missile by colliding with it at high speed. It separates from its booster and flies on its own for an interception, guided by internal sensors.

Halt in Production

The failures to intercept a target replicating an enemy intercontinental ballistic missile led in January 2011 to a halt of production of completed warheads at Raytheon’s Tuscon, Arizona, missile systems plant and of additional intercept tests of the $39 billion ground-based system designed to defend the U.S. against limited attacks by ICBMs from North Korea or Iran.

The system hasn’t had a successful intercept since December 2008. The government will bear the $1 billion cost rather than the contractors, Lehner said.

The agency “is currently undergoing an extensive effort to overcome the design problem and return to intercept tests,” auditors at the GAO, the investigative arm of Congress, said in the report.

Ten of the unproven warheads are among 30 in silos at U.S. bases in Alaska and California, the GAO said. The 20 first- generation warheads on interceptors in those states “do not have this design issue,” the Missile Defense Agency said.

Topic at Hearing

Lieutenant General Patrick O’Reilly, director of the Missile Defense Agency, may be asked about the $1 billion estimate tomorrow during a scheduled hearing on missile defenses by the Senate Armed Services Committee.

The agency won’t conduct any additional test flights to verify fixes “until our engineers and independent government and industry experts have been convinced we have resolved all issues and will be successful in our next test,” O’Reilly told the Senate defense appropriations panel April 18.

Raytheon of Waltham, Massachusetts, and Chicago-based Boeing Co. (BA:US), the prime contractor for the ground-based anti- missile system, don’t have to reimburse the government for “flight-test failures or equipment malfunctions” under the “cost-plus” contract, Lehner said.

John Patterson, a Raytheon spokesman, referred requests for comment to Boeing. Jessica Carlton, a Boeing spokeswoman, said in an e-mail that the company “continues to partner with the Missile Defense Agency on all activities” involved in returning the interceptors to flight.

‘Exceedingly Technical’

Issues facing the ground-based missile defense system “are exceedingly technical, complex and one of the toughest challenges encountered by American aerospace,” Carlton said. “We continue to conduct extensive qualification, state-of-the- art testing and multifaceted integration activities to provide our customer with the highest level of mission assurance.”

The 2010 tests were intended to demonstrate the new warhead works as designed. The Missile Defense Agency has continued a practice started by then-President George W. Bush’s administration in 2002 to accelerate the purchase and fielding of unproven systems while development tests continued, the GAO said in its report.

“Because MDA continues to employ concurrent strategies, it is likely that it will continue to experience these kinds of acquisition problems,” the GAO found.

The Defense Contract Management Agency told the congressional investigators that repairing the hardware problems that contributed to the failures may “well be very expensive and time-consuming,” the GAO said.

‘Guidance Error’

In the January 2010 test, the Raytheon interceptor failed to hit its target when its warhead thruster malfunctioned because of a missing “lockwire,” the Missile Defense Agency said. The test in December of that year failed in the final seconds because of a “guidance error,” according to the agency.

The Missile Defense Agency’s cost estimate includes $475.2 million for two failed test flights, $410.8 million for two planned verification tests, $180 million to retrofit the 10 fielded warheads and $91.4 million for a failure review board and warhead redesign.

The projection doesn’t include one-time development costs or the targets used in each test and costs for fixing the interceptors already built.

“It is possible that costs to implement fixes will continue to grow,” GAO missile defense analyst Cristina Chaplain said in an e-mail.

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

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • RTN
    (Raytheon Co)
    • $106.82 USD
    • 0.81
    • 0.76%
  • BA
    (Boeing Co/The)
    • $126.23 USD
    • 0.56
    • 0.44%
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