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P-8 Deal Tops $12 Billion in February Awards

Boeing Co., the world's largest aerospace company, won the U.S. Defense Department's biggest contract last month, a $2 billion award for more P-8 Poseidon surveillance planes.

Under the agreement, the Navy will buy an additional 16 P-8A aircraft as part of the first round of full-rate production, according to the Feb. 25 announcement. The vast majority of the manufacturing work -- almost 80 percent -- will take place in Seattle and is set to wrap up in April 2017.

The award topped a list of more than 170 contracts worth about $12.3 billion in February, excluding previously announced Army renewable energy deals, according to a Military​.com analysis of the Pentagon's daily contract announcements. The monthly value rose by 43 percent from January, the lowest level in almost two years due in part to automatic budget cuts. The figures don't reflect what was actually spent, or obligated, because many deals are only partially funded at first.

"This contract reflects the success of the program and enables us to continue delivering an advanced, cost-effective maritime patrol aircraft to the Navy," Rick Heerdt, Boeing's vice president and P-8 program manager, said in a statement. "We delivered eight P-8s, all on or ahead of schedule in 2013, and we intend to keep that streak going in 2014."

The Pentagon's top weapons tester recently concluded that the aircraft isn't effective at hunting submarines and other wide-area surveillance missions, an assessment that drew the attention of lawmakers on Capitol Hill. Also, the department's own inspector general last year said the Navy needed to conduct more "critical testing" of the aircraft before buying production models of the plane.

The Chicago-based company said the agreement was actually worth $2.4 billion, not less than $2.1 billion, the amount listed on the Pentagon's announcement.

DoD_daily_contracts_February_2014

The P-8 is based on the firm's commercial 737–800 twin-engine narrow-body passenger jet. Both are made in the same facility in Seattle. The naval plane is designed to replace the P-3C Orion made by Bethesda, Md.-based Lockheed Martin Corp, in conducting long-range missions to hunt submarines, among other ships, and collect intelligence.

The cost to develop and build a total of 122 of the aircraft, including five test versions and 117 production models, is estimated at $34.9 billion, according to figures the Pentagon released in May. The latest agreement will bring the number of planes on contract with the Navy to 54, according to Boeing.

The Navy in December deployed its first patrol squadron of the aircraft to Kadena, Japan, and has been conducting operational missions ever since. The service also displayed one of the planes last month at the Singapore Air Show.

Two of the Pentagon’s top five contracts in November were so-called multiple-award contracts. Under these kinds of arrangements, companies win seats on the contract, then compete against each other for individual orders.

A group of companies, including JetBlue Airways Corp. and UPS, shared the second-largest contract last month, a deal valued at $805 million with U.S. Transportation Command to provide international lift services, according to the Feb. 11 announcement. Another team of firms, including American Airlines Inc., landed the fourth-biggest deal in February, an agreement worth $636 million with the command for similar services.

Raytheon Co., based in Waltham, Mass., the world's largest missile maker, won the third-largest contract last month, a deal valued at $655 million with the U.S. Army to provide two Patriot fire units and associated spares to the government of Kuwait under a so-called foreign military sale, according to the Feb. 28 announcement.

In such a sale, the U.S. buys weapons or equipment on behalf of a foreign government. Countries approved to participate in the program may obtain military hardware or services by using their own funding or money provided through U.S.-sponsored assistance programs, according to the Defense Security Cooperation Agency.

KS International LLC, a McLean, Va.-based government contractor, landed the fifth-largest contract last month, a $623 million deal with the Air Force to help operate and provide security services at Balad Air Base in Iraq through January 2017. The award was also a foreign military sale.

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