Sen. John McCain is pressing the U.S. Army to rewrite Boeing's $14.5 billion contract to oversee a vast modernization of battlefield communications...
WASHINGTON — Sen. John McCain is pressing the U.S. Army to rewrite Boeing’s $14.5 billion contract to oversee a vast modernization of battlefield communications and targeting systems, asserting it doesn’t provide enough oversight of a program expected to eventually cost more than $120 billion.
People close to the program say Secretary of the Army Francis Harvey will meet with the Republican senator from Arizona early next week to discuss possible changes.
Revising the Future Combat Systems (FCS) contract could delay the largest project now in Boeing’s defense division. Furthermore, it could give Boeing’s competitors a chance to bite off more of the multipronged deal for themselves and reduce Boeing’s share of the work.
McCain signaled his intentions in a letter to Harvey on Thursday, saying, “I am concerned that the Army has not adequately protected taxpayers’ interests” in how it structured the Future Combat Systems contract. That deal was authorized by the Defense Department under a special agreement created to aid smaller, “nontraditional” defense contractors, called an OTA (Other Transaction Authority).
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McCain questioned whether that approach is justified for the combat-systems contract, noting that “the traditional protections for the public trust do not exist” in OTA contracts.
His letter asks the Army to estimate what it would cost to convert the combat-systems contract to a standard procurement contract. McCain also is considering introducing legislation to revise the entire contract.
Boeing spokesman Randy Harrison said Boeing completed a massive rewrite of the original contract in February to accommodate changes requested by the Army.
For that “extremely complex effort,” he said, more than 350 people in St. Louis worked seven-day weeks for five months, at an estimated cost of $30 million. Boeing employees involved had joked that the FCS acronym stood for “Families Come Second.”
“But if the Army wants us to change the contract again,” Harrison said, “We’ll do it.”
The general manager of Boeing’s program, Dennis Muilenburg, also downplayed the potential impact of revising the contract. “If the Army wishes to modify the contract type, that’s something we’re able to do and we’ll do it,” he said. “We don’t expect this to interrupt the execution of the contract.”
Army spokesmen did not return calls about the contract.
The combat-systems project involves facilities in 11 states; it employs about 550 in Kent.
Boeing is the lead systems integrator in the contract. The current phase is estimated to cost about $21.2 billion through 2014. The secondary contractor is SAIC, and there are almost a dozen other defense companies on everything from robots to tanks to software.
The two sides now dispute who proposed the contract structure that McCain is criticizing.
Muilenburg said “the decision to proceed with the OTA was an Army decision.”
However, on March 9, aides for key Republican and Democratic senators on the Armed Services Committee got a different version from Army representatives. The deputy director of the Army’s future force directorate and Army deputy general counsel for acquisition said the lead contractors had preferred the less restrictive OTA, according to Senate staffers.
One reason Boeing may seem sanguine about rewriting the behemoth contract is the alternative scenario: that McCain could force Boeing to again compete with companies that lost to it the last time, such as Lockheed Martin and General Dynamics.
At a March 16 hearing that McCain held on the Future Combat Systems contract, Army acquisitions director Claude Bolton assured him that specific oversight rules had been included in the contract.
But hours later, Bolton corrected himself by saying the contract does not contain the usual protections against “instances when contractors fail to provide current, accurate, and complete cost and pricing data.”
An advocacy group on government waste, Project on Government Oversight, has criticized the contract.
“I’m not surprised the contractors wanted an OTA,” said executive director Eric Miller. “It makes it easier for them, but it leaves the taxpayers holding the bag. But it would be hard to understand why the government would negotiate this kind of contract with this kind of money involved.”
Alicia Mundy: 202-662-7457 or email@example.com