Boeing's profit on its contract to manage development of the Army's Future Combat System (FCS) of armored vehicles and drones will be more...

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Boeing’s profit on its contract to manage development of the Army’s Future Combat System (FCS) of armored vehicles and drones will be more closely tied to performance, the program’s manager said.

Boeing’s base fee will now be 3 percent of the $21 billion contract, down from 10 percent, while its potential “award fee” or bonus rises to 12 percent from 5 percent, Brig. Gen. Charles Cartwright said. The amount of money available for a bonus and the goals to which it’s tied are still under negotiation, he said.

“If they meet the criteria, they’ll get a good award fee,” Cartwright said Friday at the Pentagon.

The new contract aims to strengthen oversight and keep costs down on the Pentagon’s second-most-costly program. The Future Combat System — a new family of faster, lighter battle vehicles linked by high-speed, digital communications, unmanned drones and new combat radios — is now projected to cost about $128 billion, up 38 percent from its earlier estimate of $92 billion, Cartwright said.

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That’s roughly $32 billion for research and development and another $96 billion for production, he said.

Boeing co-manages the program with San Diego, Calif.-based Science Applications International.

The fiscal 2006 defense budget passed by the House last month cut $449 million, or 13 percent, from the Army’s request for $3.4 billion for the new system.

A report accompanying the House measure cited “significant development and contracting delays” and said Congress “harbors serious concerns about the FCS program.” The Senate’s version of the defense budget, which hasn’t been voted on, does not cut the program.

Revising Boeing’s contract to comply with long-standing Federal Acquisition Regulations will give the military a greater number of audit rights, including provisions that require Boeing to certify under law that its cost and pricing data are accurate.

Boeing spokesman Randy Harrison said that “as a matter of long-standing policy, Boeing does not comment on details of financial agreements with its customers.”

Companies to develop

designs for NASA fleet

Lockheed Martin and a team from Boeing and Northrop Grumman each won a contract valued at about $28 million to design a manned spacecraft to replace NASA’s aging space-shuttle fleet.

The companies will spend eight months developing designs for the vehicles and related programs, the National Aeronautics and Space Administration said. NASA plans to pick a winning design and give a single contractor the task of building the six-astronaut spacecraft early next year, two years ahead of schedule.

The spacecraft is expected to carry astronauts beyond low-Earth orbit after the space shuttle is retired in 2010, and then to the moon as early as 2015.

Bloomberg News