P-8 Deal Tops $12 Billion in February Awards

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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There is this really cool thing called journalism. You may want to try it sometime. Now look at the GAO and DOTE reports on this aircraft. A real editor would look at what was written here and state, “You don’t have all of the story.” Guess what? You don’t have all of the story.

We’ve written many articles about the P-8, both here and on our sister blog DefenseTech​.org. This particular article was more of an attempt to look at the biggest defense contracts announced the previous month (it’s a regular monthly feature). But based on your feedback, I’ve included a paragraph toward the top that links to some of our recent P-8 coverage.

C’mon, Brendan, one lame comment from a “twitter-pimper”, and you have to get all *DEFENSIVE*, and post your own “reply”.…????.…
On a very related note, what makes all the commenters on ALL DoD Buzz & Defense​-tech​.com stories about the P-8 think that all the negative press is NOT just mis– and dis-information?.…
I thought the headline described the story fairly accurately.
I don’t know what “E_L_P“‘s problem IS.….?
The REALITY IS, that NONE of us has “all the story”.…
That’s why we are HERE, in the first place.
Overall, I am VERY happy with DoD Buzz & etc.…

I promise I’ve got a fairly thick skin after many years in this game. But I do try to make an effort to respond to some of the direct criticism. Our social media folks also increasingly encourage us to engage in a dialogue with readers. But thanks for reading. Anyone can send me comments, ideas or tips at brendan.mcgarry@monster.com.

I bet on those foreign “pass thru” deals that, we the US taxpayer, is somehow taking it up the ass” — subsidizing it somehow to make the deal happen. What should be happening is that we the “oh so fucked” US taxpayer should be making a margin on the deal. But we have the Anti-American in Chief !!!!!

Politics aside, you are correct about these foreign deals not being a good deal for the US taxpayer. In a typical US weapons development program all of the development costs plus the profit the contractor makes on those development costs (that’s the $1.10 they make on every $1.00 they spend) are paid for by the US taxpayer. When they sell the weapon to foreign buyers that buyer will pay the contractor for the cost of building the weapon plus a 10% to 15% profit on those costs, but they are not on the hook to pay back any of the development costs to the US taxpayer. Typically the argument has been that if they defense contractors had to pay back the taxpayer for these development costs, the price of their weapons would be too high to sell. Generally that is true because given the fact that the US military is a guaranteed customer of anything they develop, there is no incentive to keep costs down, and every incentive to keep them as high as possible.

If the weapon is developed commercially the vendor (previously known as the contractor) designs and tests the weapon using their own funds, but then has to make a higher profit margin on those weapons so they can pay themselves back for the development costs and make an overall profit on the weapon. This is a much better deal for the US taxpayer because not only is there a negative incentive for the vendor to jack up development and production costs, they also make a similar profit margin off of foreign and domestic sales, which means everyone who buys the weapons pays their fair share of the development costs based on how many of those particular weapons they use.

Dfens is right on target about the taxpayer subsidizing our weapons sales to foreign countries. One of the tenets of business is to shift onto taxpayers what you can’t charge a customer.

But I’m more interested in why we’re buying 122 P-8s. That’s the number of P-3s we needed for the Cold War with the Evil Empire, when they had the biggest submarine fleet in history. But that fleet is rusting away someplace. I don’t expect the new QDR to take that number down, since Hagel has already decided the American taxpayer should keep financing the same sized defense budget for the next 5 years although we really don’t have any credible threats out there. Think about it — 1.3 million men and women on active duty to fight off what? Maybe 10,000 insurgents worldwide! We need to cut the defense budget by at least 25%.

Don’t bother to use facts in your arguments. The 122 P-8s are replacing both P3’s and S3’s in an era where submarine hunting has become much more difficult due to quiet diesel/electric and AIP (Air Independant Propulsion) subs. Your comment that we only needed 122 P3s in the cold war is a flat out lie because in the 70’s and 80’s there were more than DOUBLE your 122 and that was just the P3s with a squadron of S3’s in each Air wing (well over 100 aircraft).
In the past fwe years the Navy has not had that many P3s and eliminated the S3s but that has not altered the calculus of numbers needed to meet assigned missions. Most experienced naval analysts do not consider 122 P8’s to be an adequate number but I’m sure some internet poster knows more than they do.

How about some facts, SWO. Please provide a numbers count of submarines (all types) by country then versus now. I believe most AIP subs are from friendly nations, which I guess we track, too.

Quantity of subs is not important due to the qualititative advances in detectability. Super quiet diesel electris are very widely owned among nations unfriendly to the US and AIP subs have been transferred to people that the US is not friendly with.

The number of P8s needed is not based on a number of subs out there but rather on the number of planes needed to maintain a given number of search areas encompassing a required area and maintain that search until allowed to stand down. Just as it takes several ships to keep one deployed, it takes multiple aircraft to keep one in the air and additional squadrons to rotate in and out.

“The vast majority of the manufacturing work — almost 80 percent — will take place in Seattle and is set to wrap up in April 2017.”

I doubt that number is accurate, all Boeing does is assemble the aircraft in Seattle, the pieces are made elsewhere by subcontractors for the most part. The Fuselages are made in Wichita and shipped to Seattle by train ( http://​upload​.wikimedia​.org/​w​i​k​i​p​e​d​i​a​/​c​o​m​m​o​n​s​/​4/4… ).

So Taxpayer’s point is made, then. Basically we paid less for about twice as many airplanes during the Cold War as compared to now, and yet now we are getting less capable airplanes. Make sure you add another $100 to your taxes just to let the federal government know what a bang up job they are doing with the defense of this once great country. Not that it would actually make any difference to the military, because they are going to spend what they spend without any regard to the amount of money they can bleed off the US taxpayer today. They’ll just bill your children for it. I’m sure their world will be much much safer than ours. All the bad people will be dead by then, dontcha know?

Boeing Wichita is on track to shut down in late March, a Boeing spokeswoman said Tuesday — http://​www​.kansas​.com/​2​0​1​3​/​1​2​/​0​3​/​3​1​5​6​1​1​9​/​b​o​e​i​ngs–

What, they can outsource that work to China?

MUCH more capable airplanes. Talk to the aircrews who are flying them and previously flew the P3 if you don’t believe it. Personally, I thought (and still think) that new P3 airframes with improved sensors was the better choice but the P8 is still much better than the P3 that it is replacing.
As for the difference in cost, during the cold war, my parents paid 15 thousand dollars for a house and cars cost under 2 thousand dollars. I’ll try pouting and stamping my feet about the cost differential but that still won’t turn back the clock to yesterday’s prices.

I was in VP 4 back in the day. One of the great things about the P3C was it could shut down two turboprops once on station and conserve fuel and stay on target for a lot longer. I don’t see these jets being able to do that.
Granted the P3 is getting old but hey, if it aint, broke don’t jack with it. Just like the AF trying to decom the A10. I don’t see why they can’t just build new P3s and A10s.

Won’t be long before someone proposes going back to a jet/turboprop hybrid.

Also, looks like Boeing’s 737 MAX uses new CFM engines designed to increase fuel economy. That might even the odds a little.

Then again if they won’t even re-engine B-52s why would they bother re-engining the P-8 so soon after buying them? Hah.

“Boeing announced in January 2012 that it would close its Wichita facility by early 2014 and move work to Oklahoma City, San Antonio and Puget Sound in Washington state. The decision to close was due to high overhead costs at the plant and cuts to the nation’s defense budget, officials said at the time.”

I’m guessing that’d be the Renton site. Looks like Boeing already spun off their civilian 737 stuff as “Spirit Aerosystems”, which bought out BAE’s Aerosystems spinout (which primarily funnels stuff to Airbus). Spirit is basically a contract manufacturer for Boeing and Airbus now.

Which is exactly why LCS-1 can cost more than an Iowa Class Battleship (costs adjusted for inflation) because, hey, the system works and everything costs more. Don’t ask questions, just accept what the government pours in your head and move on. If there was a better way to do things, the government would have told you there was.

There are always a few malcontents that don’t believe that crap. I guess I’m just one of them.

A jet/turboprop hybrid? That sounds very “back to the future”. I remember when NASA had a program like that. I always thought the ducted props sounded like they had a big future, especially after they’d been used so effectively in the early days of VTOL. I ran across this picture of a C-130 with ducted props not too long ago: http://​i62​.tinypic​.com/​1​5​d​r​x​2​e​.​png Maybe if the P-3 people had been more open to stuff like this they’d still be flying. The duct can, if implemented correctly, increase top speed while maintaining take off performance and reducing noise.

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