Boeing wins $2 billion satellite contract from Space Force
In what appears to be the first major space contract Boeing has won in awhile, the Space Force yesterday awarded it a $2 billion contract to build two new military communications satellites, part of the War Department’s MUOS constellation.
The Boeing Co., El Segundo, California, has been awarded a maximum $2,002,862,607 fixed-price-incentive-firm-target contract for the Mobile User Objective System (MUOS) service life extension Phase II effort. This contract provides for the design, development, build, launch support, and on-orbit test support of two MUOS satellites. Work will be performed in El Segundo, California, and is expected to be completed by Sept. 30, 2035. [emphasis mine]
Boeing won the contract competition over Lockheed Martin, which had built the previous MUOS satellites.
I highlight the fixed-price nature of the contract. Boeing’s space-related division in the past two decades has had trouble dealing with such contracts, its corporate culture having become spoiled with cost-plus contracts, which are essentially blank checks. Its fixed-price Starliner contract is the best example, but the company’s repeated inability to stay under budget or get things done got so bad that by 2020 NASA announced it would no longer entertain any contract bids from the company, a policy that it still follows.
For Boeing, making this fixed-price contract work is literally a make-or-break situation. It needs to beginning producing such contracts on-budget and on-time, or else it will die.
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I’m surprised they agreed to a fixed-price contract. I could have sworn that not too many months ago they claimed they’d never do fixed-price again. If they can actually manage it, great. I am not hopeful, but neither am I going to hope they fail.
Satellite buses aren’t like a whole new aircraft from scratch. Bus designs they should be able to knock out…that is where you want a fixed cost contract.
Nothing fixed about Starship–that’s eating bank ;)
Yes, there should be neither any ‘R’ nor any ‘D’ to do to build a couple of follow-on MUOS birds. So Boeing should be up to the job even on a fixed-price basis.
Starship, as you correctly note, is a different matter entirely. But what would have been cost-plus expenditures for legacy government contractors are being covered by SpaceX itself. The government’s only Starship contract is a fixed-price milestone and fee-for-services arrangement. The US taxpayers are not on any sort of open-ended hook. How delightful it would be were that also the case with SLS and Orion.
MUOS doesn’t have a real production line, so these are more akin to unique pieces to jewelry than anything mass-produced.
Fixed or not is important when spending other people’s money that was taken from them by government diktat. For private efforts it’s irrelevant. You don’t seem to grasp the difference.
This MUOS contract is, in essence, a task order to build more of something that has already been built, even if not by Boeing. So there would seem only a quite modest chance of any financial failure here.
Longer term, of course, a Boeing that fails to cure itself of cost-plus disease will be destined for failure at the hands of newer, hungrier and far leaner outfits willing to do far more things on a fixed-cost basis and even able to under-bid Boeing on whatever cost-plus stuff remains.
All true, but Boeing’s space division hasn’t made a good show when building much of anything else for the government for some time, so my skepticism is high.
As they say in Australia, “You’re not wrong!”
Boeing did say that they’d never do fixed-price again. My reaction at the time was “good luck with that.” I’m sure they would not have won this over LM if they’d gone cost-plus, or if the RFP even allowed for it. I assume when their CEO, I think it was, made that announcement, the people down in sales and contracting were looking at their spreadsheets, and then their resumes.
If Boeing really does stick to its no-fixed-price guns on any new government programs – as opposed to borderline antiques such as MUOS – it will be voluntarily exiting much of both the military and civilian aerospace markets by default. Given its recent travails in its core airliner market, perhaps a greater concentration on that would be better for both Boeing’s long-suffering stockholders and NASA and the War Department.
MUOS is an old system and – as with most legacy US military space systems – both small and expensive. The entire “constellation” consists of just five satellites including an on-orbit spare. The first was launched in 2012 and the last was launched – coincidentally – exactly 10 years ago today.
MUOS provides primary services roughly equivalent to 3G cell phones to compatible ground terminals. It also provides a legacy signal with a max capacity of 384K bps to support legacy military ground terminals that are now decades old. Both are antique technologies compared to, say, Starlink, but I’m okay with being a belt-and-suspenders man where military systems are concerned. With the youngest bird in the fleet celebrating its 10th birthday today, some fleet refreshing is definitely in order.
There being essentially no R&D required to build new MUOS birds, Boeing is probably safe from any unanticipated overruns on its fixed-price contract – doubtless why Boeing deigned to take it on in the first place. The eye-watering cost of each bird – 1$ billion+ – is probably accounted for by the extremely limited production run, the touch labor-intensive artisanal production process and the likely necessity of using more than a few legacy components that also have quite limited production histories and are also touch labor-intensive artisanal artifacts. Compared to MUOS, even limited-production high-end supercars like the Bugatti Veyron are mass-production items.
During the leisurely most-of-a-decade it will apparently take to build and fly the two new MUOS birds, one hopes the War Department can get its strategic and tactical comms act together, retire all of the antique junk and replace it with newer, better and far cheaper gear based on massively less vulnerable mainly civilian infrastructure such as Starlink and – when it arrives and also proves itself – Amazon LEO.
I would be much happier if they didn’t get paid until the satellite was in orbit and working.