Thursday, December 17, 2009

Boeing to pay $100m for the late delivery of the RAAF's Wedgetail

Patrick Walters

BOEING will pay the Australian government tens of millions of dollars in compensation in a final commercial settlement over the late delivery of the RAAF's $4 billion airborne early warning aircraft. After months of bruising negotiations, the two parties agreed last week on a deal that will see Boeing pay the commonwealth both a cash settlement and provide further technical help at no cost to the troubled Wedgetail project.

A spokesman for DefenceMinister John Faulkner yesterday declined to reveal the exact sum paid by Boeing in liquidated damages to the commonwealth for failing to meet the delivery timetable and the agreed performance specification for the Wedgetail's complex systems, including its highly advanced phased array radar.

But it is understood the payment is about $100 million, making it one of the largest liquidated damages payouts involving a Defence Department contract.Boeing has also spent an estimated $US1.7 billion ($1.9bn) of its own funds trying to fix the glitches in Wedgetail over and above its fixed-price $4bn contract with Defence, but they are already running four years late following a string of developmental problems.

Senior Defence officials are now confident Project Wedgetail will achieve at least 95 per cent of its contracted specification, with the radar supplied by Northrop Grumman steadily improving its performance to the point where the air force believes it will deliver a superior capability.The six Wedgetail aircraft will form the mainstay of Australia's new generation of air defence systems, with their radar designed to track huge numbers of targets on air, sea and land simultaneously, including cruise missiles, at ranges of more than 400km.

The first two Wedgetails were handed over to the air force last month at RAAF Williamtown near Newcastle but are still several years away from achieving full operational status.Although five of the six aircraft are already in Australia, they still have to be equipped with electronic warfare self-protection kits and their electronic support measures suite, which is due to be installed next year. The sixth Wedgetail has remained in the US for further testing of its radar and other critical systems before it is delivered later next year.

Under the agreement, Boeing technicians will continue to help iron out any remaining problems with the aircraft at no cost to the government.Boeing is keen to complete the Wedgetail project with Australia, the first customer for the airborne early warning aircraft that is also eventually expected to enter service with the Korean and Turkish air forces.

"We have consistently maintained our commitment to Project Wedgetail and delivering a world-class airborne early warning and control capability to the RAAF," a Boeing spokesman said last night. "We look forward to continuing our collaboration with Australia."


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