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ADDITIONAL FCS FUNDING ANNOUNCED

09 Aug 04. (Reutersreported that Boeing (NYSE:BA – News), said on Monday the U.S. Army signed an agreement to provide up to $6.4 billion in additional funding for the development phase of the Future Combat Systems program, a 43 percent increase in the initial award.

The FCS program is a network-linked system combining advanced communication and technologies with manned and unmanned ground vehicles, platforms and sensors.The money for the system development and demonstration phase adds to the initial $14.78 billion the Defense Acquisition Board approved in May,
2003.

The newly approved money adds what Boeing called four distinct “spirals” of capabilities for current forces and fully funds the FCS network and the 18 core systems that were planned, including four previously deferred.The change will allow the Army to deploy new technologies starting in 2008 to add FCS capabilities to more than 30 modular Army brigades through 2014 and to field the first fully-equipped FCS unit in 2014, Boeing said.In a time of uncertainty for many new military programs going forward, the increased funding for FCS was good news for Boeing, which now derives more of its revenue from the military than from its flagship commercial aircraft business.

“This agreement underscores the importance of the new capabilities we are developing for the nations’ warfighters,” said Roger Krone, senior vice president of Boeing Army Systems.

Secretary Bolton said in the memorandum that the “modification will result in an expansion of the Lead System’s Integrator’s responsibilities,” primarily in developing longer-range elements, the newspaper reported.Boeing, the number two U.S. defense contractor, is based in Chicago.

The restructured FCS program has a 70 percent or greater chance of success, up from an estimated 28 percent before, chief of staff General Peter Schoomaker said last month.

The Pentagon last May approved the start of the $14.9 billion “system development and demonstration” phase of the FCS program, which led to dozens of subcontractor awards by Boeing and the SAIC. The fate of those contracts was not immediately clear after the restructuring was announced.

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