Index

Pentagon Agency Announces Large Missile Defense Award



NATIONAL MISSILE DEFENSE CONTRACT AWARDED

The Ballistic Missile Defense Organization's (BMDO) National Missile
Defense Joint Program Office announced today that The Boeing Company,
Space & Communications Group, Anaheim, California will be awarded a
cost-plus-award-fee contract for continuing development of the
National Missile Defense (NMD) system. The performance period is
January 1, 2001, through September 30, 2007, with work performed by
Boeing and its major subcontractors, primarily in Huntsville, Alabama;
Tucson, Arizona; Sudbury and Bedford, Massachusetts; and Colorado
Springs, Colorado.

The contract award announced today exercises certain options under the
original contract and provides a flexible contract structure to
accommodate the President's September 1, 2000, decision on continuing
development and testing of the NMD system while deferring a deployment
decision to the next administration.

This contract (with a potential value of $6 billion) protects the
option for the next administration to deploy the NMD system at the
earliest possible date, and restricts obligation of funding to funds
available to the NMD program in fiscal 2001. Subsequent year
obligations will be subject to review and approval by the Department
of Defense and the next administration. No decision has been made to
deploy a NMD system, and this contract award does not change the
current NMD system architecture or any previously planned system
elements.

The contract has a full potential value of $13 billion, if all future
options are exercised. In April 1998, Boeing was selected as the Lead
System Integrator (LSI), or prime contractor, for the NMD system.

The initial contract awarded to Boeing in 1998 will expire in April
2001, and does not reflect present-day NMD program requirements
relating to initial deployment, countermeasures mitigation and the
need for an improved test program. Award of the contract today ensures
continuity of the development and test program, and eliminates the
potential for interruption of planned test activities.

The award of the contract announced today is a normal acquisition
procedure designed to keep the NMD development and testing program on
track. It provides continuity and a disciplined business approach
until the new administration decides on its NMD program direction.

Based upon several recommendations received by both internal and
external experts, the new contract provides the framework for
potential enhanced test and evaluation via an expanded test program
infrastructure and the implementation of a more extensive
countermeasures mitigation program. All future program elements are,
of course, subject to discussion by the new administration.