Posted: Tue, Feb 3, 2004, 11:57 AM ET (1657 GMT)
The Defense Department is considering providing up to $1 billion in aid to Boeing and Lockheed Martin to support their launch vehicle businesses. The Wall Street Journal reported Monday that the proposal would expand existing vehicle contracts by adding in additional engineering and mission assurance tasks. Future launch contracts may also shift from the firm fixed price contracts previously used to cost-plus contracts, which provide additional flexibility to cover costs. Those changes could add $1 billion to the $4 billion the Defense Department is planning to spend on Atlas 5 and Delta 4 launches through the end of the decade. The fiscal year 2005 budget proposal, released Monday, includes $200 million in such additional funding for existing contracts. Meanwhile, Pentagon officials estimate that switching seven launches from Boeing to Lockheed Martin last year as part of penalties against Boeing for ethics violations cost the government $223 million. That official also told Reuters that the government is under little time pressure to lift Boeing's suspension and award a new round of launch contracts, saying that it could wait six to eight months before feeling "any pressure on its launch calendar."

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