Raytheon [RTN] and the Air Force said they have revised the delivery schedule and resumed payments for the Advanced Medium-Range Air-to-Air Missile (AMRAAM).
Raytheon spokesman John Patterson said Dec. 21 in a statement the company has resumed making deliveries, adding the company delivered more than 120 missiles this fall and in December delivered the first missiles with the new rocket motors developed by Norwegian manufacturer Nammo. Raytheon spokeswoman Holly Caldwell said recently the company delivered 44 missiles with Nammo motors and ATK [ATK] rocket motor cases in December. Raytheon contracted with Nammo in case ATK, its first rocket motor contractor, couldn’t fix its rocket motor issues.
Patterson said Raytheon “will be ramping up quickly to a production rate commensurate with meeting customer requirements.” He added that Raytheon will continue to have two companies, ATK and Nammo, supplying rocket motors.
Air Force spokesman Ed Gulick said Dec. 21 in a statement the service has resumed payments to Raytheon after withholding funds due to Raytheon falling behind in delivery schedule. Gulick said the Air Force had withheld payments from February through early December 2012 and at the time of the official suspension announcement, around $330 million remained to be paid on the Lot 24 contract. Gulick said with the resumption of payments, no funding remains withheld from Raytheon.
Gulick said the service and Raytheon signed a contract modification Dec. 11 restructuring the AIM-120C7, AIM-120D and the Baseline Rocket Motor (BLRM) schedules to “reflect more realistic missile deliveries,” which lifted the suspension of payments imposed in February 2012 and allowed for an immediate payment of around $104 million for events completed. Gulick said this payment enabled future payments to be made as all-up-round missiles (guidance section and motor) are delivered. Gulick said restructuring the AIM-120C7 and AIM-120D delivery schedules will enable production to be back to its original schedule by mid-2014.
Gulick also said Raytheon would provide “consideration packages,” or payments, ranging from $27 million to $33 million to the United States and international customers depending on how Mean Time Between Failure (MTBF) is calculated and what repair models are used. Gulick also said international customers will also receive no-cost labor to install a variety of software upgrades for those harmed by delayed BLRM deliveries and warranty coverage and no-cost repairs for customers awaiting AIM-120C7s.
Gulick said the U.S. gains warranty coverage for approximately 325 AIM-120D AUR missiles currently without coverage through Lot 26.
The Air Force in February suspended $621 million in payments to Raytheon due to late AMRAAM deliveries caused by fault rocket motors provided by ATK. Raytheon then enlisted Nammo’s help as a second source of rocket motors.
The restoration of payments and the revised delivery schedule were first reported by Reuters and Bloomberg.