By Andrea Shalal
WASHINGTON (Reuters) - The Pentagon on Thursday said it had ordered a review of Raytheon Co's work on a new ground control system for Global Positioning System satellites after an Air Force-ordered restructuring drove the program's cost significantly higher.
The current contract value is $1.6 billion, according to Air Force officials, which marks an increase of over 80 percent from the initial contract value of $886 million.
Frank Kendall, the Pentagon's chief arms buyer, on Tuesday ordered a "deep dive" review, starting in January, of the next-generation GPS Operational Control System (OCX) that Raytheon is developing, according to his spokeswoman, Maureen Schumann.
Kendall told an investor conference in New York on Tuesday that most U.S. weapons programs were within 2-3 percent of their cost targets, but he was keeping an eye on one program that was "significantly over." He did not name the program.
Schumann told Reuters on Thursday that Kendall was referring to the Raytheon OCX program.
The U.S. Air Force's Space and Missile Systems Center awarded Raytheon a contract in February 2010 to develop the hardware and software needed to control U.S. GPS satellites and ensure the security of their signals, but the program has run into technical challenges and cost increases. Including options, the total contract was initially valued at $1.5 billion.
The Air Force this summer restructured the OCX program, increasing the value of the base contract by 80.5 percent from $886 million to $1.6 billion, and delaying its completion by two years to 2018.
A spokeswoman for the Air Force Space and Missile Systems Center confirmed the contract value was now $1.6 billion, and said it included options for further work. She did not spell out the percentage increase or the value of the options.
Raytheon said it had worked closely with the Air Force to modify the cost and schedule baseline and incorporate new Department of Defense (DOD) cyber security requirements.
"The revised contract reflects the complexity of implementing the DOD's most rigorous cyber requirements coupled with improvements to our systems engineering and software development approach," Matt Gilligan, Raytheon's GPS-OCX program, said in a statement.
Gilligan said the company had successfully completed four of five exercises to prove the system's readiness for launch, and is due to start formal qualification tests in early 2015.
(Reporting by Andrea Shalal; Editing by Alden Bentley, Chizu Nomiyama and Christian Plumb)