March 14, 2013
On Thursday, the Department of Defense awarded Boeing (NYSE: BA ) a $128.4 million modification to a previously awarded cost-plus-award-fee contract to perform "extended lifetime fatigue testing, teardown, and post-teardown analysis of the P-8A airframe under the P-8A System Development and Demonstration Program."
The P-8A Poseidon is Boeing's newest jet-powered, long-range subhunting aircraft and, in many arsenals, the successor to Lockheed's venerable prop-driven P-3 Orion. Based on a modified "Next Generation" Boeing 737-800 airframe, with 737-900 wings, and equipped with engines from CFM International, the P-8A flies at speeds upwards of 560 mph and has a range of 1,200 nautical miles.
The U.S. Navy has plans to buy 117 Poseidons over time -- and time is key to this contract. According to the Pentagon's announcement, the engineering tasks Boeing will be asked to perform on the test P-8As are "necessary to authorize P-8A operations for up to 150 percent of the specified service life of the airframe, dependent upon the results of the extended lifetime testing." In other words, if the tests check out, Poseidons could be kept in U.S. military service for years after their originally designed service life -- potentially saving taxpayers billions of dollars, and extending the period over which Boeing can expect to reap maintenance revenue from keeping the airplanes flying.
Work on the instant contract is expected to be complete in December 2018.
More Expert Advice from The Motley Fool
With great opportunity comes great responsibility. For Boeing, which operates as a major player in a multi-trillion dollar market, the opportunity is absolutely massive. However, the company's execution problems and emerging competitors have investors wondering whether Boeing will live up to its shareholder responsibilities. In this premium research report
, two of The Fool's best industrial industry minds have collaborated to provide investors with the key, must know issues around Boeing. They'll be updating the report as key news hits, so make sure to claim a copy today by clicking here now