Is Boeing's New Submarine-Destroying Warplane a $35 Billion Bust?

Boeing's P-8A Poseidon. Source: U.S. Navy.

Boeing (NYSE: BA  ) designed its P-8A Poseidon warplane to accomplish two missions: scout out wide areas of water, and track down and destroy dangerous enemy submarines gliding beneath it. But a new report out of the Pentagon suggests that Poseidon is failing at both jobs.

According to the Pentagon's chief weapons tester, director of operational testing and evaluation Michael Gilmore, the performance of six Boeing P-8As deployed to Japan from September 2012 to March 2013 has revealed "major deficiencies" in the warplane. Gilmore noted that Poseidon's Raytheon (NYSE: RTN  ) -built radar shows "limitations for some targets." Additionally, the plane's Northrop Grumman (NYSE: NOC  ) -built electronics provide only "limited threat detection" against enemy anti-aircraft radars.

Overall, Gilmore concluded that the Poseidon was "not effective for the intelligence, surveillance, and reconnaissance mission and is not effective for wide area anti-submarine search." For a program that is expected to cost U.S. taxpayers upwards of $35 billion to purchase 117 Poseidons -- and that Boeing hopes will bring in billions more from dozens of international sales at price tags of $299 million a pop -- this is discouraging news.

Opinions may differ
But not everyone agrees with the report. U.S. Navy 7th Fleet commander Vice Admiral Robert Thomas, for one. He's on record saying the P-8A "represents a significant improvement" over the Navy's older Lockheed Martin (NYSE: LMT  ) P-3 Orion subhunters, and is able to "detect, track, and report on more targets" than the Orion can.

P-8A Poseidon deploying a MK-46 anti-submarine torpedo. Photo: Wikimedia Commons.

Undersecretary of Defense for acquisition, technology, and logistics Frank Kendall agrees, calling the P-8A Poseidon a "good product." Sure, it would be better to have a "great" product. But the Poseidon wasn't expected to be great right out of the box. Kendall explains that "the plan was to develop a certain set and field a certain set of initial capabilities for local anti-submarine warfare capabilities and then add capabilities to that in increments." Going forward, Boeing's plan is to gradually introduce upgrades that will improve the plane's anti-submarine warfare capability "over several years."

Sky-high hopes, baby steps
Meanwhile, even if the Pentagon's report sounds critical of the Poseidon, it does admit that the plane is effective in providing small-area searches similar to the P-3C Orion it's replacing. The report confirms that the P-8A can, in fact, conduct "unarmed anti-surface warfare missions" and, indeed, does effective "all-weather surface target search." Plus, it offers "significant improvements in hardware reliability, maintainability, and availability" over the P-3, as well as "increased range, payload, and speed" in comparison with the P-3C Orion.

The plane Poseidon is replacing: Lockheed's P-3C Orion -- exiting, stage left. Photo: U.S. Navy.

Where work still needs to be done, therefore, is in the area of underwater sub-hunting. But while improvements still need to be made, it sounds like the P-8A Poseidon is at least "good enough" for the Navy and enjoys the service's support. And at the risk of damning with faint praise, at the very least the Poseidon is incrementally better at finding subs than the Orions it is replacing -- and getting better with each round of upgrades.

For Boeing investors, that's the really the important part: As Poseidon is better than the alternative, and extending its lead over time, this $35 billion weapons program should be safe. 

Oh, and one more thing
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Read/Post Comments (20) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 01, 2014, at 4:23 PM, TheAncient wrote:

    Interesting that Michael Gilmore has had nothing to say about the F-35's blatant failures, major cost overruns; production so limited for a first line defensive weapon that it would be virtually useless in a major conflict. 60 years? Really? The military has had the F-35 for 3 years now and it still isn't combat certified. The military can't whine about how 'old' the P-3 is not when they still keep the B-52 in their inventory and plan on keeping it there for 50 more years even though parts are near impossible to find because the original makers are long out of business.

  • Report this Comment On February 01, 2014, at 4:24 PM, toddsumner wrote:

    This is exactly why the American taxpayers get so ticked-off. When cannot afford to pay our troops or take care of their medical needs, but we can sure waste billions on ineffective weapons systems.

    It is time to kick the military commanders and other civilian leader to the curb. These individuals do not have the skill sets to handle these complex weapons systems. The have no understanding of the complexity of these systems so they have to defer to the contractors. Therefore, these contractors are able to get everything without having to be financially responsible for their mistakes or ineffective systems.

    If Boeing, Lockheed-Martin, Northrop Grumman, Raytheon, General Dynamics, Honeywell, and other defense contractors cannot step-up and meet their objectives and commitments, then it is time to move to contractors outside the U.S.

    I am tired of spending billions dollars while these companies make obscene profits.

    Lastly, why don't we allow NASA to expand its role into these areas. They have the top technical resources in the Federal government. I am confident that they could design these systems. They could have these conceptual or prototype models built by these different contractors. When they are ready to go into full production, then bid it out to all of the contractors. This is the way to save taxpayers' money while delivering great weapons systems.

  • Report this Comment On February 01, 2014, at 4:46 PM, ilsm50 wrote:

    Boeing needs the money, the admiral needs a job, the Navy needs the P-3.

    Like the KC 135 (KC 46 is also Boeing welfare), the B-52 and the C-130 the P-3 can be flown for the next 50 years.

    Two engines on P-8 vice 4 on the P-3. When one engine goes off line on the P-3 it stays "on station", when one engine goes off line on the P-8 (B737-800) it has about 2 hours to get home!

    The sensors on the P-3 are upgradable to anything new on the P-8, which I do not see any new stuff.

    The Navy will need to use expensive commercial repair facilities for heavy maintenance.

    The test reveal the risks of going on with the kluge.

    Main issue is Boeing is inept at "integration" of compex data backbones on a plane it needed to sell.

    While the Admiral who wants it is a cheerleader who likely will be a consultant to Boeing or some other revolving door contractor.

  • Report this Comment On February 01, 2014, at 4:59 PM, m199413 wrote:

    Let's be clear. No modern weapon system has ever been certified to full scale performance when first delivered. Since the 1980's I worked at Boeing and built numerous aircraft, including the Posiedon. Our approach was to build the best aircraft possible in the time period allowed. None of the delivered aircraft are ever finished. Delivery starts the advanced development and improvement process.

  • Report this Comment On February 01, 2014, at 5:22 PM, rotorhead1871 wrote:

    it will be a good sub hunter, it is fast and the sensors are better than the P3C....the sub always has the advantage....

  • Report this Comment On February 01, 2014, at 5:50 PM, floatnfly wrote:

    from 1st hand experience, the P-3 is is brute and will last another 25-35 yrs with new wing spars and wing plank skins replaced. P-3's can patrol longer have a vast spare parts network and is much cheaper to operaTE because of the yrs and yrs of operation experience and network of support. P-3's fly feet off the deck where as 737 / p8's don't fare well at low altitudes. lockheed has a updates 21st century orion that would out perform and out last brother boing.We are currently replacing numerous wing components extending the life of The P-3 till 2030. The EP-3 is the best sub / patrol aircraft made!

  • Report this Comment On February 01, 2014, at 5:58 PM, Sailndayz wrote:

    The P8 Submarine... Glub, glub...

  • Report this Comment On February 01, 2014, at 6:07 PM, al8603 wrote:

    Yes, it is a bust. The P-3 can fly lower, slower, and loiter longer. And, as others have noted it has 4 engines.

    The Boeing has more advanced avionics. But, apparently, the more advanced avionics is pretty pathetic at hunting subs. The most important function of the platform.

    I believe the groups assessment is accurate. The Admiral is thinking more about his next career than about the Navy, his troops, or national security. This is typical of most 3 & 4 stars.

  • Report this Comment On February 01, 2014, at 7:19 PM, GrayPlayer wrote:

    Why not update the Orion? New is not always "newer!"

    To spend 35 billion on sub detection planes when Russia is the only credible nation with active submarines is ludicrous!

  • Report this Comment On February 01, 2014, at 8:11 PM, tommy1954 wrote:

    ok,lets remember the best information for the enemy is DISimformation about a dod program saying I cant do this and cant do that all the while program is 90% point and forget.i remember in 91 about patriot missle batterys that no one had even heard of came in top news,anyway dod has satellites that see nuclear power subs down to 600 ft in real time so lets don't take the cheese off the trap just yet,we might get a bite.

  • Report this Comment On February 01, 2014, at 8:21 PM, Cuencanolenny wrote:

    Comparing the P3 Orion to the P8 Poseidon is like comparing a P51 to an F22, apples and oranges. The Navy most definitely looked into upgrading the P3 but when comparing to the Boeing 737 the choice became much easier. Also note the pylons under the wings of the P8 which don't exist under the wings of the P3. This provides mounting for air-air or air-surface missiles providing the aircraft with protection. Also compare the size of the fuselage with the P3, much more room for equipment. There was an exercise, prior to contract let, where the Navy wondered whether the aircraft could fly low over the water, as can the P3. The Boeing pilot promptly dropped it down to 100 feet to show the capabilities. Also note the $35B program cost for over 100 aircraft vs the F35 which has cost the taxpayers that much per year since 2001 and still isn't in service. The P8 is the best aircraft for the mission, at the price specified and delivered on time.

  • Report this Comment On February 02, 2014, at 12:00 AM, jethrobdn wrote:

    you can put lipstick on a 737, but it's still a 737.

    you know what mission it is able to accomplish?

    It is able to redistribute vast amounts of wealth from the middle class taxpayer to the boeing shareholder with minimal expense to the manufacturer.

  • Report this Comment On February 02, 2014, at 4:46 AM, ellaerdos wrote:

    Weapons systems should be judged three criteria:

    The ability to Move, Shoot and Communicate.

    The P8, which has more floor space for equipment and operators, is exactly twice as fast as the P3 and can reach an AOR (Area Of Response) in 1/2 the time of a P3. By the movement measurement the P8 is a winner

    The P8, a highly modified 737, carries about half the weapons of a P3. By the shooting measurement the P8 is inferior to the P3.

    The P8s submarine warfare capabilities do not at this time seem to be any improvement over the P3s. I would call that a draw.

  • Report this Comment On February 02, 2014, at 10:48 AM, Riggerwo wrote:

    Gotta love the DOD procurement process...just like the new USAF fighter...over budget in the billions...still tries to kill its we have this aircraft that does the job worse than the aircraft it is supposed to replace....Then as a retired Army Officer they decide to cut my pay and benefits because the DOD budget is too high....maybe they need to take a good look at Procurement...they waste billions of dollars every time a new aircraft, tank or other high tech equipment is designed and fielded....and to add insult to injury all DOD civilians are encouraged and in some areas forced to take classes on the procurement side of the house....the Procurement folks are the ones wasting all the money...and that is before the politicians start trying to pull strings to get the equipment built on their patch...driving up costs...

  • Report this Comment On February 02, 2014, at 11:58 AM, Fog643 wrote:

    Tweaking the electronics suite on the P-8A is not a problem created by Boeing. Their job was to build the airframe. If the ASW & other systems installed in the a/c aren't working properly, those are issues the Navy & the electronics manufacturers have to resolve. Such issues are common in the introduction of large, complex, multi-mission a/c. I would wager that the P-8 will be flying & doing its job excellently for 35+ years - with the USN and other allied nations worldwide.

  • Report this Comment On February 02, 2014, at 12:01 PM, TMFDitty wrote:

    7thcavalry: Thanks for the on-point observations. One other factor to consider would be cost. The unit cost on the P-3C is estimated at about $36M. The Poseidon is somewhere in the upper $200Ms, maybe as high as $300M.

    Right now, I'm not sure the Poseidon is 9-10x better than the plane it's intended to replace. But it's getting better...

  • Report this Comment On February 02, 2014, at 12:40 PM, oldtimenavy wrote:

    one thing not mentioned in the article is fuel burn. The p3 is a proven platform with a company likely to stay in business for years,(spare parts!) and the cost in flight hours to retrain current crews on a new airframe will be in addition to the exorbitant cost of a 737 with the passenger seats ripped out>

  • Report this Comment On February 02, 2014, at 1:59 PM, Fog643 wrote:

    Let the record reflect that the P-3 is a Lockheed Electra - a very unsuccessful commercial airliner - with the seats ripped out.

  • Report this Comment On February 02, 2014, at 3:20 PM, jgjggggggj wrote:

    Wow. Sounds like some Boeing reps doing their part to sell the product. The Orion is long in the tooth but a proven design.

    Further the harder to detect diesels are becoming common place in the rogue nations and the Russians are back up to some of their cold war patrols.

    P-3 could carry stores under the wings and has a large bomb bay for a variety of weapons.

    The turbo prop was a good compromise between the low speed, low altitude endurance of a prop and high speed transit of a jet.

    Lockheed builds pilot's aircraft.

    Boeing builds buses.

    Have flown planes from both companies. Really suspect that the McDonnell Douglas mafia in Boeing got a hold of the P-8. They were always long on promise and short on performance.

  • Report this Comment On February 03, 2014, at 4:04 AM, voiceinshadows wrote:

    This is just now coming out??? Any of us in the ASW community could have told you a long time ago that the 737 is one of the worst possible replacements for a P-3. Nobody actually thought it could do the job it was being slated for. The only thing that shocks me here is that they actually admitted it. It doesn't shock me, however, that they waited until it was too late to do say anything about it.

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