Boeing loses defense contract

SEATTLE (AP) -- The Air Force has terminated contracts with The Boeing Co. and Cleveland-based TRW Inc. for two demonstration projects worth more than $800 million involving the National Missile Defense system.

The Air Force said Friday that the contract was canceled because the companies faced technical difficulties and cost overruns of up to $79 million over the next four years.

``Naturally it was disappointing,'' said Boeing spokeswoman Kathleen Schroeder. ``Years of effort have gone into this project.''

Jay McAffrey, a spokesman for TRW, said Saturday he could not comment because he was unaware of the program.

The missile defense system is part of the Space-Based Infrared System, a key component in the missile shield the Defense Department wanted to deploy by 2005.

That system would protect the United States from an attack or an accidental missile launch by Russia or China. Satellites in low Earth orbit would spot a missile moments after launch and a land-based interceptor would be fired to destroy it.

Boeing and TRW had been competing to develop the satellite sensors that would detect a missile launch.

``This is rocket science. It's not easy,'' said John Pike of the Federation of American Scientists. ``Clearly the two companies bit off more than they could chew.''

The TRW contract was for $683 million, while Boeing's contract was worth $148 million.

Despite the setback, Boeing remains the prime contractor for the National Missile Defense System. It must demonstrate next year that a rudimentary shield would work, before the government decides whether to go ahead with the project.

Defense Secretary William Cohen recently said deployment of the shield was being pushed back by at least two years -- from 2003 to 2005 -- because of the many technical challenges of the $10.5 billion system.

The Air Force said it hopes to award new contracts by April for a redesigned system that will be effective and affordable.

Schroeder said Boeing will study the Air Force requirements and submit a proposal in hopes of winning a new contract.