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Raytheon Loses Fees as New Military GPS System Delayed

According to Bloomberg , “Raytheon Co. has lost $42 million in U.S. fees because of delays in delivering a network of ground stations for new Global Positioning System satellites designed to be more secure from hacking and jamming.”  

“The loss of almost half of the $85 million in Air Force fees that had been set aside for Raytheon so far is a setback for a satellite control system that’s running about four years late and a contract that’s more than doubled in estimated cost to $1.9 billion from $886 million in 2010.”  

“Raytheon is losing payments under its cost-plus contract, in which the Defense Department shoulders overruns in costs for a new system while withholding fees that are set aside to give a contractor an incentive to meet performance, budget and deadline goals. The Pentagon is moving toward more fixed-price contracts, in which the contractor bears more of the risk.”

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