Boeing Gets "Mind-Boggling" $2 Billion Bonus Despite Failed Missile Defense System Tests

Tyler Durden's picture

From 2002 through early last year, the Pentagon conducted 11 flight tests of the nation's homeland missile defense system. The interceptors failed to destroy their targets in six of the 11 tests -- a record that has prompted independent experts to conclude the system cannot be relied on to foil a nuclear strike by North Korea or Iran. Yet, as The LA Times reports, over that same time span, Boeing, the Pentagon's prime contractor, collected nearly $2 billion in performance bonuses for a job well done...

Furthermore, The Pentagon paid Boeing more than $21 billion total for managing the system during that period.

An LA Times investigation by David Willman also found that the criteria for the yearly bonuses were changed at some point to de-emphasize the importance of test results that demonstrate the system’s ability to intercept and destroy incoming warheads.

Early on, Boeing’s contract specified that bonuses would be based primarily on “hit to kill success” in flight tests. In later years, the words “hit to kill” were removed in favor of more generally phrased benchmarks, contract documents show.


L. David Montague, co-chair of a National Academy of Sciences panel that documented shortcomings with GMD, called the $2 billion in bonuses “mind-boggling,” given the system’s performance.


Montague, a former president of missile systems for Lockheed Corp., said the bonuses suggest that the Missile Defense Agency, the arm of the Pentagon that oversees GMD, is a “rogue organization” in need of strict supervision.


The cumulative total of bonuses paid to Boeing has not been made public before. The Times obtained details about the payments through a lawsuit it filed against the Defense Department under the Freedom of Information Act.

The Times asked the Missile Defense Agency in March 2014 for information on bonuses paid to GMD contractors.

 Boeing objected to release of the data, and the agency denied the newspaper’s request, saying disclosure might reveal “trade secrets and commercial or financial data.”


The Times then sued in federal court last year, asserting that the public had a right to know about the payments. The government’s lawyers later agreed to release the information if Boeing would not intervene in the litigation “or otherwise take steps to prevent disclosure.”


Boeing eventually acquiesced, and the Defense Department settled the suit with a single-page letter listing the sum total of bonuses paid to Boeing from Dec. 31, 2001, to March 1, 2015.


The figure: $1,959,072,946.


The precise criteria for bonuses could not be obtained for each of the relevant years. However, documents on file with the Defense and Treasury departments show that the missile agency at some point altered a central criterion.


“In recent contract terms, the words ‘hit-to-kill’ have been changed to support the more detailed documented objectives of each respective flight test. For intercept flight tests conducted under the current design and sustainment contract, a successful intercept remains a key performance objective.”

Whatever their rationale, by characterizing the test as a success, the agency and the contractors may have bolstered the prospects for performance bonuses, according to missile defense specialists.

Boeing, in its most recent annual report, underscored the significance of GMD to its finances. The company could face “reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise,” the report said.


Timothy Sullivan, a former federal contracting officer who examined GMD financial documents at the request of The Times, said the bonus provisions were extraordinarily complex.


“How you administrate something like this is mind-boggling to me.… It is an administrative nightmare,’’ said Sullivan, an attorney who represents defense companies and other government contractors in Washington for the law firm Thompson Coburn LLP.


Montague, the former Lockheed Corp. executive, said the intricate bonus system reflected the missile agency’s lack of rigor in engineering and contracting. If the goals for managing GMD had been adequately defined at the beginning and spelled out in contracts, there would be little need for lucrative incentives, he said. 


By relying on bonuses, Montague said, the missile agency has effectively told Boeing: “We don’t know what we’re doing, but we’ll decide it together and then you’ve got to work toward maximizing your fee by concentrating on those areas.”

Is it any wonder that The Pentagon has 'lost' a few trillion dollars?

Mission Accomplished!!

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Latitude25's picture

I can see Putin laughing now.  Corruption is so deep nothing even has to work.  Just print the dollars and pass them to cronies.

AVmaster's picture

Who said its a failure?

Considering the target is about the size of a telephone booth flying thru the air at Mach 5 and is flying higher than a passenger airliner, they are able to hit it, 50% of the time...


Thats pretty damn good.


Lets see you try and do that...

Ballin D's picture

When the pizza delivery guy shows up with half my order I don't pay him someone else's money + tip, I tell him to fuck off. They took a contract for double what it should cost and didn't deliver. Work with the shop across the street until they fulfill their obligation.



Does no one have any concept of what a billion dollars means?? At this point, it'd be more economical to just have your bottom barrel pilots crash f35s into missiles as needed.

NidStyles's picture

Pizza is easy, hitting missiles mid-flight is nearly impossible. It was impossible 15 years ago.

bleu's picture

War is an EVIL business. Expect no less from the DEATH MERCHANTS.

Ballin D's picture

thats great.  dont tell me you can do it when you cant.  And if you try anyway dont move the goalposts to milk the taxpayer.  Who the fuck negotiated something for nothing with boeing in changing that contract?  They are the real criminal here. Lose your job, no pension, do not pass go.

Mustafa Kemal's picture

Are you trying to assert that it will be "pretty damn good" if only half the warheads arrive?

Nylsaar's picture

Most people who can hit a bullet with a bullet 50% of the time will probably fire at least 3 bullets.

Agstacker's picture

Would you trust a doctor to operate on you who passed his medical exams with a 50% score?

adanata's picture


You are so right. People who don't really care paying people who don't know what they're doing... and who also don't care as long as they get the money. However, we're taking this ride together whether we like it or not. From here to the furthest horizon we can see nothing but crap. :/


booboo's picture

Boeing should pay the Russian to figure it out. Their rocket brains are light years ahead of us

Winston Churchill's picture

The looting will continue until morale improves.

de3de8's picture

Just gets added to an already unpayable debt.

JRobby's picture

Nice try kid, here's your participation trophy!

OR: thanks for the guaranteed contact Congress tools!

Overfed's picture

The boyz at Boing ( I spelled it that way intentionally) know how shit works. They pay their contributions to the right people, and they collect their pay that was taken from you and me at gunpoint.

Stuck on Zero's picture

Bet on it ... the people handing out the bonuses will soon be working for Boeing.

BurningFuld's picture

Just subsidies to be able to "fairly" compete with Airbus and now Bombardier.

Never One Roach's picture

I don't think BA is worth its price right now.

knukles's picture

Some days I wish I'd never taken the Red Pill.

Doom Porn Star's picture

It sucks to know the truth when the truth is so fucking ugly; but, I never for an instant regret chosing to be informed versus existing in a state of self imposed blissful ignorance and attendant stupidity.

JRobby's picture

Know the habits of your enemies 

Exploit them

knukles's picture

Absolutely agreed.
Awake is the way we were intended.
Almost as if Everything, and I do Mean Sincerely Everything, is meant to Distract one from an Awakening
Which is in a sense, True Evil
Not as a Metaphor, But as a True Reality, a Manifestation of Pure Evil with respect to Natural Law

espirit's picture

I still would prefer the taste of steak over what I have been eating.

Latitude25's picture

And when proven wrong, simply recognize it and adapt to the reality even though it may be difficult.

BennyBoy's picture

This kind of "bonus" paid by the pentagon for failures has been going on for decades.

Set the bonus bar low enough and anyone can jump over.

knukles's picture

For the kind of money they're handing out I'd consider slithering under the bar ...
A true ethical dilemma
But no.
Keep your crime and greed for yourselves Your Lordships.
I prefer sleeping well, a clear conscience, a quiet mind.

Radical Marijuana's picture

Empires Then And Now

By Paul Craig Roberts, April 3, 2012.

"... Washington’s empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America. The military-security complex, Wall Street, agribusiness and the Israel lobby use the government to extract resources from Americans to serve their profits and power. The U.S. Constitution has been extracted in the interests of the security state, and Americans’ incomes have been redirected to the pockets of the 1 percent. That is how the American empire functions. ... In this new empire, success at war no longer matters. The extraction takes place by being at war. Huge sums of American taxpayers’ money have flowed into the American armaments industries and huge amounts of power into the Department of Homeland Security. The American empire works by stripping Americans of wealth and liberty. ..."

Slomotrainwreck's picture

The figure: $1,959,072,946.

... for a coin flip result.

michelp's picture

"The figure: $1,959,072,946."

The figure: $1,959,072,946.99

Fix it for you.


Tallest Skil's picture

They just HAD to buy that extra song on iTunes.

whatamaroon's picture

Aegent; It's only money Part 2, the vid shows how money is created out of thin air by the Feds, good instrutional stuff. Set to some good tunes IMO

European American's picture

The Power of War has no limits to the greedy.

JRobby's picture

Mame these fuckers, let them limp and wheel around for a couple of years, them bulldoze them into a pit.

Doom Porn Star's picture

Maim is the meme for the mean.

Yen Cross's picture

  They can always issue more corporate debt at NIRP and buy Tesla and Space- evaporated<


  Better yet, they can get a personal loan from that creepy clown that runs Faceplant.

 Musk and Zuckertard should build that giant wind~tunnel and launch themselves through it, with a fruit basket.

  * at least that failed launch had balls. lol

ebworthen's picture

Everyone is a winner!  They probably got participation trophies and embroidered jackets too.

chunga's picture

Fuckin' millennials at it again.

Doom Porn Star's picture

Millennials at Boeing?

Fat and grey with few Just-For-Men exceptions I'll wager..

chunga's picture

That's right. It takes many years of experience to get into the fiat rocket biz, besides, everybody needs a safe space.

Duc888's picture



Keep paying taxes muthafukkerz.  Ha!


To Infinity And Beyond's picture

The MIC is screwing the taxpayer at every opportunity. God forbit we ever have to rely on these over-priced and under-performing systems.
Isn't it a little troubling that Russia did to ISIS in 6 months what the US couldn't (in 2 years).

Overfed's picture

Unfortunately for us, about the only jobs left in the US have to do with gubmint cheese.

SirBarksAlot's picture

I think V reently reported that 1/3 of the jobs in the US are government jobs.

SixIsNinE's picture  - Space X Rocket failures & fraud    cia John Brennan calling chemtrails Stratospheric Aerosol INjection on June 29, 2016 addressing the Council on Foreign Relations, and for a mere $10 billion a year, it's a good deal to confront gloBull warming  - SPACE agencies exist to make sure you know nothing about space

Cautiously Pessimistic's picture

Graft & Corruption has rotted us to the core.  No one will have to shoot missles at us.  A patient adversary only has to wait for us to implode.... and, we will.

whatamaroon's picture

obutthole has been trying these last 7 1/2 yrs.