Unit cost of Raytheon artillery program soared

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The unit cost of Raytheon Co’s Excalibur precision-guided projectile has increased nearly 200 percent above initial estimates, breaching congressional thresholds and triggering a mandatory review for possible termination, the Pentagon said.

The increase stemmed from a big cut in the Army’s planned purchase from 30,388 Excalibur artillery rounds to just 7,050, the Defence Department said in a news release explaining its most recent acquisition cost report to Congress.

While the program’s project unit costs increased by nearly 200 percent, the overall cost of the new weapons program fell by US$867 million or 35 percent to US$1.6 billion, the Pentagon said.

For the program to continue, the Pentagon’s top acquisition official must certify that it meets five criteria, including that it is essential for US national security needs, Reuters reports.

The Army’s decision to scale back its purchases of the new Excalibur projectiles came in response to an internal review ordered by the vice chief of the Army.

The unit cost increase and breach of the threshold in the Nunn-McCurdy law was expected given the change in the Army’s plans, but details were not released until Monday.

In August, Raytheon addressed the issue, saying, “While the reduced production numbers drive up the cost of the round for that lower quantity, the Excalibur Ib program still represents value and provides cost-savings to the US Army over time.”



Raytheon is due to deliver the new 155 mm precision-guided projectile to the Army in 2012, and has already completed more than 100 test flights. The projectile uses global positioning satellite data to target the projectile and give troops better accuracy, while limiting damage to unintended targets.