Army Stops Work on Boeing's Manned Ground Vehicles

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WASHINGTON—The U.S. Army has formally canceled part of Boeing Co.'s manned ground systems contract, under which the defense contractor was expected to build combat vehicles better suited for fighting insurgents in places like Afghanistan.

The formal decision follows a directive by Secretary Robert Gates to cancel Chicago-based Boeing's Brigade Combat Team contract as part of the Pentagon's 2010 budget plan. The manned ground systems are part of the Army's $160 billion modernization effort that Gates is looking to overhaul.

Gates has said a major reason he decided to cancel the Future Combat Systems vehicles is because they didn't adequately protect against the road side bombs that are popular with insurgent fighters. A stop work order was placed on the manned ground systems, as well as on a giant mobile cannon in preparation for the termination.

The Army said it will conduct a 120-day review of a new ground combat vehicle program.

Future Combat Systems, overseen by Boeing and SAIC Inc., combines heavy firepower with high tech gadgetry, like unmanned sensors that would help soldiers fight more effectively. The program has been criticized for using unproven technology, though the Army says some of the equipment is already in use and working well.

In a statement, Boeing said it will begin notifying suppliers and partners of the Pentagon's decision and begin the termination process with the Army. The defense contractor declined to comment further on those discussions, but noted the termination only covers the manned ground system, and not the entire Army program.

Shares of Boeing added 84 cents, or 2 percent, to close earlier at $42.20.

Source: Associated Press