Turkey demands $183M in penalties from Boeing

The Turkish government has demanded that Boeing pay $183M in penalties stemming from the delay in delivery of Peace Eagle AEW&C aircraft. The Peace Eagle is based on the Boeing 737, and performs the same role as the USAF E-3 AWACS, with a more advanced radar and electronics suite.

The initial delivery was due to take place in 2008, but the first aircraft was delivered in January of this year. Two more aircraft will be delivered this year, with the last delivered in 2015. The total cost of the deal was $1.3B, with the Turkish government paying $637M in advance.

The Turkish government has said they'll take the penalty in services, instead of monetary payments. They want the initial start up support to go from two years, to five, with three years of software maintenance, and $32M in spare parts. In return they will write off the penalties.

ANKARA — The Turkish government has demanded $183 million worth of penalties from Boeing due to major delays in the delivery of spy planes to the NATO ally, officials said Feb. 18.

A senior procurement official familiar with Turkey’s airborne early warning and control (AEW&C) aircraft program said that Ankara demanded Boeing pay the penalty in services.

Cemal Evci, project coordinator at the Undersecretariat for Defense Industries (SSM), told reporters that the Turkish Defense Ministry demanded an increase in the start-up support period from an initial two years to five years as well as three years of software maintenance service in addition to $32 million worth of spare parts in return for writing off the $183 million penalty and accumulated interest due to delays in the AEW&C program.

www.defensenews.com...

Makes good sense. "Ye receive not because ye ask not" and all. There's generally a penalty provision in the contract already, but Boeing might well prefer to extend the service contracts at less actual cost and no lump sum from the coffers. They'll negotiate down until it's a win-win.

Seems like Turkey is being reasonable and it's a good option for Boeing.

reply to post by OccamsRazor04


Oh, they're being extremely reasonable considering the delays and problems that Boeing ran into with both this and the Wedgetail for the RAAF.

reply to post by Zaphod58


I drove by that Turkish unit sitting at Boeing field all summer. It didn't move once. Pigeons liked it though...

reply to post by nwtrucker


They were doing a lot of ground testing working out some bugs with the radar and systems integration prior to delivery.

OccamsRazor04
Seems like Turkey is being reasonable and it's a good option for Boeing.

Turkey absolutely seems to be quite reasonable in what it is asking and they are really leveraging the media and public perspective of the delays to get Boeing to step up and get it done. I think that is a brilliant way to really pressure them without forcing a more "real" penalty. Support valued at x-dollars is a much better bargain for Boeing than having to hand over actual dollars, especially if they don't need much support in the future.

Seems like good business sense all around, with the exception of Boeing getting behind in the first place.

reply to post by evc1shop


Boeing has had a history of putting the cart before the horse lately and setting unrealistic goals. Although to be fair this time it wasn't entirely their fault. There were radar integration and software issues with the new radar and antenna.