Pentagon ends Boeing 'kill vehicle' contract, cites technical problems

By Bryan Pietsch

WASHINGTON (Reuters) - The U.S. Defence Department said on Wednesday it is cancelling a Boeing Co <BA.N> contract for a "kill vehicle" due to technical design problems after spending $1.2 billion on the project.

The decision to end the contract for the Redesigned Kill Vehicle (RKV) follows the Pentagon's move in May to issue a stop work order on the project after it "determined the technical design problems were so significant as to be either insurmountable or cost-prohibitive to correct," the Pentagon said.

In December, the Missile Defence Agency and Boeing deferred a design review due to the failure of critical components to meet technical requirements.

Boeing said it accepts the "decision to terminate work" on the vehicle and supports the competition for a new system, it said in a statement.

"After exercising due diligence, we decided the path we're going down wouldn't be fruitful, so we're not going down that path anymore," said Michael Griffin, under secretary of defence for research and engineering. "Ending the program was the responsible thing to do."

The next-generation kill vehicle needs to be prepared to counter current and future technological advances by countries like North Korea and Iran, as well as terrorist groups, a Pentagon official said.

Lead subcontractor Raytheon Co <RTN.N> said in a statement it supported the decision to cease work on the project and initiate a new competition.

(Reporting by Bryan Pietsch; Editing by Bill Rigby)