Letter Agreement re: NMD ABV Subcontract - The Boeing Co. and Orbital Sciences Corp.
J. W. Evatt The Boeing Company
Executive VP, Space & Comms. 1421 Jefferson Davis Highway MC LS-C2
President-Government Sys. & Suite 200
General Manager-NMD Program Arlington, VA 22202
December 4, 2001 Ltr. No. 1-1103-MDS-RHK-066
To: Orbital Sciences Corporation
3380 S. Price Road
Chandler, AZ 85248-3534
[BOEING LOGO] Attention: David W. Thompson
Chairman of the Board and Chief Executive Officer
Subject: Terms and Conditions of Potential NMD ABV Subcontract
Reference: Boeing RFP NMD-DJC-2001-00049 (17 August 2001),
Clarification Request 0-164, Financial Condition of OSC
Dear Mr. Thompson:
The Boeing Company (Boeing) and Orbital Sciences Corporation
(Orbital), anticipating that Boeing will enter into negotiations
with Orbital for a subcontract on the Ground-based Midcourse
Defense Segment (GMDS) (formerly, National Missile Defense or
"NMD") Alternate Boost Vehicle (ABV) program, have agreed to
include certain terms and conditions identified in this letter
in any such subcontract. These terms and conditions are in
addition to those identified in the solicitation. This letter
is written to confirm and document your agreement with this
understanding. If you do agree, please so indicate by
executing the acknowledgement at the end of the letter and
returning one original to the undersigned.
Herein, the term "ABV Replacement Contractor" shall mean Boeing
and/or a Boeing-designated third party. The term "transition
period" shall mean that time after the Parties hereto agree to
transition work under GMDS ABV subcontracts from performance by
Orbital to performance by an ABV Replacement Contractor.
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1. Terms and conditions offered by Orbital in response to the referenced
Clarification Request:
a. Custody of all property in which the government has a vested interest
through such FAR clause flow-downs as FAR 52.245-5 [(DoD Deviation)
Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour
Contracts)] will be transferred upon a transition to a Replacement ABV
Contractor. Orbital's Launch Systems Group will maintain an effective
material control system through which all such property will be segregated or
conspicuously marked, to include (but is not limited to) work-in-progress and
inventory.
b. Orbital will provide in place use of Orbital-owned ground support
equipment and/or tooling that is necessary to ABV contract deliveries for a
period of one year (or such lesser period as required by the ABV Replacement
Contractor), during which time the ABV Replacement Contractor shall have the
option to purchase all or individual pieces of this equipment or to make
other arrangements.
c. (1) Orbital will deliver all documented intellectual property and data
(including, but not limited to, software, drawings, processes, et cetera) in
which the Government has a vested interest under the ABV contract, to include
items ordered under deferred ordering clauses of the subcontract, to the ABV
Replacement Contractor. (2) Orbital will provide access at cost to all
company employees who may be able to assist in collation, interpretation,
and/or implementation of such intellectual property and/or data. Further,
Orbital agrees to permit the ABV Replacement Contractor to recruit and hire
Orbital employees assigned to the ABV program during the transition period.
d. Commencing at the start of any transition period, Orbital will grant
Boeing and the ABV Replacement Contractor a License to use all Orbital-owned
intellectual property necessary or beneficial to the ABV program on a
rent-free basis.
e. Orbital will make a good faith effort to negotiate into each ABV-unique
subcontract the unilateral right to assign such subcontracts to a third
party. Orbital will identify Boeing as a third party beneficiary with respect
to deliveries for the ABV program in each of its relevant subcontracts.
f. For subcontract and purchased ABV items that are to be delivered, or are
delivered, after a transition occurs, Orbital will
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redirect or forward the deliveries as specified by ABV Replacement Contractor
(subject to appropriate payment arrangements).
g. Orbital agrees, if a transition is to occur and subject to Government
approval, to cede or assign any space it has, or is scheduled to use, for ABV
in Government facilities, such as Vandenberg Air Force Base Missile Assembly
Building, to the ABV Replacement Contractor.
h. Commencing at the start of any transition period, Orbital will offer to
Lease at a market rate portions of its own industrial facilities in Chandler,
Arizona to the ABV Replacement Contractor for a period of one year (or such
lesser period as required by the ABV Replacement Contractor)
i. Orbital agrees to continue as long as practicable to support the ABV
program on a cost reimbursement basis through any transition period.
2. Additional terms and conditions as agreed between the Parties.
a. Audit Rights. [1] Seller, if requested by Boeing, shall provide financial
data, on a quarterly basis, or as requested by the Boeing Credit Office for
credit and financial condition reviews. Said data shall include, but is not
limited to, balance sheets, schedule of accounts payable and receivable,
major lines of credit, creditors, income statements (profit and loss), cash
flow statements, firm backlog, and headcount. Copies of such data are to be
made available within seventy-two (72) hours of any written request by
Boeing. Boeing shall treat all such information as confidential in accordance
with Boeing Procedure. [2] Orbital agrees to grant Boeing, within seventy-two
hours of a request by Boeing, on a non-interference basis the right to have
access to and the right to audit any directly pertinent books, technical
and/or cost documents, papers, and records relating to costs billed on the
ABV program.
b. Option to Escrow Materials. At Boeing's request, Orbital agrees to place
in escrow under an escrow agreement approved by Boeing, the cost of which
shall be billed to Boeing, the then current versions of software, drawings,
and processes [herein referred to as the Escrow Materials] necessary and/or
beneficial to the design and the production efforts under the ABV
subcontract(s) issued by Boeing to Orbital. The Escrow Materials to be stored
by the Escrow Agent. One copy of the most current version of each item of
Escrow Material will be provided to the Escrow Agent, including, but not
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limited to, support materials such as existing annotated source code
listings, flow charts, decision tables, schematics, drawings, specifications,
documentation, design details, and other related documents and all technology
necessary to understand the design, structure, and implementation of the
Orbital deliverables as produced by Orbital under the ABV subcontract. Escrow
Materials will be subject to release to Boeing by the Escrow Agent upon
Boeing's request and (1) agreement of the Parties, or (2) the filing of a
voluntary or involuntary petition in bankruptcy.
c. Right of First Refusal. In the event financial conditions warrant, e.g. in
the event of a voluntary bankruptcy or to preempt an involuntary bankruptcy,
Orbital grants to Boeing a right of first refusal to acquire title to the
assets and/or facilities, and Licenses to use intellectual property and data,
that are necessary or beneficial in the production of the Orbital ABV.
If you have any questions or other comments, please contact either the
undersigned at (703) 872-5952 or Richard Kaake at (703) 413-6487.
Sincerely yours,
/s/ J.W. EVATT
J.W. Evatt
Executive Vice President & General Manager
Missile Defense Systems
The Boeing Company
Acknowledged as what will be included in any ABV subcontract:
/s/ DAVID W. THOMPSON
David W. Thompson
Chairman of the Board & Chief Executive Officer
Orbital Sciences Corporation