UPDATE 1-US Air Force revamps Raytheon missile contract
* New contract frees $104 mln in funding for Raytheon
* Air Force says on track to be back on schedule by mid-2014
* Raytheon says program 'top priority'
By Andrea Shalal-Esa
WASHINGTON, Dec 20 (Reuters) - The U.S. Air Force said on Thursday it has restructured a troubled air-to-air missile program run by Raytheon Co, freeing $104 million in immediate funding for the company and putting the program on track to return to its original schedule by mid-2014.
Lieutenant General Charles Davis, the top Air Force official in charge of acquisition issues, said the two sides reached agreement last week on new contract terms that will pay Raytheon for delivery of actual missile rounds rather than the "performance-based" milestones used in the past.
"That gets us back to where we would have been ... roughly in the middle of 2014," Davis told Reuters in an interview at his Pentagon office.
He said the Air Force would continue to keep close tabs on Raytheon's AIM-120 Advanced Medium-Range Air-to-Air Missile (AMRAAM), which is used by Air Force fighter jets and Navy planes that fly off carriers.
"At this point right now the only thing that's important ... is the delivery of the missiles," Davis said, describing the Air Force's decision to withhold funds from Raytheon "very prudent" after repeated failures of the missile's rocket motors. Continued...