Multi-Year Contracts Stabilize Programs

MILITARY | UTILITY

The U.S. Army expects to save about $500 million by signing a five-year contract with Boeing to support the CH-47 Chinook next month.

"We’ve estimated half a billion savings," Col. Newman Shufflebarger, Army Chinook project manager, said April 7 at the annual Army Aviation Assn of America conference outside Washington. He expects to complete negotiations and sign the multi-year contract in June.

It would cover 180-190 Chinooks, a mix of -47F and G models.

The savings would come in part from lower production costs that Boeing would realize by buying raw materials and long-lead items under longer-term agreements with suppliers.

Another multi-year contract has put the Bell Helicopter/Boeing V-22 Osprey program on the most solid financial footing in its 26-year history. The Naval Air Systems Command gave the companies a $10.4 billion contract on March 28 to build another 167 of the tilt-rotor troop transports during a five-year timeframe for the U.S. Marine Corps and Air Force.

The Bell-Boeing partnership recently delivered the 100th of 458 Ospreys planned. NavAir expects the five-year deal to save $427 million compared to buying Ospreys on short-term contracts by allowing the Boeing production line in Ridley Park, Pa. and the Bell final assembly line in Amarillo, Texas to operate on a more stable, longer-term basis.

The companies will build 141 MV-22s for the Marines and 26 CV-22s for the Air Force Special Operations Command under the new contract at a flyaway price of about $60 million per MV-22 and $73 million per CV-22, down from a previous $69 million for the MV- and $86 million for the CV-, according to NavAir. The contract will increase V-22 production from 18 a year to 38 by 2013. NavAir awarded the deal as the first Marine V-22 combat deployment in Iraq neared its end after seven months. — Richard Whittle contributed to this report