Boeing Wins $4 Billion, Five-Year Chinook Deal
Boeing Co. has won a five-year contract with the U.S. Army for as many as 215 CH-47F Chinook helicopters in a deal potentially valued at more than $4 billion, the company announced.
The service plans to buy at least 177 of the twin-engine, heavy-lift helicopters made by the Chicago-based company, according to a June 11 release. The agreement includes options to increase the quantity to 215. Deliveries are set to begin in 2015.
“This multi-year contract provides unprecedented savings for the U.S. Army and American taxpayers,” Col. Robert Barrie, the Army’s project manager for cargo helicopters, said in the statement. The savings that result from not having to renew the deal on an annual basis were estimated at $800 million.
The Army has 241 CH-47F helicopters in the fleet. The contract will bring the service close to its goal of having an inventory of 464 F-models, a newer version of the aircraft and designed for service through 2030.
The helicopter is the backbone of combat, logistics and humanitarian operations for the Army and other militaries around the world. Some 16 active-duty and National Guard units fly the chopper.
Boeing has invested $130 million to upgrade the Chinook manufacturing plant near Philadelphia in Ridley Park, Pa., according to Chuck Dabundo, vice president of the company’s cargo helicopter programs.
“The Army is benefiting not only from the efficiencies of a multi-year contract but also from the production efficiency gains Boeing and our suppliers have made,” he said in the release.
The Pentagon’s inspector general last week released a summary of a report indicating Boeing overcharged the Defense Logistics Agency on aircraft spare parts. Because the company didn’t maintain “complete cost and pricing data,” the agency said it paid about $13.7 million “in excess of fair and reasonable prices.”
The Army in fiscal 2014, which begins Oct. 1, wants to spend more than $5 billion on aircraft, including 38 CH-47F Chinook, 65 UH-60M Black Hawk helicopters made by United Technologies Corp.‘s Sikorsky Aircraft Corp. 19 MQ-1 Gray Eagle drones made by General Atomics Aeronautical Systems Inc., according to its budget request.
For the remainder of this fiscal year, the Pentagon is seeking permission to shift $9.6 billion to pay for higher-than-expected war costs and other expenses. That includes $306 million from aircraft procurement by reducing funding to build and upgrade AH-64 Apache helicopters made by Boeing, among other programs.