FARNBOROUGH United Technologies Corp (UTX.N) on Monday announced that its Sikorsky Aircraft unit had signed a five-year, $8.5 billion contract to build 653 H-60 Black Hawk and Seahawk helicopters for the U.S. Army and Navy.
The contract includes options for up to 263 more aircraft that would increase the value of the contract to $11.7 billion if exercised. Actual production quantities will be determined year-by-year based on funding allocations set by Congress and Pentagon acquisition priorities, the company said.
"By buying a five-year quantity of four helicopter models in a single joint-service purchase, the two services have enabled Sikorsky and our suppliers to aggressively control our long- term costs," said John Palumbo, Sikorsky's vice president for Black Hawk production.
He said the move would help Sikorsky stabilize its Black Hawk production over time.
This is the eighth multi-year production agreement signed for this program since 1982. The agreement puts in force a multi-year procurement that was approved by Congress as part of the Pentagon's fiscal 2012 budget. It includes several variants of the helicopter to be used by the different military services and runs through fiscal 2016.
The procurement deal for the workhorse helicopters includes options that could add $1 billion to $2 billion to the contract's value, if exercised, said sources, who were not authorized to speak publicly.
"The Black Hawk series has become the poster child for multi-year contracts," said aerospace analyst Richard Aboulafia of the Virginia-based Teal Group. "Guaranteeing procurement numbers for five-year blocks has been extremely effective in bringing down costs."
No comment was immediately available from the Army, which took the lead in negotiating the agreement.
Sikorsky President Mick Maurer told Reuters earlier that the company was "on track" for the multi-year procurement deal but declined to give any details.
The UH-60 Black Hawk, which first flew in 1974, is a twin-engine single-rotor helicopter used to transport assault troops, evacuate injured troops and carry out special missions.
It normally carries 12-15 troops but can accommodate up to 20.
(Reporting By Andrea Shalal-Esa; Editing by Bob Burgdorfer)