Bell-Boeing Working with Navy on Next V-22 Contract

by: Matthew Potter
August 8, 2011

Category: Bell, Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, Military Aviation, production program, Services, Textron, U.S. Air Force, U.S. Marine Corps, U.S. Navy | RSS 2.0

Boeing (BA) along with Bell Helicopter, part of Textron (TXT), have been building the versatile V-22 Osprey tilt rotor aircraft under a current five year contract with the U.S. Navy. The V-22 is used by the Marine Corps for transport missions and the U.S. Air Force for search and rescue and Special Operations. The current production contract is for 174 aircraft. The companies have opened negotiations with its customers on the award of a second production contract.

The V-22 has had a long development time but finally began entering service in the early part of this century despite being conceived almost forty years ago. The program was started, stopped and re-started as the Defense Department and various Presidential Administrations argues about the cost and utility of the aircraft. Now that it is in service the aircraft has performed admirably in both Iraq and Afghanistan with no reported combat losses although one crashed there last year.

The new contract for up to 122 of the aircraft between 2013-2017 has the potential value of $8 billion and would be a multi year award. The V-22 current fly away cost is about $65 million. This might go down as more of them are built and Bell-Boeing negotiate better deals with suppliers and sub-contractors. The benefit of awarding a multi year contract such as this is that it allows longer and smoother planning of the production line offering a better price for the government.

The majority of stable U.S. aircraft production lines are under similar constructs. These include aircraft like the C-17 and C-130J transports and helicopters such as the UH-60 Black Hawk. The transition of the V-22 to this contract type would indicate that it has reached a point where the user is very comfortable with its performance and price.

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