The U.S. Army and Navy today signed an $8.5 billion contract with Sikorsky Aircraft Corp., a subsidiary of United Technologies Corp. (NYSE:UTX), to buy a baseline quantity of 653 BLACK HAWK and SEAHAWK® helicopters through December 2017. The five-year contract will yield significant savings for the U.S. Government compared with purchasing the same quantity across five separate annual agreements.
The five-year agreement also allows the Army and Navy to order as many as 263 more aircraft within the same contractual terms. If exercised, the optional purchases could push the contract value as high as $11.7 billion. Actual production quantities will be determined year-by-year over the life of the program based on funding allocations set by Congress and Pentagon acquisition priorities.
“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 aircraft production. “Furthermore, by ordering a similar number of aircraft year-over-year, the Army and Navy have ensured that we can stabilize our supply base over the same period of time.”
Designated Multi-Year 8 — for the eighth multi-year order of H-60 helicopters since fiscal year 1982 — today’s formal signing ends more than three years of planning, including six months of negotiation. The base contract includes UH-60M utility and HH-60M MEDEVAC helicopters for the U.S. Army, and MH-60R and MH-60S helicopters for the U.S. Navy. To reach the full baseline value of $8.5 billion, the services are ordering aircraft in the base agreement to be sold via the U.S. Government’s Foreign Military Sales program. These aircraft include Foreign Military Sale (FMS) UH-60M aircraft for several allied countries and MH-60R SEAHAWK anti-submarine and anti-surface warfare helicopters for the Royal Australian Navy. Colonel Thomas Todd, the Utility Helicopters Project Manager, stated that, “This contract will provide our Army, sister services and Allies with state-of-the-art modernized helicopters. Moreover, this effort will stabilize our manufacturing base during this period of fiscally challenging times.”
BLACK HAWK and SEAHAWK aircraft deliveries under the new contract will begin this month. Sikorsky produces the two H-60M BLACK HAWK and two MH-60 SEAHAWK aircraft models on four separate production lines at its final assembly facility in Stratford, Conn., and West Palm Beach, Fla.