An international team led by Lockheed Martin beat Sikorsky to get a $1.7 billion contract to build the next fleet of White House "Marine One" helicopters Friday.
When the full contract is exercised, Lockheed's award will rise to about $6.1 billion for 23 helicopters.
The decision ends Sikorsky's 47-year stranglehold on the presidential helicopter program.
It also gives a significant contract to a British and Italian company AgustaWestland, which will build about a third of the helicopter parts in European plants, according to a Navy official.
The decision to award the contract to an international consortium raises security issues, Navy officials acknowledged Friday. They said they will work with Lockheed to assure workers get proper clearances and there is appropriate security at all the manufacturing sites.
Lockheed's initial contract for $1.7 billion is for the development of the helicopters. A second contract adding three pilot production helicopters and five initial production helicopters will increase the contract value to $3.5 billion. Another 15 helicopters production version helicopters will be added later for another $2.5 billion. The final version of the aircraft will cost $110 million per copy.
The Navy's assistant secretary for research and development, John Young, said Friday the Navy selected the helicopter that best met the national security requirements for the aircraft, which is used as a command center similar to Air Force One whenever the U.S. president is on board.
He also said Lockheed's price was somewhat lower than Sikorsky's.
"Lockheed started at a point that was closer to the requirements. ... So they were able to bid a cost that was lower," Young said.
Both companies have spent the last six months aggressively lobbying Capitol Hill and the press for their version of the aircraft. The contest was cast as a clash between an "all-American" team of builders at Sikorsky and a consortium of companies headed by Lockheed Martin that included two important U.S. allies in Iraq.
The helicopters are used exclusively to ferry the U.S. president, his family and guests.
The chopper will replace the aging fleet of CH-3D Sea Kings now in use. Sikorsky has held that production and maintenance contract since 1957.
The CH-3D has weight restrictions because so much new equipment has been added since it was originally built. It is supposed to carry 16 people but can only carry 10, according to Young.
Lockheed, along with AgustaWestland and Bell Helicopter Textron, proffered a version of the EH-101. Sikorsky offered up its H-92 -- a version of its S-92 medium-lift helicopter. The aircraft are powered by General Electric engines.
Sikorsky officials in meetings with reporters for the last six months have played up both their unique design -- the fuel is carried in pods outside the passenger compartment for safety in the event of a crash -- and its "all-American team" based in Stratford, Conn. The S-92 would have been assembled in a newly built, secure Executive Transport Center plant adjacent to the current maintenance facility for Marine One helicopters.
For its part, the Lockheed/AgustaWestland consortium adopted the name "Team US101." It recently announced it is consolidating and relocating its operations centers to Fairfax County, Va., just outside of Washington. The consortium promised to hire an additional 300 employees if it won the contract.
In addition to bragging rights to building the president's helicopter, the contract could put the winner in the cat-bird seat to snare a more lucrative Air Force contract for a new search-and-rescue helicopter, the Personnel Recovery Vehicle.
The contract award has been delayed multiple times since April 2004, when the award was supposed to be made. Young said the delays were made because the Navy was not satisfied with either proposal.
Prior to the contract award, Lockheed was already the largest U.S. defense contractor, with annual sales to the Pentagon in 2004 of more than $20 billion.
The Pentagon's independent testing office has criticized the Navy's effort to develop the aircraft. It said the service is rushing two initial versions of the helicopter to production before tests determine whether there are flaws or improvements that need to be made first.
"The program acquisition strategy violates the fly-before-buy concept," the operational test and evaluation report for 2004 states.
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