Boeing finalizes $5.3 billion Navy contract

By Reuters
Posted Sep. 29, 2010 at 9:41 a.m.

Boeing Co. has finalized a $5.3 billion four-year agreement with the U.S. Navy to build 124 F/A-18 fighter jets and electronic attack planes, a deal that will generate savings of over $600 million.

The deal, announced on Tuesday by Boeing and the Pentagon, calls for the company to deliver 66 F/A-18 “Super Hornet” fighters and 58 EA-18G airframes designed for electronic attack to the Navy from 2012 through 2015.

The Pentagon said the multiyear agreement was on fixed-price terms, with an incentive fee — terms that will limit the government’s liability in the event of any cost overruns.

Boeing also won a $249 million contract for logistics support for the F/A-18 fighters, which operate worldwide from the decks of 11 Navy aircraft carriers — including ongoing missions in Afghanistan.

Boeing said the agreement would generate more than $600 million in savings by allowing Boeing and its suppliers to plan further ahead and buy materials in bulks, making production more efficient than under a single year contract.

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