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Boeing hunts 2nd Chinook multi-year deal

More helicopter news this week: Boeing wants to make the Army a heckuva deal on a second multi-year contract for its workhorse CH-47 Chinook helicopter, the company said Friday.

Big B says it can deliver "double-digit percentage savings" to taxpayers, as compared to year-by-year deals for new aircraft. When it and its vendors and sub-contractors can rely on predictable work over the medium term, everybody wins, the company's announcement said:

"This second multiyear contract proposal will provide not only the vertical lift capability that warfighters use and need every day, but also will generate hundreds of millions of dollars in savings for taxpayers and the U.S. government," said Leanne Caret, Boeing vice president, H-47 Programs. "With this contract Boeing, and its partners in more than 45 states, will be able to negotiate longer-term agreements with suppliers, make necessary investments in production tooling and processes, and more effectively plan for capital expenditures."

(Dare we add that this could mean ... oh yes ... the J-Word? The company did not make that claim itself, but there it is, clearly visible beneath the surface.)

Boeing explained that it's about halfway through a 2008 multi-year deal for 191 F-model helos that was worth about $4.3 billion. The Army needs to add the rest of the helicopters it wants, Boeing's ready to go, so c'mon, the company said: "This second five-year, firm fixed-price proposal would provide the Army with close to the full complement of 464 Chinooks outlined in the Department of Defense program of record for the CH-47F helicopter."

Today's grim, meat-hook realities in Washington mean both sides probably want to lock in this deal as soon as they can. Boeing wants the business. The Army wants the helicopters. And although defense contractors often sell these multi-year contracts as a bargain for taxpayers, it's worth remembering that they're almost more valuable to the vendors: When the government signs a long-term deal, that's guaranteed income, and profits, no matter what happens in Congress with all the budget craziness. Either the feds keep taking delivery and signing out their checks, or they pay a hefty fee if they break their end of the deal.

Boeing has gotten this sort of thing down to a science -- remember its recent F/A-18F deliveries to Australia? Sure, the Super Hornet isn't the newest jet in the sky, and for that matter, the Chinook is nearly a 50 year-old design -- not to mention the almost 30 year-old Apache we heard about this week. But Boeing officials believe their ability to keep pushing the replay button trumps customers' desire for a brand-new tune.

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