Boeing Wins Navy Aircraft Bid

WASHINGTON —  The U.S. Navy on Monday said that it awarded Boeing Co. a $3.9-billion deal to design a replacement for the submarine-hunting P-3 aircraft, bypassing Lockheed Martin Corp., which built the current fleet of aging P-3s.

Chicago-based Boeing, the second-largest U.S. defense contractor, snared the multi-mission maritime aircraft, or MMA, contract from Lockheed, which many analysts had expected to win the deal for 150 replacement aircraft.

Full production and likely foreign orders could boost the value of the MMA program to more than $20 billion, industry analysts have said.

Navy acquisitions chief John Young said the MMA would transform how the Navy carried out maritime reconnaissance and surveillance missions, ensuring a sustained forward presence, sea domination and network intelligence capability.

Boeing said it would supply modified versions of its 737-800 passenger jet outfitted with advanced computers and other electronic gear from Raytheon Co., Northrop Grumman Corp. and Britain’s Smiths Group. CFM International, a joint venture of General Electric Co. and France’s state-owned Snecma, supplies engines for all 737s.

Rep. Norman D. Dicks, a Washington Democrat whose district includes a large Boeing facility, lauded the decision and said the Boeing 737 offered the Navy greater capability and speed.

He also called the deal “a major breakthrough” for use of commercial off-the-shelf technology in military procurement deals. “It makes all kinds of sense in terms of saving development costs,” Dicks said.

Richard Aboulafia of the Virginia-based Teal Group said the Navy would also derive some cost benefits from opting for the Boeing 737 platform, given its extensive worldwide logistics and support base. “The 737 has a huge worldwide support base that’s very attractive for a budget-conscious Navy,” he said.

Congressional sources and others familiar with the contract said the Navy planned to buy about 150 aircraft in the next few years. The Navy planned to pick the winner of the high-stakes competition last week, but it delayed its announcement because of events honoring the late President Reagan.

Boeing said that the planes would be built in Wichita, Kan., and Washington state.

Shares of Boeing closed Monday at $48.83, up 8 cents, while shares of Bethesda, Md.-based Lockheed fell 50 cents to $50.45. Both trade on the New York Stock Exchange.