UPDATE 1-US in deal to refurbish aircraft for Taiwan

Fri Mar 13, 2009 6:55pm EDT

(adds details, background, byline)

By Jim Wolf

WASHINGTON, March 13 (Reuters) - Lockheed Martin Corp (LMT.N) is being awarded a much-anticipated U.S. Navy contract to refurbish 12 submarine-hunting aircraft for Taiwan, the Pentagon said Friday.

The $665.6 million deal was announced after Washington protested what it described as Chinese harrassment on Sunday of the Impeccable, a U.S. Navy surveillance vessel operating in China's Exclusive Economic Zone in the South China Sea.

Taiwan sealed a government-to-government deal in December 2007 for the turboprop-driven P-3C Orion aircraft, which are U.S. Navy surplus and no longer in production.

They are used for maritime patrol, reconnaissance, anti-surface warfare and anti-submarine missions.

The U.S. Navy, acting as middleman, said last month it had reached a tentative refurbishing deal with Lockheed Martin, the Pentagon's No. 1 contractor by sales.

The upgrades will include new avionics, or electronic brains, and service life extension kits to extend the aircrafts' service life for an additional 15,000 flight hours, said Tierney Helmers, a spokeswoman for Lockheed Martin Maritime Systems & Sensors business unit.

The first modernized P-3C aircraft will be delivered to Taiwan in 2012, she said. The work is expected to be completed in August 2015, according to a Pentagon contract digest.

The P-3Cs were part of a landmark arms package approved by former President George W. Bush for possible sale to Taiwan in April 2001.

In addition to the refurbishing contract, the deal is expected to include support, maintenance, spares and other services that would bring its total value to about $1.3 billion, said a Navy official who asked not to be named because of the matter's sensitivity.

The P-3 is the primary maritime patrol and reconnaissance aircraft operated by the U.S. Navy and 18 international allies. Its roles include anti-submarine warfare, anti-surface warfare, surveillance and reconnaissance, search and rescue, drug interdiction, economic zone patrol, airborne early warning and electronic warfare.

(Reporting by Jim Wolf; editing by Gunna Dickson)