Boeing upbeat about Air Force competition

WASHINGTON (Reuters) - Boeing Co (BA.N) has cut the price and shortened the time it takes to reassemble its HH-47 helicopter as part of its bid to win a $15 billion Air Force competition for a second time, a Boeing executive told Reuters.

The Air Force surprised analysts and even some top defense officials when it picked the twin-rotor HH-47, a variant of Boeing's popular Chinook helicopter, as its new combat search-and-rescue helicopter in late 2006.

But the Air Force had to relaunch the contract competition after congressional auditors twice upheld protests filed by the losing bidders -- Lockheed Martin (LMT.N) and Sikorsky Aircraft, a unit of United Technologies Corp (UTX.N).

The Air Force initially hoped to announce a new contract winner this spring, but that date has now slipped to November at the earliest, industry sources say.

Boeing remains convinced that its proposal was and remains the best one for the Air Force, but it has also been making minor changes to make its bid more attractive, Boeing HH-47 program manager Rick Lemaster said in an interview.

"The proposal that we submitted this time was stronger," Lemaster said, referring to higher scores it received for logistics and product support. "In the interim evaluation, the Air Force did give us more strengths this time around."

Defense analyst Loren Thompson of the private Lexington Institute said he expects Boeing to win the competition a second time, given that the Government Accountability Office cited only minor problems with the initial contract award when it upheld the two protests.

"To some degree, re-awarding to Boeing would be a vindication for the Air Force," he said.

MORE VARIANTS FIELDED

Lemaster said Boeing had pored over records from tens of thousands of hours of operation of other Chinook variants to cull data that pointed to better results for the HH-47.

The company also made some changes to the aircraft and lowered its price, but Lemaster declined to give any details since the competition is still under way.

Boeing also found ways to cut the time -- two hours and 58 minutes -- it takes to reassemble the aircraft after it has been transported, although he declined to say by how much.

"We have identified changes that will reduce the time. We are committing to do it in a more rapid time frame," he said.

Lemaster said variants of the helicopter had already been put into use by the U.S. Army, which helped lowered the risk of the proposal for the Air Force.

But he said Boeing was not making wholesale changes to the craft since the HH-47 had already been found to meet the Air Force's needs.

Two Chinook variants that were in development during the first contract competition have already been fielded -- the Army's MH-47G aircraft, which is used by special operations forces, and the CH-47F, which is preparing for an initial deployment in Iraq later this month.

Those deployments help lower the risk of the Boeing proposal, while increased production of those aircraft will help trim the cost of the HH-47, Lemaster said.

Boeing has sold 480 Chinook helicopters to U.S. customers and another 430 overseas, including to Italy, Japan, South Korea, the Netherlands and Britain.

Other bidders in the competition have also been improving their offerings.

Sikorsky told Reuters last month that its new single-rotor S-92 aircraft was able to rack up 86,000 flying hours, which could help make it a more attractive contestant.

Lockheed is offering a variant of the single-rotor EH101 helicopter built by AgustaWestland, a unit of Italy's Finmeccanica (SIFI.MI). Lockheed says it has made its bid more attractive by making it less risky.

(Reporting by Andrea Shalal-Esa; editing by John Wallace)