UPDATE 1-L-3 team wins $2 bln Pentagon cargo aircraft deal
(Recasts throughout with details from contract announcement)
By Jim Wolf
WASHINGTON, June 13 (Reuters) - A team led by L-3 Communications Holdings Inc. (LLL.N) has won a contract worth up to $2 billion to supply as many as 78 cargo aircraft over the next five years to the U.S. Army and Air Force, the Defense Department said on Wednesday.
The L-3 team includes Boeing Co. (BA.N) and Alenia North America, a unit of Italy's Finmeccanica SpA (SIFI.MI), as well as Rolls-Royce Plc (RR.L) and Honeywell International Inc. (HON.N).
The winning team beat Raytheon Co. (RTN.N) and its partner, Europe's EADS (EAD.PA), which also competed for the contract.
The winning twin-engine C-27J Spartan turboprop has also been bought by Greece, Italy, Lithuania, and Bulgaria.
The U.S. Army and the Air Force have been approved for an initial purchase of 78 aircraft -- 54 for the Army and 24 for the Air Force, said Brig. Gen. Stephen Mundt, the Army's aviation director.
The C-27J is designed to take off and land on short landing strips similar to those found in Iraq and Afghanistan.
Mundt told a news conference he would be surprised if the eventual purchase turned out to be less than 145 of the so-called Joint Cargo Aircraft.
The contract announced on Wednesday consists of three 12-month ordering periods for low-rate initial production and two 12-month options for full-rate production.
The first two aircraft are to be delivered in just over a year, far quicker than when the Pentagon opts to design a new aircraft from scratch.
Work in the United States will be performed at Waco, Texas, and is to be wrapped up by June 30, 2012, the Pentagon said.
For the Army, the aircraft will replace Vietnam-era C-23 Sherpas, C-26 Metroliners and some C-12 Hurons.
For the Air Force, it would complement the four-engine C-130, a Lockheed Martin Corp. (LMT.N) workhorse used for transportation of personnel and supplies on the battlefield.
The Army solicited bids and ran the competition with the Air Force joining in the evaluation. The Senate Armed Services Committee, in a potential complication, is now seeking to give the Air Force responsibility to run the program.
