Boeing, U.S. Army start work on new AH-64 Apache multi-year deal

By Andrea Shalal

WASHINGTON (Reuters) - Officials from Boeing Co (BA.N) and the U.S. Army said on Wednesday they had begun discussions about a multi-year agreement to buy about 240 AH-64 Apache helicopters from fiscal 2017 to 2021, a deal that analysts say could be worth around $4 billion.

U.S. Army acquisition chief Heidi Shyu recently signed a document allowing both sides to begin work on a multi-year agreement, with an eye to securing approval from the defence secretary by March 2016, Colonel Jeff Hager, Apache programme manager, told reporters at an event hosted by Boeing.

Mark Ballew, Boeing's head of business development for attack helicopters, told Reuters that the multi-year agreement could include options for about 100 international sales of the attack helicopter, which would add to its overall value.

The U.S. government has already approved Apache sales to Qatar and Indonesia, and those deals are being negotiated now, Ballew said. He said three or four other countries have expressed interest in the helicopter, but declined to name them.

He said such deals could take many years to complete, given the complications often involved in the foreign arms market.

Boeing hosted a separate meeting about the third successive Apache multi-year agreement with government officials and suppliers on Wednesday at its Washington headquarters.

Military services must demonstrate significant savings when asking for approval for multi-year agreements, as compared with the cost of negotiating procurements on a year-by-year basis. There is no specific target, but lawmakers generally look for those savings to amount to around 10 percent

Kim Smith, vice president for Boeing's attack helicopter programs, said the company was "absolutely on track" to work with the Army and its suppliers to identify savings that would help justify a multi-year agreement.

"We at Boeing have been doing our part to leave no stone unturned," Smith told reporters.

Pentagon chief arms buyer Frank Kendall told the House Armed Services Committee on Wednesday that he favoured multi-year agreements because they allowed programme managers to focus on programme performance, and less on yearly contract negotiations.

Earlier on Wednesday, Boeing reported higher-than-expected quarterly profit, sending its shares up 4.6 percent to $138.58. [ID:nL4N0V74XD]

(Editing by Matthew Lewis)