Lockheed, U.S. Air Force reach agreement on C-130 multiyear deal

[October 16, 2015]  By Andrea Shalal
 
 WASHINGTON (Reuters) - Lockheed Martin Corp on Thursday said it had reached a verbal agreement with the U.S. Air Force on a five-year contract to build up to 83 C-130J Super Hercules transport planes for the Air Force, Coast Guard and Marine Corps through 2020.

The company said its goal was to complete the remaining contract actions, certifications and congressional notifications and finalize the deal by the end of the year,

Pentagon documents put the value of a 79-aircraft deal at around $5.9 billion in 2013, when negotiations over the agreement first began.

"We have reached a verbal agreement on the C-130J multiyear II contract," Lockheed spokesman Joe LaMarca told Reuters in response to a query. He gave no details on the value of the multiyear deal, or the amount of savings it would provide, compared to buying the airplanes one year at a time.

The agreement was reached late last week after over two years of negotiations. It was not immediately clear why the negotiations took so long to conclude.

Lockheed officials told Reuters in September 2013 that they expected the multiyear agreement to generate savings of at least $600 million for the U.S. government, or more than 10 percent, compared to buying the planes one year at a time.

Lockheed has sold C-130J transport planes to 16 countries, and 330 of the turboprop planes have been delivered or are currently on order. The planes, which are able to touch down on austere landing zones, are used for humanitarian relief missions, special operations, aerial refueling, close air support, and search and rescue.

Air Force acquisition chief William LaPlante last week warned that the C-130J multiyear agreement could be jeopardized if Congress fails to pass a budget for fiscal 2016 and relies on a series of continuing resolutions to fund the government.

(Reporting by Andrea Shalal; Editing by Shri Navaratnam)

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