* Deal valued at nearly $6.5 billion
* Also includes options for 22 more aircraft
* Program manager cites growing international demand
By Andrea Shalal-Esa
WASHINGTON, June 10 The U.S. Navy plans to sign this week a five-year contract valued just under $6.5 billion to buy 99 new V-22 Osprey tilt-rotor aircraft built by Boeing Co and Bell Helicopter, a unit of Textron Inc, the program's manager said in an interview on Monday.
Marine Corps Colonel Gregory Masiello said the multiyear contract, the second one signed for the program, covers the period from fiscal year 2013 through 2017 and includes options for 22 additional aircraft. He said the government's decision to sign the five-year agreement underscored its confidence in a program that had once been threatened with cancellation.
"Given the current fiscal situation, it speaks volumes as far as the confidence that the Department of Defense and the government have in the V-22," Masiello told Reuters. "This is a big year for us."
He said 92 of the aircraft in the new order would be built for the Marine Corps, the main buyer of the V-22s, with the Air Force set to receive seven aircraft. The Navy's Naval Air Systems Command oversees the program and negotiates contracts with the manufacturers.
Boeing and Bell Helicopter jointly build the V-22 aircraft, or Osprey, which can fly as fast as a plane but lands like a helicopter. The program is getting good reviews for its performance in combat after a rocky start that saw 23 Marines killed during flight testing in 2000. Two more Marines were killed during a training exercise in Morocco last year.
Masiello said the five-year contract would save the Navy $1 billion compared with buying the aircraft one at a time.
The Navy is already exploring the possibility of a third multiyear contract for 100 or more aircraft, which could include the 48 V-22s that the Navy plans to buy for its own use, as well as possible international sales, he said.
"I don't think it's too soon for us to start working on those details," he said, noting the aircraft's performance since its first deployment in 2007 was fueling international demand and could generate other orders in the United States.
The contract signing is scheduled for Wednesday. Masiello said the contract would be a modification of an initial single-year deal valued at $1.4 billion that was announced in December.
He said the agreement was good news for the prime contractors on the program, but would also stabilize production for smaller suppliers that build parts for the aircraft.
He said the program was making good strides and the 214 aircraft in use now had flown nearly 190,000 hours in combat.
One V-22 would be used this week on the USS Truman for a series of exercises aimed at demonstrating its ability to deliver food and other cargo to Navy ships at sea, Masiello said. The Navy could save billions of dollars if it used the V-22 to replace its fleet of aging C-2 supply aircraft, he said.
Two V-22s had also been added to the military unit that flies the U.S. president, while others were being deployed to Britain and Spain, he said.
International interest in the new aircraft also remained high, Masiello said, noting that the U.S. government had provided briefings to Saudi Arabia, Qatar, the United Arab Emirates, Italy, Brazil, Colombia, Singapore and Australia.
He said the Pentagon was exchanging letters with three countries on possible V-22 purchases but did not name them.
Defense Secretary Chuck Hagel announced in April that Israel would be the first foreign buyer of the V-22. Sources said Israel would receive five or six V-22s at an estimated price of $70 million each.