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Boeing Company Finalizes $5.3 Billion Multiyear Agreement for F/A-18 with the U.S. Navy


The Boeing Company had finalized their $5.3 billion agreement with the U.S Navy to create 124 F/A-18 fighter jets, as well as electronic attack planes. The deal extends for four years, which is expected to make over $600 million savings.

Boeing and the Pentagon announced the deal on Tuesday, which requires the Boeing Company to deliver 66 F/A-18 “Super Hornet” fighters and 58 EA-18G airframes that are intended for electronic attacks to the U.S Navy from year 2012 to 2015.

According to the Pentagon, the multiyear deal was based on a fixed-price terms with additional incentive fees. Since it is a fixed-price term, the government will not be charged with extra fee if there are any cost overruns.

Boeing also made a $249 million contract for their F/A-18 fighters to have logistics support. These F/A 18 fighter jets operate worldwide including the progressing missions in Afghanistan.

Since the agreement will run for four years, this will save them more than $600 million in costs, for they would be able to buy the materials in bulk and allow their suppliers to plan ahead of time. This will make the production more efficient as opposed to a single-year contract.

The agreement is based on a $42.7 million price per plane, but the engine and other government-furnished equipment is not included in the price.

Boeing is the largest aircraft manufacturer around the world and this contract is the third multiyear agreement that Boeing Company has signed with the U.S Navy for their F/A-18 fighter jets.

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