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29 Jul 05. Reuters reported that Textron’s (NYSE:TXT – News) Bell Helicopter unit was chosen on Friday by the U.S. Army to build 368 new armed reconnaissance helicopters in a contract that the company valued at $2.2 billion.

The new helicopters would replace the Army’s OH-58D Kiowa Warrior helicopters, first fielded in 1985, that were also produced by Bell. The Army put the eventual total purchase cost at $3 billion. Bell beat a rival team led by Boeing Co. (NYSE:BA – News) for the work that will start with an initial development contract worth $210.7 million.

Boeing said it was disappointed not to have been selected. “We will review the decision over the next several weeks and will have more to report at that time,” the company said in a statement. Boeing spokesman Hal Klopper refused to speculate over whether the company might protest the contract award.

Bell offered the Army a military version of its 407 helicopter, an upgraded version of the OH-58 family that has a more powerful engine, new avionics and advanced weapons systems. Bell’s partners include Lockheed Martin Corp. (NYSE:LMT – News), Rockwell Collins Inc. (NYSE:COL – News) and FLIR Systems (NasdaqNM:FLIR – News).

The first of the new helicopters should reach the U.S. Army in 2006, a Bell spokesman said. The U.S. Army said it aims to begin fielding the new aircraft in fiscal 2008. The government’s fiscal year begins Oct. 1.

The helicopters will be assembled at Bell’s Mirabel facility near Montreal in Canada before coming to Texas for outfitting with weapons and sensors. Texas Republican Sen. John Cornyn predicted the work would create hundreds of new jobs in the Fort Worth and Amarillo areas of his state.

The competition for the armed scout helicopter comes after the Army in 2004 canceled the RAH-66 Comanche helicopter program, which was being built by Boeing and United Technologies Corp.’s (NYSE:UTX – News) Sikorsky Aircraft division.

Textron’s shares closed down 94 cents ahead of the announcement at $74.17 a share on the New York Stock Exchange. Boeing’s shares closed up 1 cent at $66.01 on the NYSE.

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