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U.S. Army officials said to back new scout helicopter

By Andrea Shalal-Esa

Army acquisition chief Heidi Shyu and other officials agreed to start the new acquisition program for the smaller military helicopter at a meeting on Thursday, but senior Army and Pentagon officials must still sign off on the new acquisition program, said the sources, who were not authorized to speak publicly.

It will be the Army’s third attempt to start replacing the OH-58 helicopters, which were built by Bell Helicopter, a unit of Textron Inc. The basic OH-58 airframe dates back to the Vietnam War era, although it has been upgraded and modernized several times since then to keep it current.

Army spokesman Dov Schwartz declined to comment on the outcome of the meeting. On Wednesday he told Reuters the Army was not expected to announce a decision until next year.

The Army’s decision to recommend a new acquisition program is good news for a host of weapons makers that hope to bid for a contract that could eventually be worth $6 billion to $8 billion. It represents one of few new acquisition programs on the horizon for defense companies at a time when the defense budget is expected to shrink for the first time after a decade of unbridled growth.

Boeing Co has said it plans to offer a version of its AH-6 Little Bird if the competition is launched, as an armed scout, while Sikorsky Aircraft, a unit of United Technologies Corp and the North American unit of Europe’s EADS, have each invested heavily to develop new, more capable helicopters for a possible competition.

Bell Helicopter; AgustaWestland, a unit of Italy’s Finmeccanica SpA; MD Helicopters; and AVX Aircraft are also interested in the program.

The Army, at pains to avoid another disastrous acquisition program and under mounting pressure to reduce its budget, last year said it would hold off on deciding whether to upgrade the current helicopters or buy new ones until after a series of flight demonstrations by potential bidders this year.

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