June 17, 2013
The U.S. Marine Corps plans to pay a higher price for its next 99 Bell-Boeing MV-22 Ospreys because of a drop in the production rate under the recently signed multiyear contract.
The average price in fiscal 2012 was $67 million; the target price for the next multiyear is $70 million, says Col. Greg Masiello, the V-22 joint program manager. The company will deliver 40 V-22s this year. Next year, the program will deliver roughly 35 and then production drops dramatically into the 20s for the next multiyear.
The $6.5 billion contract, signed last week, includes buys of 92 MV-22s for the U.S. Marine Corps and seven CV-22s for the U.S. Air Force. Options for another 23 Ospreys are also built into the contract, and Masiello says the Marine Corps is likely to enact the first option soon.
The drop in production rate accommodates fewer available funds from the U.S. Defense Department and leaves excess capacity for foreign sales. Defense Secretary Chuck Hagel announced a sale to Israel during a recent visit. The first six are likely to be included in a single batch with more to follow later, according to a U.S. defense official.
Israel is likely to be the first foreign customer to take delivery of a V-22, and the United Arab Emirates the second. Japan is also possibly a near-term buyer as well. Last week, the Japanese conducted trials in which V-22s landed on their Hyuga and Shimokita class ships and were stowed in the belly of the Hyuga-class ship.
Masiello expects foreign customers to buy roughly 100 V-22s within the next 10 years.
Meanwhile, Masiello says the cost per flying hour of the V-22 has decreased by 19% over time to $9,250.
To date, 214 MV-22s have been delivered to the Marine Corps. Three of 12 planned for use as executive airlift in the Washington region have been delivered to the Marines.
The service plans to buy 360 MV-22s. The Air Force wants 50 CV-22s and the Navy still holds a requirement for 48 V-22s to be used as a C-2 Greyhound replacement for the Carrier Onboard Delivery requirement.