Blow for Boeing As Pentagon Cancels £20bn Contract

Boeing and United technologies were dealt a blow last night when the US army cancelled its $38bn (£20bn) Comanche helicopter programme.

The decision is one of the biggest cancellations of an ongoing programme in army history. The Pentagon had already spent about $7bn on the reconnaissance helicopter and had earmarked another $15bn to buy 121 of the next generation chopper. The total budget was to have been in the region of $39bn.

The Comanche programme began in 1983 and has been beset by delays and technical problems. It was restructured six times, most recently in 2002.

The price of building a single helicopter had skyrocketed from $2m to $58.9m.

The project was a 50/50 joint venture between the two companies with smaller subcontracting work handed out to other defence firms including Lockheed Martin.

Money that had been earmarked for the Comanches will be diverted to buy 796 Black Hawk and other helicopters and to upgrade another 1,400 already in the fleet.

"It's a big decision, but we know it's the right decision," said Gen Peter Schoomaker, the army chief of staff. He said the army also will invest more heavily in a variety of unmanned aircraft, such as the existing Hunter and the new Raven.

The Comanche was planned as a twin-engine, two pilot helicopter with stealth technology designed to make less detectable to enemy radar.

The decision reflects a growing realisation in the Pentagon that there is not enough money to fund the investments in hardware planned, despite the growing defence budget under the Bush administration.

Many of the projects being killed were conceived during the Cold War and, some military experts argue, have become less relevant in the present world.

Defence secretary Donald Rumsfeld has placed a lot of emphasis on modernising the army with computer-based technology.