Adapting Boeing's civilian 737 jets will save the US Navy money

The Pentagon picked Boeing's proposal to build a modified version of its 737 commercial jet, which offers long term cost savings.

The decision is a blow to Lockheed Martin, which bid to upgrade its existing sub-hunter P-3 Orion planes.

The Pentagon said full production could take the deal to $20bn later on.

At present, Boeing is contracted to build a handful of the planes for testing.

Adaptable defence

The new long-distance surveillance jets, known Multi-mission Maritime Aircraft (MMA), will replace Lockheed Martin's turbo-propeller powered P-3s, which have been in use for more than 40 years.

By choosing a proposal based on a widely-used civilian aircraft, the Pentagon hopes to save money.

"The 737 has a huge worldwide support base that's very attractive for a budget conscious Navy," said Richard Aboulafia, an analyst at Teal Group, a Virginia-based aerospace and defence consultancy.

The new MMA jets should be ready for deployment by 2013, according to John Young, US Navy assistant secretary for research, development and acquisition.

The 737 planes will be equipped with hi-tech military surveillance equipment.

Besides Boeing, several other suppliers will benefit from the contract, including Raytheon, Northrop Grumman, Smiths Group and engine maker CFM International, which is jointly owned by General Electric and Snecma, Reuters news agency reported.

Over the next decade, Boeing said it expects to make just over 100 of the planes.