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January 08, 2004

MANASSAS, Virginia -- A joint venture of Lockheed Martin [NYSE: LMT]and Sikorsky Aircraft Corporation, a subsidiary of United Technologies Corp. [NYSE: UTX] has been awarded a $417 million, five-year contract from the U.S. Navy to provide supply support, spares and repairs to in-service H-60 helicopters.

Under the contract, Maritime Helicopter Support Company (MHSCo), a joint venture formed in 2001, will provide for the procurement, repair, overhaul, modification, packaging, handling, storage, configuration management, obsolescence management and reliability improvements for the next five years on 540 Navy H-60 unique spares and repair parts. The Navy's H-60 Performance-Based Logistics (PBL) program is one of the largest applied to a fully fielded naval aircraft fleet. It includes an innovative compensation plan in which MHSCo will be paid based on total helicopter flight hours, rather than on the number and type of repairs.

"Payment based on flight hours gives MHSCo a direct and clear incentive to help the Navy improve the reliability of the fleet," said Jeff Bantle, vice president of Multi-Mission Solutions for Lockheed Martin Systems Integration - Owego. "Under this contract, Sikorsky and Lockheed Martin are committing to a bold new approach to life-cycle logistics support."

David Adler, senior vice president of Worldwide Customer Service at Sikorsky added, "We expect Performance-Based Logistics to significantly reduce the Navy's cost of ownership while improving overall aircraft readiness. This is truly a new way of doing business. Collectively, the MHSCo contractor team can provide a total support solution by leveraging commercial best practices to achieve greater effectiveness, at less cost and less risk, and further enhance the innovative logistic practices being fostered by the Department of Defense."

MHSCo President Larry Elberfeld stated, "Our industry team has been working with the Navy over the past three years to achieve this key milestone. Through smaller, component-level PBL contracts, Lockheed Martin and Sikorsky have demonstrated that this approach results in improved supply support and readiness at a lower cost. We are now ready and eager to take this next big step and apply this performance across the full H-60 weapon system."

Performance-Based Logistics encompasses all activities related to delivering spare and repair parts for H-60 aircraft. It includes manufacturing, repair, warehousing, inventory management, transportation, and related functions. Lockheed Martin and Sikorsky formed the joint venture to provide the Navy with a single-point solution for full "tip-to-tail" life-cycle logistics support of the H-60 helicopter. MHSCo is a limited liability company established to significantly reduce operations and support costs and improve material availability for the H-60 fleet.

The contract is awarded by the Naval Inventory Control Point (NAVICP), Philadelphia. The MHSCo joint venture is based in Manassas, VA. NAVICP procures, manages, and supplies spare parts for Naval aircraft, submarines and ships worldwide. NAVICP is responsible for over 400,000 items of supply, $27 billion of inventory and annual sales of $4.2 billion. It has two locations, one in the Lawndale section of Northeast Philadelphia and the other in Mechanicsburg, just outside Harrisburg, PA. NAVICP is the largest field activity of the Naval Supply Systems Command (NAVSUP).

NAVSUP's primary mission is to provide U.S. Naval forces with quality supplies and services. With headquarters in Mechanicsburg, Pa., and employing a worldwide workforce of more than 23,000 military and civilian personnel, NAVSUP oversees logistics programs in the areas of supply operations, conventional ordnance, contracting, resale, fuel, transportation, and security assistance. In addition, NAVSUP is responsible for quality of life issues for our Naval forces, including food service, postal services, Navy Exchanges, and movement of household goods.

Sikorsky Aircraft Corporation, based in Stratford, CT, is a world leader in helicopter design, manufacturing and service. Sikorsky is a subsidiary of United Technologies Corporation, of Hartford, CT, which provides a broad range of high-technology products and support services to the aerospace and building systems industries.

Headquartered in Bethesda, MD, Lockheed Martin employs about 130,000 people worldwide and is principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services.

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