The Navy gave

Lockheed Martin

(LMT) - Get Report

a coveted contract to produce the so-called Marine One helicopters used to transport the president and other White House personnel.

Maryland-based Lockheed, the nation's biggest defense contractor, will lead a team that comprises companies from the U.S., England and Italy in producing the aircraft. Lockheed unseats

United Technologies'

Sikorsky division, which has built Marine One for half a century.

The contract is worth about $1.8 billion, but is seen as conferring its recipient with a key strategic edge in developing a next-generation military helicopter for the Pentagon. The government is expected to spend $7 billion on 200 of those aircraft in 2006.

"Sikorsky and our All-American supplier team are disappointed with this outcome," said Sikorsky's Stephen Finger. "We are focused on doubling our business by 2008, with a portfolio of products and aftermarket services for military and commercial customers worldwide. We anticipate achieving this goal even absent the VXX."

Lockheed rose $1.12, or 2%, to $57.50 after hours Friday. United Tech fell 40 cents to $101.60.