The United States has signed off the $2.1 billion sale of five Hercules aircraft to New Zealand.
The C-130J Hercules are the most urgent acquisitions among $20 billion in planned defence spending, and the Government expected to pay more than $1b for five planes.
But the defence minister has signalled the Hercules spend is unlikely to reach the US$1.4b (NZ$2.1b).
The US State Department signed off the sale last week.
Arms manufacturer Lockheed Martin, in Fort Worth, Texas, will provide the aircraft, but as a "foreign military sale" it required US government approval.
Also approved for purchase were 24 Rolls Royce turboprop engines (20 to be installed and four spare), 15 GPS systems, eight video terminals, and missile warning systems.
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The US State Department signed off on the sale as it would "support the foreign policy and national security" of the US, by helping improve the security of a major ally - New Zealand.
"The proposed sale of this equipment and support will not alter the basic military balance in the region," a US State Department news release reads.
New Zealand will now negotiate the purchase with Lockheed Martin.
Minister of Defence Ron Mark said the Government was not yet committed to buying the aircraft.
Cabinet would next year decide on the cost, funding, and number of planes to be bought.
The price of the potential purchase of five planes, full training and other packages "will include a generic allowance for risk, project management and escalation".
"[It] will not necessarily be tailored for New Zealand or reflect what will be presented to Cabinet," a statement from Mark's office read.
"For these reasons, the price in this notification should not be viewed as the final contract price."
The sale of four P-8A Poseidon planes to New Zealand was similarly signed off by the US in 2017, at an estimated cost of USD$1.46b.
The planes were then bought from Boeing for NZ$2.3b, and they will be delivered and in the air by 2023. This included other infrastructure costs for facilities in New Zealand.
The Government bypassed the standard tender process when seeking to purchase the Hercules, opting for a like-for-like replacement over other, newer models on offer elsewhere.
The planes lift passengers and cargo in support of combat, peacekeeping and humanitarian missions, across the Pacific, Antarctica and in the Middle East.
The current fleet of Hercules planes was bought by New Zealand in the 1960s.
PLANNED DEFENCE SPEND
- Replace the five existing C-130H Hercules aircraft, at a cost of more than $1b, by 2023.
- Four P-8A Poseidon planes, already purchased for $2.3b and due to be in action by 2023. The planes will replace the current P-3 Orions and be used for maritime patrol.
- A replacement for the Boeing 757 fleet, at a cost of $300m to $600m, by 2028.
- A long range unmanned drone at some point after 2030.
- A Southern Ocean Patrol Vessel, costing as much as $600m and in operation by 2027.
- An Enhanced Sealift Vessel, at a cost of more than $1b, by 2030.
- A new fleet of maritime helicopters to replace the eight Seasprite SH-2G which will be decommissioned before 2030. Replacements are expected to cost more than $1b and be in operation by 2028.
- Replacement of Navy vessels Canterbury and Otago, with two new vessels costing up to $1b, and in operation by 2032.
- A possible 6000-strong infantry force for the army, by 2035.
- Replacement of the Pinzgauer armoured vehicle fleet, at a cost of $300m to $600m by 2024, and Light Armoured Vehicles, estimated to cost the same, by 2033.
