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UPDATE 1-Boeing lands $2 bln C-17 aircraft sustainment contract

* Contract extends logistics support through 2017

* Covers 246 C-17 transport planes

* Boeing says contract lowers costs

(Adds details throughout)

WASHINGTON, Oct 10 (Reuters) - Boeing Co said onWednesday that it had received a $2 billion contract to continueproviding logistics support for the U.S. military's fleet ofC-17 transport planes through 2017.

The contract includes support for the aircraft, forecasting,purchasing and material management under a Performance-BasedLogistics program that began in 1988.

Boeing said the sustainment program, which has expanded to246 aircraft from 42, helps lower costs through economies ofscale.

Under performance-based logistics contracts, customersreceive an agreed level of system readiness instead of payingfor a specified number of spare parts.

(Reporting by Andrea Shalal-Esa and Bangalore newsroom)

((andrea.shalal-esa@thomsonreuters.com)(202-321-7839))

Keywords: BOEING TRANSPORT/