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 on Wednesday that it had received a $2 billion contract to continue providing logistics support for the U.S. military's fleet of C-17 transport planes through 2017.

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

Boeing said the sustainment program, which has expanded to 246 aircraft from 42, helps lower costs through economies of scale.

Under performance-based logistics contracts, customers receive an agreed level of system readiness instead of paying for a specified number of spare parts.

(Reporting by Andrea Shalal-Esa and Bangalore newsroom)