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WASHINGTON (Reuters) - The Defense Department is scrapping the multibillion-dollar RAH-66 Comanche helicopter program being developed by Boeing Co. (BA.N: Quote, Profile, Research) and United Technologies Corp. (UTX.N: Quote, Profile, Research) , government sources said on Monday.
Pentagon officials plan to announce the decision at a news conference at 4:30 p.m. (2130 GMT), the sources said.

The cancellation is part of the Pentagon's continuing drive to transform the U.S. military into a force better able to face modern threats, they said. The program was under intense scrutiny because of its hefty price tag.

The U.S. Army launched the Comanche armed scout helicopter program in 1983, and low-rate initial production of the craft was slated to begin in 2006.

The current estimated cost of the program, which has been in development for about two decades, was $38 billion, according to John Pike, director at GlobalSecurity.org, a defense policy research group.

U.S. lawmakers are expected to oppose ending the program. President Bush's fiscal 2005 budget included $1.2 billion for the Comanche.

Scrapping the program could result in termination fees of $2 billion to $4 billion being paid to Boeing and Sikorsky Aircraft, the United Technologies unit working on the Comanche, the sources said.

Matt Brothers, a spokesman for Sikorsky, asked to comment, said, "Our company's policy is not to respond to rumors. As far as we are concerned, the program is fully funded and on schedule."

Boeing officials said the Chicago-based company had not been informed of any program cancellation. "The Comanche program is on track and schedule. We have not been notified about any change in the program status," said Boeing spokesman John Morrocco.