The helicopter had operated normally during the first flight of the day. After DEPARTURE on the second flight the aircraft overflew Pyrmont before heading east along Sydney Harbour. As it approached the Sydney Heads, at 500 feet above sea level, the engine failed. The pilot gave a mayday call and successfully ditched the helicopter some 500 metres from two Army landing craft. After landing in the water the helicopter rolled inverted and floated for about 10 minutes. The crew escaped from the aircraft and after spending five minutes in the water were picked up by the landing craft. Prior to leaving the water the pilot attached a line from the landing craft to the helicopter. The helicopter subsequently sank but remained attached to the line and was towed to Balmoral Beach. An inspection of the wreckage revealed that a material failure of the acceleration bellows in the engine fuel control unit had caused the engine failure. The reason for the material failure was not established. The component has been forwarded to the manufacturer for further examination.