Two Helicopter Programs Start Over
In its first budget, the Obama Administration grounded two helicopter programs--a new presidential helicopter and a rescue helicopter for the U.S. Air Force known as "CSAR-X". One program was suffering cost and schedule overruns; in the other, the contract had been overturned.
But the reasons for needing these new aircraft did not disappear; and now the programs are starting over, extending the delay in replacing the current helicopters flying these missions.
The new VH-71 presidential helicopter was to supposed to replace the aging fleet of VH-3 and VH-60 helicopters. The plan, given urgency by 9-11, was to buy a bigger aircraft that was more survivable and with better communications. The Navy selected Lockheed Martin (LMT) to modify the EH101 helicopters, made by Italy's Finmeccanica. In the first phase of the program, beginning in 2005, the Navy would buy several aircraft for testing and development. The second phase was to build them.
That's when the trouble started. Faced with $6 billion in cost over-runs and several years delay, the administration decided to end the contract as part of its acquisition reforms. Of course this now requires money to be spent to keep the older systems flying while a new replacement is developed. Despite the end of this program there is still a requirement to replace the aging VH-3 and VH-60 aircraft in use. While in exceptional condition, they are limited in range, speed and payload.
The Navy has put out feelers on what companies might be interested in bidding on the new helicopter program. Finmeccanica is still interested and is reportedly looking for a U.S. partner. Having a U.S. defense contractor do the military modifications is the easiest way to comply with technology export and foreign employee rules and restrictions. Finmeccanica does not have a U.S. subsidiary like Britian's BAE Systems (BAE:L) or the European EADS (EADS:P). Sikorsky, which bid the first time around and maintains the current aircraft, will also likely be interested. While this is not a large contract in terms of aircraft it is prestigious and the maintenance support will be valuable.
The Combat Search and Rescue (CSAR)-X program is to build a new aircraft to perform rescue missions of pilots behind enemy lines as well as civil search and rescue efforts. The Air Force operates a fleet of HH-60s for this mission right now. The CSAR-X held a competition two years ago and Boeing (BA) won with a version of their CH-47 Chinook aircraft. Sikorsky and Lockheed Martin protested the decision. The Government Accounting Office (GAO) ordered a new contest. This was planned for 2009 but the question became moot when the Obama Administration canceled the program.
There is still a need for a replacement aircraft, so the Air Force is considering buying a modified UH-60M helicopter, made by Sikorsky. If this plan goes through, it will be a significant expansion of business for the Connecticut-based company. This decision, however, means that the Air Force has had to reduce requirements for the aircraft. In the last contest Boeing won with the CH-47 and Sikorsky and Lockheed bid larger aircraft then the UH-60. The size was dictated due to range and payload requirements needed in the harsh environment of Afghanistan. The decision is a straightforward one and illustrates a compromise that avoids another lengthy competition and the potential for further protests.
Delays cost money and cause capability gaps. The old programs may have been costly and poorly managed, but it is hard to buy back the time lost by ending them and starting all over again.