By Geoff Fein

Although Congress cut $212 million from the Navy’s VH-71 presidential helicopter Increment II effort in the FY ’09 defense appropriations act, lawmakers still left $100 million to start up the second phase of the program, a Navy official said.

“The good news is that most of the president’s budget request was approved in the ’09 bill, Thomas Laux, deputy assistant secretary of the Navy Air, told Defense Daily in a recent interview. “There is going to be all of the Increment I funding that was asked for, $735 million was approved in the bill, and they left in $100 million for Increment II.”

The president had requested $1.047 billion in FY ’09 for VH-71 Increments I and II. The final authorization bill recommended $835 million ($735 million for Increment I and $100 million for Increment II).

Although the Increment II amount was $212 million short of what the Navy sought, Laux said the service sees the decision as a signal from Congress that they want the Navy to start on Increment II.

“[Congress is] perhaps in some measure reserving judgment. But we are going to do what we have to, to continue to generate all the Increment II further continued design that is required so that when we do go through the Nunn-McCurdy process through the beginning of the ’09 calendar year, we will have the information needed to provide the senior leadership and the decision makers…and stakeholders on the Hill, with the information they need to make an informed decision,” Laux explained.

The Nunn-McCurdy statute requires congressional notice in the event of 15 percent cost growth, plus formal certification/restructuring in the event of a 25 percent cost-growth breach.

The Navy will have to do some amount of prep work to continue to advance the design of Increment II, so that the service can make adequately informed decisions, Laux added.

“We would have been able to do more of that with the budget the president proposed,” Laux said. “We will do everything we can with the money the Congress did appropriate.”

The cut in funding will have an impact on the Increment II schedule, Laux noted, although it is too soon to tell what the effect will be.

“There were several critical path activities that were included in the president’s budget request that are going to have to be deferred until ’10, so that will definitely push things back,” he said.

The Navy is planning to buy 23 of the Lockheed Martin [LMT], Bell Helicopter Textron [TXT] and AgustaWestland helicopters in Increment II.

Increment II is expected to reach initial operational capability (IOC) in 2017, with full operational capability of all 23 helicopters planned for 2019 (Defense Daily, May 7).

Under Increment I, the Navy will be buying four test aircraft and five Pilot Production aircraft. Increment I IOC will occur no earlier than September 2010.

The total cost for the overall VH-71 program rose to $11.2 billion for both Increments I and II, with $4.7 billion of that total for Increment II.

Program officials had proposed a number of different options for the presidential helicopter program, including the idea of expanding Increment I and delaying Increment II to a future date, and taking a second look at both the Bell Helicopter Textron-Boeing [BA] V-22 and the Sikorsky [UTX] CH-53 to possibly fill the mission requirement, a Naval Air Systems Command (NAVAIR) source said.

“The program manager offered 35 options to the defense leadership, and an extended Increment I was one that was offered,” Laux said.

But increasing the Increment I buy has its problems, Laux noted.

“Increment I is an interim solution. It does not have 30-year capability. We have essentially taken the existing aircraft and overloaded it in order to provide the mission capability that is required,” he said. “What we need to do with Increment II is upgrade the basic airframe to where it will last 30 years.”

Currently, Increment I is really a 1,500-hour aircraft right now, Laux said.

“As it exists right now, Increment I is not a viable solution for the long-term,” he added.

Because the Navy did not have the funding for Increment II, until the president signed the defense bill earlier this week, the Navy had to extend the stop work order on Increment II until Jan. 30, 2009, according to the NAVAIR source. The decision to extend the stop work order to next year was made Sept. 22, the source added.

A stop work order letter was sent to Lockheed Martin Systems Integration-Owego on Dec. 21, 2007 directing them to temporarily stop work on all activities associated with VH-71 Systems Design and Demonstration Increment II contract requirements (Defense Daily, March 17).

A Lockheed Martin spokeswoman referred questions on the stop work order extension to the Navy.

Additionally, the Navy is working with Lockheed Martin and their industry partners to determine the next steps regarding the Increment II contract. That contract was expected to be awarded in February ’09, the NAVAIR source noted.