By Geoff Fein
The Navy is in the process of preparing to release a request for proposal (RFP) in June for Increment II of its presidential helicopter, as the service looks to put the troubled program back on track
The RFP is required because of the changes the Navy has made in Increment II, Capt. Donald Gaddis, VH-71 program manager, told sister publication Defense Daily in a recent interview.
Industry responses will be due in October, around the same time a stop work order on Increment II is expected to be lifted. Industry responses will detail how they will execute the program, Gaddis said.
“The idea is to…do a modified contract award for Increment II,” he said.
The contract will be awarded in February 2009.
The changes, which also includes an increased price tag, to Increment II are required to meet specific requirements, Gaddis noted.
“For the Increment II program I am going to need $4.7 billion…$2.2 billion is pure schedule,” Gaddis said.
In the end, the additional funds will raise the overall VH-71 program to $11.2 billion for both Increments I and II, he added.
“The dollars are going for this Increment II program. To meet the range, payload, and hover requirements, at the weights that we have, I need to upgrade the dynamic components,” Gaddis said.
The increased cost of VH-71 means he will be submitting the requisite paperwork for a Nunn-McCurdy breach in the first quarter of FY ’10, Gaddis said.
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.
“As a practical matter, OSD (Office of the Secretary of Defense) is already substantively proceeding under a de facto Nunn-McCurdy ‘National Security’ certification under the recent Navy VH-71 program restructuring,” James McAleese, of McAleese & Associates, a national security law firm located in McLean, Va., told Defense Daily.
“This OSD, NAVAIR (Naval Air Systems Command), White House restructuring, requires four test vehicles and five production aircraft in Increment I. OSD and Navy are diverting planned funding from parallel ‘Increment II’ production, to support added requirements and cost-growth in Increment I,” he said.
Because the restructured VH-71 configuration has a unique mission in terms of survivability and mission functionality, “it makes VH-71 largely-immune from the traditional Nunn- McCurdy breach remedy, of cuts to planned production quantities to minimize or ‘self-fund’ overall program cost-growth,” McAleese said. “Additionally, there are strong appearances that NAVAIR, the White House, OSD, and Lockheed Martin, were genuinely ‘mutually-mistaken,’ regarding the final ruggidized airframe and survivability requirements.
“Consequently, OSD’s recent technical/schedule/cost restructuring of Navy’s VH-71 program is almost certain to be adopted during the formal Nunn-McCurdy certification in approximately June 2009. Specifically, this is the same procedural process that USD (AT&L) [John] Young, NAVAIR, the White House, just went through during the substantive restructuring of VH-71,” he added. “Consequently, absent unexpected or severe new cost-growth, there is very limited basis under which OSD could now arbitrarily depart, to issue a dramatic program truncation during the Nunn-McCurdy procedural certification in June 2009.”
As a practical matter, OSD, NAVAIR, and the White House have already reached firm agreement-in-principle, that the restructured VH-71 Program is “essential to National Security”, with “no alternatives” for equal capability at lower-cost, McAleese said.
“Additionally, the recent joint-restructuring clearly demonstrates that average procurement unit costs are reasonable, and that the new management structure is adequate to control future costs,” he said. “Consequently, absent severe new cost or schedule growth, OSD, the Navy, the White House customer, and congressional stakeholders, should rest- assured that the VH-71 program will survive the June 2009 formal Nunn-McCurdy certification, so long as the contractor adheres to the new technical/schedule/cost milestones, with revised program reserves.
Lockheed Martin [LMT] is partnered with Bell Helicopter Textron [TXT] and AgustaWestland on the presidential helo effort, also known as Marine One.
Gaddis said he has all the dollars he needs in the program for FY ’09.
“We reprogrammed up into the research and development line…so in the president’s budget I have $1.047 billion for FY ’09,” he added. “I need that money. I need congressional support to keep this program going.”
Gaddis said he has briefed all the defense committees, and while he acknowledges there is always the chance a committee could mark the program, he is hoping that the information he provided as to what happened to VH-71, will have answered all of their questions.
“We definitely need their help in ’09. In ’09, I have a 70/30 split,” Gaddis said. “About 70 percent (of the funding is) for Increment I and 30 percent for Increment II. [There is] lots of support from all of the defense committees on Increment I, but, of course, the Increment II need [is] $4.4 billion.”
In the program objective memorandum 10 (POM 10), VH-71 will need $3.2 billion added through FY ’10 through FY ’15, Gaddis noted. “That’s all research and development. I don’t need any plus-up across the APN (aircraft procurement Navy).”
The Pentagon is going to put the $3.2 billion in, he added.
“My request is there and the leadership of OSD knows it is $3.2 billion. And, of course, there are going to be some dollars in FY ’15 and ’16 to finish,” Gaddis said.
That will “get you to the $4.4 billion,” he added.
“But to continue this program I need full congressional support for the ’09 president’s budget request and I need $3.2 billion added in research and development across FY ’10 through FY ’15.”
Not getting the funds for Increment II would cause a great deal of harm to the program, he said.
Because of the $500 million funding cut in FY ’08, the presidential helicopter program has slid at least a year, Gaddis explained.
Additionally, the Navy would be asked to continue flying both the VH-3 and VH-60, the current fleet of helicopters used to transport the president and heads of state.
In the president’s budget, there is $230 million for VH-3 and VH-60 sustainability and life extension. Those life extensions will take the helicopters out to 2019, Gaddis said.
“The H-3 will be on its third life extension in 2019. I can’t take these helicopters any further than 2019, and the FOC (full operational capability) for H-71 is 2019,” he said. “I can’t delay this program any further. So if they decide to [withhold funds for Increment II), then I’ve got huge issues, and there’s a huge deal of harm done to the program. I don’t have a Plan B if that happens.”
Under the realigned program, Increment I will now reach initial operational capability (IOC) no earlier than September 2010. “It will be with four aircraft,” Gaddis said.
The Navy will be buying five Pilot Production (PP) aircraft. PP-1 will remain at Naval Air Station Patuxent River to become a follow-on test and evaluation aircraft, he added.
The original plan called for IOC in October ’09.
Although IOC will be 11 months later than scheduled, Gaddis said Increment I will still be, on average, a year earlier than the average program.
“So, yes, we have had cost growth on Increment I. Yes, we have stumbled to a start. It was painfully slow, but we are up and running now,” he said. “Of course, the ’08 funding shortfall has slowed us down, but when all is said and done, Increment I will still be a year ahead of normal acquisition programs.”
Increment II is a different story.
The Increment II buy of 23 helicopters was originally planned for 2014. The effort, which has been in a stop work order since Dec. 21, 2007, will now have IOC in 2017, with FOC of all 23 helicopters planned for 2019, Gaddis said.
“The FY ’08 funding shortfall has definitely played a part in this IOC date of 2017. When I first got here we were talking about a 2016 IOC,” he added.
Gaddis was introduced as the new VH-71 program manager in September 2007 after a very successful tenure as program manager for the F/A-18E/F and EA-18G programs.
When Gaddis came to VH-71 he also found out that he had $500 million less than he thought he had in the program’s budget. “So, I had to restructure the program. That played a key part in this [Increment II] IOC slip as it did in [the Increment I slip].”