By Ann Roosevelt
The Army plans to move ahead expeditiously to re-validate the characteristics and requirements for a manned, armed reconnaissance helicopter (ARH) to replace the Bell Helicopter [TXT] ARH cancelled late last week, officials said.
“We will use lessons learned from the war and rapidly bring the requirement to the [Joint Requirements Oversight Council] JROC as soon as possible,” Lt. Gen. J.D. Thurman, Army G-3/5/7, said at a Pentagon roundtable Oct. 17. “My intent as the G-3 of the Army is no later than January. The requirement has not changed. My job is to get the requirement revalidated as quickly as possible. It will be a top priority every day.”
Boeing [BA], which lost the ARH competition to Bell in 2005, is closely watching the process. A Boeing team offered the AR Little Bird helicopter.
“We have seen the Department of Defense announcement stating that it will not certify the U.S. Army Armed Reconnaissance Helicopter (ARH) program for continuation,” a Boeing statement said. “The Boeing Company is ready to respond to any request from our U.S. Army customer for rotorcraft solutions that will enable them to move ahead with an alternative course of action to meet this critical capability for America’s Soldiers.”
Other helicopter makers, such as Sikorsky [UTX] also are likely to be monitoring the Army closely.
At the roundtable, Thurman reiterated what officials said a week earlier at the Association of the U.S. Army annual conference, that whether DoD terminated the ARH program or not, the requirement remains critical to replace the OH-58 Kiowa Warrior–also produced by Bell Helicopter–and the service would move onward quickly ((Defense Daily, Oct. 8).
“Our OPTEMP [Operational Tempo], attrition and losses of six aircraft per year since 2003 underscore the need to fill this requirement as quickly as possible,” Thurman said.
The Army requires 512 ARH aircraft.
While pursuing revalidation, the Army will also invest “significant efforts”–likely tens of millions–into the existing Kiowa Warrior fleet so the helicopters can bridge the gap to a new aircraft.
The Kiowa Warrior has the oldest airframes in the Army and the highest operational tempo in the inventory, he said. Since 2003, the aircraft have flown more than 2.6 million flight hours in support of operations in Iraq and Afghanistan. “We currently have 342 aircraft available out of a 368-aircraft requirement.”
The Army has been part of a collaborative process over the past several months with the Office of the Secretary of Defense and other key interested groups to review ARH.
Lt. Gen. Ross Thompson, military deputy to the Army’s top acquisition official, said, “It takes time to do a fair and open competition to meet the requirement. The existing SEP (Safety Enhancement Program) will keep the Kiowa Warrior fleet reliable, safe, and suitable until a replacement is procured.” Additionally, he said at the roundtable, “the fundamental requirement, the six requirements that are laid out in the requirements document that are key performance parameters have absolutely not changed. We have an approved capability document that was validated during the Nunn/McCurdy process.”
A Securities and Exchange Commission 8-K filing by Bell parent company Textron on Oct. 17 stated that as of Oct. 16–the date the Army notified it of the ARH termination–it estimated its “inventory and vendor obligations incurred with respect to the ARH program total approximately $95 million-$100 million, and reserves for this program total $50 million.”
The notification said the company “is currently evaluating several avenues by which it believes that it may be able to recover some or all of its investment in inventory and its obligations to vendors.”
Textron reported third quarter earnings Oct. 16, before the Pentagon terminated ARH (Defense Daily, Oct. 17). Bell segment revenues increased $52 million in the third quarter, while segment profit increased $5 million. Revenues and segment profit for government business decreased $44 million and $11 million, respectively. The decrease in revenues is due to lower V-22 volume, partially offset by higher H-1 revenue and higher spares and service volume. Segment profit decreased due to unfavorable cost performance and lower volume. The unfavorable cost performance in 2008 reflects the non-recurrence of the 2007 recovery in ARH costs.
The ARH contract was awarded for an expected cost of $359 million and a procurement average unit cost of $8.56 million. DoD now estimated that development would cost $942 million and the procurement average unit cost will be $14.48 million. ARH deliveries to the Army would slip from the original schedule of 2009 to a projected 2013.
Top DoD acquisition official John Young said in a statement on the ARH termination that: “I have decided that the best course of action is to provide the Army with an opportunity to define a coherent, disciplined Kiowa Warrior helicopter replacement program, and to obtain more rigorous contract terms for its development.”
Army Secretary Pete Geren said, “The cost and schedule that were the focus of the decision to award the contract to Bell Helicopter are no longer valid. We have a duty to the Army and the taxpayer to move ahead with an alternative course of action to meet this critical capability for our Soldiers at the best price and as soon as possible.”