Business

Decision Time for U.S. Army's New Helicopter

By Dave Majumdar, Special to Aviation.com

posted: 22 September 2008 03:11 pm ET

: The U.S. Army's new ARH-70 Armed Reconnaissance Helicopter was originally planned to be a simple modification of the civilian Bell 407. However, the U.S. Army added more requirements and defense analysts say Bell underestimated the challenges of integrating a new engine into the design. Now the cost of the ARH-70 program is 40 percent over budget and it is undergoing a review that could kill it. Credit: U.S. Army
: The U.S. Army's RAH-66 Comanche stealth attack and reconaissance helicopter program was killed in 2004 because it was too ambitious and its costs spisaled out of control. Ironically, the ARH-70 Armed Reconaissance Helicopter program that supposedly was meant to represent a low-cost, simple successor is suffering from many of the same problems of over-specification and budget overruns. Credit: U.S. Army
: if, as appears likely, the ARH-70 program does get the final go-ahead, the new Armed Reconnaissance Helicopter will eventually replace the Bell OH-58 Kiowa (foreground) in U.S. Army service. Defense analysts say the last truly successful U.S. military helicopter program in terms of cost was the Sikorsky UH-60 Blackhawk utility transport helicopter. A UH-60 is seen in the background of this photo. Credit: U.S. Army

Rising from the ashes of the 2004 cancellation of the RAH-66 Comanche stealth attack helicopter, the Armed Reconnaissance Helicopter Program was intended to be a quick, cheap and easy replacement for the decrepit fleet of OH-58D Kiowa Warriors serving in the U.S. Army’s arsenal. It has proven to be anything but.

Derived from the commercial Bell 407 helicopter, itself a derivative of the earlier Bell 206 which forms the basis of the current OH-58D, the new ARH-70 was meant to be a simple conversion of an existing design to meet military requirements with minimal modifications.

The program, which according to a Pentagon Selected Acquisition Report dated Dec. 31, 2007 was originally budgeted at $3.6 billion, has ballooned 40 percent to some $6.4 billion. Production of the troubled aircraft has also been delayed by two years from September 2008 to 2010, according to the Teal Group, a defense and aerospace consulting firm in Washington, D.C.

Things came to a head on July 9, 2008 when the Army reported to Congress that the Armed Reconnaissance Helicopter program had breached the 25 percent cost growth limit imposed by the Nunn-McCurdy statute, triggering a 60-day review of the program.

The statute requires that a defense program be terminated unless the Secretary of Defense can certify that it meets certain requirements. These are that the program must be essential to national security; there cannot be a viable alternative that provides equal capability at less cost; any new cost estimates for the program must be reasonable; and its management structure must be adequate to control program costs.

ARH unlikely to be canceled

With the 60-day review nearly complete, the fate of the Armed Reconnaissance Helicopter will be revealed sometime this month. While this is the second time in as many years that the ARH program has faced termination, defense experts Richard Aboulafia of the Teal Group and Loren Thompson of the Lexington Institute believe there is little chance that the Defense Department will cancel the aircraft, even with the big rise in program costs. No viable alternative to it exists.

“Some Army managers want to kill the program the way they cancelled the Comanche and start over,” said Thompson, who has close ties to the Pentagon — but he added that this is unlikely to happen.

Thompson explained that such an approach would likely delay the fielding of a new reconnaissance helicopter even further and would likely cost even more. Nor would a new program necessarily guarantee success, as the Army has consistently had “difficulty containing cost, schedule, and requirements,” said Thompson.

He places the blame for the ARH-70 disaster squarely on the Army. “Operationally the Armed Reconnaissance Helicopter is a success, it meets requirements. The unit cost went up due to the Army changing the requirements," said Thompson. "This could have been quick, cheap, and easy, had the Army stuck to its plan of a simple conversion of an existing commercial design.”

Thompson said the initial cost estimate was based on a quick modification of the commercial Bell 407, but the Army insisted on adding features well beyond the original scope of the program.

“Further up the chain, there is a lot of sympathy for Bell. (Under Secretary of Defense for Acquisition) John Young, for example, is more sympathetic to the contractor,” because the “rules changed on Bell” midway through the program, said Thompson. At the Army's lower Program Objective Memoranda level, however, “there is a lot of anger towards Bell” due to the perception that the company failed to deliver.

Bell criticized

“One of the problems was inadequate performance from Bell,” said Aboulafia.

The company underestimated the huge challenge of integrating the new Comanche-derived HTS-900 turboshaft engine into the existing airframe, as well as the difficulty in militarizing a commercial design, said Aboulafia. However, he agrees that changing Army requirements were a huge contributor to the overall cost overrun.

That said, the ARH-70 is by no means unique in having disastrous cost overruns, as all three major current Defense Department (DOD) helicopter programs have become mired in the procurement process. Like the Army ARH-70, the Navy VH-71 Presidential helicopter is similarly mired in massive cost growth and delays. Meanwhile the U.S. Air Force's CSAR-X rescue helicopter is in a similar quagmire, with repeated protests delaying the award of a production contact.

“When this happens like this with three programs, with different contractors, and three different services, you got to think something is very wrong” with the government procurement system, said Thompson.

There are serious problems with the defense acquisitions system as a result of the defense drawdown of the 1990s and other factors, and a “lack of discipline and lack of mature management” plagues DOD helicopter programs, said Thompson.

Procurement is becoming too complex

During the Cold War, helicopters were a simple and uncomplicated aspect of defense procurement. However, in the age of network-centric warfare, even these historically simple aircraft have become entangled in the “system of systems” quagmire, he said.

Steve Kosiak, a defense budget analyst for the Center for Strategic and Budgetary Assessments, said that, for any given program, “The initial cost of development and procurement will rise 20 percent as a matter of course.”

For a commercial off-the-shelf system, the DOD's hope is that the development cost would be lower than this, since new technology is not being developed. But this does not always work out as planned: In recent years “the trend of cost growth seems to be accelerating,” said Kosiak.

Most U.S. military helicopter programs since the Vietnam War have been saddled with one or more of three basic problems, said Thompson: The helicopter “doesn’t meet requirements or it cost too much, or is simply not realistic.”

The Comanche, for example, was originally intended to replace the relatively simple OH-58D Kiowa, but it had the complexity of an F-16 jet fighter and performance closer to the Apache Longbow attack helicopter than a lowly scouting aircraft, said Thompson.

“There was no chance the Army could afford it,” Aboulafia added.

The last completely successful U.S. military helicopter program was the 1970s-vintage UH-60 Blackhawk helicopter, said Thompson.