Helicopter contract canceled

By STARS AND STRIPES AND WIRE REPORTS Published: October 18, 2008

WASHINGTON — The Pentagon on Thursday canceled the Army’s multibillion-dollar reconnaissance helicopter program being developed by Textron Inc.’s Bell Helicopter.

Defense Undersecretary John Young said officials decided to dump the program — which has been over budget and behind schedule — to look for another replacement for the existing Kiowa aircraft, the Army’s most heavily used fleet in Iraq and Afghanistan that is also built by Bell.

Young said the Pentagon will not certify the new program, ultimately forcing the Army to terminate the contract. The Army initially said it might cancel the helicopter program in July after a significant cost breach.

Development of the Armed Reconnaissance Helicopter was initially set at about $359 million, with each aircraft costing about $8.5 million. That price has soared to $942 million for development and nearly $14.5 million for each helicopter.

The delivery date for the helicopter was also pushed back from 2009 to 2013, said Lt. Gen. Ross N. Thompson III, military deputy/director for the Army Acquisition Corps.

"It was no longer a good deal for the Army or for the Defense Department, and we decided we could not re-certify this program because we weren’t getting the helicopter when we needed it, and we weren’t getting it for a price that we thought was fair," Thompson told reporters Friday.

The problems stem from Bell Helicopter’s decision to move production of the helicopter from Canada to Texas, he said.

"That drove up the price — the manufacturing cost of doing it in Texas was more expensive, and candidly, Bell was not able to control the costs the way we thought they should have been able to control their costs," Thompson said.

The Providence, R.I.-based industrial conglomerate had been awaiting a decision by the Pentagon on whether to proceed with the program after it surpassed projected costs. That cost breach triggered a mandatory 60-day review process.

Earlier Thursday, Lewis B. Campbell, Textron’s chairman, president and chief executive, told analysts during its third-quarter earnings call that it was continuing to work with Army and the Pentagon to get the program back on track.

The Army will now move quickly to resubmit its request for an armed reconnaissance helicopter, said Lt. Gen. James D. Thurman, director of Army operations.

"It’s my intent as the Army G-3 — this is J.D. Thurman speaking — that I will try to get this requirement back in [to the Joint Requirements Oversight Council] at least not later than January," he said.

The entire acquisition process would take several years, Thompson said.


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