Friday, August 1, 2008
Rotorcraft Report: Cost Dispute Threatens U.S. Armed Recon Helo Program
A disagreement between U.S. Army and Bell Helicopter officials over how much it will cost to build the first lot of ARH-70A armed reconnaissance helicopters again has that critical program in the congressional hot seat.
Army and Bell leaders in early May said the program had a solid plan for recovery backed by top Army, Pentagon and congressional officials. "Now we have to execute," said Col. Keith Robinson, the Army’s armed scout helicopter manager, at the time.
By July 9 the Army was telling Congress the program’s costs had increased so much they had breached the limits of the Nunn-McCurdy Act for containing defense cost overruns. The Army said costs had risen more than 25 percent from a July 26, 2005 baseline for two reasons. Labor and material costs to complete the prototypes "were significantly higher than previously projected," it said, and labor rates and overheads were rising faster than projections.
Bell officials said average ARH-70A unit costs had not increased above the $9.5 million set in April 2007, when the program last survived a threat of execution.
The latest dispute arose during talks on the ARH-70A low-rate initial production contract, according to Bell officials. The Army’s drive for firm cost projections for that contract resulted in a number that breached Nunn-McCurdy limits. The Defense Dept to comply with that law must now answer four questions in deciding whether to cancel or proceed with the ARH contract. They are: Is the program essential to national security? Is there a viable alternative that provides equal capability at less cost? Are the new cost estimates reasonable? Is the program management structure adequate to control program costs?
The ARH-70A is intended to replace the Bell OH-58D Kiowa Warrior, which has the highest operational tempo and readiness rate of helicopters in combat in southwest Asia. But its operations are limited by its weight and performance capability; Army leaders have said they won’t let -58Ds launch under certain temperature conditions in Iraq. An option for the Army if ARH-70A is cancelled might be to field a version of the Boeing A/MH-6 Little Bird operated by Army special forces.