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Thursday, September 1, 2011

With Defense Cuts Expected, Are Military Helicopter Programs Safe?   

With the continued need for wartime lift, funding for existing military and paramilitary rotorcraft programs is assured, according to military experts. But what about funding for future programs?

By Robert Moorman

Makers of military rotorcraft are understandably nervous these days with the real possibility of up to $700 billion in defense-related cuts between now and 2023. Add in the recent credit default showdown and trillions in anticipated budget cuts from the so-called Congressional “super committee,” and the uncertainty increases. But the anxiety could be unnecessary, according to several industry experts.

“Rotorcraft programs are probably in better shape than almost any other category of combat systems in the current fiscal environment,” says Loren Thompson, chief operating officer for the Lexington Institute, a conservative think tank. He says the programs are being funded “robustly” with a clear understanding of the “utility that helicopters bring to current war fighting.”

Thompson is not alone in his positive assessment of helicopter programs within the U.S. Department of Defense (DoD). While the U.S. government’s military spending as part of NATO is expected to decline to around 39 percent by 2015 according to a Council on Foreign Relations survey, DoD spending on military rotorcraft programs is not expected to drop appreciably because of the ongoing need for vertical lift and to replace equipment lost in the Iraq and Afghanistan wars.

“It is all about maintaining force mobility and replacing what was worn out,” says Richard Aboulafia, vice president of analysis for the Teal Group.

It is also about ensuring that helicopters remain an integral part of all branches of the U.S. military, which has three main roles—war fighting, nation building and counterinsurgency.

“Helicopters are at the center of all three,” Aboulafia says. “They have strategic relevance.”

Meaning, there is an ongoing need for numerous production rotorcraft, including the Boeing AH-64 Apache, Sikorsky UH-60M Black Hawk, Boeing CH-47F/G Chinook, Bell Boeing V-22 and Bell UH-1Y Super Huey, which is replacing the Marines aging fleet of UH-1Ns.

Funding for the Apache and Chinook programs “will likely be safe from budget cuts, with some tweaking at the edges regarding yearly purchases,” says Ron Jaworowski, senior aerospace analyst with Forecast International. “The same is true with the Sikorsky Black Hawk UH-60Ms.” The U.S. Army is looking to buy hundreds of UH-60Ms over the next several years.

Another reason why rotorcraft programs appear Teflon-protected can be explained by examining the type of aircraft DoD procures. Many of the newer models are, in fact, approved derivatives or new builds of older aircraft. The UH-60M, which was a refurbishment program initially, is now a new Black Hawk, while the CH-47F is a new Chinook.

[There are three categories of aircraft being delivered to the military. A remanufactured aircraft is an older airframe that is stripped down and refurbished with new components. A “renew” is new airframe with rebuilt components. A “new-build” is a brand new, existing aircraft, not a new aircraft.]

With the exception of the V-22, which first flew in 1989, the Pentagon tends not to buy “clean sheet designs,” says Jaworowski, adding that this trend will continue for the foreseeable future.

The AH-64 Apache remains the primary attack helicopter for the U.S. military. So funding the latest variant and upgrades to older Apaches is likely assured, but delivery numbers could drop, according to sources close to the program. As of early August, the $619-million system development and demonstration (SDD) contract signed in mid-2006 between Boeing and the U.S. Army for the AH-64 Block III program remains intact. The contract for low rate initial production (LRIP) was awarded in mid-2009.

Deliveries of the first Block III Apaches are scheduled to begin in October 2011. The Block IIIs include extended range radar capability and more powerful General Electric 710D engines.

Funding for upgrades to all Block I and II Apaches is also expected, according to Boeing. Around 937 AH-64As were built for the U.S. Army (821) and international customers (116). Many of the Army’s Apaches have been upgraded to D variants. Around 780Ds were produced, according to Boeing.

Elsewhere, the state of military rotorcraft programs look good. The Navy’s MH-60R (Romeo), which is slated for anti-submarine warfare and maritime patrol, as well as Nighthawk, a supply aircraft, are now in full production. The Navy has ordered 373 of the MH-60R and S models out of the Program of Record (POR) for 575 rotorcraft. The Navy is expected to order the remaining 202 in the next multi-year purchase agreement of Seahawks and Black Hawks expected sometime in 2012, according to a company spokesman.

Boeing AH-64 Apache with the 101st Combat Aviation Brigade,
Task Force Destiny shown during an escort of a CH-47 Chinook
from Forward Operating Base Tarin Kowt to Kandahar Airfield in
Afghanistan.
“There is decent money for rotorcraft now, but this is mostly for remanufacture or further production of 30-year-old designs,” observes one industry expert.

The Bell Helicopter AH-1Z for the Marines is the latest variant of the helicopter that first entered service in the late 1960s. In the fiscal year 2010 budget, AH-1Z new build production aircraft cost $28.994 million, while remanufactured or refurbished aircraft cost $25.652 million, according to the Teal Group’s September 2010 analysis of the program. The plan is to produce 61 new AH-1Zs, according to Bell.

The Marines also intend to acquire 200 copies of the Sikorsky CH-53K, the latest variant of the heavy lift helicopter. At this juncture, it is unknown if the orders will be paired down.

Some rotorcraft OEMs declined to comment on the status of their military rotorcraft programs because of sensitive negotiations with DoD on revised number of deliveries over the next several years. Sikorsky is involved in negotiations with DoD/Navy on future deliveries of Black Hawks, according to sources, but the company’s military programs officials were unavailable for comment.

Bell Helicopter military executives declined an interview but released the following statement from Robert Hastings, senior vice president of communications: “As the current budget negotiations are ongoing and the extend and nature of DoD budget impact is undetermined, it is inappropriate to comment until we see the final numbers and understand their impact However, we remain optimistic.”

USMC’s requirement for 360 MV-22s and the 50 CV-22s for the Air Force Special Operations Command is still current. More than 180 V-22s have been delivered to the military through May 2011. Currently, 145 V-22s are in flight service, according to the Naval Air Systems Command.

Chinooks

The Chinook, which first flew in September 1961, is now in its third and fourth generation. At present, the Army POR is for 464 CH-47Fs. Deliveries began in 2006 with 137 Fs delivered so far. The full requirement is for 246 F model “renews” and 218 “re-builds,” according to Boeing.

The 61 remanufactured CH-47Gs (MH-47Gs) to support the Special Operations Forces were delivered and deployed in February 2011, but the Army increased the requirement by eight aircraft. Those eight G models will be delivered by January 2015.

Both the V-22 and Chinook are in the midst of multi-year contracts. “Funding for both programs has been consistent throughout and indications are they will be fully funded for 2012,” says Mark Ballew, director of business development for Army and special operations programs at Boeing’s Mobility division. “Both programs are also working on a second multi-year program to be awarded in FY 2013,” he adds.

On the status of the AH-1Z Cobras earmarked for the Marines, the H-1 upgrade POR remains 349 AH-1Z and UH-1Ys, 189 AH-1Zs and 160 UH-1Ys. But those numbers could change.

While newly designed military rotorcraft is out of the question in the present environment, “there is a lot of commercial off-the-shelf technology that is more capable than the legacy fleet the military now operates,” says Dan Hill, vice president of strategy and federal business development for AgustaWestland. “This is an area at which Congress and DoD should be looking.”

AgustaWestland is offering its AW139M for the Air Force Common Vertical Lift Support Platform (CVLSP) program. Whatever rotorcraft is chosen will replace the Bell UH-1N. Total funding for this five-year program is $4 billion, for 93 aircraft as outlined in the President’s budget. Fiscal year 2012 funding for CVLSP is $59.23 million, which pays for 22 aircraft.

AgustaWestland is offering its AW119 as a replacement vehicle for the U.S. Army’s 2008 canceled ARH-70 armed reconnaissance helicopter program. The ARH-70 was originally envisioned as a replacement for the Bell OH-58D Kiowa Warrior.

The Army’s Aerial Scout (AAS) requirement, as it is now known, has several suitors: the Boeing AH-6S, Sikorsky S-97 Raider and an upgraded Bell OH-58D Kiowa Warrior. But various sources claim that AAS will never fly, saying that the requirement would be absorbed by the Army’s Joint Multi-Role (JMR) program, which is expected to use one design for a family of rotorcraft. But JMR remains in the conceptual stage with very little money expected to be allocated toward the effort until 2020. While most rotorcraft programs appear to be safe, some budget cutting is expected. According to several sources, 48 V-22 Ospreys earmarked for the Navy will likely be formally canceled. No surprise there. The 48 tiltrotors remain part of the POR, but are not funded. The Navy never found a viable role for the aircraft, although the V-22 Joint Program Office argued that it could fill a search and rescue (SAR) role. As to the on-again, off-again Presidential Helicopter program, OEMs and vendors anxiously await the publication of the Navy’s analysis of alternatives (AOA) on how to replace the aging fleet Sikorsky VH-3Ds with readily available off-the-shelf equipment. At present, there is no budget for a new fleet of Marine One helicopters, much less a prototype. In the present climate, it is unlikely that DoD will commit to a new fleet of Marine One helicopters.

Future Requirements

Funding for current military rotorcraft programs might be assured for now, but the Defense Department has yet to come up with a viable plan for developing and funding next-generation helicopters, despite a lot of talk about the need for speed.

“The Pentagon has made it very clear that high speed will be the priority in the next generation of rotorcraft,” says Jaworowski. That may be, but OEMs are, for now, footing the research and development (R&D) bill for these faster, composite-filled rotorcraft.

Consider the 250-knot capable Sikorsky X2, and offshoot military design S-97 Raider, or the Eurocopter X3 and X4, or Piasecki Aircraft’s X49. Some of these designs are being offered for the Army’s JMR program.

Sikorsky invested around $50 million in its X2 technology demonstrator and is planning to spend another $100-million-plus for two S-97 prototypes, according to the American Helicopter Society (AHS). “The Defense Department needs to reverse the effects of more than 25 years of inadequate investments in rotorcraft technology,” says AHS Executive Director Michael Hirschberg. What little R&D being funded by DoD are “band-aid solutions rather than new designs,” he adds. Congress is getting the message—sort of. It directed DoD to create a Strategic Plan for the Future of Vertical Lift. But without funding, it is a plan without substance.

In 2008, the Aerospace Industries Association published a report on the defense industrial base. One chapter, devoted to helicopters, painted an unflattering portrait of DoD’s lack of a cohesive strategy on developing and acquiring next generation rotorcraft. And it hasn’t gotten much better.

Buying or refurbishing what is in the fleet is significantly easier in a climate of shrinking military budgets. But this dilemma of how to move into next generation rotorcraft is more than just a lack of funding. What’s needed is a change of mindset.

“The perception coming out of DoD is that rotorcraft technology has gone about as far as it can go, and there is no real point in investing in the next generation of speed and capacity,” said one expert, who preferred to remain anonymous due to his position within the U.S. government.

Another factor worth noting: “There isn’t a market yet for next generation technology, because the military operations and tactics are set up for the current level of rotorcraft technology,” he added.

In the past, benefits from new military equipment and systems worked their way down to the civil market eventually. But that transfer of technology is no longer assured. The drivers for commercial success of rotorcraft are fuel efficiency and owner-operating costs, while the military’s pressing need is for speed, lift capacity and survivability.

Sikorsky MH-60S Sea Hawk with the Wild
Cards of Helicopter Sea Combat Squadron (HSC)
23 delivers supplies to the aircraft carrier USS
Ronald Reagan in early August.

“Until that paradigm changes, there isn’t motivation for the trickle-down technology to happen,” noted the expert.

Helicopter related R&D across the board is likely to feel the budget axe, despite the pressing need to advance the technology for new airframes, systems and engines. For the foreseeable future, there will be a contraction in funding for every facet of military spending, including benefits and size of the various services. “But R&D will be hit first and hardest,” Lexington Institute’s Thompson predicts, “because research typically is an orphan in the budget process.”

While R&D could be threatened, the upgrades to legacy rotorcraft and steady orders for existing models in the DoD fleet appear to be safe. Some analysts see an integral part of rotorcraft modernization that outstrips progress made in other categories of war fighting systems. Others view this funding pattern as a shortsighted stopgap measure that risks the lives of those on the battlefield.

Bell AH-1Z Viper with Marine Medium Helicopter Squadron 268 (Reinforced), lifts off from the amphibious assault ship Makin Island on August 14 to support a counter-piracy training mission.

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