Army cancels helicopter program after cost overruns

The Pentagon’s chief weapons buyer on Thursday cancelled one of the most coveted combat helicopter programs because of ballooning costs.

Pentagon acquisition chief John Young decided to terminate the troubled Armed Reconnaissance Helicopter (ARH) program after cost overruns put the program on pace to greatly exceed its initial $6.2 billion estimate and triggered a congressionally mandated review. That review can lead to a program’s termination unless the Pentagon certifies that it is of utmost national security importance and that the cost estimates for pursuing the program are reasonable.

{mosads}The development cost of the ARH nearly tripled from the initially estimated $359 million while the procurement cost jumped from $8.5 million to $14.5 million per helicopter – a 70 percent increase. Additionally, the Army was projecting that it would be receiving the new batch of helicopters four years late—in 2013 rather than 2009.

This helicopter model has been a target of congressional scrutiny and budget cuts for a couple years now.

The Pentagon notified both Congress and the contractor Bell Helicopter—a unit of Textron, Inc.– after the decision was reached in consultation with senior Pentagon and Army officials. Bell Helicopter was building the helicopter in Fort Worth, Texas and has been struggling for months to bring down costs.

The decision will set back the Army, which has said that it urgently needs to replace the decades’ old OH-58 D Kiowa Warriors also built by Bell. The Kiowa Warriors are the most heavily used helicopters in Iraq and Afghanistan.

"Rather than continue this program, 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,” Young said in a statement Thursday.

Secretary of the Army Pete Geren also cited cost overruns and delays in the decision to move on.

“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," he said.

The Army talked about potentially canceling the program in July.