As we wrote the Secretary of Defense moved fast to end the work on the VH-71 Presidential Transport helicopter. As part of this decision the Navy has to come up with a new plan to replace the existing helicopters while continuing to support the mixed fleet of H-3 and H-60 aircraft.
Today it was reported that the cost to end the contract alone would be close to $600 million dollars. This would be on top of the $3.2 billion already spent. The two phase program already has delivered nine first phase aircraft to support testing and integration. The second phase which would meet the full up requirements was the part of the program that had seen massive price and schedule escalation mainly due to the fact that basic a new aircraft had to be developed and built which reduced the savings by buying an existing certified aircraft.
The Navy also has estimated a cost of over $4 billion to keep the existing fleet flying safely. This is because it will now take several years longer to buy the replacement aircraft then originally planned. Some in Congress as well as outside groups like Citizen Against Government Waste are now saying it might make more sense to continue the VH-71 program despite the projected cost increases.
Finemeccanica and Lockheed the two major contractors on the program have proposed a cheaper program where all aircraft are made to the Phase I standard and then modified if necessary. Lockheed is also putting pressure on Congress and the Obama Administration by quickly announcing layoffs of people associated with the program.
When any large programs like this are canceled you see this same kind of posturing. There have also been cases where in the long run it might have made more sense to continue them despite the projected cost problems. These can be possibly fixed if given enough time, or more capability delivered. If the Navy goes through with the termination there will be nine aircraft in the government's possession that cost them upwards of $4 billion. This should get more interesting as it winds its way through Congress.