The US Army cancelled a 9.2-billion-dollar contract with Bell Helicopter to build hundreds of armed reconnaissance helicopters because of ballooning cost overruns and delivery delays, officials said Friday.
The decision leaves the army with a gap in its aviation requirements at a time of high demand for helicopters in Iraq and Afghanistan, senior army officials acknowledged.
They said the gap would be bridged by upgrading and extending the life of its fleet of OH-58 Kiowa helicopters at a cost of about 800 million dollars.
...
The army, which notified Bell Helicopter Thursday night of the decision to terminate the contract, said cost overruns of about 40 percent over original estimates and delays in delivery schedules forced the action.
"The schedule and the cost that we expected with this helicopter did not pan out," said Lieutenant General Ross Thompson, the army's deputy procurement chief.
...
The terminated contract, which was awarded to Bell in 2005 over a bid by Boeing, called for delivery of 512 armed reconnaissance helicopters by 2021.
But the cost of the aircraft had skyrocketted from 8.5 million to 14.5 million each and delivery slipped from 2009 to 2013, officials said.
While the cost over-runs are obviously a huge problem, someone needs to explain why there's such a cost over-run for an off-shelf helicopter:
The ARH-70 - a derivative of the Civil Bell 407 - was expected to cost $359 million to develop and have an average unit cost of $8.56 million. The DoD's latest estimates put the development cost at $942 million and the unit cost at $14.48 million. Delivery was to begin in 2009. Now it is projected for 2013.
By: Brant
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