* Flight demonstration said to fall short of requirements
* Army decision closely watched by industry
* Program would be third attempt to replace current aircraft
By Andrea Shalal-Esa
WASHINGTON, May 8 (Reuters) - U.S. Army officials on Wednesday said they do not expect to decide until later this year whether to start a multibillion-dollar program to develop a new armed scout helicopter, or extend the life of the current Vietnam-era OH-58 Kiowa Warrior.
The news marks another delay for companies interested in bidding for a program valued at $6 billion to $8 billion. The Army’s decision was expected last December but had already been put off until spring. On Wednesday, officials said they now expected a decision in the summer or early autumn.
Industry executives say they hope to hear more in June or July, but their hopes for a new acquisition program - one of few on the horizon - have dimmed given disparaging comments by top Army officials in recent weeks about flight demonstrations of some possible “off-the-shelf” helicopters last year.
Lieutenant General William Phillips, military director of Army acquisition, told a subcommittee of the Senate Armed Services Committee that none of the existing helicopters in production met the Army’s requirements, which meant that any new program would require significant development work.
“We didn’t find a single aircraft that was out there that could meet the Army’s requirements,” Phillips told lawmakers. “So if we were to go forward with an armed aerial scout, it would essentially be a development program.” He said he now expected a decision around mid-summer.
Army officials have said privately that a new development program could take a decade to carry out, although some industry executives say they could execute a program far more quickly.
Regardless of the direction the Army takes, it will proceed with a separate program to improve the cockpit displays, sensors and other capabilities of the current OH-58 fleet, Lieutenant General James Barclay, the Army’s deputy chief of staff for budget issues, told a subcommittee of the Senate Armed Service Committee on Wednesday.
“That allows us to address safety and obsolescence issues with the current fleet we have, which will bridge us to either decision we make to procure new (helicopters) or to (extend the life of) the current fleet,” Barclay said.
U.S. Army leaders had hoped to launch a new competition for a replacement for the Kiowa Warrior helicopter, but mounting budget pressures have raised questions about whether they can proceed with a new program.
Army Chief of Staff General Ray Odierno recently told a separate hearing that the Army needed to assess whether the technology was far enough along to justify a new program, or whether it should keep the current helicopters flying longer.
Those comments mark a setback for Boeing Co, Europe’s EADS and other companies that planned bids based on modified commercial helicopters, but could bode well for Sikorsky Aircraft, a unit of United Technologies Corp, whose high-speed S-97 Raider is in prototype development.
Bell Helicopter, a unit of Textron Inc and maker of the current OH-58; AgustaWestland, a unit of Italy’s Finmeccanica SpA, which had teamed with Northrop Grumman Corp; MD Helicopters; and AVX Aircraft, had also expressed interest.
EADS, Boeing and the AgustaWestland-Northrop team recently withdrew their bids for a separate Air Force search-and-rescue helicopter program after concluding it was too narrowly structured, favoring a helicopter built by Sikorsky.
This is the Army’s third attempt to start replacing the OH-58 helicopters, the basic airframe of which dates back to the Vietnam era, although it has been upgraded and modernized several times.
The Army cancelled the Comanche helicopter program in 2004, then scrapped a follow-on deal with Bell Helicopter for an armed reconnaissance aircraft in 2008. It then launched a successor “Armed Aerial Scout” program but decided to carry out flight demonstrations to see what capabilities were already available.
Industry executives are perplexed about the Army’s recent comments about its disappointment in the aircraft viewed last year, especially since officials had previously talked about some of those helicopters meeting or exceeding requirements.
In January, Colonel John Lynch, capability manager with the Army’s Training and Doctrine Command, said several of the aircraft seen in the flight demonstrations and factory visits met or exceeded recommended performance requirements.