US Army eyes quick armed helicopter competition

By Jim Wolf

WASHINGTON, Oct 17 (Reuters) - The U.S. Army plans to stage a new competition for a multibillion-dollar armed reconnaissance helicopter as soon as possible after canceling a contract with Textron Inc's (TXT.N) Bell helicopter unit due to delays and cost overruns.

Lt. Gen. James Thurman, the army's director of operations, said on Friday he planned to seek the necessary program "revalidation" from the joint staff by January, a signoff that would usher in new bidding.

The helicopter remains "a critical requirement" and the army "will move as fast as possible" to enter a new contract, Thurman told reporters at a briefing at the Pentagon.

Lt. Gen. Ross Thompson, the top uniformed officer for acquisition, said a new competition could take a year to complete after Pentagon approval to move ahead.

Thurman and Thompson spoke a day after John Young, the Defense Department's top weapons buyer, asked the Army to come up with a new plan for replacing its OH-58D Kiowa Warrior fleet.

The Kiowas, now numbering 342, are the most heavily used Army helicopter in Iraq and Afghanistan as well as the oldest.

Thompson said the army had expected to pay $8.5 million per aircraft, compared with the projected $14.5 million that helped doom the Bell contract. The delivery date had also been pushed out by four years to 2013.

Boeing Co (BA.N), which lost the initial competition to Bell in 2005, is expected to be a strong competitor in the projected new competition. Bell is also welcome to compete, but past performance on a government contract will be a factor in the outcome, as always, Thompson said.

The army canceled Bell's development contract on Thursday night after Young decided to discontinue the deal based on a review sparked by a congressionally mandated review of its soaring costs.

Thompson said the Army planned to spend nearly $800 million make the existing Kiowa fleet "safe, suitable and reliable" and keep it operating until 2020 as a bridge to the next helicopter.

He said the prime factor driving up Bell's costs had been the cost of labor and materials after the company dropped plans to manufacture the air frame in Canada and fly it to Texas for military outfitting.

Bell said last night it was "extremely disappointed" in the decision and it still believes its ARH-70A was the best replacement for the Kiowa Warrior. (Reporting by Jim Wolf; Editing by Tim Dobbyn)