December 11, 2012 / 9:40 PM / 5 years ago

UPDATE 1-Most contractors opt out of US Air Force chopper bids

By Andrea Shalal-Esa
    WASHINGTON, Dec 11 (Reuters) - Five big defense contractors
on Tuesday withdrew from the U.S. Air Force's latest attempt to
replace its aging fleet of HH-60 Pave Hawk rescue helicopters,
leaving just Sikorsky Aircraft in line for a deal whose valued
is capped at $6.84 billion.
    Northrop Grumman Corp, which was teamed with Italy's
Finmeccanica SpA ; Boeing Co ; Textron's 
Bell Helicopter unit; and the U.S. unit of Europe's EADS
 all said they would not compete to build 112 new
helicopters for the Air Force, raising questions about whether
the contest can proceed as planned.
    Industry executives, speaking on background, said the Air
Force bidding rules were so narrowly framed that they
effectively excluded their aircraft from the competition. They
said the terms favored Sikorsky's Black Hawk helicopter and
would not reward extra capability offered by bigger aircraft.
    An Air Force spokesman said he was unable to discuss whether
competition for the contract would continue under the terms
first outlined by the service in March and finalized in October.
    "The Air Force is committed to a fair, open and transparent
process to select a new combat search and rescue helicopter that
meets the established warfighter requirements at an affordable
price for the taxpayer," the Air Force's Ed Gulick said in an
emailed statement.    
    "Once we select and announce the final contractor we will be
able to openly discuss the details of the CRH (Combat Rescue
Helicopter) program," Gulick said.     
    Sikorsky Aircraft, a unit of United Technologies Corp
 that has teamed up with Lockheed Martin Corp,
said it still planned to submit a bid for the work. Sikorsky
built the existing fleet of H-60 Pave Hawks, which are a variant
of its popular Black Hawk helicopter.
    Northrop, which announced a teaming agreement with
Finmeccanica's AgustaWestland in September, said the two
companies still plan to bid for a separate U.S. Navy competition
for a new presidential helicopter using AgustaWestland's AW101. 
    Northrop spokeswoman Margaret Mitchell-Jones said the two
companies decided to skip the Air Force competition after a
thorough analysis of the service's final request for proposals,
or RFP, which was published in October. Bids are due Jan. 3.
    Boeing said it would not submit bids based on its H-47
helicopter - which won the Air Force's last rescue helicopter
competition, only to see the $15 billion contract canceled - or
the V-22 tilt rotor aircraft built with Bell Helicopter unit.
    Spokesman Damien Mills said Boeing's H-47 Chinook and V-22
"Osprey" had been proven to be the world's most capable and
cost-effective search and rescue aircraft, but their
capabilities exceeded the parameters of the Air Force contest. 
    "While the Chinook and Osprey exceed the parameters of the
USAF's Combat Rescue Helicopter program, they are often the
go-to aircraft for the U.S. Army, Marines and Air Force Special
Operations Command when needing to extract personnel from
dangerous situations," Mills said. 
    He said the two aircraft had been used to save lives in
conditions where other aircraft could not operate. 
    EADS also said it would skip the competition. EADS North
America Chief Executive Sean O'Keefe told Reuters in July that
his company might not bid unless the Air Force dramatically
revamped rules. As written, he said at the time, the rules would
have knocked his company's helicopters out of the running.
    The Air Force rules say no company will be considered if its
total bid is evaluated to cost more than $6.84 billion.
    The Air Force in 2006 picked Boeing's H-47 Chinook
helicopter to replace its aging fleet of Sikorsky HH-60 Pave
Hawk helicopters, but the Pentagon canceled the contract in 2009
after multiple protests by the losing bidders.
    The service released a draft request for proposals in March
that was conceived as a "best value" competition, but left some
industry executives concerned about whether the rules would
allow them to win the bid, or make much profit if they did. It
finalized the rules in October.
    The Air Force revamped its approach to the rescue helicopter
program to put a premium on lower costs, since it is facing huge
outlays in coming years for new refueling tankers being built by
Boeing, F-35 fighter planes built by Lockheed Martin and a new
long-range bomber that it wants to start developing.
    "The Air Force budget is under tremendous pressure," said
defense consultant Jim McAleese. "The tanker, F-35 and bomber
are critical priorities. Every other program must justify the
incremental gain in combat capabilities relative to its cost."
    In October, the Air Force said it was pursuing a
"capability-based, best-value approach," with a big push to use
aircraft and training systems that are already in production. 
    The service said its approach had been carefully reviewed by
top Pentagon leaders to ensure a low-risk, executable process
that "will deliver the warfighter a product that meets the
requirement at an affordable price."

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