Lockheed’s new military helicopter to cost billions more

Buying a fleet of the heavy-lift aircraft has been given the go-ahead by the Pentagon but an official memo reveals it will cost much more than originally anticipated.

The CH-53E Super Stallion helicopter will be superseded by the Lockheed King Stallion. Wong Maye-E / AP

The Pentagon’s approval for the US marine corps to start buying Lockheed Martin’s new heavy-lift helicopter came with a hidden surprise: the projected total acquisition cost for the King Stallion programme has increased 6.9 per cent to US$31 billion.

The updated estimate was provided in an April 4 decision memo by James MacStravic, the Pentagon’s acting weapons buyer, that authorised production of the initial batch of 26 helicopters. The memo, labelled “For Official Use Only,” was obtained by Bloomberg News.

The estimate for the total acquisition cost – which includes everything from research to purchase of the aircraft, including spare parts – climbed to $31bn from about $29bn that the navy reported in March 2016. No aircraft were added beyond the 200 planned.

Likewise, the “programme acquisition unit cost” estimate, with everything included, increased to $138.5 million per ‘copter from $131.2m as of August 2016. The latest projection is a 20 per cent increase from the initial goal of about $115m established in late 2005, according to data in the memo.

Niki Tsongas of Massachusetts, the top Democrat on a house armed services subcommittee that oversees the helicopter programme, already has questioned the King Stallion’s basic cost as “a heck of a lot of money”.

The aircraft, designated the CH-35K, will be capable of lifting 12,246 kilograms. It will be the same size as its predecessor, the Super Stallion, but able to haul triple the cargo, according to Bruce Tanner, Lockheed’s chief financial officer. The decision memo calls for requesting $756m in procurement funds in fiscal 2018, up from $528m this year. It recommends requesting $1.2bn for fiscal 2019 and $1.5bn for fiscal 2020.

The Pentagon’s independent cost analysis group “identified additional schedule risk” in developmental testing for the helicopter, according to the memo.

The increase in the per-helicopter cost “is most likely due to continued development instabilities”, said Michael Sullivan, a director for the government accountability office. Mr Sullivan managed preparation of the agency’s latest annual assessment of major weapons programmes, which listed the unit cost as $131.2m based on August figures provided by the CH-53K programme office.

The recent increase might be a remnant of the programme’s early development difficulties, such as a finding in 2010 that the helicopter’s design was unstable, Sullivan said.

“These guys got off to a bad start, and they are still churning through it,” he said.

* Bloomberg

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