SPECIAL OPERATIONS FORCES Army Plans Highly Concurrent Acquisition Strategy for Costly Helicopters w‘ HllllllllI IIll 142536 * E f ^_... _. ..-... _- _,._- “_.l.“. ..__ ___-“_“.--__--.--.---- -- ^. .._. I ..__ ____ _( ..- --ll..--“-.. ._ .._.l..~l.---l-l--l United States General Accounting Office Washington, D.C. 20648 National Security and International Affairs Division B-240262 September 28,199O The Honorable William V. Roth, Jr. United States Senate Dear Senator Roth: As you requested, we evaluated cost, schedule,and test plans for the Army’s special operations forces (SOF) helicopter program. Specifically, we reviewed (1) the Army’s planned concurrency of prototype and oper- ational testing with helicopter production and (2) current cost estimates for the program. The Army plans to award full-rate production contracts for SOF helicop- Resultsin Brief ters before it completesdevelopmental testing and long before it com- pletes operational testing. In fact, the Army plans to have about 90 percent of its SOF helicopters either delivered or in production before the completion of operational testing. The Army’s current acquisition strategy for SOF helicopters increasesthe risk of having to make expensive retrofits on production helicopters to correct deficiencies identified in testing rather than limiting the risk to only those systems produced in a low-rate initial production run. Fur- ther, the Army plans to field these systemswithout an important self- defensecapability required for certain missions. The Army currently reports total SOF helicopter modification program costs at about $1.36 billion. However, a more accurate estimate of the cost is at least $2.1 billion becausesomecomponent and airframe costs are being reported and paid for by Army activities other than the SOF product office. In addition, many other costswere not included in the Army’s estimate. Furthermore, this estimate doesnot include the added costs of installing additional equipment after the helicopters are fielded and of overcoming problems identified during testing. The Army initiated SOF modification programs in 1986 for someof its Background CH-47 Chinook and UH-60 Black Hawk helicopters. Operationally, these modified aircraft, designatedthe “MH-47E” and the “MH-6OK,” are Y expected to be able to perform clandestine, deep-penetration airlift mis- sions in adverse weather conditions and high-threat environments. Page 1 GAO/NSIAD-DO-267 Army SOF Helicopter Program Appendix I provides greater detail on the modifications being made to the Chinooks and Black Hawks to convert them to SOF aircraft. Believing that both the MH-60K and the MH-47E helicopters were nondevelopmental items, the Army originally decided that little heli- copter developmental testing and no operational testing were needed.In its 1989 statement of its SOF helicopter acquisition strategy, the Army assumedthat becausethe helicopters used in the program were quali- fied systems,planned testing and evaluation would consist primarily of integrating and testing already qualified components.Recently, how- ever, the acquisition and testing strategies for both helicopters have been restructured to include additional developmental testing and evalu- ation of the prototype aircraft. The Army believesthat current SOF pro- gram cost and performance risks are acceptable. Although the Army has designatedthe SOF aircraft as nondevelopmental items, the SOF modifications include an extensive integration of both off- the-shelf and newly developed avionics equipment. More specifically, the Army plans to combine about 40 piecesof communications, naviga- tion, and aircraft survivability equipment into the integrated avionics subsystem in the SOF aircraft. In addition, the Army plans to integrate a multimode radar, a forward-looking infrared sensorsystem, a map dis- play generator, and an aviator’s night vision imaging system. According to independent Army evaluators, it is the extensive integration of avi- onics equipment that puts the SOF aircraft at risk. In addition to producing one prototype helicopter for each program, the Army plans to award a series of contracts for the production of 60 MH-47E and 22 MH-6OKhelicopters between fiscal years 1990 and 1993. Of these, the Army has designatedthe first 11 MH-47E and 11 MH-6OKhelicopters as low-rate initial production helicopters. Department of Defenseand Army regulations call for operational testing High-Risk Acquisition before production decisionsare made to reduce cost and technical risks. Test Strategy Past unsatisfactory experiencein system acquisition demonstratesthe need for this testing. In the SOF program, however, the Army doesnot plan to conduct initial operational test and evaluation before proceeding beyond low-rate initial production. Rather, under current Army plans, I most SOF aircraft (63 of the planned 74) will be in production or deliv- ered before operational tests even begin. Further, the Army plans to test and field SOF helicopters that do not possessall the equipment necessary to satisfy operational capability requirements. Page2 5240202 Acquisition Policies and Current acquisition guidance calls for early developmental and opera- Regulations Provide tional testing to demonstrate that a system will work as intended and can accomplish its intended mission. Department of Defensepolicy man- Internal Controls to dates the completion of initial operational testing and the assessmentof ReduceDevelopmental results before the full-rate production phase. Army regulations state Risks that low-rate initial production may be conductedto verify production capability and to provide the assetsnecessaryto conduct various types of testing, including operational testing. These regulations also require that before the full-rate production decision, initial operational test and evaluation on a production-representative system must be conducted, with a dedicated phase of initial operational test and evaluation on a system certified as ready for fielding. When the Army doesnot follow operational testing requirements, it risks fielding systemsthat require expensive retrofits or are unable to perform their required missions. For example, in 1986, we reported that the Army had little performance information available on the Sergeant York air defensegun to measureits reliability, maintainability, and effectiveness before production began.The acquisition and testing plan for the SergeantYork was similar to that of the SOF helicopter program in that critical operational test information about the ability of the Ser- geant York to perform its mission under realistic conditions was unavail- able prior to the production decision. The Army judged both performance and cost risks on the SergeantYork to be acceptable,based on the use of mature componentsand subsystemsand contractor responsibility and experience.Thus, with only limited test results, pro- duction began on an unproven system. However, the system integration processproved more difficult than expected.When operational testing was eventually conducted,the SergeantYork was unable to perform as intended, and the Secretary of Defenseconsequently terminated the program. Army Plans Production The Army plans a low-rate initial production of 22 SOF helicopters Concurrent With (30 percent of the total helicopter buy) concurrent with developmental testing on the prototype aircraft. The Army also plans to award full-rate Developmental Testing production contracts for both helicopters nearly 2 years prior to the and Before Operational completion of the developmental testing of the prototype helicopters Testing and over a year earlier than planned operational testing is to begin. Over 90 percent of the 72 MH-47E and MH-6OKproduction helicopters are to be in production or delivered by the time operational testing is to be completed. Page 3 GAO/NSIAD-SO-267 Army SOF Helicopter Program E240202 Figures 1 and 2 show the developmental and operational testing sched- ules for the Army’s SOF helicopter modification programs, along with the production decisionsfor each of the helicopters. Figure 1: MHIIE Testing and Production Schedule Number of Production Aircraft: Production Contract Award Full-Rate Production Decision Low-Rate Initial II Production Decision (11 Aircraft) Contractor Prototype Testing II Operational Testing @j#j@ Government Preliminary Airworthiness t-) Developmental Testing Evaluation of Prototype Aircraft gig@j Government Prototype Testing Y Source: GAO analysis of Army data. Page 4 GAO/NSIAIMO-2f37 Army SOF Helicopter Program . ” . B-240282 Fiaura 2: MH-60K Testing and Production Schedule Number of Production Aircraft: Delivered: 0 7 18 On Production Line: 5 15 3 Total: 5 22 22 I I I I I I I I Production Contract Award II II Full-Rate I I Production Decision Low-Rate Initial -.---!V Production Decision Q I (11 Aircraft) Contractor Prototype Testing II Operational Testing @@J Government Preliminary Airworthiness f-) Developmental Testing Evaluation of Prototype Aircraft gggj Government Prototype Testing Source: GAO analysis of Army data. Aircraft Will Be Fielded Each of the Army’s SOF helicopters is to have an air-to-air missile system Without Somti Required and a flight data recorder, neither of which will be available when the helicopters are to be fielded. Flight data recorders are required; how- Equipment ever, they are not critical to the SOF helicopter’s ability to perform its Page 5 GAO/NSIADSO-~~~A~I~ SOFHelicopterProgram , B-240262 missions. On the other hand, the air-to-air missile provides a key defen- sive capability for the helicopter when it is performing certain missions. Without the missile, there is little to protect these helicopters if they are discovered by the enemy while on such missions. Neither the missile nor the recorders have been developed,but the Army plans to incorporate both items into the helicopters at a later date through preplanned product improvements. Army Has Identified Some The Army has identified four areasof risk associatedwith the SOF heli- Program Risk copter program: (1) the development of the Integrated Avionics Sub- system mission processor,(2) the time required for the certification and qualification of the multimode radar system, (3) the performance of government-furnished equipment, and (4) retrofit costs for four helicop- ters in production during contractor flight testing and government pre- liminary airworthiness evaluation flight tests. While the Army has identified these areas of risk, it has not addressed the risk associatedwith concurrent production and government develop mental and operational testing. On the contrary, Army officials told us that delaying a full-rate production decision until after the completion of operational testing would result in cost increasesfor MH-47E aircraft. They believe that costswould increasebecauseMH-47E and other modi- fications would have to be made after the CH-47Dproduction line is closed. Operational testing of the MH-47E is expected to be completed in Feb- ruary 1993. At that time the Army will have 32 CH-47Daircraft in pro- duction. As we reported in February 1990, the Army doesnot have a mission-basedjustification for 34 of the 61 MH-47E aircraft it plans to procure.’ Therefore “E” modifications could be made to 16 of the 32 CH-47D aircraft still in production after the completion of opera- tional testing and before the closeof the CH-47Dproduction line. The Army has estimated the SOF modification program cost for 74 heli- ProgramC--C- IA* ,uai~ lvltich copters to be about $1.36 billion. However, a more accurate estimate of ther Than Higj- -- the cost is at least $2.1 billion becausesomecomponent and airframe Cukently Estimated costs that will be incurred are being reported and paid for by Army Y activities other than the SOF program office. The government is likely to Forces: Army Plans to Buy More MH-47E Helicopter8 Than Needed -118, Feb. 14,lOOO). Page 6 GAO/NSIAD-DO-267 Army SOF Helicopter Program B-240202 incur additional coststo correct problems identified during develop- mental and operational testing and to install equipment that will not be included on the helicopters when they are fielded. This additional equip- ment, such as the air-to-air missile, is necessaryto make the MH-47E and MH-6OKhelicopters capable of meeting operational requirements, Many Costs Not Included Currently reported cost estimates for the modification program exclude in SOFModification many costs associatedwith obtaining fully equipped SOF helicopters, including the cost of mission-essentialequipment that has not yet been Program Estimates developed. The Army’s current SOF program cost estimate of $1.36 billion doesnot include costs associatedwith SOF helicopter equipment that is paid for and reported by other Army activities. Theseother costs include (1) the cost Qf changesbeing made to the older CH-47Chelicopters (under the CH-47Dmodification program) before they are upgraded to the MH-47E model; (2) much of the cost of obtaining T-712 engines,which are modified to provide better performance for the MH-47E; and (3) the cost of providing internal auxiliary fuel tanks neededto make the MH-47E self-deployable. Coststo obtain the basic Black Hawk airframe, the engine and equipment common to both the basic Black Hawk and the MH-60K, and the 230-gallon external fuel tanks required for some MH-6OKmissions are also reported in other programs. Finally, over $196 million is neededto fund cost increasesthat have been identified by the SOF product office but are not reflected in current Army esti- mates. Table 1 details a more accurate estimate of the SOF modification program’s costs. Page 7 GAO/NSIAD-90-267 Army SOF Helicopter Program B-240262 Table 1: Eatlmate of Actual Program Carts Dollars in millions Cost element MH-47E MH-6OK Total Current Army estimatea $888.35 $467.95 $1,356.30 Other costsb CH-47D modifications 318.24 0 318.24 T-71 2 engine 66.28 0 66.26 MH-47E fuel tanks 16.80 0 16.80 Basic Black Hawk airframe 0 142.13 142.13 Black Hawk external fuel tanks 0 1.18 1.18 Subtotal 1,289.67 611.26 1,900.93 Cost increasesC 97.60 97.60 195.20 Total $1,387.27 $708.86 $2,096.13 %cludes research, development, and procurement costs for 51 MH-47Eand 23 MH-fXlKaircraft plus 2 combat-mission simulators. bCosts related to obtaining fully equipped Army SOF helicopters that are to be paid for and reported by Army activities other than the SOF product office. CTotalof $195.20 million in cost increases not included in the Army’s current estimate (a). The Army’s current unit cost estimate, including research,development, test, and evaluation plus procurement for 51 MH-47E helicopters, is $17.4 million. The Army estimates a $20.3 million unit cost for 23 MH-6OKhelicopters. Using our estimate of total program costs shown above,these unit costs are more likely to be $27.2 million for the MH-47E, or $9.8 million more than the Army’s estimate, and $30.8 mil- lion for the MH-GOK,or $10.5 million more than the Army’s estimate. Further Cost Growth Is The Army has not estimated the potential cost impact of developing, Likely procuring, and installing somerequired equipment on the SOF production helicopters. Further, additional cost growth is anticipated for the MI-I-6OK.The Army’s required operational capabilities documents for SOF helicopters state that the SOF helicopters must be equipped with air- to-air missiles and flight data recorders. These capabilities are to be added as product improvements when they are developed.In addition, production costs for the MH-6OKcould increaseif production of the basic UH-60 Black Hawk ends as planned with the fiscal year 1991 purchase. The Army has not yet estimated this potential cost increase. Page 8 GAO/NSIAD-90-M7 hy SOF Helicopter Program Concurrent Testing and The Army’s plan to have most SOF aircraft in production or delivered Production Plans Could before developmental and operational testing is completed not only increasestechnical risk but also increasesprogram cost risk. At present, Also Increase Program the Army has not estimated the total cost risk associatedwith this deci- Cost Risk sion. The correction of problems identified during developmental and operational tests could increaseprogram cost. We recommendthat the Secretary of Defensedirect the Secretary of the Recommendations Army to take the following actions: Limit low-rate initial production to the minimum number of MH-47E and MH-6OKhelicopters necessaryfor operational testing. Postponecontract awards beyond low-rate initial production until the Army can demonstrate that the aircraft can meet the operational needs of the users through required operational test and evaluation. . Develop and provide to the Congresscomplete cost estimates that accu- rately reflect all coststo the government associatedwith acquiring fully equipped, mission-capableSOF helicopter systems. We conducted our work from January through June 1990 in accordance Scopeand with generally acceptedgovernment auditing standards. As requested, Methodology we did not obtain formal agency commentson our draft report, but we did discussour observations with agency officials during the assign- ment. We conducted interviews and obtained and analyzed data at the Army’s Special Operations Aircraft Product Office; various offices at the Army Aviation SystemsCommand,St. Louis, Missouri, including the UH-60 Black Hawk Project Office and the CH-47 Chinook Project Office; the U.S. Special Operations Command,MacDill Air Force Base,Tampa, Florida; the Office of the Assistant Secretary of Defensefor Special Operations and Low Intensity Conflicts, the Pentagon,Washington, DC.; the U.S. Army Materiel SystemsAnalysis Activity, Aberdeen, Maryland; and the US. Army Operational Test and Evaluation Agency, Alexan- dria, Virginia. We also visited the Sikorsky Aircraft Division of United TechnologiesCorporation, Stratford, Connecticut; the Boeing Helicopter Company, Philadelphia, Pennsylvania; and the IBM Federal Systems Division, Owego,New York. Y As arranged with your office, unless you announceits contents earlier, we plan no further distribution of this report for 30 days. At that time, Page B GAO/NSL4D&O-267 Am~y SOF Helicopter Program we will send copies to the Chairmen of the Senateand HouseCommit- tees on Armed Servicesand on Appropriations, the Director of the Office of Managementand Budget, the Secretariesof Defenseand the Army, and other interested parties. Major contributors to this report were Henry Hinton, Associate Director; Jim Shafer, Assistant Director; Gary Billen, Assistant Regional Manager; John Wiethop, Evaluator-in-Charge; and Carole Coffey, Staff Member. Pleasecontact me at (202) 276-4141if you or your staff have any ques- tions concerning this report. Sincerely yours, Richard Davis Director, Army Issues Page 10 GAO/NS~@O-267 Army SOF Helicopter Program , Page 11 GAO/NS~BO-287 Army SOF Helicopter Program , Appendix I - Descriptionsof the Army’s SpecialOperations ’ Helicopter Modification Programs The Army modification programs for the SOF helicopter systems are among the most demanding helicopter development tasks to date. The modification programs stress commonality of upgrades to mission equip- ment systems.The MH-47E and the MH-6OKhelicopters also contain a common state-of-the-art integrated avionics subsystem. MH-4’7EHelicopter The MH-47E is being produced through a modification to the Army’s ongoing CH-47Dhelicopter modernization contract. Under the CH-47Dmodernization effort, the Army is upgrading and modernizing earlier models of its tandem-rotor, twin-engine, medium-lift CH-47 heli- copter to provide improved handling and increasedperformance. The Army had planned a total fleet of 472 CH-47Dmodel helicopters. How- ever, that number will be reduced to 421 if all 51 planned MH-47E models are produced. The MH-47 “E” model will include somebut not all of the CH-47Dmodel’s improvements. In addition to some“D” modifications, the MH-47E model will include an internal cargo-handling system, internal auxiliary fuel tanks, a terrain following/terrain avoidance radar, a forward-looking infrared radar, a rotor brake, an air-to-air refueling probe, a rescuehoist, additional troop seats,0.50-caliber machine guns, and T&L-714 engines(seefig. 1.1).The MH-47E will also contain avionics system upgrades and an integrated avionics subsystem. Avionics improvements include aircraft survivability equipment, and the integrated avionics system includes both monochromeand color dis- play monitors, mission and display processors,a map display generator/data transfer module, and remote terminal units. Page 12 GAO/NSIAD-M-267 Army SOF Helicopter Program Demrlpthu of the Army’s Special OpraUo~~Ha~~ModlflcationPrograme Flgum 1.1:MH-47E Configuration Internal Internal Cargo-Handling Auxiliary System Fuel Tanks Rotor /A? Brake Terrain Following/ Radai Terrain Avoidance T-55-L-714. Engines 0.50 Caliber Machine Guns L Forward-Looking Rescue Hoist Infrared Sensor System Integrated and Updated Avionics Air-to-Air Refueling Probe MH-6OKHelicopter The Army is procuring MH-6OKhelicopters through a contract modifica- tion to its multiyear procurement of new production UH-6OLBlack Hawk helicopters. The Black Hawk is a t&n-engine, single-rotor, medium-lift helicopter whose primary mission is to transport troops and equipment. Additional functions are to provide aeromedical evacuation, troop resupply, and command and control. The MH-6OKhelicopter modification will include a folding stabilator, a rotor brake, an external hoist, wire strike protection, an air-to-air refueling probe, shipboard compatibility modifications, O&SO-caliber Page 13 GAO/NSIAlMO-267 Army SOF Helicopter Program , Appendix 1 Dtsdption~ of the Amy’8 Spedal Operatlona Hehpter lbdiflcation Progmme guns, and external fuel tanks. The MH-6OKwill be equipped with essen- tially the sameintegrated avionics system and avionics system upgrades as the MH-47E helicopter. Flm~ro 1.2: MHdOK Configuration Rotor Brake T700-GE-701 C I Engines External h I-“lull ,y Qtabilator Wire Strike Protection Fuel Tanks 0.50.Caliber I Machine Guns Air-to-Air \ Refueling Probe Integrated and I I-y.....-” lndatarl ,Avinnicc . ..-. ..“_ I Forward-Looking Infrared Sensor System Y (393389) Page 14 GAO/NSIAD-90-267 Army SOF Helicopter Program ,I ,. .I. _...^ .__-.__-__- _..... _..__ --.-- I Ordering Inforrnal,ion -- ,. T % .-=* tC= ; =T;
Special Operations Forces: Army Plans Highly Concurrent Acquisition Strategy for Costly Helicopters
Published by the Government Accountability Office on 1990-09-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)