U.S. Navy defends presidential copter bid format as firms bail out

Reuters News
Posted: Jul 31, 2013 1:40 PM
U.S. Navy defends presidential copter bid format as firms bail out

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The U.S. Navy on Wednesday defended the way it structured a competition for development of a new presidential helicopter, even as all but one of the companies interested in the multibillion-dollar program pulled out of the running.

Officials at AgustaWestland, a unit of Italy's Finmeccanica SpA, and Boeing Co, which had considered proposing its V-22 tilt rotor plane or H-47 Chinook helicopters, said Wednesday they do not plan to submit bids. AgustaWestland had teamed with Northrop Grumman Corp to pursue a possible bid.

That leaves only Sikorsky Aircraft, a unit of United Technologies Corp, which is teamed with Lockheed Martin Corp, according to industry officials.

Bids in the new competition are due Thursday. The Navy had planned to award a contract in the third quarter of fiscal 2014.

Sikorsky built the current fleet of Marine One helicopters that whisk the president away from the White House.

Lockheed was the prime contractor on the previous helicopter contract, which was scrapped in 2009 after requirements changes threatened to double the cost of the program to $13 billion.

Defense officials said they did not expect the latest developments to alter their plans to proceed with the competition, and said there were procedures in place to ensure competitive pricing even in cases involving a single bidder.

The no-bid decisions came weeks after the Navy's handling of another large acquisition program, a multibillion-dollar contract for a new electronic jammer awarded to Raytheon Co, was challenged by Britain's BAE Systems.

Senator John McCain and congressional agencies have also criticized the Navy's approach in a $34 billion program to buy 52 new coastal warships.

Navy spokeswoman Captain Cate Mueller said the number of bidders was considered sensitive information while the acquisition process was underway, and declined comment on the consequences of the latest developments.

But she underscored that the Navy's request for proposals in the competition had been shaped by an extensive process that was focused on the military requirements for the new helicopter, not any specific aircraft offered by the companies.

The Navy issued a draft request for proposals (RFP) in November and updated it several times. Navy officials also visited various industry sites and held several group and one-on-one forums to get feedback from potential bidders, she said.

"Industry feedback was given serious consideration throughout the RFP refinement process with the goal of maximizing participation from interested bidders," Mueller said.

She said the Navy's acquisition approach was looking to tamp down costs by integrating mature equipment into an aircraft that is currently in production, noting that one key lesson learned from the previous failed effort was the need to ensure that requirements could be met on time and within the budget.

Lockheed was the prime contractor on the previous program, called VH-71, with the helicopters supplied by AgustaWestland.

A similar situation developed last year on the Air Force's new combat rescue helicopter after Boeing, the AgustaWestland-Northrop team, and Europe's EADS dropped out, leaving only Sikorsky bidding for the work.

In that case, Air Force officials said they would require Sikorsky to provide more detailed cost data to ensure that the resulting pricing was good as possible.

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AgustaWestland on Wednesday said it had decided to skip offering its AW101 helicopter for the competition because the requirements set for the deal favored a competitor.

"There are fundamental proposal evaluation issues that we believe inhibit our ability to submit a competitive offering, and that provide a significant advantage to our likely competitor," AgustaWestland said in a statement.

Northtrop spokesman Randy Belote confirmed that the team had decided not to bid, but declined to elaborate.

Boeing spokesman Damien Mills said his company opted out after concluding that neither the H-47 Chinook helicopter or V-22, which it builds with Bell Helicopter, a unit of Textron Inc, would be competitive for the program as currently structured.

Industry officials said the Chinook was too big to land in the designated envelope at the White House, while the V-22 was too big to fit into the C-17 cargo plane for transport.

The U.S. Navy's posting in May called for construction of six developmental helicopters during the engineering design phase, followed by nine helicopters during a low-rate production phase and up to eight more in the following years.

The current presidential helicopters are VH-60N "Night Hawks" and VH-3D "Sea Kings," both built by Sikorsky.

(Additional reporting by Danilo Masoni in Milan; Editing by Gary Hill)