Light Helicopter Program:

Risks Facing the Program Raise Doubts About the Army's Acquisition Strategy

NSIAD-89-72: Published: Dec 23, 1988. Publicly Released: Dec 23, 1988.

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GAO reviewed the Army's Light Helicopter (LHX) Program to assess: (1) changes and risks in the program's cost estimates and technology development; (2) changes in the program's acquisition strategy; and (3) the Army's progress toward achieving program goals.

GAO found that: (1) the Army believed that its original LHX performance requirement goals were too demanding; (2) to scale back the program, the Army reduced the total quantity, deleted the LHX utility version, and traded off performance requirements for lower aircraft weight and cost; and (3) the Army's use of flyaway costs to set LHX cost goals did not provide a sound basis for controlling and measuring costs, since such costs did not reflect the full expected cost of an LHX equipped for its primary mission. GAO also found that: (1) to lower LHX research and development costs, the Army chose an acquisition strategy that would eliminate competitive prototype testing and evaluation before contractor selection and full-scale development; and (2) the Army preferred competitive prototyping, but believed that it was not affordable given the limited research and development funds available.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Department of Defense (DOD) believes that flyaway cost, if properly defined, is a good measurement. LHX cost estimates were using an incomplete definition of flyaway costs, erroneously excluding the cost of mission kits. DOD stated that other, more inclusive cost measurements will also be employed for LHX.

    Recommendation: The Secretary of Defense should set program cost goals around more meaningful cost measurements than flyaway costs, such as the cost of an LHX equipped for its primary mission, the unit procurement cost, or both.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD disagreed with this recommendation, citing the current strategy as sound and affordable. The GAO position that the current strategy is too risky is unchanged.

    Recommendation: The Secretary of Defense should reassess whether LHX warrants a higher priority for more research and development funds within projected resources to pursue an acquisition strategy that provides for the test and evaluation of competitive prototypes, particularly regarding mission equipment, before selecting a winning contractor team and committing the program to full-scale development.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD disagreed, claiming a change in strategy was premature until the December 1990 milestone decision. GAO maintains the current strategy is flawed and should be corrected now. In September 1990, DOD revised the LHX acquisition strategy to decouple the full-scale development decision from the contractor selection. It also deferred the development decision until prototypes can be built and tested.

    Recommendation: The Secretary of Defense should, if the current acquisition strategy is pursued, separate the decision to select the winning contractor from the decision to commit the program to full-scale development by postponing the full-scale development decision until it can be on the basis of the winning contractor's demonstrated performance with prototypes.

    Agency Affected: Department of Defense


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