New York Times — Wanting to clamp down on wasteful spending, President Obama halted a project to create new presidential helicopters four years ago, saying its soaring price was a symbol of government contracting “gone amok.”
But to the administration’s surprise, a new competition to build the helicopters much more cheaply is also running into trouble. Industry officials said that only one company, Sikorsky Aircraft, was likely to bid on the multibillion-dollar contract this week. And some of Sikorsky’s rivals are voicing an increasingly common complaint — that bid specifications are being written so narrowly they are driving away potential competitors.
Given the budget crisis, the White House has reiterated the call for sharper competition in all areas of contracting, to lower costs. But the bidding for Marine One, the helicopter that sweeps away presidents from the White House lawn, suggests that goal is hard to achieve, as have other recent contract troubles. By putting more emphasis on price and being more precise in what it wants, the government could end up with cheaper bids, but could also be excluding equipment that might be more flexible or less expensive in the long run, experts in government contracting said.
“The question is not whether the president can get the cheapest helicopter, but the best one that’s affordable to buy,” said Jacques S. Gansler, who was the top Pentagon acquisition official in the Clinton administration. “It’s like when you buy a car. Do you drive a Yugo? Or is the best buy the cheapest one that meets your needs?”
Such questions have simmered for months among military and information-technology companies, which are feeling the pinch as opportunities to win large federal contracts dwindle. But the issues could attract wider attention now that the president’s own helicopter is back in the spotlight.
Mr. Obama first expressed concerns about the cost of the new helicopters shortly after he took office in 2009, when Senator John McCain of Arizona, who had been his Republican opponent in the presidential race, confronted him at a conference on fiscal responsibility. At the time, the projected price for 28 futuristic helicopters, to be designed to fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast, had nearly doubled, to $13 billion.
Mr. Obama responded by saying that the existing fleet of white-topped helicopters, which are now 35 to 40 years old, seemed “perfectly adequate to me.” He also promised to fix the procurement process.
Since then, the White House Military Office, which sets the requirements for the helicopters, and the Navy, which buys them because the Marines fly them, pared back some of the demands that had contributed to the cost overruns, like how fast the helicopters must fly and how far they can go without refueling. The Navy also decided that it would supply the sensitive communications gear using existing technology rather than asking the contractors to create something new.
The latest plan is to buy 21 helicopters — at a much lower but unspecified cost — that would begin to enter service in 2020. Congressional auditors have praised the plan as more sensible, and the Navy had said it expected “a full and open competition.”
But with the bids due on Thursday, officials at three companies that had considered bidding — Boeing, Bell Helicopter and Europe’s AgustaWestland — all said in interviews that they had decided not to.
AgustaWestland, which was expected to be Sikorsky’s biggest rival, said in a statement that several aspects of the bid process “inhibit our ability to submit a competitive offering” and “provide a significant advantage to our likely competitor.”
Under the deal that the Obama administration scrapped, AgustaWestland had supplied the helicopters to Lockheed Martin, the prime contractor. (The Navy later sold the nine basic helicopters they produced to Canada for $164 million to use for spare parts.) AgustaWestland teamed with Northrop Grumman in preparing for the new competition, while Lockheed Martin is now working for Sikorsky.
AgustaWestland, in planning a new bid, proposed a helicopter based on its AW101 model, which it sells overseas. It was larger than Sikorsky’s basic H-92 model, and it lost some advantages when the Navy eased the requirements, like reducing the minimum seating to 12 people from 14.
Industry officials said that while the earlier contract required the winning helicopter to eventually be certified to Navy standards, the Navy wanted to save time in the new competition by allowing safety approvals by either civilian or military authorities. Sikorsky’s helicopter already had been certified by the Federal Aviation Administration, while AgustaWestland’s was not.
And while the Navy highlighted four areas where the bidders could improve their scores, AgustaWestland concluded that it could not gain enough extra points to overcome Sikorsky’s basic price advantage, the industry officials said.
Boeing had considered bidding with its large H-47 Chinook helicopter, or offering the V-22 tilt-rotor craft that it makes with Bell. But neither would have worked once the government decided that the helicopter had to be small enough to easily land on the White House lawn.
AgustaWestland, Boeing and Bell also dropped out of an Air Force competition last year for a new combat-rescue helicopter in which Sikorsky also appeared to be the only bidder. The Air Force is now considering using V-22s for part of that mission.
AgustaWestland, a unit of Finmeccanica, also faced a potential problem from a bribery scandal in India, where it is under investigation for using middlemen for a $754 million contract for AW101s. Sikorsky, which built the White House helicopters now in use, has run into extensive delays and cancellation threats on a military project in Canada with a helicopter similar to the one it is offering the Navy.
The White House referred questions to the Navy.
Navy officials declined to speculate on what they would do if Sikorsky were the only bidder for the new presidential helicopter, known as the VXX.
Until the bids are due Thursday, the Navy “does not know, and it is of no consequence — no consequence at all — to speculate what companies will submit bids,” Capt. Cate Mueller, a Navy spokeswoman, said in a statement.
Captain Mueller said the Navy had considered feedback from industry throughout the process. She said it had learned from the earlier presidential-helicopter contract that it would be more cost-effective to use a helicopter that would not need a new safety certification later.
Dr. Gansler, the former Pentagon acquisition official, said another problem was that solo bidders “rarely try to cut their price.” But Frans Jurgens, a spokesman for Sikorsky, said, “Our proposal will put forward a safe, reliable and cost-efficient aircraft.”
By CHRISTOPHER DREW
Posted on July 28, 2013
New York Times | Few Suitors to Build a New Marine One