Defense Secretary Leon Panetta on Thursday ordered the U.S. military services to freeze civilian hiring, delay maintenance work and reduce other spending, acknowledging for the first time that the additional cuts - on top of $487 billion already being implemented - were increasingly likely.
Lieutenant General William Phillips, the military director of Army acquisition, said there was a huge focus on affordability and ensuring that modernization funds were balanced across an array of competing needs, including new acquisition programs, current programs and the Army’s goal to develop and field a new vertical lift capability in two decades.
If the Army proceeds with a new “armed aerial scout” helicopter competition, it would be the Army’s third attempt to start replacing the OH-58 helicopters, which were built by Bell Helicopter, a unit of Textron Inc. The basic OH-58 airframe dates back to the Vietnam War era, although it has been upgraded and modernized several times to keep it current.
Boeing and a number of other weapons makers hope to bid for a contract that could eventually be worth $6 billion to $8 billion. It represents one of few new acquisition programs on the horizon at a time when arms companies are bracing for cuts in military spending after a decade of unbridled growth.
Boeing has said it plans to offer a version of its AH-6 Little Bird if the competition is launched. Sikorsky Aircraft, a unit of United Technologies Corp and the North American unit of Europe’s EADS, have each invested heavily to develop new, more capable helicopters for a possible competition.
Bell Helicopter; AgustaWestland, a unit of Italy’s Finmeccanica SpA; MD Helicopters; and AVX Aircraft are also interested in the program.
Officials said Army procurement plans were also jeopardized by the fact that Congress has not passed an appropriations bill for fiscal 2013, which began on Oct. 1. Under the continuing resolution now funding government operations, the military services are banned from starting any new programs.
In the Army’s case, that means it may have to scrap a five-year, multibillion-dollar procurement agreement with Boeing Co for CH-47 Chinook helicopters that officials say would save the Army $810 million.
Officials said they were in talks with lawmakers about how to allow that contract to proceed, given the high amount of savings, but said it remained unclear if that would happen.