Army's lean helicopter-leasing plan fattened up by congressional tinkering

December 01, 1991|By Richard H. P. Sia | Richard H. P. Sia,Washington Bureau of The Sun

WASHINGTON -- A simple, money-saving Army helicopter project that won strong congressional support last year was recast by lawmakers recently into an unwieldy $100 million aircraft-buying program that government and industry officials say will help two small U.S. helicopter companies.

Neither of the two firms -- Schweizer Aircraft Corp. of Elmira, N.Y., and Enstrom Helicopter Corp. of Menominee, Mich. -- is assured of winning lucrative Army contracts, but friendly lawmakers have now made it easier for them to compete for Army business, industry officials agreed.

"Enstrom is in a very good position on this project," Representative Robert W. Davis, R-Mich., said in a press release sent to his district last week. As a member of the House Armed Services Committee, he claimed some credit for helping one of the district's biggest employers.

"This is going to be a good investment for the Army," Mr. Davis said. "Of course, the prospect of defense dollars in this area creating jobs in the upper [Michigan] peninsula makes this program that much sweeter."

Army officials are privately expressing dismay over the abrupt congressional action, made final last week, which effectively repealed last year's approval of a plan to lease, rather than buy, between 157 and 180 helicopters to train combat pilots at the Army Aviation Center at Fort Rucker, Ala.

The original idea was to replace an aging, Vietnam-era fleet of 240 UH-1 Huey helicopters as quickly as possible with readily available commercial aircraft that would be cheaper to operate and maintain. While a Huey costs an estimated $682 an hour to fly, a smaller commercial helicopter would have an operating cost of less than $218 an hour, Army officials said.

"This initiative should generate significant savings to the Army over the life of the program," the Army claimed in its 1991 report on aviation modernization.

A senior official estimated savings of at least $44 million a year, or $751 million over the 20-year life of the new training program.

By using operating funds allocated for support of the Huey fleet to pay for a commercial lease, the Army could obtain a new fleet of training helicopters without asking Congress for more money or dipping into an ever-shrinking pot of procurement funds and robbing vital weapons-buying programs of scarce dollars, officials explained.

Some officials viewed the "New Training Helicopter Program" as a modest attempt to heed the advice of military reformers in Congress who often criticize the Pentagon for favoring elaborate "gold-plated" combat systems, built to complex military specifications, over cheaper commercial hardware that is available "off the shelf."

Although Congress gave the Army the green light when it passed the 1991 defense budget last year, it unexpectedly added explicit provisions to both the recently passed 1992 defense authorization and appropriations bills that repealed approval of the lease program. Lawmakers also added $23.5 million to the Army procurement budget and ordered it to buy the first 40 replacements for the Huey helicopters.

"We were good to go in '91 and there were no questions from the appropriators," said a senior Army officer involved in the program. "We were moving on down the road and then, boom! The road is blocked. We've been detoured."

While Army officials were loath to criticize the fattening of their procurement budget by Congress, especially for helicopters they want badly, they said this change in acquisition strategy could put future budgets at risk. No longer able to spend an ample supply of operating funds directly for a lease, the Army now must come up with enough procurement money in 1993 to buy the next lot of 70 aircraft and in 1994 for as many as 47 more, they said.

The senior officer, who insisted on anonymity, said money saved in the operating budget could be transferred to a helicopter-procurement account, but that shift, as well as the purchase of additional helicopters, requires annual congressional approval.

The Army cannot take that for granted, he said.

The plan began unraveling after the House Armed Services Committee passed the 1992 defense budget in May without changing last year's decision to authorize an initial five-year aircraft lease.

As the Army prepared drafts of its bid requests, Enstrom Helicopter and Schweizer began to clamor that a leasing program would put their small companies at an economic disadvantage. The Paris-based helicopter giant, Aerospatiale Corp., appeared to be the favored competitor because it would have far more capital resources on hand to supply a new fleet of training aircraft under a leasing arrangement, the American firms argued.

"Historically, we supported the concept of a lease since we thought that would be a method to implement the program without [requiring] lead time to get procurement money," said Robert M. Tuttle, president of Enstrom Helicopter. "We thought that was the only way the program could get implemented."

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