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As Budget Nears, Pricing Decision Coming for USAF Rescue Helo

Mar. 3, 2014 - 03:45AM   |  
By AARON MEHTA   |   Comments
The Air Force wants to buy 112 new helicopters to replace the aging Sikorsky Pave Hawks.
The Air Force wants to buy 112 new helicopters to replace the aging Sikorsky Pave Hawks. (Staff Sgt. Aaron D. Allmon II / Air Force)
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As the defense community waits to see whether the US Air Force’s Combat Rescue Helicopter (CRH) program will be funded in the FY 2015 budget, producer Sikorsky’s price proposal is set to expire by the end of March.

According to a Sikorsky official, the company’s proposal was good through Sept. 2013. The company agreed to extend that through the end of March at the behest of the Air Force as the service attempted to sort its way through its ongoing budget crunch.

If the service does not award the contract before the end of the month, it would either have to request another price extension from Sikorsky, or ask the company to update its costs and provide a new estimate.

That is a consideration in how the service moves forward with the contract, according to Lt. Gen. Charles Davis, Air Force military deputy for acquisition. He noted that Sikorsky has been helpful during the delayed decision process, but said they could not extend their offering forever.

“It’s not so much do they extend [their bid], it’s how and when we make a decision about signing the contract or not,” Davis said. “I don’t think we need them to extend anything. We just need to decide how that is going to roll out in the budget.”

An updated price would come from Sikorsky talking with its suppliers and gathering information on those costs. While dramatic swings in costs would seem unlikely, an increase in price for the Air Force is not out of the question.

“A lot of the economics say, ‘Sure, take advantage and also cover your higher cost,’” Richard Aboulafia, vice-president of analysis with the Teal Group, said. “On the other hand, this is a terrible time to make yourself a budgetary target. I think they’ll probably balance the two and just negotiate.”

Aboulafia also pointed out that the declining volume of UH-60M production may be contributing to increased costs in the time since the original bid was submitted.

“They’re not going to get greedy, but it’s probably an opportunity to cover some higher costs they might be incurring,” he said.

The Combat Rescue Helicopter program is the Air Force’s latest attempt to modernize its combat search and rescue fleet. The Air Force wants to buy 112 new helicopters to replace the aging Sikorsky Pave Hawks. In late November, the service said it would select Sikorsky if it can award a contract.

The Sikorsky official had not received word from the Air Force about the program’s fate in the FY 2015 budget, but said the company “anticipates positive news” on Tuesday.

But the secretary of the Air Force indicated CRH is one of those programs that may not make the cut in the budget release.

“We have current helicopters that perform this mission,” Deborah Lee James, Air Force secretary, said at a Bloomberg sponsored event last week. “They are getting old. They won’t last forever, so something’s got to give. It’s a priority, but we have to rack and stack that priority along with the others.”

“I personally am looking at this very hard,” she continued. “It’s a question of can we afford it, can we afford it now versus later, [and] is it better to do upgrades or buy new? So it’s all of these different factors we need to weigh.”

Even if CRH is not awarded as part of the president’s budget, Congress is already eyeing more funding for the program, according to a Capitol Hill aide.

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