Thursday, 4 April 2019

Lockheed's (LMT) $31 Billion King Stallion Helicopter Delayed - Bloomberg


Lockheed's (LMT) $31 Billion King Stallion Helicopter Delayed - Bloomberg: Lockheed Martin Corp.’s $31 billion King Stallion helicopter program for the U.S. Marines may miss its first key milestone by more than 19 months because of a growing checklist of flaws discovered in development testing.

The Naval Air Systems Command acknowledged that the helicopter designed to carry heavy cargo won’t meet its December target date for initial combat capability. The roster of unresolved technical deficiencies has grown to 106 items from about 94 logged in December, according to Navy documents.

King Stallion heavy-lift cargo helicopterPhotographer: John MacDougall/AFP via Getty Images
A proposed new date -- between July and September 2021 -- “has not been finalized and 
is pending the final decision” on a request before Congress to shift $158 million into the testing program to pay for fixes and more test flights, Greg Kuntz, a spokesman for the command, said in an email.

The latest delays for the King Stallion, which was the first major acquisition program given a go-ahead by former Defense Secretary Jim Mattis, make it a prime candidate for congressional scrutiny. That questioning may begin during hearings on Navy and Marine Corps aviation before a Senate Armed Services subcommittee on Wednesday and its House counterpart on Thursday.

The King Stallion, designated CH-53K, will be the same size as its predecessor, the Super Stallion, but will be able to haul almost triple the cargo, lifting 27,000 pounds (12,200 kilograms), according to Lockheed. The Navy’s plans to buy 200 copters for the Marines was a prime motivation for Lockheed’s $9 billion acquisition of Sikorsky Aircraft from United Technologies Corp. in 2015.

Combat Deployment

The delay of 19 months or more is “not expected to impact” the aircraft’s first planned combat deployment in 2023, Kuntz said. The list of aircraft deficiencies “will continue to fluctuate as the program continues through flight test discovery,” Kuntz said.

James Geurts, the Navy’s assistant secretary for acquisition, “continues to closely monitor the program,” the service said in a separate statement. “He recently approved the restructure plan.”

“Close cooperation and risk-sharing” with Lockheed “will be critical to achieving success," according to the statement.

The Marines reduced the number of helicopters requested for fiscal 2020 to six from nine, because of “late discovery of technical issues” requiring more time and test flights, Captain Christopher Harrison, a Marine Corps spokesman, said in an email. The issues “necessitated a decrease in near-term procurement” to “ensure uninterrupted testing,” he said.

Bill Falk, the King Stallion program manager for Bethesda, Maryland-based Lockheed, said in a statement that the contractor and the Navy “remain aligned on a joint program plan” to support the first deployment in 2023 to 2024.

“We have flown more than 1,300 test flight hours and completed high-altitude, hot temperature, and degraded visual environment flight tests demonstrating the CH-53K’s unmatched capabilities,” he said.

The cost per aircraft, including research, production and military construction, is now estimated at $141.5 million, or about 22 percent more than the original program baseline in 2005. That’s 2 percent over a revised April 2017 target, according to Navy figures.

Reducing Risk

The Navy has the first two production choppers under contract. For the next two contracts for 14 more helicopters, Geurts wants to reduce the risk of concurrent development and production that’s plagued Lockheed’s F-35 jet program and was once labeled “acquisition malpractice” by former weapons buyer Frank Kendall.

The service wants to put three stringent milestones or “gates” in place that the company must pass through -- tying payments to resolving technical issues. One such gate allows payment for four aircraft only after Lockheed demonstrates this year that it’s solved the helicopter’s most significant unresolved problem: exhaust gas sucked back into an engine.

Lockheed’s Sikorsky unit is operating under a $4 billion “cost-plus incentive fee” development contract and as of late January was earning the “minimum fee,” according to a program briefing slide.

Test Copters

Sikorsky also has a separate $715 million contract to build and deliver as many as six test helicopters. Three have been delivered. But the Pentagon’s testing office said in its latest internal program assessment that parts on the fourth copter are being removed and placed on the first three to keep them flying.

The fifth and sixth ones are delayed and scheduled for delivery in 2022 because “development contract overruns resulted in insufficient funding levels to continue work on” them, Kuntz said. The contract “was modified to avoid further expenditure.”

(Updates with delays in test helicopter deliveries in final two paragraph.)

Lockheed's $31 Billion King Stallion Helicopter Delayed
USMC gets its first CH-53K King Stallion from Sikorsky

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