The White House has asked Congress for $419.3 billion for the
Defense Department in fiscal year 2006 — 4.8 percent more than the
Pentagon’s current budget before including money for military
operations in Iraq and Afghanistan (which will come in the form of
an $80 billion supplemental). Although the total value of the
Marine One presidential helicopter program — $6.1 billion for 23
helicopters — is the equivalent of just 1.5 percent of what the
Pentagon has budgeted in 2006, the decision to award the contract
to the Lockheed Martin team is more important than just dollars and
cents. It demonstrates that the Pentagon allowed fair competition
and free trade to win out in the end.
The battle for the Marine One contract was a heated, bitter
competition between Lockheed Martin and Sikorsky. Sikorsky’s bid
was named the “All American Team.” The company’s president, Steve
Finger, claimed, “This helicopter is completely American,” but also
conceded that not “every nut, bolt and pin will be [American], but
I can tell you this — it will be so close to 100 percent so as to
be indistinguishable.” Sikorsky’s former president, Dean Borgman,
had stated that awarding contracts to European firms amounted to
“unilateral disarmament.” Clearly, Sikorsky was appealing to the
kind of “buy American” sentiment embodied in legislation sponsored
by Representative Duncan Hunter (R-Calif.). According to Hunter’s
spokesperson, “Having a dependency on foreign countries for our
military resources is not in the best interest of America’s
national security policy.”
The Lockheed-led entry was dubbed “US101” and included European
partner AgustaWestland, a British-Italian joint venture. Lockheed
countered Sikorsky’s all-American approach by claiming that the
US101 helicopter would be assembled by Bell Helicopter in the
United States and source more than 65 percent of its content from
American suppliers, creating hundreds of jobs for U.S. high-tech
workers. A flurry of press releases announced that 200 companies
from 41 states would support the US101 program. But there was an
international dimension as well — British prime minister Tony
Blair and Italian prime minister Silvio Berlusconi made personal
appeals to President Bush.
In the end, politics — both domestic and international — were
not a factor. Instead, the decision was made — as it should have
been — on the merits. The Navy weighed the performance, safety,
risk, and cost tradeoffs between the Sikorsky-led team’s VH-92
design and the Lockheed-led team’s US101 design. According to the
Navy, the fact that the US101 cabin was larger — which could more
easily accommodate upgrade and expansion over time — “was clearly
a factor.”
The US101 was also probably helped by the fact that 99 EH101
helicopters (on which the US101 design is based) have been
delivered to five NATO countries plus Japan and have logged more
than 56,000 flying hours. In contrast, the first S-92 helicopter —
the basis for the VH-92 design — was delivered less than six
months ago. The Pentagon’s choice reflected the belief that a more
mature design was a way to reduce risk and control cost.
According to Rep. Hunter, “This decision is all the more
unfortunate given the continued atrophy of the United States
helicopter industrial base.” Rep. Rosa DeLauro (D-Connecticut,
where Sikorsky is based) laments, “‘Made in America’ should mean
something. The Defense Department has some explaining to do.”
But there is nothing unfortunate about fair competition and free
trade. The Defense Department does not have to explain why it
didn’t play favorites simply because one team billed itself to be
more American than its competitor. The Marine One decision is a
clear indicator that the Defense Department understands the
realities of the global marketplace. American companies — even in
the defense industry — do not have a monopoly on designing and
building the best equipment.
The decision also sends a message that foreign firms can compete
on a fair and level playing field, which ultimately enhances
American companies’ ability to compete in foreign arenas. (U.S.
foreign military sales exceed $12 billion and the U.S. defense
industry commercial sales directly to foreign countries is more
than $30 billion.)
Conservative commentator Neil Cavuto worried, “I don’t want to
see a French firm carting our president around.” But such worries
are misguided and betray an ignorance of the facts. Cavuto needn’t
worry that the president will be flying around in a French
helicopter — the Pentagon chose the best helicopter for the
president. It will be an American-British-Italian helicopter.
