Special Report

Helicopter Politics

The Pentagon's chopper wars end in a victory for fair competition and free trade.

By 3.1.05

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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.

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