Lockheed Marine Helicopter Came with Unpublicized Cost Increase (excerpt)
(Source: Bloomberg News; published April 17, 2017)
by Anthony Capaccio
The Pentagon’s approval for the Marine Corps to start buying Lockheed Martin Corp.’s new heavy lift helicopter came with a hidden surprise: the projected total acquisition cost for the King Stallion program has increased 6.9 percent to $31 billion.

The updated estimate was provided in an April 4 decision memo by James MacStravic, the Pentagon’s acting weapons buyer, that authorized production of the initial batch of 26 helicopters. The memo, labeled “For Official Use Only,” was obtained by Bloomberg News.

The estimate for the total acquisition cost -- which includes everything from research to purchase of the aircraft, including spare parts -- climbed to $31 billion from about $29 billion that the Navy reported in March 2016. No aircraft were added beyond the 200 planned.

Likewise, the “program acquisition unit cost” estimate, with everything included, increased to $138.5 million per copter from $131.2 million as of August 2016. The latest projection is a 20 percent increase from the initial goal of about $115 million established in late 2005, according to data in the memo.

It’s not unusual for cost estimates of major weapons programs to increase at a significant milestone, such as this month’s decision on the Lockheed helicopter, as Pentagon acquisition experts sharpen their pencils in order to budget for actual expenditures. But the new cost estimate may become a focus of congressional oversight when the Marine Corps’ fiscal 2018 budget is submitted to Congress. (end of excerpt)

Click here for the full story, on the Bloomberg News website.


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