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U.S. Air Force delays rescue helicopter contract award

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The U.S. Air Force has delayed the award of a contract valued at up to $6.8 billion for a new combat search and rescue helicopter program until the first quarter of fiscal year 2014, which begins October 1, spokesman Ed Gulick said.

The expected winner is Sikorsky Aircraft, a unit of United Technologies Corp, after all other potential bidders dropped out of the competition last December.

Gulick said the award date had slipped from the fourth quarter of fiscal 2013 due to several factors, including time required to complete an independent cost estimate and the impact of government furloughs.

He said an initial delay in the release of the terms of the competition for 112 new helicopters also played a role, but insisted it was not related to the number of bid submitted.

All but one of the contractors expected to bid for the work dropped out last December, effectively ceding the competition to Sikorsky and its key subcontractor, Lockheed Martin Corp.

Boeing Co, Textron Inc's Bell Helicopter unit, EADS and Northrop Grumman Corp teamed with AgustaWestland, part of Italy's Finmeccanica SpA, decided to skip the competition after concluding the bidding rules were so narrowly framed that they effectively excluded all but Sikorsky's Black Hawk helicopter from the competition.

The Air Force denies the competition was written to favor Sikorsky, arguing that it wrote the terms of the competition to be as clear as possible with potential bidders about what capabilities the Air Force wanted and could afford.

Frans Jurgens, spokesman for Sikorsky, said the company had received numerous queries from the Air Force during the competition, and looked forward to a contract award.

"During the last several months, Sikorsky has interacted with the Air Force to conduct an extensive evaluation of our CRH proposal. We are ready to begin work building a proven, cost-effective CRH-60 aircraft at the service's convenience," he said.

Dan Spoor, vice president of aviation systems for Lockheed Martin's Mission Systems and Training business, said Lockheed had spent a fair amount of time responding to queries from the Air Force that are called "evaluation notices."

Asked if the Air Force had changed its process as a result of the other bidders dropping out, Spoor said, "They had the same rigorous process that they've done in the past."

The Air Force has been trying to replace its aging fleet of Sikorsky HH-60 Pave Hawk helicopters for many years. In 2006, it picked Boeing's H-47 Chinook helicopter, but the Pentagon canceled the $15 billion contract in 2009 after multiple protests by the losing bidders.

Defense analyst Loren Thompson, with the Lexington Institute, said the Air Force was determined to make sure that this contract award was airtight, after several embarrassing acquisition problems in recent years.

(Editing by Eric Walsh)

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