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Presidential Helicopter Expenses Highlight Federal Defense Procurement Flaws

February 24, 2009 at 6:35 PM EDT
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President Obama has indicated that he may not seek upgrades to the presidential fleet of helicopters due to skyrocketing costs, an expense for which former President Bush had budgeted. An analyst assesses the rapidly rising prices charged by defense contractors.
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RAY SUAREZ: It’s become a familiar and famous image over 50 years: the president of the United States getting on and off the presidential helicopter, now known as Marine One, on the South Lawn of the White House.

And for 34 years, since President Gerald Ford was in office, it’s been the same fleet of choppers, built by the Sikorsky Aircraft Corporation in Connecticut.

The Defense Department hired Lockheed Martin to build the next generation of presidential helicopters in 2005. The 28-chopper fleet was to be outfitted with new communications equipment, anti-missile defenses, and hardened hulls.

But four years into the project, the budget has doubled from $6.1 billion to $11.2 billion.

Yesterday, President Obama’s one-time rival, Sen. John McCain, spoke at a White House summit on fiscal responsibility and expressed his outrage at the soaring price tag.

SEN. JOHN MCCAIN, R-Ariz.: We all know how large the defense budget is. We all know that the cost overruns — your helicopter is now going to cost as much as Air Force One. I don’t think that there’s any more graphic demonstration of how good ideas have cost taxpayers an enormous amount of money.

So we will — and I know that you’ve already made plans to try to curb some of the excesses in procurement. We really have to do that. We’re going to have to pay for Afghanistan, as you well know, and we’re not done in Iraq.

But most importantly, we have to make some tough decisions or you, Mr. President, are going to have to make some tough decisions about not only what we procure, but how we procure it.

U.S. PRESIDENT BARACK OBAMA: Well, John, this is going to be one of our highest priorities.

By the way, I’ve already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate to me.

Of course, I’ve never had a helicopter before.

You know, maybe I’ve been deprived and I didn’t know it. But I think it is a — it is an example of the procurement process gone amok, and we’re going to have to fix it.

RAY SUAREZ: Neither Marine Corps leaders nor Defense Secretary Gates has responded to the McCain-Obama exchange.

Price of helicopters skyrockets

RAY SUAREZ: For more on the skyrocketing cost of the new president's helicopters and what it says about other programs at the Pentagon, we turn to Time magazine's defense correspondent Mark Thompson.

And, Mark, before yesterday, was there already sticker shock floating around Congress or the Department of Defense over this new helicopter fleet?

MARK THOMPSON, Time magazine: Yes, there was, Ray. I mean, the original scheme was that these things would probably cost $200 million apiece. Understand, these are commercial helicopters already being flown by the Italian and the British navies. They're buying them for roughly $60 million, so to fly our president around may be triple the cost.

But in reality, it's now to close to $500 million. And, in fact, some of the development on the helicopter has been put on hold so the Obama administration can get a clean shot at this program.

RAY SUAREZ: Has Lockheed had any explanation for the rising cost in that precipitous manner that you're talking about?

MARK THOMPSON: Well, it's interesting. Both the Navy and Lockheed are sort of blaming each other. Lockheed has maintained that the design was never frozen when they were supposed to start work on the helicopter and as many as 30 to 40 blueprint changes were coming in every month that they'd have to sort of filter into the helicopter, which made it very difficult.

The Navy for its part has said, listen, we did the best we could. This is driven by an urgent national security requirement. It's got to be available to fly anywhere in the world, any time of day. It's got to be invulnerable to chemical and biological weapons. It's got to protect the president and his people and family against all kinds of threats, including radiological dirty bombs. And that's why the price has just gone through the roof.

Original price unrealistic

RAY SUAREZ: Was the original price ever realistic? Is this an example of low-balling?

MARK THOMPSON: Yes, I mean, the price is never realistic because a lot of the technology to be used in this helicopter wasn't firm when the contract was signed, so everybody was sort of guessing at what it would cost. And generally at the Pentagon, when they guess, in terms of cost, they guess too low.

RAY SUAREZ: Is this an all-or-nothing thing? I mean, the contract calls for 28 of them. Does he need 28?

MARK THOMPSON: Well, you know, the president, when he flies around the world, these helicopters go with him in groups of twos and threes to have a decoy, to have a backup, when he flies from the local airport into the presidential palace or whatever.

The 28 helicopters have broken down into two chunks, an initial chunk of five, which is a little bit better than what he's currently got, and the flying Oval Office that will be the second batch of 23.

A lot of people are betting that they'll settle just for that first batch of five, which is already undergoing flight-testing and then, perhaps, re-compete the second batch with Sikorsky.

RAY SUAREZ: Are there a lot of weapons systems or military acquisitions that are in the same kind of pricing trouble as the new Marine One?

MARK THOMPSON: Yes, I think Secretary Bob Gates, the secretary of defense, has made this pretty clear. Because the U.S. military for so long was competing with the Soviet Union and they'd have something newer and something better, we felt we had to.

But all of a sudden, the Cold War stopped, yet the military continues in that mode, as Secretary Gates has said repeatedly. Why do we keep buying weapons that can do 99 percent of the missions we need to be done when you know generally what we need is a 75 percent solution that can be bought on time and on budget? And basically the services still don't seem to have gotten that message.

Cuts to the defense budget

RAY SUAREZ: Well, have they been told by the secretary of defense they're going to have to trim their wish lists, order fewer things?

MARK THOMPSON: Yes, I mean, Secretary Gates has made it very clear that under the Obama administration, when it's 2010 -- the defense budget goes to Capitol Hill here in a couple of months -- there are likely to be hefty cuts, and not just stretch-outs of all the existing programs, but rather hard choices to kill this, kill this, and kill this, so that what is left over can be bought in adequate numbers to supply the forces.

RAY SUAREZ: Give us some examples of the kind of weapons or planes or ships that are getting that kind of scrutiny that may be on the chopping block.

MARK THOMPSON: Well, the Army's Future Combat Systems. This is the crown jewel of its modernization. It includes 14 different vehicles that, you know, are designed to go after bad guys, but many in the Army feel that's really a Cold War system.

The Army already preemptively is trimming away at some of this, trying to get down to the core elements that it can sell to the secretary of defense and the Congress.

The Navy has had a lot of trouble with various shipbuilding programs lately, the Littoral Combat Ship and its new class of Destroyers. These are likely to be on the chopping block, as well.

And, obviously, the Air Force's hottest fighter, the F-22. Secretary Gates has said 183, which is what we've already bought, is probably sufficient, seeing as none of these airplanes has yet flown in Afghanistan or Iraq. And the Air Force initially wanted twice as many, and now they're sort of saying, "Well, maybe only 60 more." And it will be a key indicator as to how serious these folks are, whether they get those additional 60.

Other expensive programs

RAY SUAREZ: Now, this is not the first time this subject has come up. It's a hardy perennial in Washington. Have secretaries been successful when they've gone after programs that they judge to just be too expensive?

MARK THOMPSON: Well, they've been marginally successful. I think 20 years ago, there was a big change when a lot of the acquisition excellence was taken out of the Pentagon and given to the contractors. That was sort of putting the fox in charge of the chicken coop, and that has become very pernicious.

And I think we're going to have to go back more where we get more acquisition excellence among government employees and where prototyping is employed, where we see we're not going to buy this until you show us it can work, and once you've proven that it can work, we'll agree on a price, and then you'll build it. It's not the way things are done anymore.

RAY SUAREZ: And now that a prominent Republican, John McCain, and the president of the United States, and some senior members of Congress have shined an unflattering light on Marine One, is that the kind of thing that gets the public interested? And does that mean it's likely to be cut way back?

MARK THOMPSON: Well, the public, of course, can understand what a presidential taxi cab can do. It goes from Point A to Point B. So they understand, when its cost is eight times higher than the original commercial version, they scratch their heads. I mean, it's not complicated, like a submarine-launched cruise missile.

And so I think, even though this helicopter doesn't have any offensive weapons on it, it may shoot down some other programs.

RAY SUAREZ: Mark Thompson, thanks a lot.

MARK THOMPSON: Thank you, Ray.