When Military Helicopters are no Longer Required, They can be Sold to Foreign Governments for Further use, or as Civil Aircraft,Although the Process is Not as Simple as You Might Think.
By Andrew Drwiega
One of the most obvious outcomes that the budget enforced sequestration has had on the U.S. military has been the immediate reduction in personnel and in materiel across all branches of the Armed Forces. The required reduction as a percentage of budgets across every item is an expensive method of cutting each segment. In terms of unit costs, particularly for new equipment and aircraft, this increases prices for the remaining numbers in any acquisition. However, some have reacted by tackling proposed cuts in a proactive way.
U.S. Army Aviation is one such branch that proposed its own Aviation Restructuring Initiative (ARI) in 2014. The reasoning behind this measure, according to Colonel John Lindsey, Director of Army Aviation’s operations plans and policy, speaking in December 2014, was to moderate the substantial financial cuts by keeping the newest equipment and thus not “salami slice” the whole force. A result of ARI was that two stalwarts of the U.S. Army fleet — the Bell Helicopter OH-58D Kiowa Warrior and the TH-67 Creek training aircraft — would be cut in their entirety. This represented a total of 652 helicopters of both types that would be retired from service between Fiscal Year 2014 and Fiscal Year 2017. This was actually the opportunity the U.S. Army had been waiting for, as the OH-58D had been slated for replacement for many years, although lobbying to retain it had been strong. Bell Helicopter, with its ARH-70 Arapaho, and, earlier, Boeing/Sikorsky, with the RAH-66 Comanche, had tried to fill the reconnaissance role, but both projects ultimately ran over budget and were cancelled.
Of the helicopters that are being taken out of service, U.S. Army spokesperson Sofia Bledsoe, based within the U.S. Army Aviation Program Executive Office, says that there are “approximately 308 flyable aircraft (that) have been declared as Excess Defense Articles (EDA) and are available in support of Security Assistance opportunities.” The government subsequently found uses for many of the retiring aircraft. The U.S. Department of Justice was allocated sixty TH-67s, which would be sent to Columbia to support U.S. Drug Enforcement Agency (DEA) operations there. A further twenty-five were shared between the U.S. Army’s combat training center (twenty) and the U.S. Navy’s test pilot school (five). The U.S. Department of Defense has a specified procedure for retiring its old military aircraft and removing them from its inventory. This is bound within the Instruction 4160.21-M (Material Disposition) manual. As Bledsoe explains, “In accordance with the divestment screening process, a worldwide EDA survey was issued through the U.S. Security Assistance Command (USASAC) in first quarter Fiscal Year 2015.”
As part of this process, countries that have an interest in acquiring the OH-58D helicopters for military use must submit a Letter of Request (LOR). (As the OH-58Ds are in a category “C” combat configured status, they are considered unsuitable for civil use, either nationally or for foreign customers.) These LORs can be presented either as a request for pricing and availability or as a Letter of Offer and Acceptance (LOA). Such requests are then considered by the Non-Standard Rotary Wing Aircraft (NSRWA) group within the U.S. Army’s Program Management office, together with the Aviation and Missile Command (AMCOM) Security Assistance Management Division (SAMD). Their findings are reported back to the USASAC, which compiles a total package for each potential customer country. According to Bledsoe, this process resulted in interest from fourteen countries for up to a maximum of 242 helicopters. For instance, Croatia expressed an interest in acquiring sixteen OH-58Ds. The Croatian government is also trying to secure additional funds to modernize and upgrade the ex–U.S. Army machines to be a viable replacement for their own out-of-service Russian Mi-24/35s.
What Do They Get?
So what do potential customers get when buying an ex–U.S. Army OH-58D? According to the EDA regulations, each helicopter is sold on an “as is” basis that comprises the aircraft, less components that are not part of the basic end item. This refers to anything added by the U.S. Army in terms of weapons or mission-specific equipment. These military helicopters are in a category that shows they have been intensively managed and are Class VII major end items in their own right (other examples include launchers, tanks, mobile machine shops, other vehicles, and so on). The export potential of a specific aircraft is determined on a country-by-country basis. This raises the question: Would it be possible for a potential export customer to request equipment and supporting systems/avionics/weapons to be supplied through the Foreign Military Sale (FMS) process? This is less clear and again comes down to a country-by-country decision process. According to Bledsoe, “The OH-58D EDA/FMS would be executed under the ‘total package approach,’ which ensures (that) applicable components, spare parts, training and sustainment are provided via an FMS agreement.”
Resale Verses New
Original equipment manufacturers (OEMs), such as Bell Helicopter, are not necessarily happy with prospective resales of their older helicopters, as they would prefer foreign customers buy their latest types of helicopter. During the Paris Airshow in June, Bell’s ex-CEO John Garrison commented that he wanted the U.S. government to limit sales of ex-Army Kiowa Warriors to foreign customers.
One of the reasons for this is that Bell is currently fielding new versions of its AH-1Z Viper attack helicopter and UH-1Y utility helicopter to the U.S. Marine Corps as part of the UH-1 upgrade program. The two aircraft share common design traits, including a common tail boom, engines, rotor system, drive train, avionics architecture, software, and controls with around 84 percent identical components. Although it appears that Pakistan will take fifteen AH-1Zs through an FMS arrangement, Bell would like to attract other military customers (either existing Cobra operators or potential new operators), having invested time and resources in bringing the H-1 aircraft up to a modern configuration.
One major point for potential customers to note was Garrison’s statement that Bell would not offer to upgrade the OH-58Ds to the standard that was previously proposed to the U.S. Army for the aircraft’s upgrade pre-sequestration. This would have brought the rotorcraft to the OH-58F standard, which would have included a nose-mounted sensor (rather than the distinctive mast-mounted position in the existing configuration), a new Control and Display Subsystem 5 (CDS5), Integrated Common Missile Warning System (CMWS), dual-channel FADEC, and Integrated Level II MUM-O (Manned-UnManned Operations) for teaming with unmanned aerial systems, such as the U.S. Army’s MQ-1C Grey Eagle and smaller AAI RQ-7 Shadow.
At the same time, Garrison was not completely against the sale of OH-58Ds, as any sale of OH-58Ds would largely provide their owner with a stopgap capability. An option to upgrade to newer models, such as the Bell 407GT, itself an improvement on the ARH-70 Arapaho, would be attractive business to the company, which would still like to recoup time and investment that was put into development.
Across the Pond
In the United Kingdom, retired and surplus materiel, from ammunition and vehicles to fast jets and even C-130J Hercules aircraft, are the concern of the Disposal Services Authority (DSA). The breadth of the DSA’s work can be witnessed by an examination of its published receipts for Fiscal Year 2014 to Fiscal Year 2015, which totaled £29.21 million. Reported activities included the sale of tracked reconnaissance vehicles to Latvia, the sales of ammunition to Estonia and New Zealand, and the recycling of the destroyers HMS Liverpool and Manchester, which were sold for scrap to a Turkish company, as well as the disposal of more recent types of equipment, resulting from the drawdown in Afghanistan. The DSA’s current brochure lists Westland Sea King HC Mk3s and Mk3As for sale, alongside the Lynx Mk8 and Mk9a. Both of these types have just been decommissioned. The DSA will be responsible for the disposal of the helicopters, although the exact number has not yet been made public.
The Sea Kings were operated by the U.K.’s Royal Air Force and Royal Navy, conducting military and civil search and rescue tasks on the mainland and around Britain’s coastline. The origin of this rescue service can be traced back to high-speed rescue launches, plucking downed fighter pilots who fought during the Battle of Britain and for the rest of the war. But the military’s role in civil SAR operations concluded on Sunday, October 4, 2015, when the last Sea King rescue mission was flown from Chivenor air station. The helicopter rescue service will now be provided by the civilian contractor Bristow.
Robin Clegg, spokesperson for the Ministry of Defence’s (MOD’s) Defence Equipment & Support (DE&S) points out that the DSA initially considers selling capital assets, such as aircraft and ships, to foreign governments with intentions to continue operating them. The reasoning is that such sales strengthen international relationships and “can also provide U.K. industry with opportunities to undertake some of the regeneration work.” If a government-to-government sale does not materialize, however, then the equipment is offered for commercial sale to be used for non-military purposes or ultimately for recycling (scrapping). A number of specialist contractors are usually used for smaller surplus equipment; they are made responsible for the collection, storage, marketing, and selling of stock on the DSA’s behalf.
Regarding the future of helicopters and other aircraft, Clegg explains that when an aircraft is nearing the end of its service life, the MOD will consider what the optimum advantage will be for the government in the disposal of the asset. It may be used for training purposes, it may be broken down for spares, or for ready disposal by sale. In the event of the latter, the MOD will recover any material not releasable into the civil market. The DSA will also consider the potential for sale to a third party for future military use — so not a direct government-to-government sale. Continued supportability would be taken into account during such considerations.
Finally, the condition of each aircraft, the number to be disposed of, and, most important, the need to maximize the financial return to the U.K. taxpayer must be balanced. Sometimes scrapping turns out to be the most lucrative option.