Fight for Marine One contract grows intense

Defense contracts are always political. But competing companies usually leave negative advertising to the politicians. Not so in the fight to replace Marine One, the presidential helicopter.

The two companies bidding for the contract -- Connecticut-based Sikorsky Aircraft and an international team led by U.S. aerospace giant Lockheed Martin -- are putting up dueling media events, heavy advertising, lots of flag-waving.

There have even been anonymous attacks on each aircraft's record. Said aviation analyst Richard Aboulafia, from the Fairfax, Va.-based Teal Group: "It's starting to look like the actual presidential campaign."

By defense standards, the contract is not huge -- a squadron of 23 Marine Corps helicopters to be delivered over six years at an estimated price of $1.6 billion, compared with more than $4 billion to be spent in 2005 alone on 24 F-22 stealth fighters for the Air Force. But the prestige stakes are high. "There are few images that capture the U.S. presidency like that of Marine One landing on the White House lawn," said Rep. Rosa DeLauro, D-Conn., whose district would build Sikorsky's S-92 aircraft. "It sends one hell of a signal to business in this country [if] the presidential helicopter is going to be made by the British and Italians."

A Lockheed win, however, "could mean as many as 750 jobs in Owego" in upstate New York, said Rep. Maurice Hinchey, D-N.Y., who has rallied all but two members of the New York delegation in support of Lockheed's bid. Hinchey emphasizes that the Lockheed "US101" -- a variant of the European "EH101" design -- would largely be built in his district and in Texas, albeit using a significant number of imported parts.

As the battle escalates, Washington insiders have been treated to full-color, full-page advertisements from both companies (including in this magazine). Sikorsky's ads tout their "All-American" aircraft; the Lockheed-led team counters with the slogan "Built by Americans" -- although the logo of Italian-owned partner AgustaWestland remains at the bottom of the page. Lockheed timed a pre-emptive press event for the day before reporters got to fly in a prototype Sikorsky aircraft. National Journal has received anonymous mail and e-mail citing past problems with each machine.

"I've never seen anything like this," said Loren Thompson, an analyst with the Arlington, Va.-based Lexington Institute who has done consulting work for companies on both sides. And more is at stake than just prestige and profits. "There's a possibility that someday, somebody's going to shoot a missile at this helicopter," Thompson said, "or that it may have to serve as an airborne command post in a genuine emergency."

While the 1970s-vintage Sikorsky VH-3 helicopters that now transport the president were targeted for replacement years ago, said aviation analyst David Harvey of Shephard Press, "it really came into focus after 9/11. It's not just a shuttle anymore." The crucial demand is for more advanced electronics -- for communications and self-defense -- than the aging VH-3s can handle. And both competitors have good credentials here: Lockheed Martin is a "systems integrator" -- the contractor that makes all the systems work together -- on a range of complex programs from spy satellites to strike fighters; Sikorsky has partnered with L-3 Communications, which works on the E-4B, the nation's flying command post in the event of nuclear war. Although details are classified, both helicopters could probably carry similar electronics.

But the helicopters themselves embody opposite approaches to transporting the president. "These are in different classes," said Teal analyst Aboulafia. "You'd never think they would compete with each other."

The Lockheed/AgustaWestland 101, originally developed in the 1980s to fly off British Royal Navy ships in the harsh environment of the North Atlantic, is a much bigger helicopter with endurance, cargo capacity, and cost to match. The Sikorsky S-92, developed in the 1990s as a commercial transport, is smaller and cheaper, yet is more advanced. Comparing currently available models -- which may differ significantly from the top-secret presidential variants -- the Lockheed aircraft is about 20 percent heavier than the Sikorsky; has about 15 percent more cabin space for the president, aides, and special equipment; flies about 50 percent farther without refueling; and costs, very roughly, 50 percent more. The Lockheed also has three engines to the Sikorsky's two, requiring much more maintenance and fuel, but also providing an extra margin of safety if an engine fails.

The Lockheed/AgustaWestland 101 has more history than the Sikorsky S-92. Cost overruns, delivery delays, and technical flaws -- including four crashes -- marred its introduction in Britain and Canada. But over time, it has established a reputation for robustness, with the Canadian "Cormorant" version flying long-range search-and-rescue missions through icy Arctic weather, and the British "Merlin" shrugging off gunfire in Bosnia.

Sikorsky's S-92, by contrast, has no such record, good or bad: So far, only prototypes have been flying. But Sikorsky insists that a slew of sophisticated technologies will keep the S-92 free of the usual teething troubles of new aircraft. It carries its fuel in breakaway tanks along the sides -- not beneath the passengers' feet as in the 101 -- to prevent deadly fires in a crash. It has been tested to more-rigorous Federal Aviation Administration standards against everything from engine explosions to collisions with birds. And key moving parts are designed to be "flaw tolerant," able to keep working safely until cracks grow so large and obvious that inspecting mechanics will see the problem. These innovations won the S-92 the aviation industry's Collier Trophy and a higher level of FAA safety certification than any other helicopter in the world -- including the Lockheed/AgustaWestland 101. But just how these advances will work out in practice is unproven: Sikorsky just delivered the first operational S-92 in September.

That delivery, to Petroleum Helicopters, a company that shuttles oil workers to offshore rigs in the Gulf of Mexico, fits Sikorsky's original business plan for the S-92. But overall, Sikorsky has reversed that strategy. Originally aimed at the commercial market, the S-92 now stakes its survival on government purchases. Twenty-eight have just been ordered by the Canadian military (which, notably, bought the S-92 instead of the 101, albeit in a competition that prioritized price over performance), and hopes are pinned on the Marine One contract plus a future Air Force buy for new search-and-rescue helicopters. Another irony is that the aircraft advertised by Sikorsky as All-American is currently built with parts and partners from Spain, Brazil, Japan, Taiwan, and China -- in keeping with the well-established offshore outsourcing strategy of Sikorsky's parent company, multinational United Technologies Corp. For the presidential variant, Sikorsky is replacing its foreign subcontractors with American ones.

Replacing so many overseas suppliers is "a management challenge," acknowledged Nick Lappos, Sikorsky's S-92 program manager, but the offshore partners were producing simpler sheet-metal components that are "relatively straightforward to replace." By contrast, the heart of the helicopter, the complex transmission and rotor system, was always going to be made by Sikorsky in America -- whereas the transmissions and rotors on the Lockheed US101 will be made in Britain and Italy by AgustaWestland.

By Lockheed's own estimates, as much as 35 percent of the 101, by value, will be made abroad. The company insists, however, that going international gives it an advantage. AgustaWestland's Anglo-Italian engineers, for example, can build a sophisticated "variable-chord rotor" that lifts weight more efficiently, said Lockheed Vice President Rick Kirkland: "That's an innovation that doesn't exist here in the U.S."

That's also jobs that won't exist here in the U.S., fumes DeLauro: "We need to protect our manufacturing base here at home." The Marine One winner will receive millions in development dollars to improve its product and manufacturing techniques.

But jobs aside, "our focus on the All-American aspect isn't jingoistic," said Sikorsky Vice President Joseph Haddock. "We don't know how to build the aircraft with foreign parts and still maintain security." Under current regulations, every worker who builds or maintains a presidential transport, from limousines to helicopters to Air Force One, must have a clearance known as "Yankee White." To get that clearance, said Rep. Christopher Shays, R-Conn., "you have to be an American citizen" -- which would seem to rule out any foreign-made components.

Lockheed officials insist they have worked this out with the government and will comply with all regulations (although, in a classic Catch-22, they cannot reveal what security measures they would take). Shays is not so sure: He has already commissioned a Government Accountability Office report on the clearance question and plans to hold hearings as well. But given the congressional calendar, neither the report nor the hearings will happen until next year -- after the government has already awarded the Marine One contract in December.

"The fierceness is on autopilot," said Aboulafia. In fact, he said, three key factors that had hyped the competition have all vanished. Both competitors had seen a Marine One win as a leg up on the huge contract for 150 to 200 Air Force search-and-rescue helicopters -- but the presidential requirements are different enough that the link to the later, more lucrative contract is in doubt. Sikorsky, starved for firm orders for the S-92, felt it had to win Marine One -- but the recent Canadian purchase guarantees the S-92's survival.

And Lockheed, deeply committed to foreign partnerships, had seen the 101 as a test case for international ventures against the "buy-American" crowd in Congress -- but this summer, the Pentagon awarded Lockheed a contract to build a new reconnaissance aircraft, using 57 converted transport jets designed and partially built by Embraer, a Brazilian firm. "Not even Britain!" exclaimed Aboulafia. "Brazil! You can't imagine a bigger stick in the eye to the buy-American crowd." By contrast, an Anglo-

Italian design seems almost homegrown.

So the corporate priorities that made Marine One so important have already been met elsewhere. What remains is bragging rights, venom -- and, by the way, the safety of the president.