Friday, October 31, 2014

Army Deflates LEMV, Plans Sale Of $300 Million Hybrid Airship

Posted on InsideDefense.com: June 3, 2013
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After spending nearly $300 million to rapidly develop a sensor-laden state-of-the-art hybrid airship that was once poised for deployment to Afghanistan, the Army plans to sell the Long-Endurance Multi-Intelligence Vehicle -- possibly for scrap -- after the original maker was unable to round up the cash needed to buy it back from the government, according to government and industry officials.

Hybrid Air Vehicles, a U.K.-based company that designed and -- with Northrop Grumman -- built the massive hybrid airship, very much wanted to buy back the LEMV to continue developing it and exploring potential civilian uses. In fact, the company offered to take sole responsibility for the aircraft and its continued development, and to grant the U.S. military access to the innovative technology, these officials said.

However, when the Army in April offered to sell the hybrid airship back to HAV for $44 million -- a price calculated from federal acquisition regulations requiring renumeration for material costs -- the sum was more than the company could immediately muster, HAV business development director Hardy Giesler told InsideDefense.com.

HAV countered by proposing a down payment of more than $10 million, followed by installment payments. That offer, however, was deemed by "high risk" and "unacceptable to the government," according to John Cummings, spokesman for Army Space and Missile Defense Command, which managed the LEMV acquisition effort.

On May 29, at the direction of the Army, government officials at Joint Base McGuire-Dix-Lakehurst, NJ, began deflating the massive LEMV -- which was made from 99,000 yards of 13 different materials, stitched together through 11 miles' worth of seams -- in preparation for an informal sale this summer, in accordance with the Defense Contract Management Agency's plant clearance disposal process, according to Cummings.

The move was a setback not only for HAV, which may still attempt to acquire the aircraft and its components, but also for military officials who believe that hybrid airships offer a range of promising combat capabilities. Just weeks after the Army acknowledged terminating LEMV as part of its fiscal year 2014 budget plan, the Defense Department's top uniformed logistician voiced strong support for a LEMV-like capability.

"Hybrid airships represent a transformational capability, bridging the longstanding cap between high-speed, lower-capacity aircraft, and low-speed, high-capacity sealift," Air Force Gen. William Fraser, head of U.S. Transportation Command, told the Senate Armed Services Committee on March 7. "We encourage development of commercial technologies that my lead to enhanced mobility capabilities in the future."

DCMA's plant clearance closure process was not the end Pentagon officials originally envisioned for the hybrid airship when, in 2009, then-Defense Secretary Robert Gates' influential Intelligence Surveillance and Reconnaissance Task Force spearheaded an effort to rapidly develop and acquire LEMV to meet a requirement advanced by commanders in Afghanistan.

Northrop Grumman, HAV and the Army's Space and Missile Defense Command took LEMV -- an airship with a complex fly-by-wire flight control system, a complex electrical system to manage power from multiple engines and a pressure-management system to operate the ship's' internal ballonets -- from design to first flight in 26 months. Program officials tout this as as a major success. "This is the most aggressive schedule ever for a first-of-a kind hybrid airship that achieved successful first flight," Cummings said, relaying answers prepared by the LEMV program office.

Program officials said they would deliver an operational capability -- an airship capable of flying at 20,000 feet and carrying payloads of up to 2,500 pounds for 21 days -- as soon as January 2012. That goal quickly slipped away and first flight did not occur until August 2012.

At the start of this year, LEMV "was on the three yard line" -- nearly set to begin an assessment readying it for deployment, according to an industry official.

Still, the ripple effect of early delays in the program meant that, at best, LEMV might be deployed just as the U.S. military operation in Afghanistan began winding down in 2014. In addition, as the fiscal year 2014 budget plan was being prepared -- and as the prospect of spending cuts mandated by the 2011 Budget Control Act loomed large -- Army leaders scoured their modernization accounts for places to save money.

During the budget endgame, the roughly $50 million planned for continued spending on LEMV in FY-14 and FY-15 was harvested for other needs, and the program was terminated in February.

While the LEMV project initially had the support of the ISR Task Force in the Office of the Secretary of Defense, the program never enjoyed a broad base of support within the Army. The Army aviation community did not champion the program. Also, according to a former senior government official, LEMV was viewed as a potential threat by the Army's fixed-wing ISR community -- particularly by those who supported and flew the Airborne Reconnaissance Low and the Guardrail aircraft. LEMV promised to deliver much of the same capability at much lower operating and maintenance cost.

In total, the government spent $297 million on LEMV, according to Cummings.

HAV, in its offer, sought to give the Defense Department a "cost-free means" to continue LEMV development, a company executive stated in an April letter to a senior Army official. "Our offer also allows the United States to preserve the value of its large investment in the LEMV program by . . . offering continued access to the technology as it is developed by us at our expense," Stephen McGlennan, HAV's chief operating officer, wrote in an April 8 letter to Army acquisition executive Heidi Shyu. "We believe that this hybrid air vehicle technology has important application for current and future capability gaps including more persistent wide wide-area surveillance, and missile defense."

One industry official expressed concerned that the "vagaries" of the plant clearance process could result in the airship's being broken up for scrap. "It could be sold and turned into rubber bands," said the industry representative.

Army officials, however, said the LEMV project office is "working to preserve as much as possible from the program . . . [for] future airship projects." Specifically, the office is archiving technical data, computer software rights, drawings and specifications; it also has provided Army Materiel Systems Analysis Agency a report on lessons learned while developing LEMV, according to Cummings.

As for the actual aircraft, the Army took steps to avoid any unnecessary damage, he said. "Deflation was conducted in a careful manner to allow for potential reinflation at a later date," wrote Cummings. "Commercial entities will have an opportunity to purchase the vehicle during the plant clearance process so care is being taken to prevent any damage. Disassembly of the air vehicle is expected to be completed in mid- to end of June."

The DCMA official in charge of winding down the program "will pursue an informal sale by sending notices to industry asking for offers to purchase" the residual LEMV assets, according to Cummings. -- Jason Sherman

 
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