DoD Kills Textron's Recon Helo Program

WASHINGTON - The Pentagon has canceled the Army's multibillion-dollar reconnaissance helicopter program being developed by Textron Inc.'s Bell Helicopter.

Defense Undersecretary John Young said Oct. 16 that officials decided to dump the program - which has been over-budget and behind schedule - to look for another replacement for the existing Kiowa aircraft, the Army's most heavily used fleet in Iraq and Afghanistan that is also built by Bell.

Young said the Pentagon will not certify the new program, ultimately forcing the Army to terminate the contract. The Army initially said it might cancel the helicopter program in July after a significant cost breach.

Development of the Armed Reconnaissance Helicopter was initially set at about $359 million, with each aircraft costing about $8.5 million. That price has soared to $942 million for development and nearly $14.5 million for each helicopter.

The Defense Department said it would have cost $9.2 billion for the 512 helicopters the Army was expected to buy by the year 2021.

"The cost and schedule that were the focus of the decision to award the contract to Bell Helicopter are no longer valid," Army Secretary Pete Geren said in a statement.

The helicopter was expected to be delivered this year, but had been delayed until 2013.

A Textron representative could not immediately be reached for comment Thursday evening.

The Providence, R.I.-based industrial conglomerate had been awaiting a decision by the Pentagon on whether to proceed with the program after it surpassed projected costs. That cost breach triggered a mandatory 60-day review process.

Earlier Thursday, Lewis B. Campbell, Textron's chairman, president and chief executive, told analysts during its third-quarter earnings call that it was continuing to work with Army and the Pentagon to get the program back on track.

The latest round of bad news came on the same day the maker of Cessna jets, Bell helicopters and E-Z-GO golf carts, reported a 19-percent drop in third-quarter profit as its financing division for business jets and other customers got hammered by the global credit crisis.

Shares of Textron added $1.12, or 5.9 percent, to $20.19 Thursday.