Ian C:
I would somewhat disagree with Mr. Flater's pessimism. I think the OTA R&D funding approach has a shot at being successful. The technical guys that make decisions at the OSD, AATD, AFRL, NAVAIR, etc. are sharp and will do a good job deciding what development work merits funding. I think it's also good that everyone is becoming aware of the US's decline in rotorcraft engineering and manufacturing base.
Having the rotorcraft industry come to a consensus and propose to the DoD what they think should be funded will likely result in more productive research projects, and less politics.
Here's a good backgrounder on the initiative:
US Army JM&L Contracting Center - Procurement Network