JohnDixson

Cdnnighthawk,

If you know there is a non-recurring engineering ( that's what you meant by NRE, correct? ) cost overrun of $800M, and you are publishing it in a public forum, then a lot of other people know that as well.

They say, " Never say Never in Aviation ", but if that were the case it would surprise me ( I mean, really surprise me ) that personnel changes have not been made at SA.

Another question that suggests itself is how SA would recover $800M on 28 production aircraft. Not 100% certain, but that's not a cost plus contract as I recall, so it's not obvious to me how SA gets back that kind of money.

Is it possible that there is an extra zero in the number you quoted and the NRE overrun is $80M ?

Thanks,
John Dixson

Corax

Heard that Sikorsky is poised to just "walk away" from Cdn Cyclone project in its entirety. Pay their fines and declare the whole thing a bust.

Anyone?

Corax

That is a misguided quote, the CH 148 Cyclone is very much a frigate born maritime helicopter and not at all intended to conduct dedicated SAR in Canada. It must however be capable to perform SAR duties as a secondary role to it's Naval warfare role.

cdnnighthawk

What you have heard sounds to me like a fabricated rumour that has been cast out for no other purpose than a fishing expedition for comment.

I take the bait... my comment:
Sikorsky and Canada are certainly not pleased with each other over the terms and performance of the current MHP contracts. I don't' believe that anyone can possibly deny that.

What remains to be seen is whether Canada will accept junk for the currently (and oft amended upwards price) for the Cyclone or will Canada call the hands dealt. Only in the event of the latter will Sikorsky fold in my view.

The most likely outcome (my view) is that we (the RCN & RCAF) will end up being stuck with a pig in a poke and we will learn to live with it.

I sincerely hope that the Canadian MHP lesson does not get repeated elsewhere (enemies excepted).

cdnnighthawk

JD...
I no longer have the link but I assure you that the following are accurate excerpts from the UTC SEC submission filed one year ago:

Page 6-7

“….Sikorsky is also developing ... the CH-148 derivative of the H-92 helicopter, a military variant of the S-92 helicopter, for the Canadian government. The latter is being developed under a fixed-price contract that provides for the development, production, and 24-year logistical support of 28 helicopters. This is the largest and most expansive fixed-price development contract in Sikorsky’s history. As previously disclosed, in June 2010 Sikorsky and the Canadian government signed contract amendments that revised the delivery schedule and contract specifications, and established the requirements for the first six interim aircraft deliveries to enable initial operational test and evaluation activities prior to the scheduled delivery of final configuration helicopters starting in June 2012. The amendments also included modifications to the liquidated damages schedule, readjustment of payment schedules, resolution of open disputes and other program enhancements. Delivery of the interim configuration helicopters was scheduled to commence in November 2010, but is now expected to begin in the first quarter of 2011.”

Page 15:

“…Sikorsky is also developing the CH-53K next generation heavy lift helicopter for the U.S. Marine Corps and the CH-148 derivative of the H-92 helicopter, a military variant of the S-92 helicopter, for the Canadian government. The latter is being developed under an approximately $3 billion firm, fixed-price contract that provides for the development, production, and 24-year logistical support of 28 helicopters. This is the largest and most expansive fixed-price development contract in Sikorsky’s history. As previously disclosed, in June 2010 Sikorsky and the Canadian government signed contract amendments that revised the delivery schedule and contract specifications, and established the requirements for the first six interim aircraft deliveries to enable initial operational test and evaluation activities prior to the scheduled delivery of final configuration helicopters starting in June 2012. The amendments also included modifications to the liquidated damages schedule, readjustment of payment schedules, resolution of open disputes and other program enhancements. Delivery of the interim configuration helicopters was scheduled to commence in November 2010, but is now expected to begin in the first quarter of 2011.”


Page 38:

“…As of December 31, 2010 and 2009, inventory also includes capitalized contract development costs of $804 million and $862 million, respectively, related to certain aerospace programs. These capitalized costs will be liquidated as production units are delivered to the customer. The capitalized contract development costs within inventory principally relate to capitalized costs on Sikorsky’s CH-148 contract with the Canadian government. The CH-148 is a derivative of the H-92, a military variant of the S-92.”

JohnDixson

Cdnnighthawk,

In your earlier post you referred to "unplanned" NRE costs, whereas this last post refers to capitalized contract development costs. When you wrote "unplanned", I took your meaning to be just that, i.e., an overrun above planned ( and capitalized ) development costs.

If I am interpreting your last post correctly, you take the position that all of the capitalized development costs referred to in the submit tall are unplanned ( an overrun ). All I posit is that if that were true, my expectation would be some immediate and decisive executive action, and to recover that egregious an overrun on 28 machines would be looking at the world in rather rose colored glasses. As I said, though, "Never say never in aviation " and it's hard looking at that program from the outside to know all of the details.

Thanks,
John Dixson

Corax

S92 Legacy of Heroes tour:

So I've been reading all the media coverage of the S92 Legacy of Heroes tour and can't help but wonder if they really believe that the S92 is such a great machine for our military heroes as depicted on the camouflage paint scheme of the aircraft. As a Canadian and former Sea King driver I can't help but think why would they not just put that effort and those funds in completing their commitment to the CH148 Cyclone and damn well deliver on their agreement.

In one of the articles the president of Sikorky presented a strong picture of the company’s succesful history and recent achievements. While I do not begrudge those achievements I find it appaling how Sikorsky has handled the contract to provide Canada’s brave men and women with the agreed upon CH148 Cyclone. Their handling of this contract is nothing short of shameful particularly for a military that has been flying their product since 1963 in the CH124 Sea King.

It will be 50 years for the Sea King in 2013 and sadly Sikorsky will barely be starting their deliveries of a watered down version of the product they contractually agreed to deliver. It is an affront to Canadians and I believe that Sikorsky is better than that. They are obviously aware of their failing since I have yet to see Canada on their S92 Legacy of Heroes tour. I believe they should man up and make amends to our government and our military.

I’m a fan of Sikosky helicopters but this contract is a true black mark on this proud company. Sadly as far as the Canadian military is concerned this should be titled the Legacy of Apathy tour.

Fire away Nick.

cdnnighthawk

[It will be 50 years for the Sea King in 2013 and sadly Sikorsky will barely be starting their deliveries of a watered down version of the product they contractually agreed to deliver. It is an affront to Canadians and I believe that Sikorsky is better than that.]

The latest from Sikorsky is that they hope to deliver two interim Cyclones to Shearwater this month (April 2012) and a further two by the beginning of June. These aircraft are expected to remain under Sikorsky title (i.e. not accepted yet by the customer) for several months. Sikorsky Cyclone #806 that has been hangared at Shearwater since May 2011 is being returned to Sikorsky facilities in the US. The four interim aircraft to be delivered soon will be used for the first serial of aircrew and groundcrew initial cadre training (ICT) but it is anticipated that they will still have significant operating restrictions. Bear in mind that this is unofficial forward-looking information at this time and is subject to change (eg. further delay).

Rotorhead124

It has been reported that those 'interim' (non-compliant) MH-92As will be restricted.

NO - IFR
NO - NIGHT
NO - OVERWATER FLIGHT

Not much of a capability..

Torcher

Not that it is any excuse for the Sikorsky, but as an amusing anecdote:
As far as I can remember, the same restrictions applied to the RN Merlin in the early days+No flying in rain, no landing on soft ground, no.... And the list went on and on.


Torcher

rjsquirrel

The Canadian program seems to point out the difficulties that are being experienced by many programs world-wide, a product not just of the mistakes made by the company that produces the product, but also the mistakes made by the national military people who run their side of the project. If someone knows of a successful similar development project, post it here, please!

The development of a new system is often a delicate dance between the folks who specify and the folks who design and develop the solution to that spec, sort of like a new kitchen for a house, or a swimming pool. Bad customers make failed projects, and blaming only the contractor is often simplistic. No country seems to buy off the shelf, that all want to design a new system, and ask for one tailored to their preceived needs. Development is difficult because the folks who write the spec are also the folks who determine if the aircraft is in compliance, so that items that are poorly communicated often need redesign since the "judge" is also the "Jury" and the "Executioner".

When a junior officer (in charge of approval of a part of the system)decides the spec means something far beyond the scope of the previous junior officer who approved the original design (a near certainty since many officers rotate through assignments every 2 or 3 years), the project quickly collapses into a scramble to redesign and re-test. Since many of the project team members on the military side have no professional training, the comedy can be devastating, and can look like a Fawlty Towers episode.

I recall a country program where the manufacturer actually stole the partially completed aircraft at midnight from the in-country completion partner, and spiritited tham back to the home country for completion!

Most of the problems in the Canadian program seem to be on the system side, a highly specialized, separate program within the program, developed by Canadians for the project, and highly dependant on that collaboration between military customers and civilian developers. Rumor says that is the messiest part of this whole thing, and the most customized part, one that could not be off the shelf, since the military insisted it must be custom, specifically designed for the Cyclone.

espresso drinker

Torcher - For sure the the AW101 (EH101/Merlin/Cormorant) has not been without it's problems, but at least it has 30 minute run dry time and not certified through some dodgy loop hole.

At the time of the order for the Cyclone the Canadians could have had an 'off the shelf' aircraft with proven maritime/ASW capability and commonality with another in-service aircraft.

Pretty much every aircraft/system will go through the 'bath tub reliability curve' (Bathtub curve - Wikipedia, the free encyclopedia) and experience initial (excuse the term) 'infant mortality failures'. For that reason I'd never buy the first model/version of a new car, I'd wait for the 'mark II' version and hopefully the manufacturer has had the opportunity to iron out all/some of the problems with the first model.

Maybe this would be a good rule for the Canadian government to follow but I guess it's too late for the Cyclone (unless they ditch it as Sikorsky have obviously failed to fulfil their contractural obligations and buy something that's proven - and no not necessarily the AW101).

[email protected]

RJSquirrel - you have MoD procurement in a nutshell there!

Torcher

Espresso

From personal experience, formerly involved in government procurement processes, I believe the only way to go (espescially for smaller nations) is COTS.

Let the manufacturers present their goods from a fairly broad and simple set of requirements, then decide what best fills your requirements vs cost, and there you have it (Make sure you have a fire proof contract, including OEM logistic support)

Examples of success:
Sweden, 15 Blackhawks off the current production line, including training and support.
Norway, C130J, off the current production line. In service within 18 months of ordering.

Examples of failure:
Norway, New SAR Helicopters. Procurement program initiated in 2007, and still has not produced anything other than papers and unrealistic requirements. Latest in service forecast 2020. Original Seaking replacement was scheduled for 2008.
Norwegian frigates (similar process), supposed to be a state of the art multi-purpose weapon system.
Turned out to be a weaponless, out of date ASW frigate. Mostly due to the time it took from project start until it was finished, but also due to the "We must specify all aspects of the procurement ourself, and under no circumstances buy anything already available" mentality

Torcher

SARBlade

Having been involved with the Cormorant procurement in Canada, one of the most difficult hurdles is that the project was managed by a civilian bureaucrat, with a government office making sure that the Canadian worker was going to get their fare share of work for the money spent. Mistakes by the military people is often the easy finger to point and I for one don't like it. The military has its flaws, but when it comes to a requirement, they meticulously look at every option and plan accordingly. Money does hinder the procurement in that everyone wants a piece of it, including politicians! Really, it comes down to an RFP being so watered down to meet what industry can provide with the most spin-offs being the overriding issue, not performance. When it comes to performance, the military will get a machine and work within those limitation, and fix later. Joe VCR working at GE will still be employed. I'm not against this but it is what it is. Keeps people employed, not necessary give the military the perfect helicopter.

espresso drinker

Torcher, SARBlad & Crab. I agree with all your comments. Why is it noboby ever seems to learn the lessons of previous poor military procurement programmes?

Unfortunately for government military programmes politics nearly always come it to it, as well as often changing requirements as different threats come and go during the often protracted procurement process.

It is much easier if you're buying something 'off the shelf' like the examples cited by Tourcher. I guess one of the problems now is that new military aircraft programmes are so expensive and complex they have to be funded by one or more 'launch' customers and it is a long and arduous process before you get a sufficiently 'mature' aircraft.

Wherever possible manufacturers need 'off line' developement to hopfully perfect the design as much as possible before offering it for sale. But like I said unless a government comes to these manufacturers with big wad of cash they can't afford to do this.

As for the Cyclone, I had heard (purely rumour) that Sikorsky had hoped/expected to win the previous US presidential contratct and would have used this wad of cash do to a lot of the 'militarizing' of the aircraft. Unfortunately they didn't and had to start from scratch with a 100% civil aircraft for the Canadians. Throw in there all the problems issues with the gearbox, and those that other contributors (e.g. squirrel) have mentioned, and there you have it.

BUT, if you always buy existing aircraft 'off the shelf' then the industry is never going to move forward and delevop new aircraft.

Shawn Coyle

espresso drinker:
I disagree with your last statement about developing new aircraft.
Absent a hot shooting war where you need a big improvement over the enemy, there is little that will drive a military to ask for something better. Look at Sikorsky's very bold move to develop a larger version of the co-axial design. The President of Sikorsky said that if they waited for the military to put out an RFP, it would be something that might be 10% better than the Blackhawk, where their machine is significantly better.
More to the point the civil world does have a lot of innovation and development - the competition is pretty fierce, and none of the major manufacturers had a military order for what is now the AW-139, the Bell 525 and the original S-92. Those new aircraft can perform quite a few of the non-shooting military missions quite well, and were all developed without a military requirement.

SansAnhedral

The COTS dogma is an abject failure, when attempting to use a civilian-designed and certified helicopter.

In each and every case, requirement creep catches up to the machine. This causes schedule delays, performance hits, and budget overruns.

S92 - CH148 : 4 years late now, millions over budget, and still no completed IDMGB or mission system package

VH71 - AW101 : Billions over budget thanks to insane requirement changes midway though the design process

CSARX, VXX : All axed due to inflated costs in the face of progressively tighter budgets

EC145 - UH72 : One of the few touted "success stories", but this is because this machine was not very militarized and its mission is designed almost exactly the same as its civil counterpart (quite a rarity). That said, even this helicopter had some fairly major issues with its new avionics overheating, which required the addition of some fairly ungainly cooling equipment cutting into its capacity.

The idea that taking a COTS machine and "cheaply" obtaining your military helicopter is deeply flawed and this has been proven over recent history. The customer always realizes (after the contract award) just how much of a compromise it is to be constrained to the COTS product performance, and then tries to redesign it to such an extent that the process breaks down.

rjsquirrel

sans,
Frankly, your point proves the opposite - NONE of those programs was even remotely COTS, and they wandered in the never-never land of requirements gone bad.

Example: The Canadian requirement was supposed to have described in great length what the control knobs for the radar would be like - diameter, scaling marks, etc. Somebody sent lots of time making their requirements precise. Unfortunately, modern radars don't have knobs.

SansAnhedral

Every one of those programs were designated from the outset to use a COTS airframe to save money from developing anything new. That was my whole point.