rumors of demise hardly exaggerated: some aircraft programs that will likely go away, and one more...

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Rumors of Demise Hardly Exaggerated:Some Aircraft Programs That Will Likely Go Away, and One More That May Arise

The past week has seen rumors and announcements of budget actions against several high-profile military projects in the US and the UK: the British Armyʼs Scout Vehicle, the US Armyʼs EMARSS and MQ-1C, and the US JLTV. The emerging common pattern appears to be excessive commonality with other systems. From that indicator, I offer three aircraft programs in the US that I expect will not proceed, and one in the UK that I expect will yet arise, regardless of budgetary difficulties. I close with a reminder of a classic model for thinking about how to foster the adoption of new ideas—at least those that arenʼt too new not to get adopted.

Defense-Industrial Research Memorandum #2011-08, 16 September 2011

James Hasik+1-512-299-1269www.hasikanalytic.com

THE BUDGETARY BACKGROUND

Yesterday, US Senator Kent Conrad (Democrat, North Dakota) publicly told the Budget Control Act Super-Committee that the United States “urgently need a package in the range of $4 trillion” over ten years to address the government's disastrous finances.1 Just today in the UK, Chancellor of the Exchequer George Osborne exclaimed that this is no time to go wobbly on the government's plan to eliminate borrowing in four years.2 It's indeed good to see that people are getting serious. Of course, that means some serious budget cutting ahead, so it's time for industry to get serious about what this will mean.

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In the past few days, one particular pattern has begun to emerge. Consider these few examples. At DSEi earlier this week, General Dynamics UK Managing Director Sandy Wilson warned that the British Armyʼs Scout Vehicle program to replace the venerable Combat Vehicle Reconnaissance-Tracked (CVR-T) with a version of his ASCOD II was in some jeopardy. It could get stretched out; it could be discontinued entirely.3 Today in the US, emerging details of the Senate Authorization Committee's mark to the administration's budget request point to the possibility of the elimination of the Army's EMARSS and MQ-1C Grey Eagle aircraft programs. And we had already heard about the committee's wish to kill the Joint Light Tactical Vehicle (JLTV) program.

Of course, three more committees and two full houses of the legislature must agree for these cuts to cone to pass, but it's important to remember that the cutting is just starting. If the military budget in the US takes an even share of spending cuts, getting to Conrad's $400 billion will take a lot more than these recisions. So, sacrifices offered early will probably stick in the long run.

What these few of the past week have in common is excessive commonality with other things. Scout vehicles are great, and the British Army has been particularly enthused about getting that new 40 mm cannon from BAE Systems and Nexter on one. But its Warrior tracked troop carriers will be getting the same weapon through their Lethality Improvement Program, and the ASCOD II is a roughly similar troop carrier, just reconfigured as a cavalry vehicle. The US Army ordered both infantry (M2) and cavalry (M3) versions of the Bradley, of course, but that was at a time when Cold War budgets were flush, and the M3 has turned out to be a much better tank destroyer than scout vehicle (troop carriers are awfully big for the latter role). With far fewer tanks to destroy today, the British Army's need for a wholly new SV just may not be pressing.

In the blogosphere over the last few days, I've seen quite a few commentaries about how badly the JLTV is needed, because MRAPs, even M-ATVs, just aren't all that mobile off-road. Perhaps. But given the weight problems that the design teams have been having—the Army rejected all 23 prototypes that it was shown—it's not clear that the JLTV will be shockingly more mobile. For whatever the Army might wish, the technological clock cycle of automotive design just isn't running that fast. And to be fair, the M-ATV is a pretty beloved vehicle these days, and the services have bought almost 9,000 of them. As Bob Gates put it once, thatʼs a pretty big investment to walk away from.

Elimination of the EMARSS, as I read in one advisory today, just isn't shocking. The mouthful of the full title—Enhanced Medium-Altitude Reconnaissance and Surveillance System—eludes to the program's essence: another King Air crammed with electronics. Those are great too, but the USAF is already flying a bunch of them as MQ-12C Liberties. One could make a case that more are needed, but that case probably shouldn't be coming from the Army, unless that service can show how it will fly and operate them so differently to justify standing up a separate fleet.

Ditto the MQ-1C. I saw a few heads scratched a few years ago when the Army announced that the winner of its Extended-Range Multi-Purpose drone competition was General Atomics Aeronautical—with another version of the Predator. Sure, the Predator series is composed of great airplane designs. It's easy to make a case that more MQ-1s or MQ-9s would be more cost-effective than F-35s, at least on the margin. But by choosing an airplane so similar to the Air Force's airplanes, Army Aviation may have been setting itself up for just this moment.

Defense-Industrial Research Memorandum 2011-08 Hasik Analytic LLC

page 2 of 6 16 September 2011

After all, the Army had already lost the fixed-wing cargo fight with the Air Force in the no-longer-Joint Cargo Aircraft program: the USAF and the Air National Guard will now be getting all the C-27Js that Alenia will sell in the US. The service was happy to hand all its future no-longer-Joint High Speed Vessels to the Navy—transoceanic transport is just not a land force mission. But whoever is taking the initiative, all of this points to more thorough scrubbings of appropriate roles and missions, and some sharper interservice, intraservice, and even program-by-program competition for them. We needn't wait for another Pentagon review or Crown Commission for pronouncements. We just need to observe these individual budget decisions to know that these trade-offs will keep coming.

STUFF THAT PROBABLY WON'T HAPPEN

So, I will now lean farther forward than I usually do, and make some bold predictions about a few aircraft programs in where cuts will proceed. Hopefully these will stimulate some thoughts amongst suppliers about where not to be doing serious business planning for the next few years, and what alternatives to pursue in their stead.

The USAF's Combat Search-and-Rescue (CSAR) helicopter. The US Air Force's interest in helicopters reminds me of its interest in close air support: paying just enough attention not to lose another mission to the Army, or any other service. But helicopters are clearly the left-handed stepchildren of the blue suiters; no USAF helicopter pilot is ever going to become head of Air Combat Command, much less chief of staff. Without a driving personality to make the CSAR airplane into something really unique (think back to the A-10 program), the project has a high likelihood of floundering. That will go on until someone at the Office of the Secretary of Defense or on one of the congressional staffs notices that the Army, Navy, and Marines all run their own CSAR when needed. After all, did the USAF rescue its own Scott O'Grady? No—that was the Marines, and without a wholly different airplane dedicated to that one mission. The USAF's idea of spending billions on more than 100 helicopters solely for, as John Young once put it, "single-digit rescues" is a surreal case of cost-benefit non-analysis.

The US Navy's V-22s. As Rotor & Wing notes this month,4 they've been planned for years, but never funded. As rotorcraft expert friends of mine remind me, the V-22 is not a helicopter; it's possibly a game-changer, but so far, only in long-range, lightly unopposed aerial assault and resupply. There's certainly a great deal more that could be done to make use of this airplane's extraordinary range and speed, such as shipborne search-and-rescue or submarine-hunting, if the proper models were developed. But the Navy has never shown enthusiasm for the project. That is not a normative comment on whether it should, just a positive evaluation of whether it ever will.

The US Army's Armed Aerial Scout helicopter. Kiowa Warriors are working hard in Afghanistan, and they're been looking overworked for years. They've frequently proven more survivable in ground-fire gunfights than the bigger, louder, more obvious Apaches. The service certainly has good mostly-on-the-shelf candidates for that AAS, such as Boeing and MD's AH-6. It's just that the US Army has almost 800 Apaches. Given that the Army will be trimming down to 30-35 ground combat brigades, that's enough to give each one its own squadron of 24 gunships—without even asking for an AAS.



That said, there are two alternatives paths under which concept might go forward. Bell's offer to remanufacture and upgrade the Kiowas one more time into O/AH-58Fs should be easy to accept with money tight. That's not an endorsement of the concept, just a prediction that after screwing up so many acquisition efforts across the service, the Army might decide to bunt. But if it did decide to swing for the fences, it might get interested in aircraft like Sikorsky's S-97 Raider or Eurocopter's X3. These are combination helicopters (sometimes called heliplanes or gyrodynes), as they have both rotors and propellers. As such, they approach tilt rotors in speed, if not range, but without their considerable mechanical complication.

ONE THING THAT PROBABLY WILL EMERGE

These examples get to the point about what will go forward. The allure of Bell and Sikorsky's approaches to the AAS concept is that each idea is, in its own way, highly differentiated. Bell is offering to rebuild a fleet that the Army likes. Sikorsky and Eurocopter may offer something not-quite-proven, and thus possibly riskier, but with a big margin of potential performance improvement. Boeing and MD are offering a very fine helicopter, but one that's neither common with the bulk of the fleet (outside the 160th Special Operations Aviation Regiment) nor possessed of something really new-and-different.

With this in mind, I offer one example of a new program that likely will get started in the next few years, whatever the spending problems:

A new maritime patrol plane for the RAF—or the Fleet Air Arm. I cannot write anything new about the fiasco of the Nimrod MR4, for so many have written about it for more than a decade. I cannot argue with the government's decision to finally cut its losses. But Britain is now without maritime patrol aircraft, if one does not count Hercules transports with navigators' binoculars as their primary sensor. Now, it's one thing for the Dutch to leave the Netherlands Antilles without long-range patrol aircraft. What's more interesting is to whom they sold their P-3s: the Germans. If a substantial German maritime patrol aircraft wing makes somewhat more sense than the Kaiser's High Seas Fleet, then it's just bizarre that the Queen lacks one. For despite the governmentʼs initial assertion that Hercs and helicopters would take up the slack, those really arenʼt close substitutes.

Thus, I fully expect that the Royal Navy will make the reestablishment of this capability a top priority. After all, with the withdrawal of the Harrier, it has more than a few surplus pilots looking for flight pay. It's rather analogous to the USAF's CSAR problem, both in its own inattention and the willingness of bureaucratic competitors to step in. If the RAF can scuttle the vestige of Coastal Command with expensive over-reaching, it should expect that the RN will be all-too-willing to cost-effectively backfill its failure. Word has it that the Navy is working on just such a plan, and therein new-and-different isn't much desired. There's not so much new in patrol aircraft these days, though their electronics continue to march forward in technical progress. No doubt Boeing, CASA, and Alenia have all been showing the First Lord piles of slides.

CONCEPTUALIZING AND PITCHING THE NEW, NEW THING

This gets me to my point for industry to consider. Even if itʼs a proven concept, a maritime patrol plane would be a little new-and-different for the Fleet Air Arm. Even if the Royal Navy badly



wants one, it would need to get used to the idea. To figure out how to pitch newer experiences within constrained budgets, we can return to Everett Roger's classic formulation of the five facilitators of an early decision to adopt a new idea:5

✦ Relative value: clear advantage over existing ways of doing business✦ Compatibility: consistency with the existing values, experience, concepts of operations

(CONOPS), and kit✦ Complexity: perception of difficulty in use or even understanding✦ Trialability: divisibility in usage for lower uncertainty and learning-by-doing✦ Observability: visibility of results to stimulate discussion for concept refinement and

socialization of the decision

Thereʼs a reason that relative value is listed first. Close substitutes can carry significant fixed adoption costs without bringing significant improvements in capability. That can be true whether one is buying another system within a single military service, and it can be more true if one is buying the same piece of kit for substantially overlapping missions across multiple military services. Call this commonality not for cost-effectiveness, but for me-too-ism The US Army, Navy, and Coast Guard can all fly H-60 helicopters without arousing congressional scrutiny because theyʼre all flying them for meaningfully different missions. But when the USAF is flying them purely for search-and-rescue, for which all three other services fly them in part, the business looks much less sensible.

Amongst the rest of the factors, for contractors with new designs, or old designs for new customers, there are tradeoffs to be made. A big leap in performance may require considerable complexity, at least if the design isn't particularly elegant. If it's expensive, the system will have less trialability, as fewer will be available for experimentation. Systems requiring actual combat for proving their value with have lower observability. And in some cases, the craziest ideas—like the early nuclear weapons or today's robotic aircraft will have very mixed degrees of compatibility. They will challenge military forces' understand of how they do business, but eventually, parallel organizations can be established—in some cases, relatively easily—to take them up.

The key is to lean not so far forward in any single factor that one stresses the others. Consider how, so far, robotics have been fitting this bill nicely. They've shown clear relative value in things dull, dirty, and dangerous; they've not proven remarkably complex (indeed, rather the opposite); their generally low price points have led to high rates of trial; and two campaigns in Iraq and Afghanistan have made their results highly observable. Even DARPAʼs new ACTUV concept could eventually take hold of this last factor: that "continuous tracking" of submarines has been providing constant feedback for anti-submarine forces since the early Cold War.

Seen through Everett's framework, if there's any issue with greater adoption of robotics, and perhaps quite a few other military technologies, it's compatibility—not physically with the force, but in cultural values and CONOPS. Sometimes, that's the hardest part of marketing to the military. As legendary stories like those of the development of the F-16 show, dogged pursuit of the right concept can eventually win out, but it requires marketers with knowledge of the right pathways for penetrating organizations and a passion for their products. When you find these people, glom up them up. Better yet, invest in them.



THE USUAL BOILERPLATE

This memorandum is for private circulation and distribution, and is provided for information only. Hasik Analytic LLC makes every effort to use reliable, comprehensive information, but does not represent and cannot warrant that it is necessarily accurate or complete. The views in this publication are those of Hasik Analytic LLC and are subject to change without notice. At the same time, Hasik Analytic LLC undertakes no obligation to update its opinions or the information in this publication.

Neither Hasik Analytic LLC nor any respective officers, employees, or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. Analysts may own securities of the issuers discussed herein.

© Copyright Hasik Analytic LLC 2011, all rights reserved. No part of this publication may be reproduced, sold, or redistributed without the prior permission of Hasik Analytic LLC.

NOTES



1 Jeffrey Sparshott, "Gang of 36 Wants Debt Panel to 'Go Big'," Wall Street Journal, 15 September 2011

2 Ainsley Tomson & Jason Douglas, "UK Plots New Path to Bolster Growth," Wall Street Journal, 16 September 2011

3 Andrew Chuter, "DSEi: New UK Army Scout Vehicle Under Threat," Defense News, 14 September 2011

4 Robert Moorman, "With Defense Cuts Expected, Are Military Helicopter Programs Safe?" Rotor & Wing, September 2011

5 Everett M. Rogers, Diffusion of Innovations (New York City: The Free Press, 1964)



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