Navy's V-22 Buy Sidesteps Conventional Procurement Process

By Sandra I. Erwin
Aircraft manufacturers Bell-Boeing and Northrop Grumman two years ago were gearing up for a contentious battle for a prestigious Navy contract to replace aging cargo planes that shuttle passengers and supplies to and from aircraft carriers.
But the competition never got under way. The Navy instead opted to buy Bell-Boeing’s V-22 Ospreys under an existing $6.5 billion five-year contract that the company signed with the Marine Corps in 2013. Navy officials determined this was the better choice and decided against Northrop Grumman’s recommendation to remanufacture the existing fleet of 35 C-2 Greyhound cargo aircraft.
The Navy will buy a total of 44 V-22 aircraft beginning in fiscal 2018 to eventually replace the C-2 fleet. Deliveries are scheduled to begin in fiscal 2020 at eight aircraft per year, said Navy spokesman Lt. Robert Myers.
The selection of the V-22 to become the future “carrier onboard delivery” aircraft is unusual in that it did not follow the traditional military acquisitions process of competitive bidding and source selection reviews. The choice was made known Jan. 5 internally within the Navy in a “memorandum of understanding” signed by Chief of Naval Operations Adm. Jonathan Greenert, Marine Corps Commandant Gen. Joseph Dunford and Secretary of the Navy Ray Mabus. The existence of the memo was first reported in mid-January by
The news were made public Feb. 4 by Deputy Assistant Secretary of the Navy for Budget Rear Adm. William K. Lescher as part of the rollout of the administration's fiscal year 2016 budget request.
Myers said the MOU is an “internal working document” not intended for public release. The memorandum, he explained, “laid the fiscal groundwork to enable funding for the V-22 solution to perform the COD mission. It's a great example of the Navy-Marine Corps team working together, using a proven manufacturing process and a proven asset instead of starting a new program.”
Extensive studies led up to the Navy’s decision, officials said, although it is no secret that the Marine Corps has been making a big push to have the V-22 deployed aboard aircraft carriers. The Osprey is a hybrid that combines the functions of a helicopter and a fixed-wing turboprop aircraft. Marines intend to buy a total of 360 Ospreys, and the Air Force Special Operations Command has a requirement of 50. The V-22 first flew in 1989. The Marine Corps began testing it in 2000 and fielded it in 2007.
The Navy said a thorough analysis of potential choices was completed in 2012. The study looked at multiple alternatives, including a service life extension program for the C-2A; new construction of improved C-2s, V-22s and improved V-22s; a common support aircraft concept and a “clean sheet” aircraft design.
As early as spring 2013, the Naval Air Systems Command was planning on seeking contractor bids sometime in 2014, with a contract award anticipated for fiscal year 2016. But the Navy later determined these procedures would not be followed because it already had an existing “program of record” with the V-22. “We decided to pursue our current acquisition strategy funding the existing program of record because it was the best value to the U.S. government,” Myers told National Defense. “Though there was no formal competition, we did explore other alternatives as part of our decision-making process. That process included issuing a ‘request for information’ in 2013 where we asked industry for the ‘art of the possible’ regarding how they could meet our requirements for a COD platform,” Myers said. “Based on the RFI responses and further analyses, the Navy chose not to stand up a new acquisition program, thus there is nothing to compete.”
The introduction of a new airplane to the carrier deck usually is a big deal for the Navy, but the Osprey should have no trouble transitioning to carrier operations, Myers said. “The Navy conducted a V-22 military utility assessment to assess the viability of the V-22 to perform the COD mission from the aircraft carrier and evaluate its impact on flight deck and cyclic operations,” he said. “Within the scope of this assessment, the V-22 demonstrated an effective, flexible and safe capability to conduct the COD mission.” Further detailed analysis looked at the logistical and maintenance support for the airframe and a plan has been developed to support the transition, he added. Navy pilots are training alongside Marine aviators to “sharpen proficiency and develop a strong knowledge base for the aircraft.”
The airframe eventually will be customized to meet specific Navy requirements and will be named HV-22. “We intend to procure a baseline MV-22 aircraft with an engineering change to add an extended range fuel system, high frequency radio and public address system,” Myers said. “The resultant Navy V-22 variant will provide extended range capabilities and operate as a basic transport aircraft in the COD mission.”
Mabus last week was asked to elaborate on the V-22 pick during a hearing of the House Appropriations subcommittee on defense.
“It seemed like a quick decision … which hopefully saved money,” said Rep. Ander Crenshaw, R-Fla. He asked Mabus to submit backup documentation on the selection process.
“We've been looking at the COD replacement for a good while,” Mabus told the subcommittee. “The further we got into the analysis of alternatives, the clearer it became that we had an aircraft — the Osprey — that was a hot line.” Because the aircraft already is in full-rate production, the Navy saves money, he noted, because the HV-22 variant can be acquired as part of the same multiyear contract that the Marine Corps signed with manufacturer Bell-Boeing. “It was a very affordable aircraft,” Mabus said. Another consideration is that the V-22, unlike the C-2, does not require catapult launches and arrested landings. The Ospreys can be used in different parts of the carrier, Mabus said. “They can also be used on other ships that the COD cannot. It is a more flexible platform. And the further we got in, the clearer that that option became.”
Northrop Grumman for years had argued that the Navy could refurbish existing C-2 aircraft at far less cost than buying $67 million apiece Ospreys.  The Greyhounds have been workhorses since they started flying in 1964, and the Navy needed to start a modernization program before the airframes begin to experience fatigue-related problems. Northrop Grumman has proposed updating the airframes with new components that would be common with the Navy’s E-2D Advanced Hawkeye radar plane, which the company also builds.
Northrop officials declined to comment on the V-22 decision but it is apparent that the company does not believe the fight is over. “We still believe C-2 modernization is the best option and stand by our recommendations,” Judy Quinlan, spokeswoman for Northrop Grumman Aerospace Systems told National Defense in a statement.
Because this was not a conventional contracting duel, there is no protest mechanism to challenge the Navy’s decision, industry sources said. According to one industry executive speaking off-the-record, the Navy’s move “sets a dangerous precedent in the acquisition world” that procurements can be settled without formal competitions. Industry insiders see the Marine Corps’ fingerprints all over this. “The Marines are getting their wish,” the industry source said. “They want the Navy to buy more V-22 to keep the price down.”
Photo: An MV-22B Osprey takes off from the flight deck of the USS Essex (Navy)

Topics: Aviation, Procurement

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