ARH in jeopardy

by: Matthew Potter
July 10, 2008

Category: Bell, Congress, Department of Defense, development program, Federal Budget Process, Military Aviation, Restructuring, U.S. Army | RSS 2.0

The soaring costs of the ARH program have caused a Nunn-McCurdy Cost Breach. See a story here. The 40% increase in unit cost has caused the Army and DoD to rethink, again, proceeding with the contract. Nunn-McCurdy cost breaches were established in the 80’s as part of the overall reform of Congressional monitoring of programs. Programs are required to report costs at a unit cost. There are two types of unit costs considered: total cost of the program divided by the number of units and total procurement cost divided by the number of units. An increase of over 25% in either category requires the DoD and Army to certify to Congress that the program is needed and fixable. With ARH it might be easier to cancel the program and start over then spend more political capital getting Congress to continue it. Last year one committee did defund the program, and that may happen again with the FY09 President’s Budget.

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