CSIS: Assessing the Affordability of the Army’s Future Vertical Lift Portfolio

This week the Center for Strategic and International Studies’ Defense-Industrial Initiatives Group released a report entitled “Assessing the Affordability of the Army’s Future Vertical Lift (FVL) Portfolio.”

The 31-page report — here — characterizes and assesses the Army’s approach to vertical lift modernization; identifies long-term issues relating to programmatic, sustainment, and portfolio costs; and clarifies the long-term affordability implications of the Army’s portfolio approach to vertical lift modernization.

CSIS’s preliminary analysis found that both of the FVL’s key programs — the Future Attack Reconnaissance Aircraft (FARA) and the Future Long-Range Assault Aircraft (FLRAA)* — can be fielded under accelerated timelines at historically viable levels of modernization funding, but the Army will need to manage cost risk through the prototyping efforts, particularly with respect to operating and support costs.

Following are the anticipated schedule milestones for both programs.

CSIS notes that while the Army is keeping its eyes on constraining development cost, development is a relatively minor percentage of life cycle costs (approximately 5% for rotary-wing systems). The authors note that cost growth in production is a more significant concern because production constitutes roughly 28% of life cycle cost. Even more important than development and procurement cost, cost growth in sustainment (O&S costs) can have the most severe impact on budgets because sustainment constitutes 68% of life cycle costs.

* CSIS notes that FVL is replacing an operational fleet comprised primarily of the UH-60 Black Hawk; AH-64 Apache attack helicopters; CH-47 Chinook heavy-lift helicopter; and the UH-72 Lakota light utility helicopters. FLRAA (capability set three) will replace the UH-60 Black Hawk. FARA (capability set one) will take over the scouting mission from the AH-64 Apache. Although FARA is replacing the Apache in the scouting mission, it is not an Apache replacement program. Instead, FARA fills a long-term capability gap that was deepened when the Army decided to retire the OH-58 Kiowa Warrior due to budgetary cuts. Finally, while there are no immediate plans to replace the AH-64 Apache and CH-47 Chinook as part of the FVL effort, the Army has indicated that those could be follow-on programs—roughly aligning with capability set two and capability set five, respectively — once FARA and FLRAA are further along.