Business
Pentagon puts in order for Textron’s Osprey
01:00 AM EST on Wednesday, January 24, 2007

Two V-22 Ospreys, hover over a tree line during a demonstration in 2005 in Jacksonville, N.C.
AP / GERRY BROOME
The Defense Department has approved Navy and Air Force plans to buy as many as 35 Textron Inc.-Boeing Co. V-22 Osprey tilt-rotor aircraft each year through 2013, according to internal budget documents.
Deputy Defense Secretary Gordon England approved the purchases in a 60-page memorandum on the Pentagon’s fiscal 2008-2013 budget he sent last month to military service secretaries, chiefs of staff and acquisition officials. The V-22 is a fixed-wing plane with rotors that tilt so it can take off and land like a helicopter. The military sees it as useful for long-range Marine Corps and commando missions.
The Navy will request money for 171 aircraft, a reduction of 25 aircraft from last year’s plan. Purchase of the additional 25 planes is pushed beyond 2013. The Air Force will buy 31 versions for use in long-range commando missions, reflecting last year’s plan. England’s memo didn’t list the cost of the 171 aircraft. The overall V-22 program is to cost $50 billion over its anticipated 20-year life.
England’s approval is good news for Providence-based Textron and Chicago-based Boeing because, even though the numbers are reduced from last year, the budget ensures enough purchases to make the program almost impossible to cut, said Richard Aboulafia, a military aircraft analyst.
“The move indicates strong support. These quantities justify a multiyear contract, which will further reduce costs,” said Aboulafia, who is with Alexandria, Va.-based Teal Group.
“The U.S. Air Force’s support further bolsters the program, so with budget numbers like these, the V-22 debate has been conclusively decided,” Aboulafia said. “It’s a secure program.”
Textron shares dropped the most in more than four months on Friday after it announced management changes on the H-1 Marine Corps helicopter upgrade program because of new cost overruns.
Yesterday, Textron shares rose $1.02 to $95.85 in New York Stock Exchange composite trading. Textron reports fourth-quarter earnings today. Shares have risen 26.5 percent in the last 12 months. Boeing shares rose $1.76 to $87.36.
The Navy plans to buy 21 MV-22 Ospreys in fiscal 2008 and 30 a year from 2009 through 2013. The Air Force plans to buy five CV-22 commando versions in fiscal 2008, six in 2009 and five each successive year through 2013.
The total of 26 in fiscal 2008, growing to about 35 annually through 2013, is up from 16 requested this fiscal year.
The aircraft was cleared in July 2005 to enter full production, and the Marine Corps version is scheduled to be declared combat ready later this year for possible deployment to Iraq. The CV-22 Air Force commando version continues in development and won’t be ready for operations until 2009.
England’s “Program Decision Memorandum,” signed Dec. 13, is one of four directives sent to top military officials that spell out spending priorities through fiscal 2013 for space, aircraft, special operations, health-care and defense intelligence programs.
England’s directives will be reflected in the Defense Department’s portion of the fiscal 2008 budget that President Bush will propose next month and in the Pentagon’s long-term spending plan.
The V-22 “will probably see its first operational deployment this calendar year,” Marine Corps Commandant Gen. James Conway said yesterday in an interview after testimony before the House Armed Services Committee.
“I’ve flown in it three times, and it’s a great airplane and it’s going to prove itself in battle very shortly,” Conway said.
Conway’s optimism is unwarranted, said Winslow Wheeler, director of the Straus Military Reform Project with the nonprofit Center For Defense Information in Washington.
“The hoo-hah surrounding the V-22 and its imminent deployment to Iraq demonstrate the Pentagon’s procurement system at its worst,” said Wheeler, whose organization has published a critique of the aircraft entitled V-22: Wonder Weapon or Widow Maker.
“Despite poor performance in its most recent tests, unaddressed performance limitations, and advertised capabilities that simply do not exist, the system’s advocates are anxious to press on with the program as if these problems did not exist,” Wheeler said in an e-mailed statement. “This is simply asking for trouble if the plans to deploy to actual combat in Iraq proceed.”
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