Longbow Apache Helicopter: System Cost and Operational Effectiveness Need
to Be Demonstrated (Letter Report, 08/02/95, GAO/NSIAD-95-159).

GAO reviewed the Department of the Army's Longbow Apache weapon system,
focusing on whether: (1) the Army has conducted a thorough cost
effectiveness study of the weapon system; (2) critical issues related to
the production of the aircraft and the producibility of the missiles
have been addressed; and (3) the Army has adequately developed its
Longbow Hellfire missile procurement plan.

GAO found that: (1) the Army has made major program decisions concerning
the Longbow Apache weapon system without fully evaluating the costs and
benefits of alternative systems; (2) the Army's cost and operational
effectiveness analysis (COEA) will be of limited value because of its
timing and the Army's decision not to include the Comanche helicopter as
a possible attack helicopter alternative; (3) concerns have been raised
about the performance of the Longbow Hellfire missile against targets
with multiple countermeasures, radar capability against stationery
targets, and the producibility of the missile's transceiver; and (4) the
Longbow Hellfire missile procurement plan is flawed because the
procurement objective is overstated by about 3,200 missiles, and the
missiles stand to lose significant portions of their shelf life before
the aircraft are available.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-159
     TITLE:  Longbow Apache Helicopter: System Cost and Operational 
             Effectiveness Need to Be Demonstrated
      DATE:  08/02/95
   SUBJECT:  Helicopters
             Advanced weapons systems
             Cost effectiveness analysis
             Missiles
             Army procurement
             Operations analysis
             Military engineering
             Testing
             Weapons research
IDENTIFIER:  Longbow Apache Helicopter
             HELLFIRE Missile
             Apache Area Weapon System
             Apache Helicopter
             AH-64A Helicopter
             RAH-66 Helicopter
             Comanche Helicopter
             
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Cover
================================================================ COVER


Report to Congressional Committees

August 1995

LONGBOW APACHE HELICOPTER - SYSTEM
PROCUREMENT ISSUES NEED TO BE
RESOLVED

GAO/NSIAD-95-159

Longbow Apache Helicopter


Abbreviations
=============================================================== ABBREV

  COEA - Cost and Operational Effectiveness Analysis
  DAB - Defense Acquisition Board
  DOD - Department of Defense

Letter
=============================================================== LETTER


B-259390

August 24, 1995

The Honorable C.W.  Bill Young
Chairman
The Honorable John P.  Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House of Representatives

The Honorable Floyd Spence
Chairman
The Honorable Ronald Dellums
Ranking Minority Member
Committee on National Security
House of Representatives

The Honorable Sam Nunn
Ranking Minority Member
Committee on Armed Services
United States Senate

This report presents the results of our review of the Department of
the Army's Longbow Apache weapon system.  Because this program is
scheduled to enter production later this year, we focused
specifically on whether (1) critical issues related to the production
of the aircraft and the producibility of its missiles had been
addressed and (2) the Longbow Hellfire missile procurement plan was
adequately developed.  We also reviewed the need for full
consideration of all cost-effective alternatives to the production of
this attack helicopter system.  We believe that the information in
this report will be useful as you review the Department of Defense's
(DOD) plans for this program. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The Army plans to upgrade its AH-64A Apache attack helicopter,
already considered by the Army to be the most advanced attack
helicopter in the world, into a new version known as the AH-64D
Longbow Apache.  All
758 helicopters in the Apache fleet will be modernized with new
avionics and be capable of firing both the laser-guided Hellfire
missile and a radar-aided Longbow Hellfire "fire-and-forget" missile
that is under development.  These improvements are designed to, among
other things, allow the Apache to conduct precision attacks in
adverse weather, automatically engage multiple targets, and operate
on the digital battlefield of the future.  Additionally, 227 of the
758 upgraded Apaches will be equipped with a new mast-mounted,
millimeter-wave fire control radar and more powerful engines. 

The Longbow Apache weapon system is composed of three components--a
modernized Apache helicopter, a fire control radar, and a Longbow
Hellfire missile.  In December 1990, it reached milestone II, the
decision point for entering the engineering and manufacturing
development phase.  A production decision--milestone III--is expected
in October 1995, and fielding is planned to begin in 1997.  DOD has
requested $552.3 million for this system in fiscal year 1996--$354.8
million for the aircraft and $197.5 for the missile. 

Since its inception, the Longbow Apache program has expanded in scope
and size, and program acquisition costs\1 have more than doubled.  In
1991, the Army planned to develop and procure only 227 radar-equipped
modernized Apache helicopters and almost 11,000 Longbow Hellfire
missiles.\2 In May 1993, the program was restructured to include
modernizing the entire Apache fleet of 758 helicopters and procuring
over 13,000 Longbow Hellfire missiles.\3

Largely because of this restructuring, the estimated cost to develop
and procure the Longbow Apache weapon system increased from $5.4
billion to $12.3 billion between 1991 and 1994.  Program acquisition
costs again increased; this time by about $630 million between 1993
and 1994. 

As we reported in 1994, in implementing its aviation modernization
plan, the Army chose to fund procurement of both the RAH-66 Comanche
reconnaissance and attack helicopter and Longbow Apache attack
helicopter while deferring or canceling other helicopter
modernization programs.\4 Since then, production of the Comanche
program has been deferred.  The Army plans to equip some of its
Comanche helicopters with the Longbow Hellfire missile and a modified
version of the Longbow radar. 


--------------------
\1 Program acquisition cost includes research, development, test,
evaluation, and acquisition costs, and is expressed in escalated
dollars. 

\2 Longbow Apache Helicopter:  Key Factors Used to Measure Progress
in Development Need to Be Changed (GAO/NSIAD-92-43, Nov.  21, 1991). 

\3 Longbow Apache Selected Acquisition Report, Dec.  31, 1992, as
amended, June 1, 1993. 

\4 Army Aviation:  Modernization Strategy Needs to Be Reassessed
(GAO/NSIAD-95-9, Nov.  21, 1994). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

During the Longbow Apache's ongoing engineering and manufacturing
development phase, concerns have been raised by DOD test and
acquisition officials about selected Longbow Apache test events and
missile producibility.  Some of the concerns that have yet to be
resolved are (1) the performance of the Longbow Hellfire missile
against targets with multiple countermeasures, (2) the performance of
the radar against stationary targets, and (3) the producibility of
the missile's transceiver.  We believe that resolution of these
concerns is critical to a successful transition of the Longbow Apache
weapon system to production and that Congress should be apprised of
their resolution prior to approving production funds for the program. 

The current Longbow Hellfire procurement plan is inadequate because
(1) it will procure about 3,200 missiles that are not required at an
estimated total cost of between $540 million and $750 million and
(2) a significant number of the missiles will be procured before
Longbow Apache aircraft are available and will lose up to one-half of
their shelf life.\5 Because of DOD's concern about the high cost of
the missile, the Army is implementing a cost-reduction plan that
includes a 5-year production contract requiring congressional
notification.  However, if the procurement is reduced, the Army will
have to renegotiate the contract terms to determine what savings can
be achieved.  We believe Congress should be apprised of the
quantities, cost, and operational impact of the Longbow Hellfire
procurement plan before approving the 5-year contract for production
of the Longbow Hellfire missile. 

DOD guidance for developing a cost and operational effectiveness
analysis (COEA) requires that (1) a wide range of alternatives be
considered, including conceptual systems and (2) all reasonable
options should be represented, including even doubtful alternatives,
in order to establish their merit.  While the Army has recently
agreed to conduct a Longbow Apache COEA for the milestone III
production decision, the value of that analysis will be limited
because of its timing and the Army's decision not to look at all
attack helicopter alternatives, including the Comanche helicopter. 
We believe Congress needs to be aware of the cost effectiveness and
military worth of the Longbow Apache weapon system as compared to
alternatives such as the Comanche, prior to appropriating funds for
production of these systems. 


--------------------
\5 Shelf life is the expected length of time an item can be in the
inventory before it must be used or refurbished. 


   CRITICAL TESTING ISSUES HAVE
   YET TO BE RESOLVED
------------------------------------------------------------ Letter :3

Since the Longbow Apache weapon system entered the engineering and
manufacturing development phase in 1990, concerns have been raised by
DOD test and acquisition officials about various aspects of the
program.  These concerns could have a potentially serious impact on
the Longbow Apache program and, therefore, should be resolved. 

For example, the performance of both the Longbow radar and Longbow
Hellfire missile are concerns.  Poor results during specific segments
of early proof-of-principle testing and later testing demonstrated
that the radar and missile have had difficulty meeting some important
test goals.  Radar problems include misidentification and
nondetection of some targets and difficulty in developing
radar-related software for different terrains.  Missile problems
include less-than-satisfactory performance against targets defended
with multiple countermeasures such as smoke and active jammers. 

The reliability, availability, and maintainability of the Longbow
Apache helicopter are also concerns.  In September 1990, we reported
on the low availability rates of the basic Apache helicopter due to
reliability, availability, and maintainability problems.  Because the
Longbow Apache is a major modification of the basic Apache
helicopter, we also noted that (1) the Apache's existing logistical
support problems may affect the Longbow Apache and (2) the Longbow
Apache should clearly demonstrate its logistical supportability
before proceeding into production.\6 In July 1994, a DOD test
official noted that the logistics reliability of the Longbow Apache
was a recurring issue.  Also, in its October 1994 Longbow Apache
readiness and support assessment for long-lead production, DOD
affirmed its concern with logistics reliability when it noted that
the logistics reliability parameter for the fire control radar, which
was incorporated in the Acquisition Program Baseline in February
1992, was deleted in March 1994.  After discussions between DOD and
the program office, the logistics reliability parameter was put back
into the baseline. 

Questions have also been raised about the ability to produce the
Longbow Hellfire missile's transceiver in mass quantities.  The Army
found that the initial transceiver design did not meet all of the
specification requirements and was not designed to be compatible with
automated production processes.  As a result, the transceiver was
redesigned, but the Army could not provide us with the qualification
test results because the results have not been fully analyzed.  While
the Army maintains that this problem is not expected to affect
missile performance, it does acknowledge that the problem has delayed
missile testing and validation. 

DOD test and acquisition officials told us that resolution of these
concerns is important to the overall success of this program and,
therefore, DOD needs to make sure they are resolved by milestone III. 
According to DOD, developmental and operational testing has been
completed; however, the classified test results have not been
analyzed and authenticated.  Therefore, DOD has not issued a report
on Longbow Apache testing. 

According to the program manager, the Longbow Apache weapon system
performed so well in its operational testing that the Army was able
to conclude testing early.  However, a DOD developmental test
official informally expressed dissatisfaction with the Longbow
Apache's operational test, specifically that multiple countermeasure
testing may not be completed and that missile, radar, and aircraft
test results had not been integrated to give a total system picture. 
According to a DOD operational test official, results may not be as
good as the program manager observed, but they are generally good. 
He noted that (1) there are a few weak points but data had not been
synthesized and validated to determine their significance and (2)
although the system did not meet every specification exactly and was
not tested against all jammers and reactive armor, it performed
successfully in the field. 

As previously discussed, one of the concerns with the Longbow Apache
weapon system is the missile's inability to perform against active
countermeasures like jammers.  It would seem, therefore, that
operational testing would have included tests against all jammers. 
In June 1995, DOD confirmed that the analysis of test results is
currently ongoing and is expected to be a key factor in the milestone
III decision. 


--------------------
\6 Apache Helicopter:  Serious Logistical Support Problems Must Be
Solved to Realize Combat Potential (GAO/NSIAD-90-294, Sept.  28,
1990). 


   LONGBOW HELLFIRE PROCUREMENT
   PLAN IS INADEQUATE
------------------------------------------------------------ Letter :4

Our review indicated that the Longbow Hellfire missile procurement
plan is inadequate because (1) it will procure about 3,200 missiles
that are not required at an estimated cost of between $540 million
and $750 million and (2) a significant number of the missiles will be
produced before Longbow Apache aircraft are available and will lose
up to one-half of their shelf life.  At DOD's direction, the Army has
developed an $862 million cost-reduction plan, which includes a
5-year production contract that would require congressional
notification.  However, if the procurement is reduced, the Army will
have to renegotiate the contract terms to determine what savings can
be achieved. 


      LONGBOW HELLFIRE
      REQUIREMENTS ARE OVERSTATED
---------------------------------------------------------- Letter :4.1

The Army plans to procure about 3,200 more Longbow Hellfire missiles
for the Longbow Apache program than are required.  While the Army has
approved plans to procure 13,311 Longbow Hellfire missiles, a
computational error resulted in this requirement being overstated. 
This error may result in program costs of between $540 million and
$750 million, depending upon whether the Army achieves its recently
adopted cost-reduction goals. 

Using corrected data, we calculated that the total procurement
objective for the Longbow Hellfire missile program should be 10,108
for the Longbow Apache.  The Army approved program of 13,311 missiles
for the Longbow Apache is, therefore, overstated by approximately
3,200 missiles.  An official in the Office of the Deputy Chief of
Staff for Operations and Plans, who is responsible for munitions
requirements, confirmed that the procurement objective was
overstated.  According to him, the overstatement occurred because the
Army used the wrong model for calculating the procurement objective. 

The exact cost of these unneeded missiles is dependent on whether or
not the Army achieves the cost reductions expected under the missile
cost-reduction plan.  If all of the planned cost-reduction
initiatives are achieved, the unit cost may be reduced to $169,000
and, therefore, the cost of the approximately 3,200 unneeded missiles
could be about $540 million.  If none of the reduction initiatives
are achieved, the unit cost may remain $234,000 and, therefore, the
cost of the unneeded missiles could be about $750 million.\7


--------------------
\7 These estimates are based on projected average unit costs.  Actual
cost reductions would depend on when missile reductions take place. 


      SIGNIFICANT PORTIONS OF
      MISSILES' SHELF LIFE MAY
      EXPIRE BEFORE AIRCRAFT ARE
      AVAILABLE
---------------------------------------------------------- Letter :4.2

The timing for fielding the Longbow Apache helicopter and delivering
the Longbow Hellfire missile differs to such an extent that
significant portions of the missiles' shelf life will expire before
Longbow Apache helicopters are scheduled to be available to use them. 
The missiles have a designed shelf life of 10 years and program
officials told us that, based on experience with the laser Hellfire
missile, it is possible to extend that shelf life to 15 years.  In
its comments to this report, DOD stated that a 15-year shelf life is
reasonable.  The Army plans to accept the last Longbow Hellfire
missiles in fiscal year 2005 and field the last Longbow Apache
helicopter to operational units in fiscal year 2014. 

We calculated that the Longbow Apache fleet will require 7,168
Longbow Hellfire missiles in fiscal year 2010; however, the missile
inventory is projected to be 13,253\8 missiles in fiscal year 2005. 
Therefore, by 2010, over 6,000 missiles will have used at least
one-half of their designed 10-year shelf life and one-third of their
anticipated 15-year extended shelf life waiting to arm a helicopter. 

Current Army procurement plans call for the Longbow Hellfire missile
to be used on the Comanche helicopter.  An Army official informed us
that the Army might shift some or all of the 3,200 missiles unneeded
for the Apache Longbow to the Comanche program, if it is produced. 
Our analysis shows that, even if their use on the Comanche is
approved, a significant portion of the shelf life of those missiles
will expire before they are needed.\9 The Comanche would likely need
only approximately 234 Longbow Hellfire missiles by 2010.\10
Therefore, about 2,966 of the unneeded 3,200 missiles the Army plans
to have procured would spend at least one-half of their designed
shelf life and one-third of their anticipated 15-year extended shelf
life without a helicopter to carry them. 


--------------------
\8 This reflects a reduction of 58 missiles from the planned buy of
13,311.  The 58 will be used for testing. 

\9 DOD has delayed a Comanche full production decision until July
2006.  The planned six early operational capability aircraft to be
built by 2001 will not be armed until 2004.  See our report, Comanche
Helicopter:  Testing Needs to be Completed Prior to Production
Decisions (GAO/NSIAD-95-112, May 18, 1995). 

\10 This is based on a review of aircraft fielding information and an
assumption that each fielded aircraft will require only six Longbow
Hellfire missiles. 


      LONGBOW HELLFIRE PROCUREMENT
      RISKS HAVE INCREASED
---------------------------------------------------------- Letter :4.3

DOD directed the Army to reduce the procurement cost of the Longbow
Hellfire missile.  In December 1994, DOD approved the Army's plan to
reduce missile procurement costs from $3.1 billion to $2.3 billion,
thereby reducing the procurement unit cost from $234,000 to
$169,000.\11 This compares to the latest procurement unit cost of
$53,000 for the laser-guided Hellfire II missile.  The Army plans to
buy the 13,311 Longbow Hellfire missiles in 8 years instead of 10,
significantly increasing the numbers of missiles produced per year,
beginning in fiscal year 1998.  This is expected to reduce the
contractor's costs, which will be reflected in lower unit costs. 
Integral to the cost-reduction plan is a 5-year production contract
for fiscal years 1999 through 2003 that will require congressional
notification. 

A December 1994 memorandum from the Under Secretary of Defense
(Acquisition and Technology) releasing funding for the Longbow
Hellfire cost-reduction effort noted that it contains higher cost
risk than previously existed in the program.  The assessment
cautioned that the plan's savings depend on quick congressional
notification of the 5-year contract and the Army's timely development
and implementation of the reduction initiatives.  It also noted that
the 5-year contract proposal represented a substantial portion of the
projected savings. 

The Army's current procurement plan (the cost-reduction plan) is
predicated on a peak production rate of 183 missiles per month and a
reduced production timeframe.  A large part--$468 million--of the
total cost reduction is dependent upon the 5-year contract the Army
presently plans to ask Congress to approve in 1999.  If the 5-year
contract is not approved or the procurement plan is reduced, the Army
will have to renegotiate contract terms to determine what savings, if
any, can be achieved.  Moreover, these savings may be obviated by the
costs that will be incurred to replace the missiles acquired under
the cost-reduction program's accelerated delivery plan when they
become unusable because their shelf life expired. 


--------------------
\11 The procurement unit cost excludes $386.8 million in program
research, development, test, and evaluation costs.  If this $386.8
million were included, the unit cost would be $263,000, prior to the
approval of the cost-reduction plan. 


   ARMY HAS NOT CONSIDERED ALL
   ALTERNATIVES TO PRODUCTION OF
   THE LONGBOW APACHE
------------------------------------------------------------ Letter :5

DOD Directive 5000.2 requires a COEA to determine the most
cost-effective alternative available and military worth\12 to the
government during the early stages of a system's development.  This
requirement may be waived for classified programs.  DOD and Army
officials told us that at the July 1989 milestone I, the decision
point for starting a new acquisition program, the Longbow Apache
weapon system was a classified radar program and did not meet the
monetary threshold for a COEA.  According to these officials, the
Army was not required to do a COEA.  By the December 1990
milestone II, the program was unclassified, and the program met DOD's
criteria for requiring that a COEA be conducted, including the
monetary threshold.  Despite DOD guidance, the Army did not complete
and submit an adequate COEA. 

In May 1994, noting that an appropriate COEA had not been conducted
for milestones I or II, DOD again directed the Army to conduct a
Longbow Apache COEA for milestone III to compare alternative
approaches to satisfy the Army's need for a heavy division attack
helicopter.  According to a DOD official, the Army plans to complete
the COEA in August 1995. 

While DOD originally intended that the Army evaluate the Comanche as
an attack alternative to the Longbow Apache, the Army subsequently
convinced DOD that it should exclude from the COEA any analysis of
the Comanche as an attack alternative.  The Army's stated position
was that the Comanche (1) was a high-value asset that would not be
used as an attack helicopter in a heavy division and (2) would not be
available for the attack role until after 2006, and, therefore, would
not meet the Army's attack requirement at the turn of the century. 
According to DOD officials, the Comanche alternative was excluded
from the Longbow Apache COEA because it would not meet the Army's
near- to mid-term heavy attack helicopter requirement. 

The DOD and Army positions on the availability of the Comanche seem
to contradict DOD's own guidance for developing a COEA.  This
guidance requires that (1) a wide range of alternatives be
considered, including conceptual systems and (2) all reasonable
options should be represented, including even doubtful alternatives,
in order to establish their merit.  Moreover, the program schedule
shows that low-rate initial production and full-rate production for
the Comanche are planned for 2004 and 2006, respectively. 

The Army's current position that the Comanche would not be used as an
attack helicopter in a heavy division appears questionable because
(1) it contradicts a prior Army assessment of the Comanche's
capabilities, (2) the Comanche and Apache have many similarities in
attack capabilities, and (3) the Comanche recently vied for a British
contract for an attack helicopter.  In 1986, the Army reported to the
Senate Armed Services Committee that if the Comanche should meet "the
Army's full expectations, [it] may well prove to be a viable
alternative to eventually replace the AH-64 [Apache] .  .  ." In our
May 27, 1992, report on the need to reassess the Comanche program, we
pointed out the similarities in the attack capability of the Comanche
and Apache helicopters.\13 At that time, DOD noted that configuring
the Comanche as an anti-armor attack aircraft by mounting its
external wings and additional missiles provides a very lethal attack
asset; however, it reduces the aircraft's capability to perform the
reconnaissance mission.  In addition, the Comanche's contractors
recently entered it in a competition with the Longbow Apache and
other helicopters for a key contract to provide the British
government attack helicopters. 


--------------------
\12 Military worth is the measure of how a system performs its
mission in a competitive environment, including the potential of the
system.  It is measured against the operational concept and
operational effectiveness. 

\13 Comanche Helicopter:  Program Needs Reassessment Due to Increased
Unit Cost and Other Factors (GAO/NSIAD-92-204, May 27, 1992). 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

We recommend that the Secretary of the Defense direct the Secretary
of the Army to (1) modify Longbow Hellfire missile procurement
requirements to reflect accurate computational factors and shelf life
projections and (2) include comparisons to all alternative attack
helicopters, especially the Comanche in its detailed cost-
effectiveness and military worth analysis of the Longbow Apache
program. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :7

Congress may wish to consider restricting access to fiscal year 1996
Longbow Apache weapon system production funds until the Secretary of
the Army provides a report to Congress detailing the results of (1)
developmental and operational testing as related to the issues in
this report, (2) the Longbow Hellfire missile requirements, and (3)
the analysis of the program's comparative cost-effectiveness and
military worth.  Also, when the Army submits its 5-year contract for
Longbow Hellfire missiles, Congress may wish to ensure that the Army
has recomputed the number of missiles needed, reconciled the timing
of the missile deliveries with the availability of the helicopters,
and recomputed the expected cost reductions to be achieved in
approving the multiyear contract. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

Concerning our recommendation to modify Longbow Hellfire missile
procurement requirements, DOD acknowledged that the requirements
should be reviewed and indicated that all requirements will be
reviewed using the capabilities-based requirements process in
accordance with the Secretary of Defense's direction.  DOD also
indicated that the Army is considering alternatives to accelerate
Longbow Apache deliveries to better match missile fielding dates. 

While DOD's intent to recompute missile requirements is a step in the
right direction, we believe that because it will not be done until
January 1996,
3 months after the milestone III decision, it will be too late to
benefit the Defense Acquisition Board (DAB) and Congress in their
decision making.  Expediting the requirements recomputation would
help these decisionmakers and, at the same time, help DOD in
formulating alternatives to better match missile and aircraft
fielding dates. 

DOD's proposal to accelerate aircraft deliveries is not reasonable
because decisions on Longbow Apache production should not be driven
by the Army's missile cost-reduction plan.  Longbow Apache production
schedules were developed to meet the Army's need for an improved
attack helicopter within the funding limitations that exist.  Given
the cost of the aircraft compared to the missile, we believe it would
be more reasonable to match missile production to aircraft
deliveries.  Additionally, as noted in the report, DOD's alternatives
need to consider the cost to replace those missiles that become
unusable when the shelf life expires because of the cost-reduction
program's accelerated delivery plan. 

Regarding our concerns on the lack of full consideration of
alternatives in the cost-effectiveness analysis of the Longbow Apache
weapon system, DOD stated that the formal COEA to be done to support
the October 1995 DAB review would not include the Comanche as an
alternative because it could not meet the Army's near- to mid-term
heavy attack helicopter requirement. 

As we previously indicated, we believe, based on DOD's own guidance,
that the multirole Comanche should be included in any analysis. 
Low-rate initial production is scheduled for 2004 with initial
operational capability and full-rate production scheduled for 2006. 
DOD's guidance for developing a COEA requires that (1) a wide range
of alternatives be considered, including conceptual systems and (2)
all reasonable options should be represented, including even doubtful
alternatives, in order to establish their merit.  Moreover, including
the Comanche in the COEA could provide important cost-benefit
information that could affect production decision milestones for the
Comanche. 

Concerning our matters for congressional consideration, DOD commented
that (1) DOD has not yet submitted a request for the multiyear
procurement for the Longbow Hellfire missile and that Congress can
reconsider DOD's position after the request and (2) Congress does not
need to restrict fiscal year 1996 funds because the DAB, in making
its production decision, will consider the weapon system's
developmental and operational testing concerns and its
cost-effectiveness. 

After carefully reviewing DOD's comments, we continue to believe that
Congress may wish to restrict access to program funds until the Army
provides the type of information we suggest.  In our opinion,
Congress needs this information before milestone III if it is to make
an informed decision on the future funding of the program.  DOD
points out that the DAB will review developmental and operational
testing results concerning critical technical issues and transceiver
producibility will be addressed in the cost- reduction program. 
However, as noted in our report, testing may not have adequately
addressed all of the issues discussed.  Further, the focus of the
cost-reduction program could change if missile quantities are reduced
to the levels we believe are valid.  The Army will not recompute
requirements for the Longbow Hellfire missile until the next budget
cycle, 3 months after the October 1995 milestone III review. 

We have modified our suggestion about the multiyear contract to
clearly indicate that the contract has yet to be submitted to
Congress.  We still maintain, however, that Congress needs to know
the correct missile requirement for the program and how the
recomputed missile requirement will impact the savings the Army
expects to achieve by using the multiyear contract. 

Finally, as previously discussed, we do not believe the Army's
planned COEA will provide an adequate evaluation of the Longbow
Apache's comparative cost-effectiveness and military worth as it will
not consider all alternative attack helicopters, especially the
Comanche. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To determine whether critical issues related to the production of the
aircraft and the producibility of its missiles had been addressed, we
reviewed various program research, development, and acquisition
documentation related to the Longbow Apache weapon system.  We
interviewed officials at the Office of the Secretary of Defense,
Washington, D.C.; Army Aviation and Troop Command, St.  Louis,
Missouri; Air-to-Ground Missile Systems Project Office, Missile
Command, Huntsville, Alabama; Army Materiel Systems Analysis
Activity, Aberdeen, Maryland; and Operational Evaluation Command,
Alexandria, Virginia.  Developmental and operational test results are
classified, and DOD had not analyzed and authenticated them by the
end of our review. 

To determine whether the Longbow Hellfire missile procurement plan
was adequately developed, we interviewed cognizant Army officials
involved in the missile requirements setting process and performed
our own analyses on the missile inventory and requirements data
provided.  We talked to officials located in the Air-to-Ground
Missile Systems Project Office, Missile Command, Huntsville, Alabama,
and the Office of the Army's Deputy Chief of Staff for Operations and
Plans, including the Aviation Division, Combat Support/Combat Service
Support/Common Systems Division, and Requirements Program and
Priorities Division, Washington, D.C. 

To determine whether the Army conducted a thorough comparative cost-
effectiveness study, including alternative helicopter systems, we
reviewed related DOD directives and guidance as well as other DOD and
Army documents.  We interviewed officials from the Office of the
Secretary of Defense, Washington, D.C.; Army Aviation and Troop
Command, St.  Louis, Missouri; and Training and Doctrine Command,
Fort Rucker, Alabama. 

We conducted our review from August 1994 to May 1995 in accordance
with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :9.1

We are also sending copies of this report to the Chairman, Senate
Armed Services Committee; the Chairmen and Ranking Minority Members
of the Senate Committee on Appropriations, Senate Committee on
Governmental Affairs, and the House Committee on Government Reform
and Oversight; the Director of the Office of Management and Budget;
and the Secretaries of Defense and the Army.  We will also provide
copies to others upon request. 

This report was prepared under the direction of Thomas J.  Schulz,
Associate Director, Systems Development and Production Issues. 
Please contact me on (202) 512-4841 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix II. 

Louis J.  Rodrigues
Director, Systems Development
  and Production Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
============================================================== Letter 



(See figure in printed edition.)



(See figure in printed edition.)

4-5. 



(See figure in printed edition.)

5-8. 



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II


   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

Robert J.  Stolba
John P.  Swain
David B.  Best
Gregory K.  Harmon

