When the U.S. Air Force canceled a little-known airship program, veterans of aerospace development saw it as just another case of a service desperately seeking budget savings. But officials of the small contractor and some observers see something more disturbing—a prejudice against new ways of collecting intelligence and a pre-emptive strike to protect conventional programs.

The U.S. Air Force's move to quash a small company's ambitions to build a big intelligence-collecting airship has sparked a battle of words between the service and its prime contractor. Officials at would-be airship builder Mav6 say the service was always a “hostile customer,” angling to burst the company's balloon because the airship's capabilities threatened too many existing programs by demonstrating a new, radical way of collecting intelligence.

The original concept was to field within 18 months of the contract award a 370-ft.-long airship capable of staying aloft at 20,000 ft. for up to five days. The airship was meant to be ready to carry a 2,500-lb. intelligence, surveillance and reconnaissance (ISR) payload.

The goal was to park the airship over Afghanistan to collect a variety of imagery and signals intelligence data. USAF Lt. Gen. (ret.) David Deptula, who championed the Blue Devil II concept when he was the Air Force's deputy chief of staff for ISR in 2010, now serves as CEO of Mav6 where he finds himself defending the project to USAF in light of several test failures.

After months of scaling back the work scope of the Blue Devil II airship project, the Air Force recently informed Mav6 that it was to “deflate and crate” the craft in accordance with a stop-work order owing to poor contract performance. Originally slated for deployment to Afghanistan in February, the company has yet to execute the first flight of the platform. As the Pentagon struggles to produce savings demanded by Congress, programs that are lagging are especially vulnerable.

“If you're running up the bill by a few percent a year, we cannot sustain” a project, Deputy Defense Secretary Ashton Carter said May 30. Programs that are performing as planned are “going to deliver more combat capability per dollar than the ones that aren't.” Deptula, however, says the Air Force chose an arbitrary date to stop funding before first flight can take place. The service declined official comment, but one Air Force source says the company has been promising for months that first flight will take place “in a couple of weeks.”

Company officials acknowledge that the program is 12% over its original estimate of $145 million and that they encountered unanticipated problems designing the massive airship's tailfins and complex control software for the optionally manned craft. Eagle Aviation has had trouble designing the 40 X 30-ft. tailfins to withstand 80-mph winds without splintering. Likewise, designing control software has proved to be far more complex than originally planned. Rockwell Collins was scheduled to deliver the software meant for operation with an onboard pilot in early June, but has yet to tackle the unmanned operating requirements as originally planned.

Despite the setbacks, an industry official says that the eight-month delay and cost overrun for Blue Devil pales in comparison to those of programs such as the Joint Strike Fighter and Global Hawk. It is “disingenuous” for the Air Force to cut funding before first flight of the platform, which is now expected no later than Aug. 31, says Jay Harrison, co-founder of Mav6. About $3 million would be needed to continue funding the program through to its first flight, company officials say. The cost of dismantling and storing the airship, which is at the company's Elizabeth City, N.C., facility, is $2.6 million, they add.

Mav6 executives are talking with the Navy and Special Operations Command in hopes of finding the funding to reach first flight. Company representatives believe that the Air Force's claims of poor performance are designed to bias the minds of potential sponsors. It would be an “embarrassment” if another agency took over the project and found success, Harrison says. The Navy recently reviewed the program and offered positive feedback on its progress, an industry official says.

The project had an inauspicious beginning. It was conceived by the Joint Improvised Explosive Device Defeat Organization in early 2010. In November 2010, the Pentagon began a four-month transition to oversight by the Air Force, which selected its Big Safari program office—known for rapidly delivering classified technologies to the field—to handle the endeavor. Big Safari officials on numerous occasions deemed the project untenable, according to a USAF official. Big Safari put the company in the position of fighting an uphill battle, Harrison says. Owing to the delay of disbursements, the company paid its subcontractors on its own multiple times.

The Air Force added some requirements—including FAA certification—after the contract was issued. This prompted a need for more rigidity in building certain parts, the industry source says. Since the project was designed as a demonstration system to be deployed to Afghanistan, says this official, FAA certification was unnecessary.

The original payload requirement also went from 2,500 lb. to roughly 6,500 lb., company officials point out.

Blue Devil II was one of multiple airship efforts that recently garnered interest—and money—from senior Pentagon officials hoping to improve intelligence-collection efforts in the permissive airspace over Afghanistan. The Pentagon's infatuation was largely owing to the vision of parking an airship over an area to collect intelligence for a day or more with little manpower or operational expense. Also, the Pentagon was flush with funding, so the Defense Department was willing to experiment with concepts. Carter notes that the Pentagon must reconcile its plans for the ISR force of the future. “We put together quick programs under the pressure of combat,” he said May 30, referring to a bevy of small but crucial fleets designed and deployed for niche missions in the wars in Iraq and Afghanistan. “They do pose a managerial issue for us after the war.”

Mav6's endeavor was seen as running a horse race against the Army-led Long-Endurance Multi-Intelligence Vehicle (LEMV) being built by Northrop Grumman. That project is also late and over budget and has yet to prove itself with a first flight, but it enjoys solid Army support. Perhaps this is because it has a cooperative customer, says the industry official. Army officials decline to outline when LEMV milestones will be met.

Blue Devil II was slated to carry the Defense Advanced Research Projects Agency's Autonomous Real-Time Ground Ubiquitous Surveillance Imaging System, a version of which is optimized for use in Afghanistan on the Predator unmanned aircraft. USAF also planned to put two separate Axsys video balls on the airship for high-definition video feeds. The “Pennant Race” signals intelligence collector, an upgraded version of what now flies on the Reaper, was also considered for Blue Devil II, according to Air Force sources.

However, the Air Force recently sent a message to Capitol Hill stating in part: “Neither airship completion, nor first flight is possible within the remaining contract period of performance which ends 30 June 2012.” There is no funding request for Blue Devil II in fiscal 2013.

Harrison says that the Blue Devil II termination is not a death blow to his company, but the industry source notes it would be a major loss.

Blue Devil II was the second phase of a two-phase effort. The original system, Blue Devil I, has been flying in Afghanistan and includes a wide-area camera and signals intelligence-collection capability, optimized to track individuals on the ground, mounted on a King Air 90. SAIC is the prime contractor.