UAE V-22 Deal Nears Closure


After years of turbulent development and cost problems, the Bell-Boeing team is finally closing in on its first foreign sale of the V-22 Osprey.

Negotiations with the United Arab Emirates are nearing a close, and some industry sources suggest that Israel may hasten its buy of the tilt rotor as a result.

source: Amy Butler

The UAE is eyeing use of the Osprey to support its special operations forces, industry officials indicate. An agreement could be signed by year’s end, they add. Interest in the system was reinforced during last year’s NATO operations in Libya, in part because an MV-22 was used to rescue one of two downed U.S. Air Force F-15E pilots.

To help cement interest, the MV-22 made its Dubai air show debut in November 2011. Adding a new customer to the roster would be a boon for the team at a tough time for the program. Pentagon officials continue to pressure the companies to reduce the aircraft’s cost, but they are also cutting the U.S. buy rate.

The U.K. has also been eyed as a potential customer, although the country’s financial problems effectively rule out any near-term purchase. Industry officials have, at times, indicated Japan and Norway may be potential buyers as well, but neither of those prospects has firmed up.

The V-22’s unit cost is a major hurdle to securing an export order. With the tiltrotor now entering a new multiyear procurement contract, those eager to buy the aircraft are expected to move on the assumption it will deliver the best possible price.

The Pentagon has had a long-term goal of decreasing the unit price to $58 million, but this has been elusive.

In fiscal 2012, the unit price is $67 million, says U.S. Marine Col. Greg Masiello, the Pentagon’s Osprey program manager. In preparing for the second multiyear-buy proposal, the team is focusing on driving the cost of parts down, including the cost of the composite skin, he says.

However, the Pentagon’s annual delivery rate is dipping due to financial pressure on the defense budget. Boeing officials are working to maintain per-unit price or — if possible — decrease it despite the lower build numbers.

International buys could reduce pressure on the Pentagon’s delivery numbers and help to keep the price down, according to industry officials.

John Rader, Bell-Boeing’s V-22 program manager, says the company is taking lessons from work done to lower the C-17’s build rate without increasing unit cost, as it looks to decrease the Pentagon’s annual buy of V-22s to 21 per year. The Pentagon took delivery of 34 V-22s in fiscal 2011, and that dipped to 29 in fiscal 2012.

The team is expected to propose savings of roughly $850 million in its proposal for the Multiyear II buy from fiscal 2013-17 based on expectations from lawmakers. Boeing spokesman Andrew Lee says the Boeing-Bell team has submitted its proposal for the buy for review by the Pentagon.

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