US Navy and Northrop Grumman officials say they are in talks about boosting annual production for the E-2D Advanced Hawkeye as part of its recovery strategy from a "critical" cost overrun.
The Department of Defense has cleared the USN to award the first low-rate initial production contract for two E-2Ds in the 2009 financial year despite experiencing a more than 25% cost growth over the programme's baseline estimate in 2003, Northrop says.
Under the US Nunn-McCurdy law, the size of the E-2D cost overrun automatically triggers a legally required notification to Congress and internal review of the programme. The review showed the USN could mitigate the cost overrun by increasing annual procurement of the roughly $200 million E-2Ds to a more efficient rate.
So far, the USN has only started implementing "discrete cost-reduction initiatives", but Northrop officials confirm that discussions are under way to increase production.
The E-2D cost overrun was blamed partly on a US Congress decision last year to strike one of three aircraft each planned to be acquired in FY2009 and FY2010. The unexpected cuts took programme officials by surprise. With two of six aircraft struck from the budget, the average cost of the remaining E-2Ds dramatically increased.
Besides the production cuts, the programme's cost has also grown due to difficulties with glitches discovered in the design of the APY-9 radar system and rotodome. Those issues, however, had been resolved before Congress imposed budget cuts, programme officials say.
Moreover, two E-2D prototypes completed an operational assessment early in the fourth quarter last year that validated the fixes made to the radar system and the overall viability of the aircraft systems, Northrop says.
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Source: Flight Daily News
