DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

Re-Engining of the HH-65 Helicopter
	

United States Coast Guard
	

Notice: The Department of Homeland Security, Office of the Inspector General, has redacted 

this report for public release under the Freedom of Information Act, 5 U.S.C. § 552 (b)(4). 

Office of Audits 

OIG-04-50 September 2004 

appreciation to all of those who contributed to the preparation of this report. 

Clark Kent Ervin 

Inspector General 

Offi ce of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established 

by the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector 

General Act of 1978. This is one of a series of audit, inspection, investigative, and special reports 

prepared by the OIG as part of its DHS oversight responsibility to identify and prevent fraud, 

waste, abuse, and mismanagement. 

This report assesses the strengths and weaknesses of the program or operation under review. It 

is based on interviews with employees and officials of relevant agencies and institutions, direct 

observations, and a review of applicable documents. 

The recommendations herein have been developed to the best knowledge available to the OIG, 

and have been discussed in draft with those responsible for implementation. It is my hope that 

this report will result in more effective, efficient, and economical operations. I express my 

1 

Contents
	

Introduction ................................................................................................................................... 5
	

Results in Brief .............................................................................................................................. 6
	

Background......................................................................................................................................8
	

Safety and Reliability.....................................................................................................................10
	

Cost, Delivery, and Operational Risks...........................................................................................13
	

Effect On the Coast Guard’s Legacy Aviation Assets....................................................................17
	

HH-65 and the Coast Guard’s HITRON Mission .........................................................................19
	

Ability of the HH-65 to Meet Deepwater’s MCH Requirements ..................................................21
	

Latest Developments .....................................................................................................................23
	

Recommendations..........................................................................................................................25
	

Appendices 

Appendix A: Comparison of the Performance of the Honeywell LTS-101 and Turbomeca 

Arriel 2C2 Engines...............................................................................................26
	

Appendix B: Photographs of a HH-65 Progressing through the PDM Line at ARSC ..............28
	

Appendix C: Purpose, Scope, and Methodology ......................................................................30
	

Appendix D: U.S. Coast Guard Comments ..............................................................................32
	

Appendix E: OIG Evaluation of Coast Guard Response ..........................................................38
	

Appendix F: Major Contributors to this Report ........................................................................41
	

Appendix G: Report Distribution...............................................................................................42
	

Appendix H: Textual Translation of Figures in the Report........................................................43
	

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Abbreviations 

ACCB Aircraft Configuration and Control Board 

AEC American Eurocopter 

AMIO Alien Migration Interdiction Operations 

ARSC Coast Guard’s Aircraft Repair and Supply Center 

AUF Airborne Use of Force 

CGNR Coast Guard Identification Number 

DHS Department of Homeland Security 

DOD Department of Defense 

FAA Federal Aviation Administration 

FADEC Full Authority Digital Engine Control system 

FLIR Forward Looking Infrared 

GAO Government Accountability Office 

G-O Assistant Commandant for Operations 

G-S Assistant Commandant for Systems 

HITRON Helicopter Interdiction Tactical Squadron 

HLS Homeland Security 

HOGE Hover Out of Ground Effect 

HUD Heads Up Display 

IDS Integrated Deepwater System 

ICGS Integrated Coast Guard Systems 

IPT Integrated Product Team 

LANTAREA Atlantic Area 

LE General Law Enforcement 

LMR Living Marine Resource 

MCH Multi-mission Cutter Helicopter 

MPA Maritime Patrol Aircraft 

MTBF Mean Time Between Failures 

NCGI Non-Contract Government Incurred 

OEM Original Equipment Manufacturer 

OIG Office of Inspector General 

ONF Operation New Frontier 

PACAREA Pacific Area 

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Contents
	

PDM Planned Depot Maintenance 

PBH Power-By-the-Hour 

RAC Risk Assessment Code 

SAR Search and Rescue 

SHP Shaft Horse Power 

SLEP Service Life Extension Project 

SPS System Performance Specification 

SRR Short Range Recovery 

VUAV Vertical Takeoff and Landing Unmanned Aerial Vehicle 

VDEL Vertical Delivery 

VI Vertical Insertion 

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OIG
	 Department of Homeland Security 

Office of Inspector General 

Introduction 

This report presents the results of our review of the United States Coast Guard’s 

(Coast Guard) HH-65 Dolphin helicopter re-engining project. The review 

was initiated in response to a February 11, 2004, letter from the Chairman and 

Ranking Member of the House of Representatives, Committee on Appropriations, 

Homeland Security Subcommittee, expressing concern that the re-engining 

requirements specified for the HH-65 helicopter are not sufficient for the needs 

of the Coast Guard over the Deepwater Project time frame. During subsequent 

discussions with Subcommittee staff, additional concerns were raised about 

the capabilities of the LTS-101-850 engine1 and the potential cost, delivery, 

and operational risks associated with the Coast Guard’s decision to enter into 

a contract with Integrated Coast Guard Systems (ICGS)2 to re-engine the HH65 fleet with Turbomeca Arriel 2C2 engines. In a March 30, 2004, letter to the 

Homeland Security Subcommittee, we responded to the following five questions: 

• Will re-engining the HH-65 resolve air crew safety and reliability 

concerns? 

• What are the costs, delivery, and operational risks associated with the 

Coast Guard’s decision to assign responsibility for re-engining the HH65 to ICGS? 

• What impact will the re-engining project have on the Coast Guard’s other 

legacy air assets? 

• Should the re-engined HH-65 aircraft be upgraded to perform the Coast 

Guard’s Helicopter Interdiction Tactical Squadron (HITRON) mission? 3 

1 The engine under evaluation as a temporary replacement for the current HH-65 LTS-101-750 engine.
	 2

 ICGS is the prime contractor for the Coast Guard’s Deepwater Project.
	 3 The HITRON Squadron was established in FY 2000 to employ airborne use of force in the interdiction of go-fast boats engaged in 

the smuggling of illegal drugs through the U.S. maritime contiguous zone. The squadron currently operates a fleet of eight MH-68A
	

helicopters leased from Agusta Aerospace Corporation at a cost of $14.3 million per year. The current HITRON five-year lease is 

renewable on a yearly basis and expires during January 2008. 

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• Will the re-engined HH-65 be able to meet the Multi-mission Cutter 

Helicopter (MCH) requirements outlined in the existing Deepwater 

contract? 

This report expands our response to those questions and includes developments 

through August 31, 2004, regarding the HH-65 re-engining project. 

Results in Brief 

According to the Coast Guard, replacing the Honeywell LTS-101-750 engines 

that are currently installed on the Coast Guard’s HH-65 fleet will resolve 

many of the safety and reliability issues that have plagued the HH-65 fleet for 

much of the past decade. However, extended negotiations between the Coast 

Guard, ICGS, and its subcontractors4 has postponed the implementation of the

re-engining project by several months. Re-engining the HH-65 was authorized by 

the Commandant of the Coast Guard on January 15, 2004, because of an urgent 

and compelling need to mitigate safety and operational risks associated with the 

aircraft. It has been almost eight months since the Coast Guard directed ICGS to 

take immediate and definitive action to re-engine the HH-65 fleet, yet a formal 

agreement to re-engine the HH-65 fleet has yet to be finalized. 

In addition, ICGS’ latest proposal5

 does not meet the Coast Guard’s desire to have 

84 operational aircraft completed by July 2006. Instead, ICGS proposes to have 

84 of the 95 re-engined aircraft completed by June 2007 – eleven months beyond 

the Commandant’s 24-month deadline. Extending the delivery date will expose 

HH-65 air crews to additional risk due to the unprecedented rate at which in-flight 

loss of power mishaps are occurring. 

Further, ICGS’ latest cost proposal for re-engining the entire HH-65 fleet is 

than the Coast Guard’s estimate for re-engining 

the aircraft in-house at its Aircraft Repair and Supply Center (ARSC). This is 

a significant cost differential given ICGS’ intention to have the majority of the 

re-engining work performed by ARSC, the effect these additional expenditures 

will have on the Coast Guard’s ability to sustain and upgrade its legacy aviation 

assets, and the stated inability of ICGS to deliver 84 re-engined aircraft within 

4

 Eurocopter is the manufacturer of the HH-65 airframe and the airframe modifications kits, including the N4 gearbox upgrade kit, to be 

installed aboard the HH-65. Turbomeca is the manufacturer of the Arriel 2C2 engine. 

5

 ICGS/Lockheed Martin Proposal dated July 21, 2004.
	 6

 Ibid. 

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the Commandant’s 24-month time frame. The proposal also exceeds the Coast 

Guard’s AC&I estimate for the re-engining project.7 

The Coast Guard plans to fund the re-engining project using almost $200 million 

originally budgeted to sustain and upgrade legacy air assets, including its Jayhawk 

(HH-60), Dolphin (HH-65), and Hercules (HC-130) fleets. Use of these funds 

for the re-engining will force the Coast Guard to postpone or cancel critical 

maintenance and upgrade projects that could result in fleet cannibalization8 and 

the grounding of key aviation assets as early as FY 2007. 

The Coast Guard also decided not to replace the eight MH-68A helicopters 

operated by its HITRON squadron with re-engined and Airborne Use of Force 

(AUF)-capable HH-65s. This decision eliminates an opportunity to resolve the air 

crew safety, power, maneuverability, and operational endurance issues associated 

with the leased aircraft. The use of re-engined and AUF-capable HH-65s for the 

HITRON mission would eliminate the need for a lease and result in a net savings 

of dollars over the next three years.9 

We recommended that the Commandant implement the recommendation made 

by its Assistant Commandant for Operations in May 2004 to re-assert control 

over the HH-65 re-engining project and perform the re-engining as a government 

performed project. The Coast Guard does not concur with this recommendation, 

their primary rationale being that ICGS minimizes the operational, legal, and 

contract performance risks associated with the re-engining. The Coast Guard 

believes that it receives significant benefits from the current ICGS contract that far 

outweigh the costs of having ICGS manage the project. We do not believe those 

benefits have been demonstrated in this instance. 

We also recommended that the Coast Guard expedite the replacement of the 

MH-68A helicopters with re-engined HH-65s equipped with the AUF package of 

upgrades, acquire and refurbish additional HH-65 aircraft and airframes, and use 

the savings resulting from the termination of the MH-68A lease to mitigate the 

impact the re-engining project will have on the maintenance and upgrade of its 

legacy air assets. The Coast Guard agreed in part with these recommendations, 

but in all three cases cites a lack of funding as the primary reason for not 

implementing them. 

7 The Coast Guard’s Aviation Capital Improvement Plan, dated January 7, 2004, allocated to the HH-65 re-engining project. 8 The borrowing of parts from one aircraft in order to keep another aircraft operational. 

9 The elimination of $43.5 million dollars in lease costs minus the estimated dollar cost (estimated at aircraft) of 

adding the AUF upgrade to eight re-engined HH-65s. 

10 The HH-60 mishap rate data covers the period October 1, 2003, through August 31, 2004. 

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Background 

In 1984, the Coast Guard procured 96 twin-engine, short-range recovery (SRR) 

HH-65 helicopters equipped with LTS-101-750 engines. The compact design 

of this engine provided limited potential for power growth. Expanding mission 

parameters and critically needed mission growth exacerbated the performance 

requirements gap to a point where the aircraft can no longer meet the Coast 

Guard’s SRR mission requirements. There are currently 84 operational HH-65 

aircraft deployed to 17 Coast Guard air stations throughout the United States. 

The HH-65 helicopter performs several important missions including search and 

rescue, homeland security, enforcement of laws and treaties, drug interdiction, 

marine safety, and marine environment protection. The aircraft is also the Coast 

Guard’s primary cutter deployable helicopter. 

There has been an increase in the number of HH-65 in-flight loss of power 

mishaps over the past three and one half years. Coast Guard HH-65 air crews 

reported 32 in-flight loss of power mishaps between FY 2000 and FY 2002. 

During FY 2003, HH-65 air crews reported another 32 in-flight loss of power 

mishaps, or a three-fold increase over FY 2000, which led to the Commandant’s 

October 3, 2003, decision to impose operational restrictions on the HH-65 fleet. 

These restrictions are affecting the aircraft’s ability to conduct search and rescue, 

homeland security, enforcement of laws and treaties, drug interdiction, marine 

safety, and marine environment protection missions from Coast Guard cutters. In 

addition, these restrictions have limited the aircraft’s ability to perform medical 

evacuation missions involving takeoffs and landings from rooftop landing pads 

and other confined areas. 

The number and rate of in-flight loss of power mishaps have continued to increase 

despite the imposition of flight restrictions. Between October 1, 2003, and 

August 31, 2004, HH-65 air crews reported 150 in-flight loss of power mishaps. 

This translates into a mishap rate of 314 mishaps per 100,000 flight hours. In 

comparison, the Coast Guard’s in-flight loss of power mishap rate for the HH-60 

helicopter is 18 mishaps per 100,000 flight hours.10 Chart 1 includes a summary 

of HH-65 in-flight loss of power mishaps per 100,000 flight hours between FY 

1997 and FY 2004.11 

11 The data covers the period October 1, 1996, through August 31, 2004. 

12 One mission by a single aircraft. 

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Chart 1. – HH-65 In-Flight Loss of Power Mishaps
	

FY 1997 to FY 2004 (August 31, 2004)
	

Source: U.S. Coast Guard 

9 11 12 

32 

150 

In an October 3, 2003, message announcing the decision to impose operating 

restrictions on the HH-65, the Commandant stated: 

“I cannot be more emphatic. The safety and reliability of the HH-65 

power plant is the number one priority for USCG aviation. The safety 

of our flight crews is paramount. Our most valued asset remains the 

professional Coast Guard men and women who continue to admirably 

answer our Nation’s call. The missions we perform carry inherent risks, 

the equipment we provide to complete those missions should be nothing 

short of safe and reliable.” 

The erratic performance of the aircraft’s current LTS-101-750/850 engine and 

control system has shaken the confidence of the HH-65 community. Recent 

communications from commanding officers of several air stations cited concerns 

that engine malfunctions were draining resources and significantly affecting the 

air station’s ability to perform Coast Guard missions. Maintenance technicians 

are spending more time diagnosing and fixing problems, only to see them soon 

recur. Training missions, which previously were completed in one sortie,12 are 

now requiring two or more sorties, adding additional takeoffs and landings. These 

13 According to the Coast Guard, ICGS independently selected the Arriel 2C2 engine for the HH-65 re-engining project. 

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additional sorties increase the workload of air station personnel as well as increase 

air crew exposure to in-flight loss of power mishaps. 

The following excerpt from an April 2004 communication between the 

commanding officer of a Coast Guard air station and Coast Guard headquarters is 

indicative of the level of concern being expressed within the HH-65 community 

regarding the safety of flight and reliability issues associated with the HH-65: 

“...I conservatively estimate we spent 50 maintenance man-hours, 

10 ground run hours, 6.2 test flight hours chasing this problem. As a 

skipper I’m proud of the perseverance my maintenance crews displayed 

in solving this problem, but at the same time, I’m completely frustrated 

at the sheer effort expended to deal with this ridiculously complex and 

unreliable engine control system. In reading similar accounts from other 

air stations, one has to wonder just how many ‘unnecessary replacement 

of components’ situations have occurred not only recently but over the 

years, and what that has cost us. Even with the application of new 

trouble-shooting devices such as the breakout box, we still find ourselves 

tangled in these time-consuming resource draining trouble-shooting tail 

chases. I realize we have folks working around the clock to bring the 

solution on board quickly. However, we absolutely cannot allow any time 

line delays in implementing the solution, not only from a risk exposure 

perspective, but also a maintenance resource perspective. We are grinding 

our maintenance workforce into the ground with this engine control 

system....” 

Safety and Reliability 

When completed, re-engining the Coast Guard’s HH-65 helicopter fleet, using 

the Arriel 2C2 engine, will remedy long-standing safety and reliability issues that 

have plagued the HH-65 since its introduction in 1984. The selection of the Arriel 

2C2 was the culmination13 of a three year, six million dollar effort by the Coast 

Guard to develop the HH-65 into an AUF-capable platform.14 The urgency to 

develop the HH-65 into an AUF-capable platform increased following the terrorist 

attacks of September 11, 2001, and the Coast Guard’s realization that it needed 

to develop an organic AUF capability to perform HLS missions along the United 

14 AUF is not currently part of the HH-65 or Deepwater mission profile.
	 15 The HH-65 that was re-engined and given the AUF upgrades was designated CGNR 6560.
	

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States coastline. The majority of HH-65s are stationed near our nation’s busiest 

and most strategic seaports. 

The Coast Guard began investigating the use of a modified HH-65 to perform 

counter-drug missions during the early part of 2001 following a lengthy delay in 

the production, testing, and delivery of eight MH-68A aircraft for the HITRON 

squadron. The MH-68A is a militarized version of the Agusta A109E aircraft that 

was re-configured to AUF specifications to conduct counter drug operations from 

Coast Guard cutters. While the concept of operations underlying the HITRON 

counter drug mission has been successful, the Coast Guard has determined 

that the MH-68A helicopter does not meet the minimum reserve power, 

maneuverability, and operational endurance requirements for the AUF mission. 

In November 2001, the Coast Guard tasked Eurocopter to conduct a market 

survey and engineering analysis of suitable engine candidates that would provide 

the HH-65 with the AUF capability. The Eurocopter market survey identified the 

Arriel 2C2 engine as the engine best able to provide the HH-65 with the power, 

speed, maneuverability, and endurance needed to perform the AUF mission. 

Between September 2002 and December 2003, the Coast Guard’s ARSC, in close 

coordination with the Assistant Commandant for Operations (G-O), Assistant 

Commandant for Systems (G-S), Turbomeca, Eurocopter, and NAVAIR Patuxent 

River, developed and flight-tested a re-engined and AUF-capable HH-65.15 This 

aircraft was fitted with a pair of Arriel 2C2 engines, updated engine controls and 

gauges, an extended nose, an N4 gearbox, and the AUF package of upgrades. 

16 In addition to SAR, non-HLS missions include: Marine Safety; Aids-to-Navigation; Ice Operations; Marine Environmental Protection; 

and Living Marine Resources. 

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Extended Nose Upgrade 

Source: U.S. Coast Guard 

CGNR 6560 – Prototype AUF HH-65C -- Re-engined HH-65 with the extended 

nose, N4 gearbox, and AUF upgrades based at the Coast Guard’s Aircraft Repair and 

Supply Center, Elizabeth City, North Carolina. The aircraft has been deployed on 

counter-drug operations in the Eastern Pacific. 

According to the Coast Guard, the flight testing and performance analysis 

of a HH-65 that was fitted with the Arriel 2C2 engines and AUF upgrades 

(CGNR 6560), validated Eurocopter’s earlier determination that the performance 

of the re-engined and upgraded HH-65 meets or exceeds the power, speed, 

maneuverability, and endurance requirements needed to safely execute the AUF 

mission. In contrast, flight-testing and performance analysis of HH-65s powered 

by LTS-101-750/850 engines determined that the engine lacked the power, 

maneuverability, and endurance requirements needed to safely execute non-HLS 

missions16 such as search and rescue (SAR), let alone the more demanding AUF 

and HLS missions.17 Appendix A presents a comparison of the performance 

capabilities between the LTS-101 and Arriel 2C2 engines under varying operating 

conditions. 

17 Homeland Security Missions include: Drug Interdiction; Migrant Interdiction; other law enforcement (including foreign fisheries); Port, 

Waterways, and Coastal Security; and Defense Readiness.
	 18 Manufacturers of the HH-65 airframe and Arriel 2C2 engine.
	 19 The May 28, 2004, proposal included $62 million dollars worth of Lockheed Martin and Integrated Coast Guard System labor, material, 

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Cost, Delivery, and Operational Risks
	

The inability of the Coast Guard, ICGS, and its subcontractors (Eurocopter 

and Turbomeca)18 to agree on a final contract has delayed the development and 

implementation of the HH-65 modification line at ARSC. It also will postpone 

the delivery of re-engined aircraft by several months, extend the operational 

restrictions imposed on the HH-65 fleet, and expose HH-65 air crews to additional 

in-flight loss of power mishaps. In addition, the Coast Guard’s decision to assign 

responsibility for the HH-65 re-engining project to ICGS will significantly and, in 

our view, unnecessarily, increase the project’s final cost. 

ICGS’ initial proposal to re-engine 95 HH-65 aircraft was approximately 

the Coast Guard 

estimates it would have cost them to re-engine the same number of aircraft 

at its Aircraft Repair and Supply Center (ARSC). This was a significant cost 

differential given ICGS’ initial intention to have ARSC re-engine more than half 

of the HH-65 fleet, the effect that the additional expenditures would have on the 

Coast Guard’s ability to sustain and upgrade its legacy aviation assets, and the fact 

that the proposal would not complete the re-engining within the Commandant’s 

24-month time frame. Appendix B contains photographs of HH-65s undergoing 

overhaul at ARSC. 

ICGS, its subcontractors, and the Coast Guard engaged in a de-scoping session 

during June 2004 for the purpose of finding a way to reduce the cost of the reengining proposal without compromising the Commandant’s desire to re-engine 

all 95 HH-65s within a 24-month period. On July 21, 2004, ICGS submitted a 

second proposal recommending that the Coast Guard re-engine the entire 

HH-65 fleet at its ARSC at a proposed cost of . While ICGS was 

successful in reducing the size, scope, and cost of the first proposal, the proposal 

still contained millions of dollars worth of material handling, labor, incentive 

expenses, and fees. For example, the July 2004 proposal included performance 

award and incentive fee criteria that could reward ICGS up to $36 million for 

the timely delivery of goods and services that the contractor has little or no 

direct control over. The re-engining proposal was to be valid through Tuesday, 

August 31, 2004. 

overhead expenses, and incentive fees. 

20 Maintenance contract between the Coast Guard and Honeywell to support the LTS-101 engines currently installed aboard the HH-65 

fleet. 

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ICGS also has experienced difficulty developing and implementing a 

realistic delivery schedule. Shortly after accepting responsibility for the reengining project, ICGS provided the Coast Guard and the Homeland Security 

Subcommittee with a notional delivery schedule. The March 2004 schedule 

called for the first re-engined HH-65 to be delivered for flight-testing by June 4, 

2004, with an additional 20 aircraft to be delivered by the end of CY 2004. In 

addition, the schedule committed to re-engine the first 84 aircraft before July 

2006, the date for which the Coast Guard’s Power-by-the-Hour contract with 

Honeywell expires.20 On May 14, 2004, ICGS informed the Coast Guard that 

delivery of the first re-engined HH-65 would be delayed until July 2004 and that 

the remaining 83 operational aircraft would be delivered by July 2006.21 They 

also said the entire HH-65 fleet (95 helicopters) would be delivered to the Coast 

Guard by January 2007.22 However, ICGS’ May 28, 2004, proposal issued two 

weeks later decreased the total number of aircraft to be re-engined by the July 

2006 deadline from 84 to 54, with the remaining 41 aircraft to be re-engined by 

August 2007 - well beyond the Commandant’s 24-month timetable. 

The delivery schedule accompanying ICGS’ July 21, 2004, proposal decreases 

the total number of aircraft to be re-engined by July 2006 from 54 to 52 aircraft. 

The remaining 43 aircraft are scheduled to be re-engined by the end of November 

2007, or 46 months after the Coast Guard assigned responsibility for the reengining project to ICGS. Table 1 provides a summary of the aircraft delivery 

schedules provided by ICGS to the Coast Guard between March and July 2004. 

21 According to the Coast Guard, the delivery of the first re-engined HH-65 will not occur before September 2004.
	 22 All 84 aircraft would have to be delivered by July 2006 in order to meet the Commandant’s 24 month timetable. 23 GAO Report: Coast Guard’s Deepwater Program Needs Increased Attention to Management and Contractor Oversight (GAO-04-380; 

March 2004). GAO Report: Coast Guard: Deepwater Program Acquisition Schedule Update Needed (GAO-04-695; June 2004).
	

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Table 1 – Proposed ICGS Delivery Schedules,

 HH-65 Re-engining Project (March – July 2004)
	

Date 

ICGS Notional 

Production 

Schedule 

March 16, 2004 

ICGS Notional 

Production Schedule 

May 14, 2004 

ICGS Notional 

Production Schedule 

Proposal Dated 

May 28, 2004 

ICGS Notional 

Production Schedule 

Proposal Dated 

July 21, 2004 

By June 2004 HH-65 No. 1 

By July 2004 

By August 2004 HH-65 No(s). 2-5 

By September 2004 HH-65 No(s). 6-10 

By December 2004 HH-65 No(s). 11-21 HH-65 No(s). 1-2 

By December 2005 HH-65 No(s). 22-69 HH-65 No(s). 3-43 

By July 2006 HH-65 No(s). 70-95 HH-65 No(s). 44-84 HH-65 No(s). 1-54 HH-65 No(s). 1-52 

By December 2006 HH-65 No(s). 85-95 HH-65 No(s). 55-70 HH-65 No(s). 53-70 

By January 2007 HH-65 No(s). 71-74 HH-65 No(s). 71-73 

By May 2007 H-65 No(s). 74-87 HH-65 No(s). 74-83 

By August 2007 HH-65 No(s). 88-95 HH-65 No(s). 84-89 

By November 2007 HH-65 No(s). 90-95 

Source: U.S. Coast Guard and ICGS 

ICGS’ July 2004 proposal could further increase the number of HH-65s that 

will have to be removed from operational service to meet the revised delivery 

schedule. The Coast Guard typically has 11 HH-65 aircraft out-of-service for 

overhauls and upgrades at any given time. The latest American Eurocopter 

Corporation (AEC) proposal to ICGS contains an option to re-engine 46 HH-65s 

at its Columbus, Mississippi, plant at a per unit labor cost that is almost three 

times what it would cost the Coast Guard to perform the same work at ARSC. 

The AEC option offers the Coast Guard an opportunity to expedite the re-engining 

project by about three months. However, should the Coast Guard exercise this 

option, more than 17 HH-65s would have to be removed from service at any given 

time. According to the Coast Guard, removing more than 17 aircraft from service 

would significantly impact its ability to train personnel and execute its search and 

rescue, migrant interdiction, law enforcement, marine environmental protection, 

and HLS missions. 

The findings of two recently issued Government Accountability Office (GAO) 

reports23 have increased our concern about ICGS’ ability to manage the HH-65 

re-engining project. In March 2004, GAO reported problems in delivery, 

24 According to Coast Guard’s Office of Budget and Programs, the MPA delay was the result of Coast Guard requirement changes and 

available funding. 

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performance, cost control, and contract administration of two major Deepwater 

projects: the modernization, lengthening, and life extension overhaul for the 

110-foot Island Class patrol boat fleet; and the acquisition of maritime patrol 

aircraft (MPA). Under ICGS’ plan, the first Island Class patrol boat, the 

MATAGORDA, was scheduled for a November 2003 delivery. However, the 

MATAGORDA was not delivered until March 2004. According to the GAO, the 

delay affects the delivery schedules and costs associated with the remaining 48 

cutters to be upgraded under the contract. 

The GAO reports that schedule milestones for the MPA acquisition have not been 

met.24 Delivery of the first two MPAs was originally scheduled for FY 2005. 

However, current plans call for these aircraft to be delivered during late FY 2006 

or early FY 2007. The delays involving the Island Class patrol boats, the MPA, 

and now the HH-65s, all occurred early in the projects’ time line, raising serious 

uncertainties about ICGS’ ability to meet its delivery schedules. 

The GAO criticizes Deepwater’s Integrated Product Teams (IPTs), the same entity 

that has been administrating the HH-65 re-engining project. The GAO reported 

that Deepwater IPTs struggled to collaborate and accomplish their missions 

effectively, due to training deficiencies, inadequate communication among 

members, lack of timely charters to vest IPTs with authority for decision-making, 

and high turnover rates for IPT membership. The recent resignation of the 

Deepwater team leader responsible for overseeing the HH-65 re-engining project 

working group is a case in point. 

On June 14, 2004, the GAO issued a second report on the status of Deepwater 

projects. The report contains additional details on the status of a number of 

critical assets to be upgraded or acquired during the Deepwater time frame. 

The GAO noted that in two instances, the delivery of assets were so far behind 

schedule that it would be impossible for ICGS to return them to their original 

schedule. Of the 18 Island Class patrol boats scheduled to be lengthened, 

upgraded, and delivered to the Coast Guard by the end of FY 2005, only eight 

are now scheduled to be completed by the end of FY 2005. In addition, the GAO 

cited that the delivery of the Vertical Take-Off and Landing Unmanned Aerial 

Vehicle (VUAV) has experienced similar delays. 

25 This amount does not include funding for HH-65 engine replacement or maintenance. 

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1 

Effect on the Coast Guard’s Legacy Aviation Assets 

The Coast Guard’s decision to use funds from the Deepwater’s legacy asset 

maintenance account to fund the HH-65 re-engining project will postpone 

or cancel nearly $200 million of AC&I funding originally dedicated for the 

sustainment and upgrade of its legacy aviation assets for FY 2004 through FY 

2006. According to the Coast Guard, the deferment of these much-needed 

upgrades could impact the readiness of key legacy air assets, including the reengined HH-65, HH-60, and HC-130 aircraft. 

Prior to the Commandant’s decision to re-engine the HH-65, the Coast Guard had 

budgeted $226 million for maintenance and upgrades to the Coast Guard’s legacy 

aircraft.25 These upgrades originally included the updating of the weather and 

surface search radar and Forward Looking Infrared (FLIR) installations aboard 

its HH-65, HH-60, and HC-130. The Coast Guard also planned to re-engineer 

and upgrade the HH-65’s tail rotor blade assembly and landing gear. In addition, 

other airframe, radar, sensor, and avionics upgrades were budgeted for the HH-60 

helicopter. Many of these upgrades however, have been cancelled or indefinitely 

postponed. Table 2 contains a listing of the legacy aviation asset sustainment and 

upgrade projects originally planned for FY(s) 2004 through 2006. 

26 The average time (usually expressed in hours) that a component works without failure. The Coast Guard requires its aircraft components 

to meet a MTBF of 800 hours. 

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Table 2. –USCG Legacy Aviation Asset Sustainment and 

Modernization Spend Plan 

(FY 2004 thru FY 2006)
	

AIR 

Requested 

FY 2004 

($Thousands) 

FY 2004 

Received 

Requested ** 

FY 2005 

($Thousands) 

FY 2005 * 

Spend Plan 

Requested ** 

FY 2006 

($Thousands) 

FY 2006 * 

Spend Plan 

HH-65 Landing Gear 

Recapitalization $ 2,200 $ 0 $ 2,600 $ 0 

HH-60 Avionics Upgrade $ 29,600 $ 10,000 $ 23,400 $ 0 

HH-60 Service Life 

Extension Project (SLEP) $ 1,300 $ 0 $ 4,500 $ 0 

HH-60 Integrated Radar/ 

FLIR Upgrade $ 4,400 $ 0 $ 11,000 $ 0 

HH-65 Integrated Radar/ 

FLIR Upgrade $ 6,000 $ 0 $ 15,500 $ 0 

HC-130 APS-137 Search 

Radar Replacement $ 11,830 $ 0 $ 10,500 $ 0 

HC-130 Weather Radar 

Replacement $ 9,520 $ 0 $ 3,702 $ 0 

HH-65 Tail Rotor 

Recapitalization $ 2,850 $ 0 $ 2,850 $ 0 

HH-60 T-700 Engine 

Upgrade --------- $ 0 $ 8,000 $ 0 

Total $ 67,700 $ 10,000 $ 82,052 $ 0 

Source: U.S. Coast Guard 

* Data from Integrated Deepwater System Projected FY05-FY09 Budget Plan 

** Data from Aviation Capital Improvement Plan – dated 7 January 2004 

According to the Coast Guard, failure to make the improvements and upgrades to 

its legacy aircraft will increase operating costs. It also will reduce the operational 

capability of critical air assets at a time when the overall number of flight 

hours devoted to Coast Guard missions is increasing. Between FY 2001 and 

FY 2003, the total number of flight hours for all Coast Guard legacy aircraft in 

support of Coast Guard missions increased by 9%. Further, many of the planned 

maintenance and upgrades are needed because of the decline in the Mean Time 

Between Failure (MTBF) 26 rate of critical components. For example, between 

27 According to the Coast Guard, the Army recently discontinued the use of the RDL-1300. 

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FY 1997 and FY 2003, the MTBF of weather radar components installed aboard 

the HH-65, HH-60, and HC-130 aircraft declined from 946 to 400 hours. 

During the same period, the Army declared the RDR-1300 radar obsolescent and 

the original equipment manufacturer will soon stop making replacement parts 

for this system.27 Currently, the Coast Guard employs the RDR-1300 aboard its 

HH-65, HH-60, and HH-130 aircraft. According to the Coast Guard, the declining 

MTBF associated with the RDR-1300 is expected to impact maintenance and 

repair costs and increase the stress on its spare parts system. Over time, the lack 

of spare parts could force Coast Guard air stations to cannibalize28 aircraft in order 

to maintain aircraft and air station readiness. 

HH-65 and the Coast Guard’s HITRON Mission 

The replacement of the eight leased aircraft operated by the HITRON squadron 

with a re-engined and AUF-upgraded HH-65 would resolve the air crew safety, 

power, maneuverability, and flight endurance issues associated with the fleet 

of leased aircraft. It also would reduce the number of flight hours devoted to 

AUF-related training, free-up valuable transit time and asset support required 

to deploy HITRON assets to the Coast Guard’s Pacific Area (PACAREA) for 

counter-drug deployments, eliminate an aircraft lease valued at more than $43 

million over the next three years, and offset some of the costs associated with the 

sustainment of legacy aviation assets. The Coast Guard’s HITRON unit has been 

conducting counter drug interdiction since its inception in 1999.29 The unit also 

has performed a variety of HLS missions since the September 11, 2001, attacks. 

These include HLS overflights over major U.S. cities including: New York City, 

New Orleans, Houston, and Los Angeles. More recently, these aircraft were 

part of an Enhanced Maritime Safety and Security Team (EMSST) involved in 

providing security at the recent G-8 conference in Atlanta, Georgia, President 

Reagan’s memorial in Washington, DC, and the Democratic National Convention 

in Boston, Massachusetts. 

The HITRON squadron operates eight leased AUF-equipped MH-68A aircraft 

from its Cecil Field facility in Jacksonville, Florida, at a cost of more than $14 

28 Taking parts from otherwise serviceable aircraft to keep other aircraft flying. Cannibalization takes planes out of the rotation, increases 

the workload and maintenance on the other planes, and depletes flexibility in meeting response requirements. It also translates Coast Guard 

parts shortages into personnel problems because it doubles the maintenance workload. 

29 The original HITRON “unit” started conducting drug interdiction in 1999. The HITRON “unit” was later transformed into the larger 

HITRON “squadron,” which started conducting drug interdiction mission in 2001.
	 30 Annual cost estimate includes leasing and maintenance costs associated with the MH-68A. 

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United States Coast Guard 
million a year.30 Currently, the HITRON lease is in year one of a one-year 

contract with four option years (through 2008). The current lease option expires 

in January 2005. 

According to the Coast Guard, the decision to lease AUF-capable aircraft to 

perform the HITRON mission was originally intended as a stopgap measure until 

the Coast Guard could undertake a more permanent solution. The Coast Guard 

has known since at least December 2002 that a re-engined HH-65 with the AUF 

upgrades installed could perform the HITRON mission. Table 3 includes a list 

and estimated cost of the minimum upgrades needed to transform a re-engined 

HH-65 into an AUF-capable aircraft. 

Table 3. – List of the AUF Upgrades Needed to Make 

the Re-engined HH-65 an AUF-Capable Aircraft 

AUF Upgrades 

Law Enforcement Lights, Loudhailer, Siren 

Aircraft Armor 

Weapons Mount and Hardware 

FLIR 31 Optical Sensor System 

CDU 900 Software Upgrade 

Night Vision Goggles Heads Up Display (HUD) 

Satellite Communications (Voice) 

Sixth Fuel Cell32 

Estimated Cost -- Per Aircraft33 

Source: U.S. Coast Guard 

Although the current Deepwater contract does not include a requirement for 

AUF-capable aircraft, the Coast Guard testified before Congress that there is an 

urgent need to develop their rotary-wing aircraft into AUF-capable platforms to 

be able to perform the HITRON and HLS missions. The Coast Guard also is in 

the process of changing the Deepwater System Performance Specification (SPS) 

to include the requirement that all Coast Guard rotary-wing aircraft, including 

the HH-65, be AUF-capable. The HH-65 performance specifications for AUF 

currently being considered are based on the current HITRON lease contract. 

These specifications include: 

31 Forward Looking Infrared Radar system. An identical FLIR system is installed aboard CGNR 6560
	 32 According to the Coast Guard, a sixth fuel cell could be installed aboard a re-engined HH-65 for an estimated $44,000.
	 33 The estimated cost of adding the AUF upgrade includes $1,075,000 dollars worth of non-recurring engineering costs allocated among 

eight HH-65 airframes. 

34 With the extended nose and N4 gearbox upgrades installed.
	

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Power Reserve - a 20% reserve power requirement measured from maximum 

continuous power when taking off at its maximum gross weight of 9,200 pounds. 

A re-engined HH-65 provides a 20% power margin when taking off at its 

maximum gross weight of 9,480 pounds. 

Maneuverability - 45 knots sideward flight. The re-engined HH-65 operated 

at its maximum gross weight of 9,480 pounds is capable of a speed of 55 knots 

sideward flight. 

Flight Endurance - 2 hours and 30 minutes endurance, including 20 minutes of 

reserve fuel. The re-engined HH-65, fitted with a sixth fuel cell, will have 3 hours 

and 30 minutes endurance, including 20 minutes of reserve fuel, when taking off 

at its maximum gross weight of 9,480 pounds. 

Although HITRON’s squadron of MH-68A aircraft have successfully interdicted 

go-fast boats smuggling drugs into the United States, they do not meet the 

minimum power, maneuverability, and flight endurance requirements outlined 

in the latest HITRON contract. Further, the Coast Guard’s decision to bypass 

Aircraft Configuration and Control Board (ACCB) procedures and remove 

critical safety equipment, such as emergency floats and hoist from the MH-68A 

to improve its flight endurance, coupled with a history of unresolved problems 

with the aircraft’s tail rotor blade assembly, continue to raise serious questions 

about the safety and the suitability of the aircraft for the HITRON mission. The 

replacement of the MH-68A with a re-engined and AUF-capable HH-65 would 

eliminate the air crew safety and operational issues associated with the MH-68A, 

and reduce the net operating expenses associated with the HITRON squadron 

by an estimated $38 million dollars over the next three years. It also would 

provide the Coast Guard with the opportunity to take advantage of the operating 

efficiencies currently provided by the HH-65 maintenance, logistic, and training 

infrastructure, as well as provide the foundation for future expansion of its 

AUF-capability along the U.S. Great Lakes, Atlantic, Pacific, and Gulf coasts. 

Ability of the HH-65 to Meet Deepwater’s MCH Requirements 

According to the Coast Guard’s recently retired Chief, Office of Aeronautical 

Engineering, a re-engined HH-65 equipped with the extended nose upgrade, 

N4 gearbox, and fuel cell upgrades would meet existing Multi-mission Cutter 

Helicopter (MCH) power, maneuverability, and endurance requirements, as 

defined by the existing Deepwater contract. 

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The re-engined HH-65 also would meet the additional MCH mission requirements 

currently envisioned by the Coast Guard.34 The Coast Guard is currently working 

to amend the MCH requirements in the Deepwater contract to include AUF, 

vertical insertion,35 and vertical delivery36 mission capabilities. According to the 

Coast Guard, the re-engined HH-65, equipped with the AUF upgrades, when 

operated at its maximum take-off weight of 9,480 pounds, would be capable of 

conducting the AUF, vertical insertion, and vertical delivery missions with a 20% 

reserve power and an on-scene endurance of 1 hour and 30 minutes. Table 4 

contains a summary of the upgrades needed to meet future AUF, HLS, and MCH 

requirements. 

Table 4. - Summary of Upgrades Needed to Meet 

Future AUF, HLS, and MCH Requirements
	

Re-engining Upgrades AUF Upgrades MCH Upgrades 

Turbomeca 2C2 Engine Law Enforcement Lights, 

Loudhailer, Siren Tail Rotor Upgrade 

N4 Gearbox Aircraft Armor Landing Gear Upgrade 

Extended Nose Weapons Mount and Hardware Fenestron (10 Bladed) 

FLIR Optical Sensor System Digital Flight Director System 

CDU 900 Software Upgrade Radar Upgrade 

NVG Heads Up Display (HUD) Avionics Upgrade 

Satellite Communications (Voice) Satellite Communications (Data) 

Sixth Fuel Cell Flight Deck Assist System 

MFD Software Upgrade (FLIR) 

Avionics Relocation 

Source: U.S. Coast Guard 

The larger question facing the Coast Guard is not whether the re-engined and 

upgraded HH-65 will be able to perform the MCH mission, but whether there 

will be a sufficient number of re-engined HH-65s to perform all required 

missions. The original 96 HH-65s were purchased at a time when the number 

and complexity of Coast Guard missions were fewer and less complicated. In 

contrast, the missions performed by the HH-65 today are increasingly varied and 

35 The vertical insertion mission, as envisioned by the Coast Guard, calls for the MCH to deliver a four-person boarding team 

(via fast-roping) to a potentially hostile vessel or platform within an operational radius of 50 nautical miles. According to the 

Deepwater contract, the MCH will be deployed from Coast Guard cutters. 

36 The vertical delivery mission, as envisioned by the Coast Guard, calls for the MCH to be able to lower (by rescue basket or 

Coast Guard sling) a four-person boarding team onto a non-hostile vessel located within an operational radius of 50 nautical 

miles. 

37 The LTS-101-850 engine is an upgraded version of the LTS-101-750 engine, which was originally installed aboard the HH-65. 

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complex. The increased training required to perform these missions are steadily 

eroding available flight hours. For example, the Program Flight Hours for the 

HH-65 is 645 flight hours per year. However, 45% of the program flight hours are 

devoted to training for legacy and HLS missions, thereby reducing the number of 

flight hours devoted to the Coast Guard’s legacy missions to about 355 hours per 

year. 

The number of HH-65 flight hours rarely change from year to year. Hence, any 

increase in the number of flight hours devoted to Ports and Waterway Coastal 

Security (PWCS), Defense Readiness, and Enforcement of Laws and Treaty 

missions is attained at the expense of other Coast Guard missions. For example, 

the number of HH-65 flight hours flown in support of PWCS, Defense Readiness, 

Enforcement of Laws and Treaties, and various support missions between FY 

2001 and FY 2003 increased by 34% (8,524 flight hours). During the same 

period, the total number of HH-65 flight hours flown in support of non-HLS 

missions, i.e., SAR, Marine Safety, Ice Operations, and Aid-to-Navigation, 

decreased by 13% (2,611 flight hours). For the Coast Guard to restore the lost 

flight hours, they could either increase the number of program flight hours for the 

re-engined HH-65 or acquire and refurbish additional HH-65s and airframes. 

To its credit, the Coast Guard is beginning to address its force structure shortfalls. 

During July 2003, the Commandant requested that its Deepwater sponsors 

assess the personnel, training, equipment, and infrastructure implications and 

gaps associated with the Coast Guard’s heightened role in national security and 

national defense. According to the Coast Guard, the ongoing Performance Gap 

Analysis will provide the road map for developing the force structure needed to 

meet the Coast Guard’s legacy and homeland security responsibilities. It is clear 

from our review of the preliminary analysis conducted to date, the Coast Guard 

expects a re-engined and AUF-capable HH-65 to play a vital and prominent role 

in the solution. 

Latest Developments 

Concern about the lack of progress, the rising cost, and increasing risks associated 

with the HH-65 re-engining project is mounting within the Coast Guard’s senior 

aviation leadership. In a May 18, 2004, memorandum to the Commandant, the 

Assistant Commandant for Operations recommended that the ongoing delays, 

burgeoning costs, and increased operational risks associated with the re-engining 

project could be mitigated if the Coast Guard re-asserted control over the HH-65 

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re-engining project and placed responsibility for re-engining the HH-65 into 

“the capable hands of ARSC.” The Assistant Commandant also recommended 

that some of the re-engined HH-65s be configured to perform the HITRON AUF 

mission. 

The June 8, 2004, failure of the Honeywell LTS-101-85037 engines that were 

installed aboard a HH-65 assigned to Air Station Miami, and the subsequent 

grounding of aircraft that were fitted with the engine, is increasing our concern 

that the Coast Guard may not have an adequate number of spare engines to 

maintain the readiness of its HH-65 fleet during the re-engining time frame. 

This engine failure was the third LTS-101-850 engine failure reported during 

FY 2004.38 Prior to the most recent engine failure, the Coast Guard had intended 

to install LTS-101-850 engines aboard 25 HH-65’s at Air Stations Miami, New 

Orleans, Corpus Christi, Houston, and ATC Mobile to improve the aircraft’s hot 

weather performance. According to the Coast Guard, 32 spare engines are needed 

during any three-month period to maintain the operational readiness of the HH-65 

fleet. 

As of July 14, 2004, the Coast Guard’s air stations had 17 spare LTS-101-750 

engines available.39 Further, Honeywell has halted production of the 

LTS-101-750 engine in 1990. While the Coast Guard could compensate for 

the shortage by using used LTS-101-750 engines removed from the HH-65s 

undergoing overhaul and modification, the condition and availability of these 

engines is unknown. We are concerned about the Coast Guard’s ability to 

obtain spare LTS-101 engines given the delays in the establishment of a HH-65 

modification line.40 We also are concerned about the cost and operational impact 

on air stations should they be forced to ship spare engines from other units or 

cannibalize HH-65 aircraft, which have been taken out of service for scheduled 

maintenance, to meet minimum station readiness requirements. Consequently, 

the Coast Guard can ill-afford any additional delays in the development and 

implementation of the HH-65 modification line. 

Air crew safety and the operational readiness of Coast Guard air stations have 

continued to deteriorate in the 15 weeks that have elapsed since the Assistant 

Commandant for Operations’ May 18, 2004, memorandum. The number of inHoneywell’s ability to provide a comparable number of the original LTS-101-750 engines is not known. 

38 Two prior LTS-101-850 engine failures occurred on November 5 and November 8, 2003. 

39 The Coast Guard also reported that 6 of their 17 air stations (35%) that fly the HH-65 had no spare engines.
	 40 The July 2004 proposal would create a HH-65 modification line at ARSC. The purpose of the modification line would be to re-engine 

those HH-65 aircraft that do not require a complete overhaul. 

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flight loss of power mishaps has increased by 29%; the LTS-101-850 engine, 

which was intended to temporarily support the HH-65 fleet during the re-engining 

project, failed during testing; and, the estimated date for completing the reengining of the entire fleet of HH-65s has slipped by eleven months. 

Given the air crew safety, delivery delays, high cost, and operational risks 

associated with the HH-65 re-engining project, the Coast Guard should implement 

the recommendation of its senior aviation leadership to re-assert control of 

the HH-65 re-engining project and execute the HH-65 fleet re-engining as a 

government performed project at ARSC. The Coast Guard should take action to 

reduce the impact of the re-engining project upon the operational readiness and 

capability of the HH-65 fleet. Finally, the Coast Guard should take advantage 

of a timely and cost-effective opportunity to develop an organic asset capable of 

performing the AUF missions. 

Recommendations 

We recommend that the Commandant: 

1. Direct the Coast Guard’s senior leadership, including the Assistant 

Commandants for Operations and Systems and the Chief Counsel, to 

implement the Assistant Commandant for Operations’ May 18, 2004, 

recommendation that the HH-65 re-engining project be taken from ICGS 

and performed as a government performed project. 

2. Expedite the replacement of the MH-68A helicopters operated by the 

HITRON squadron with re-engined HH-65s equipped with the Airborne 

Use of Force upgrades. 

3. Acquire and refurbish additional HH-65 aircraft and airframes to reduce 

the effect on mission readiness and operational capability associated with 

the removal of HH-65s from service for re-engining and to compensate 

for the HH-65s assigned to the HITRON squadron. 

4. Use the savings resulting from the termination of the HITRON lease to 

mitigate the costs associated with the maintenance of its legacy aviation 

assets. 

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Appendix A 

Comparison of the Performance of the LTS-101 and 

Arriel 2C2 Engines – 10/20% Power Reserve 

Comparison of the Performance of the Honeywell LTS-101 and Arriel 2C2 Engines
	

10% Power Reserve
	

Mission Profile 

(Temperature in Celsius) 

LTS-101 Engine Arriel 2C2 Engine 

Power Required 

(SHP) 50 Ft No 

Wind HOGE * 

Power Available Power Required 

(SHP) 50 Ft No 

Wind HOGE 

Power Available 

(SHP) 2C2 

750 850 

10% Reserve 

SAR 

(15 Degrees @ Sea Level) 470 569 649 664 914 

Vertical Insertion 

(15 Degrees @ Sea Level) 482 569 649 693 914 

AUF 

(15 Degrees @ Sea Level) 470 569 649 664 914 

SAR 

(35 Degrees @ Sea Level) 506 435 496 681 795 

Vertical Insertion 

(35 Degrees @ Sea Level) 531 436 497 714 795 

AUF 

(35 Degrees @ Sea Level) 506 435 496 681 795 

Source: U.S. Coast Guard 

* Hover Out of Ground Effect 

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Appendix A 

Comparison of the Performance of the LTS-101 and 

Arriel 2C2 Engines – 10/20% Power Reserve 

Comparison of the Performance of the Honeywell LTS-101 and Arriel 2C2 Engines 

20% Power Reserve 

Mission Profile 

(Temperature in Celsius) 

LTS-101 Engine Arriel 2C2 Engine 

Power Required 

(SHP) 50 Ft No 

Wind HOGE* 

Power Available Power Required 

(SHP) 50 Ft No 

Wind HOGE 

Power Available 

(SHP) 2C2 

750 850 

20% Reserve 

SAR 

(15 Degrees @ Sea Level) 595 569 649 724 914 

Vertical Insertion 

(15 Degrees @ Sea Level) 622 569 649 756 914 

AUF 

(15 Degrees @ Sea Level) 595 569 649 724 914 

SAR 

(35 Degrees @ Sea Level) 735 436 497 743 795 

Vertical Insertion 

(35 Degrees @ Sea Level) 779 436 497 779 795 

AUF 

(35 Degrees @ Sea Level) 735 436 497 743 795 

Source: U.S. Coast Guard 

* Hover Out of Ground Effect 

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Appendix B 

Photographs of a HH-65 Progressing 

Through the PDM Line at ARSC 

HH-65 PDM Line – U.S. Coast Guard Aircraft Repair and Supply Center,
	

Elizabeth City, NC
	

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Appendix B
	

Photographs of a HH-65 Progressing 

Through the PDM Line at ARSC 

HH-65 PDM Line – U.S. Coast Guard Aircraft Repair and Supply Center, 

Elizabeth City, NC 

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Appendix C 

Purpose, Scope, & Methodology 

Purpose, Scope, and Methodology 

We evaluated the efforts undertaken by the Coast Guard and its Deepwater 

Strategic partners to resolve the escalating safety, reliability, and operational 

capability issues associated with the HH-65 fleet of helicopters. In addition, we 

assessed the capability of the re-engined and upgraded HH-65 to perform the 

MCH requirements outlined in the existing Deepwater contract. 

To understand the actions that have been taken to re-engine the HH-65, we 

reviewed: the steps taken to resolve the engine safety and reliability issues 

affecting the HH-65 fleet; the test results for the LTS-101-850 and Arriel 2C2 

engines; and the air crew safety, power, maneuverability, and endurance issues 

associated with the MH-68A. We examined test reports documenting the ability 

of the MH-68A and the re-engined HH-65 to perform the HITRON mission. 

To ascertain the production capability of ARSC, we visited the facility and 

interviewed personnel responsible for maintaining, overhauling, and upgrading 

the HH-65 (Dolphin), HH-60 (Jayhawk), HU-25 (Falcon), and HC-130 (Hercules) 

fleet of aircraft. We also analyzed the Coast Guard’s FY 2004 through FY 2006 

budget request to determine the viability of funding for legacy aviation asset 

maintenance and upgrades. 

We interviewed officials from Coast Guard headquarters in Washington, DC and 

Coast Guard’s ARSC in Elizabeth City, NC. A series of headquarter interviews 

were conducted with officials from the Chief of Staff’s Office of Programs, the 

Deepwater Program Executive Office, the Office of Aviation Forces, the Office 

of Aeronautical Engineering, and the Office of Safety and Environmental Health. 

A series of ARSC interviews were conducted with officials from the Office of the 

Commanding Officer for the ARSC Product Line and officials responsible for the 

HH-65 overhaul, repair, and modification line. 

We performed the review between February 2004 and August 2004 under the 

authority of the Inspector General Act of 1978, as amended, and according to 

generally accepted government auditing standards. However, we relied on the 

Coast Guard’s test and evaluation data, without independently validating the 

information. For example, we did not validate the accuracy of the Coast Guard’s 

and Coast Guard contractor flight-testing and performance analyses involving 

HH-65 fitted with the Arriel 2C2 engines and AUF upgrades or on the HH-65 

fitted with LTS-101-750/850 engines. In addition, we did not validate the analysis 

of a Eurocopter market survey, which evaluated compatible engines qualified to 

meet certain Coast Guard specifications for the HH-65 aircraft. Determinations 

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Appendix C 

Purpose, Scope, & Methodology 

on engine capability were based on the assertions and HH-65 engine test data 

analyses provided by the Coast Guard management and Coast Guard aeronautical 

engineering experts. 

Throughout the review, we worked closely with Coast Guard officials. We greatly 

appreciate the cooperation and professional courtesies extended by the Coast 

Guard to the OIG audit team. Major OIG contributors to the project are identified 

in Appendix E. 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix D 

U.S. Coast Guard’s Comments 

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Appendix E 

OIG Evaluation of Coast Guard’s 

Response 

OIG Evaluation of U.S. Coast Guard Response 

The OIG issued the formal draft version of the report to the Coast Guard on 

August 31, 2004. The final report is based on the analysis of information 

provided to the OIG up to and including August 31, 2004. 

Contracting with ICGS 

OIG remains concerned about the Coast Guard’s decision not to have ARSC 

implement the HH-65 re-engining solution as a government performed project. 

Our review of the documentation indicated the Coast Guard was aware at the 

outset of the re-engining project that its use of an outside contractor would take 

longer and cost more than it would have if they elected to have ARSC perform 

the re-engining as a government performed project. They were also aware that 

any extension of the project’s time line would: expose HH-65 air crews to the 

risks of additional in-flight loss of power mishaps; further postpone critical legacy 

aviation asset maintenance and upgrade projects; and extend the operational 

restrictions placed on the HH-65 fleet which are significantly impacting the Coast 

Guard’s ability to perform its SAR and other humanitarian-related missions. 

From a contract performance and cost perspective, the Coast Guard maintains 

that an ICGS solution will restore the operational capability of the HH-65 fleet 

in the fastest possible way at a reasonable cost to taxpayers. While this is a 

worthy goal, it is not what ICGS and the Coast Guard have provided the HH-65 

community to date. For example, ICGS’ initial re-engining solution was 34 days 

late and included $123 million worth of goods and services that the Coast Guard 

did not ask for and could not afford.41 It then took ICGS an additional 16 weeks 

to reach an agreement with its subcontractors to buy engines and modification kits 

at the price quoted in the proposal. ICGS also has not met its June deadline for 

delivering the first re-engined HH-65. Finally, neither ICGS nor the Coast Guard 

have provided ARSC with the funding it needs to develop a B to C modification 

line despite ICGS’ intention to have ARSC re-engine the entire HH-65 fleet. 

Whether the Coast Guard stays the course with ICGS or decides to have ARSC 

perform the re-engining as a government performed project does not change the 

fact that the lengthy negotiations have already affected the delivery of engines and 

modification kits, postponed the development of the modification line at ARSC, 

and ultimately pushed back the delivery of re-engined HH-65s into FY 2008, well 

41 The Business Case Analysis, which was due to the Coast Guard on April 19, 2004, was not delivered until sometime in June, 2004. 

Page 38 Re-Engining of the HH-65 Helicopter 

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Appendix E 

OIG Evaluation of Coast Guard’s 

Response 

beyond the Commandant’s completion date. Ironically, this is exactly what Coast 

Guard’s Judge Advocate General predicted would happen in January 2004. In a 

memo to the Commandant’s Chief of Staff outlining the legal issues surrounding 

the HH-65 re-engining project, he predicted the selection of ICGS to develop 

and implement the HH-65 re-engining solution would reduce the Coast Guard’s 

control over the project, lengthen the negotiation process, increase project costs, 

and ultimately delay the delivery of re-engined aircraft. It took ICGS almost 

five months to conclude what the Coast Guard’s senior aviation leadership had 

already determined back in December 2002, --- that a re-engined HH-65 with the 

Turbomeca 2C2 engine, N4 gearbox, extended nose, and an additional fuel cell 

would resolve the safety and reliability problems associated with this aircraft. 

Further, ICGS’ recommendation that ARSC re-engine the entire HH-65 fleet will 

cost the Coast Guard abou more than it would have cost them if 

the re-engining was performed by ARSC as a government performed project. 

The Coast Guard contends that because of the timing of the audit, the Inspector 

General’s team relied heavily on pre-decisional materials, preliminary cost 

estimates and notional schedules, and that further refinement of these inputs 

demonstrates clearly that the Coast Guard made the right decision in contracting 

with ICGS to manage this project. However, the information in our report was 

presented by or developed in concert with senior Coast Guard officials. These 

include: the Coast Guard’s Chief of Operations; the Chief, Office of Aviation 

Forces; the Chief, Office of Aeronautical Engineering; the Chief, Office of 

Aviation Safety, and the Commanding Officer, Coast Guard’s Aviation Repair and 

Supply Center. 

The Coast Guard response also fails to note that ICGS’ most recent re-engining 

proposal was virtually identical (except for the cost) to the re-engining solution 

presented by the Coast Guard’s senior aviation leadership to the Commandant in 

December 2003. We would also note that at the time the Coast Guard assigned 

the re-engining project to ICGS, the staff assigned to ARSC and the Coast 

Guard’s Office of Aviation Forces and Office of Aviation Engineering, had spent 

two years working with Turbomeca and AEC to construct the first re-engined and 

AUF-capable HH-65. In addition, ARSC has developed the capability to fabricate 

many of the unique parts included in the B to C modification kit. ICGS, on the 

other hand, had no prior experience maintaining, overhauling, upgrading, or 

operating the HH-65. 

The Coast Guard also says that terminating the ICGS HH-65 re-engining task 

order contract would create impacts not quantified in the Inspector General’s 

Re-Engining of the HH-65 Helicopter Page 39

United States Coast Guard 
Appendix E 

OIG Evaluation of Coast Guard’s 

Response 

report -- the sunk costs could not be recouped, and ICGS could be entitled to other 

termination entitlements, which would significantly reduce or eliminate any cost 

“savings” gained from termination. They believe termination for the purpose 

of converting the work to in-house performance could also be improper without 

assessment in accordance with OMB Circular A-76 requirements. Finally, the 

Coast Guard would have to assume full oversight of the project, incurring costs in 

contracting, project management, other overhead functions, and opportunity costs 

that have not been quantified. The Coast Guard would then likely experience the 

same challenges that ICGS is facing with obtaining critical parts and scheduling 

work to minimize the project time line. 

OIG agrees that the termination of the contract entered into with ICGS on 

September 17, 2004, would likely result in costs that would diminish the savings 

that would be achieved had the Coast Guard decided to have ARSC perform the 

re-engining as a government performed project. The response, however, fails to 

note that the Coast Guard was well-aware of our recommendation to terminate 

the contract with ICGS. The recommendation was included in the discussion 

draft version of the report provided to the Coast Guard on July 27, 2004. The 

recommendation was also a major topic of discussion at the August 3, 2004, 

exit conference with the Coast Guard. Finally, the recommendation was 

included in the formal draft version of the report issued to the Coast Guard on 

August 31, 2004. Consequently, the Coast Guard could have avoided these 

additional expenses had it implemented our recommendation. 

Other Recommendations 

The OIG is pleased to note that the Coast Guard supports the intent of 

recommendations two, three, and four. In the short term, implementing these 

three recommendations would: eliminate an expensive and marginally-capable 

aircraft from the Coast Guard’s inventory; expand the Coast Guard’s counter drug 

and AUF capabilities; minimize the impact the re-engining project is having on 

the Coast Guard’s ability to perform the Short Range Recovery (SRR) mission; 

and, help restore funding for critical legacy aviation asset maintenance and 

upgrade projects. OIG would support Coast Guard funding requests that expedite 

their efforts to eliminate the air crew safety, reliability, and performances issues 

associated with the HH-65. 

Page 40 Re-Engining of the HH-65 Helicopter 

United States Coast Guard 
 

1 

Appendix F
	

Major Contributors to This Report 

THE FOLLOWING INDIVIDUALS CONTRIBUTED TO THIS REPORT 

Name Title 

Richard T. Johnson Project Manager, Coast Guard Audits, Department of Homeland Security, 

Office of Inspector General, Washington, DC Office 

Sara Ancona Senior Analyst, Coast Guard Audits, Department of Homeland Security, 

Office of Inspector General, Washington, DC Office 

Jeffrey Wilson Analyst, Coast Guard Audits, Department of Homeland Security, Office of 

Inspector General, Washington, DC Office 

Re-Engining of the HH-65 Helicopter Page 41

United States Coast Guard 
Appendix G 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

General Counsel 

Chief of Staff 

Commandant, United States Coast Guard 

United States Coast Guard Audit Liaison 

Undersecretary for Management 

DHS Audit Liaison Management 

DHS Public Affairs 

Office of Management and Budget 

Chief Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

Page 42 Re-Engining of the HH-65 Helicopter 

United States Coast Guard 

Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General (OIG) at 

(202) 254-4100, fax your request to (202) 254-4285, or visit the OIG web site at www. 

dhs.gov/oig. 

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal 

or noncriminal misconduct relative to department programs or operations, call the OIG 

Hotline at 1-800-323-8603; write to Department of Homeland Security, Washington, DC 

20528, Attn: Office of Inspector General, Investigations Division – Hotline. The OIG 

seeks to protect the identity of each writer and caller.