Page 1 GAO-14-358R Presidential Helicopter Program

441 G St. N.W.

Washington, DC 20548

April 10, 2014

Congressional Committees

Presidential Helicopter Acquisition: Update on Program’s Progress toward Development 

Start

In June 2009, the Department of Defense (DOD) terminated the Navy’s VH-71 presidential 

helicopter program because of cost growth, schedule delays, and a projected shortfall in system 

performance. The Navy subsequently began work to define a follow-on program, now known as 

VXX, to acquire helicopters to replace the existing presidential helicopter fleet. The Ike Skelton 

National Defense Authorization Act for Fiscal Year 2011 mandated that we review and report 

annually to the congressional defense committees on the program beginning in 2011 and 

ending in 2013.

1 We issued three reports in response. In the first, we identified major lessons 

learned from the terminated program that should be applied in the follow-on program.2 In the 

second, we provided information on the program’s delays and on DOD’s planned upgrades to 

the in-service fleet and plans for moving the program forward.3 In the third, issued last year, we 

found that the Navy had made progress toward establishing a sound business case that 

reflected a rational balance between requirements, costs and schedule.4

Given the VH-71 program experience and the importance of developing a helicopter to replace 

the current fleet of presidential helicopters in a timely manner, the House Armed Services 

Committee, Tactical Air and Land Force Subcommittee requested that GAO continue to monitor 

the VXX presidential helicopter acquisition through a series of reviews, with each of those 

reviews tailored to where the program is in the acquisition process, and provide GAO’s 

assessment of the program. Subsequently, the National Defense Authorization Act for Fiscal 

Year 2014 mandated that we continue to review and report on the program annually to the 

congressional defense committees.

At the time of our last 

report, the Navy had just finalized its VXX requirements.

5

acquisition best practices and meeting corresponding requirements as it approaches the start of 

system development in the engineering and manufacturing development phase of DOD’s 

acquisition process. Specifically, it discusses independent assessment of the program’s 

technology readiness, trade-offs made to ensure affordability and requirements approval, 

development of an independent cost estimate, use of competitive prototyping, and completion of 

a preliminary design review (PDR). 

This report discusses the program’s consistency with

 1

Pub. L. No. 111-383, § 233.

2

GAO, Defense Acquisitions: Application of Lessons Learned and Best Practices in the Presidential Helicopter 

Program, GAO-11-380R (Washington, D.C.: Mar. 25, 2011).

3

GAO, Presidential Helicopter Acquisition: Effort Delayed as DOD Adopts New Approach to Balance Requirements, 

Costs, and Schedule, GAO-12-381R (Washington, D.C.: Feb. 27, 2012).

4

GAO, Presidential Helicopter Acquisition: Program Makes Progress in Balancing Requirements, Costs, and 

Schedule, GAO-13-257 (Washington, D.C.: Apr. 9, 2013).

5

Pub. L. No. 113-66, § 252 (2013).
Page 2 GAO-14-358R Presidential Helicopter Program

To conduct this work, we identified acquisition best practices, based on GAO’s extensive body 

of work in that area and DOD guidance, as well as the Weapon Systems Acquisition Reform Act 

of 2009 (WSARA) and other statutory requirements.6 We then analyzed program 

documentation, including the VXX acquisition strategy, systems engineering plan, acquisition 

decision memorandums and other documents required prior to the start of system development. 

We interviewed program and agency officials from the Office of the Under Secretary of Defense 

for Acquisition, Technology, and Logistics (OUSD(AT&L)); the Deputy Assistant Secretary of the 

Navy, Air Programs; the Navy’s Program Manager, Presidential Helicopter Program Office; 

Marine Helicopter Squadron One (HMX-1)—the presidential helicopter fleet operators, and a 

representative from the White House Military Office about plans to start system development for 

the VXX. We discussed capability trade-offs that have been made to ensure that the system is 

affordable and the program’s rationale for deferring the PDR and plans to mitigate program 

risks. We also met with an official from the Director of the Office of the Secretary of Defense 

(OSD), Cost Assessment and Program Evaluation (CAPE) to discuss the independent cost 

estimate developed for the program. In addition, we reviewed the Navy’s independent 

assessment of the readiness of the program’s subsystem technologies and visited the VXX 

systems integration laboratory where these technologies are being designed and tested. 

We conducted this performance audit from July 2013 to April 2014 in accordance with generally 

accepted government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings 

and conclusions based on our audit objectives. We believe that the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our audit objectives.

Results in Brief

We found that the Navy continued to make progress in the past year toward (1) establishing a 

knowledge-based program that generally aligned with acquisition best practices and (2) meeting 

corresponding statutory certification requirements for entering the DOD acquisition process in 

the engineering and manufacturing development phase. The Navy has met or expects to meet 

requirements relating to assessment of technology readiness, making appropriate trade-offs to 

achieve affordability and getting approval of requirements, and development of an independent 

cost estimate. DOD has, however, waived a requirement for competitive prototyping and the 

Navy plans to defer a system level PDR until after the start of development. We reviewed 

DOD’s waiver of competitive prototyping for the VXX program last year and found that it 

addresses one of the two bases provided in WSARA for such waivers; that is, that the cost to

provide competitive prototypes exceeded the expected benefits. 7 In addition, while the Navy’s

plan to defer a system level PDR until after the start of system development deviates from 

acquisition best practices and is a waiver of a statutory requirement, a number of factors, such 

as the program’s reliance on mature technologies and selection of an existing aircraft, suggest 

reduced risk in this deferral.

 6

Pub. L. No. 111-23, as amended.

7 GAO, Department of Defense’s Waiver of Competitive Prototyping Requirement for the VXX Presidential Helicopter 

Replacement Program, GAO-13-826R (Washington, D.C.: Sept. 6, 2013).
Page 3 GAO-14-358R Presidential Helicopter Program

Background

The Marine Corps’ HMX-1 (Marine Helicopter Squadron One) uses a fleet of 19 VH-3D and VH60N helicopters to transport the President in the national capital region, and when traveling in 

the continental U.S. and overseas. These aircraft have been in service for decades. The events 

following the September 11, 2001, terrorist attacks on the United States highlighted the fleet’s 

need for improved transportation, communication, and security capabilities. As a result, a 

program (subsequently designated the VH-71 program) was initiated in April 2002 to develop 

aircraft to replace the helicopters currently in service. Initial plans to field the VH-71 by 2011 

were accelerated in response to a November 2002 White House memorandum directing that a 

replacement helicopter be fielded by the end of 2008. By 2009, significant cost growth plus 

schedule delays and performance issues resulted in the decision to terminate the VH-71 

program. At that time, the estimated VH-71 program cost had doubled from about $6.5 billion at 

the start of development in 2005 to $13 billion. Because the need to replace the current 

presidential helicopters remained, OUSD(AT&L) directed the Navy to present a plan to develop 

options for a new program to acquire replacement helicopters, now designated VXX.

The Navy’s VXX efforts began immediately with the initiation of an Analysis of Alternatives 

(AOA) in 2009 to assess options on how to develop and field the replacement. It was focused, 

at least in part, on one of the primary lessons learned from the VH-71 experience—the need to 

establish and maintain a sound business case. A sound business case is one in which a 

balance is established among requirements, costs, and schedule that reflects an executable 

program with acceptable risk.

8 According to program officials, the VXX program would follow

best practices and pursue a knowledge-based acquisition approach to establish and maintain 

an affordable business case.

In February 2012, we reported that VXX program’s entry into development had been delayed as 

the program worked to provide a sound initial business case for development. The Navy 

produced its initial AOA report in 2010 but was directed by OUSD(AT&L) to update the study 

and use a streamlined acquisition strategy focused on mitigating cost drivers identified in the 

2010 study. OSD provided additional guidance in December 2011 for the 2012 update, which 

reflected insights on requirements and knowledge gained in the 2010 study and using a 

streamlined acquisition approach proposed by the Navy. The proposed approach would make 

use of mature commercial and military technologies being developed outside of the program 

before including them on aircraft selected for the program with their adoption facilitated by open 

systems architectures. Commercial or military aircraft in production would then be selected and 

government-provided mature technologies would be integrated into the aircraft. We also 

reported on DOD’s planned upgrades to the fleet of in-service, legacy helicopters. The 

termination of the VH-71 program and delays in the VXX effort necessitated efforts to extend the 

life and upgrade the capabilities of the current presidential helicopters.9

In April 2013, we reported that the Navy had made progress in the prior year in establishing a 

sound VXX business case that reflects a rational balance between requirements, costs and 

schedule. The Navy updated the AOA in 2012, based on the acquisition approach of integrating 

mature technologies from outside the program onto an existing commercial or military aircraft. 

The 2012 AOA reflected additional trade-offs made among cost, schedule, risk, and 

performance. Those performance trade-offs enable the Navy’s acquisition approach of 

integrating mature technologies onto an existing aircraft and are expected to result in reduced 

 8

GAO-11-380R. 9

GAO-12-381R.
Page 4 GAO-14-358R Presidential Helicopter Program

cost and schedule. The 2012 AOA estimated that the proposed approach of entering the 

acquisition process in the engineering and manufacturing development phase rather than 

proceeding with a technology development phase, as was anticipated in the 2010 study, would 

reduce investment cost by approximately $1.5 billion (19.7 percent) and shorten the 

development schedule by about 18 percent.10

The Navy released a request for proposals for the engineering and manufacturing development 

phase for the VXX Presidential Helicopter Replacement Program on May 3, 2013, and is 

currently in source selection. It anticipates awarding contracts to initiate engineering and 

manufacturing development in mid-fiscal year 2014. 

Program Continues to Progress toward Demonstrating Key Knowledge by Development

Start

The Navy’s VXX program continues to make progress toward establishing a knowledge-based 

approach that aligns with acquisition best practices and meets corresponding statutory 

certification requirements for entering the engineering and manufacturing development phase. 

Our prior work has demonstrated that positive acquisition outcomes require the use of a 

knowledge-based approach to product development that demonstrates high levels of knowledge 

before significant commitments are made. This approach involves achieving the right knowledge 

at the right time—enabling leadership to make informed decisions about when and how best to 

move forward. On the basis of this work, we have identified three key knowledge points during 

the acquisition cycle at which programs need to demonstrate critical levels of technology, 

design, and manufacturing knowledge to proceed. The Navy’s acquisition strategy is for the 

VXX program to enter DOD’s acquisition process at the first of those knowledge points, the start 

of system development, as shown in figure 1.

 10GAO-13-257.
Page 5 GAO-14-358R Presidential Helicopter Program

Figure 1: Program’s Anticipated Entry into DOD Acquisition Process and GAO Knowledge Points

The decision to begin the engineering and manufacturing development phase is referred to as 

milestone B. By statute and DOD policy, major defense acquisition programs11

• demonstration of technology to a certain level of maturity based on an independent 

review and assessment by the Assistant Secretary of Defense for Research and 

Engineering;

—such as the 

anticipated VXX program—are required by milestone B, unless waived by the milestone 

decision authority, to meet certain requirements, including

• appropriate trade-offs among cost, schedule and performance objectives have been 

made to ensure the program is affordable:

• approval of the program’s requirements by the Joint Requirements Oversight Council;

• development of reasonable cost and schedule estimates to execute, with the 

concurrence of the Director of CAPE, the program’s product development and 

production plan; 

• competitive prototyping; and 

• a PDR and formal post-PDR assessment have been conducted, demonstrating a high 

likelihood of the program’s accomplishing its intended mission.12

Demonstrating technology maturity, making trade-offs, having reasonable cost and schedule 

estimates, and holding PDRs by milestone B are all best practices. Last year we found that the 

VXX program had made progress toward establishing a sound VXX business case for 

development.

13

 1110 U.S.C. § 2430. Major defense acquisition programs are those designated by DOD or estimated by DOD to 

require an eventual total expenditure for research, development, test, and evaluation of more than $480 million, or,

for procurement, of more than $2.79 billion, in fiscal year 2014 constant dollars.

The program has continued to work toward such a business case and meeting 

the statutory requirements for milestone B. The Navy has met or expects to meet the 

1210 U.S.C. § 2366b. requires the listed elements with the exception of competitive prototyping. The Weapon

Systems Reform Act of 2009, Pub. L. No. 111-23, § 203(a), as amended by the Ike Skelton National Defense 

Authorization Act for Fiscal Year 2011, Pub. L. No. 111-383, § 813, required the Secretary of Defense to modify 

guidance to ensure that the acquisition strategy for each major defense acquisition program provides for competitive 

prototypes before Milestone B approval unless the Milestone Decision Authority waives the requirement. Interim DOD

Instruction 5000.02, Operation of the Defense Acquisition System, dated November 25, 2013, implements the 

statutory requirement.

13GAO-13-257.
Page 6 GAO-14-358R Presidential Helicopter Program

requirements relating to demonstration of technology readiness, making trade-offs to achieve 

affordability and getting approval of requirements, and development of cost and schedule 

estimates that will be independently assessed. It has obtained a waiver from the requirement for 

competitive prototyping and plans to defer the PDR until after milestone B.

Assessment of Technology Readiness Completed 

Ensuring that programs have mature technologies before starting systems development is a 

best practice and essential to avoiding cost and schedule problems. The Navy completed its

independent technology readiness assessment of the government designed and developed 

Mission Communications System (MCS) subsystem to be integrated in VXX aircraft and 

submitted the assessment to the Assistant Secretary of Defense for Research and Engineering. 

This office conducted its own independent assessment, and concurred with the preliminary 

assessment of the MCS which found the MCS to contain no immature critical technologies. 

In an April 2013 acquisition decision memorandum for the program resulting from a preengineering and manufacturing review, the Under Secretary of Defense for Acquisition, 

Technology, and Logistics—the acquisition Milestone Decision Authority for the VXX 

program—instructed the Navy to submit its MCS technology readiness assessment to support 

the statutory requirement that technology in the program has been demonstrated in a relevant 

environment before milestone B approval. In addition, at milestone B, the Navy is to provide 

verification that there are no immature critical technologies in the selected aircraft based on 

program requirements. A subsequent Navy assessment of potential VXX aircraft completed 

within the source selection process found no immature critical technologies on the potential VXX 

aircraft. The Assistant Secretary of Defense for Research and Engineering also concurred with 

this assessment.

Trade-offs to Ensure Affordability and Approval of Requirements Completed

The Navy used a process involving representatives from the VXX program sponsor, 

requirements, acquisition, and user communities to establish requirements. According to 

officials we interviewed, following the termination of the VH-71 program in June 2009, a 

Capabilities Integrated Product Team (CIPT) for the follow-on effort was created. The VXX CIPT 

is a working-level forum whose mission is to identify, clarify, and resolve all aspects of aircraft 

mission related issues and program requirements in order to satisfy presidential mission support 

requirements and U.S. Marine Corps’ desired operating capabilities. This team briefs the VXX 

Integrated Steering Group. Membership in these governing integrated process teams includes 

key VXX program stakeholders including the Deputy Chief of Naval Operations for Air Warfare

(the program sponsor); OUSD(AT&L); Deputy Assistant Secretary of the Navy (Air); Marine 

Corps Deputy Commandant for Aviation; Marine Corps Combat Development and Integration 

Command; and presidential helicopter fleet operators; and the White House Military Office 

(representing both the requirements and user communities). 

By December 2011, the Navy proposed a path forward for the VXX program that focused on 

affordability. In carrying out the requirements setting process, the Navy made trade-offs in 

capability to achieve affordability and promote competition. The CIPT members considered 
Page 7 GAO-14-358R Presidential Helicopter Program

potential reductions in requirements and adopted changes that would make the VXX more 

affordable while maintaining its overall ability to accomplish the VXX mission. According to 

officials we met with, some of those changes were also expected to promote competition, 

including reducing the operational availability requirement, increasing the time available to 

prepare the aircraft for transportability, and dropping a requirement related to the placement of 

the passenger door. As a result, the Navy’s requirements to improve affordability and reduce 

schedule were accepted by the users and received Joint Requirement Oversight Council

approval. 

Independent Cost Estimate in Process

Last year we concluded that completion of an independent cost estimate could confirm the AOA 

cost estimates.14 Major defense acquisition programs, such as the VXX program, are required 

by statute to have an independent cost estimate (ICE) prior to the beginning of system 

development.

15 In August 2012, OUSD(AT&L) directed that CAPE complete an ICE prior to a

pre-engineering manufacturing and development review for the program—a review that 

occurred on April 5, 2013. Since that review, according to the CAPE official we interviewed, the 

CAPE has continued work on its cost estimates to refine them, to support the milestone B 

decision. This estimate will become available once the milestone B decision has been 

completed.

Competitive Prototyping Requirement Waived

The Weapon Systems Acquisition Reform Act of 2009, as amended, required the Secretary of 

Defense to modify guidance to ensure that the acquisition strategy for each major defense 

acquisition program provides for competitive prototypes before milestone B approval—which 

authorizes entry into system development—unless the Milestone Decision Authority waives the 

requirement. WSARA states that the Milestone Decision Authority may waive the competitive 

prototyping requirement only on the basis that (1) the cost of producing competitive prototypes 

exceeds the expected life-cycle benefits (in constant dollars) of producing such prototypes, 

including the benefits of improved performance and increased technological and design maturity 

that may be achieved through competitive prototyping; or (2) but for such a waiver, DOD would 

be unable to meet critical national security objectives.16 When such a waiver is granted based 

on criteria one for cost reasons, the Weapon Systems Acquisition Reform Act of 2009 requires 

the Milestone Decision Authority to provide GAO with notification of the waiver under criteria 

one together with the rationale and for GAO to review and report its assessment of that rationale 

to the congressional defense committees.17

On April 19, 2013, the Navy was granted a waiver to the competitive prototyping requirement for 

the VXX program. We reviewed the rationale for the waiver and reported our findings in 

 14GAO-13-257. 1510 U.S.C. § 2334

16Interim DOD Instruction 5000.02, Operation of the Defense Acquisition System, paragraph 5(d)(4)(b)(2)(b), 

November 25, 2013, implements the statutory requirement.

17Pub. L. No. 111-23, § 203(b).
Page 8 GAO-14-358R Presidential Helicopter Program

September 2013.18 Specifically, in that report we found that DOD’s rationale addressed one of 

the two bases provided in the statute; namely, that the cost of producing competitive prototypes 

exceeds the expected life-cycle benefits, and found the rationale for the waiver consistent with 

the statute. Recognizing that the intent of competitive prototyping was to reduce cost and risk, 

we noted other actions that had been taken that could arguably achieve those goals—reducing 

requirements, intent to use an existing aircraft and maturing critical technologies prior to 

integrating them into the aircraft. We also noted that the Navy is gathering engineering 

knowledge by prototyping and testing sub-systems in its system integration laboratory, before 

integration efforts begin on the selected VXX aircraft. 

System Level PDR Deferred, Subsystem Review Completed

OSD intends to defer a system level PDR—one that includes the selected aircraft and all 

integrated equipment—until the awarding of a contract following the milestone B decision. It is a 

best practice to hold a PDR prior to milestone B as a PDR provides important design knowledge 

and reduces risk before entering into a development contract.19 While the Navy’s plan to hold 

the PDR after milestone B deviates from best practices, several factors in the VXX acquisition 

appear to mitigate the risk. The Navy has completed a PDR of the MCS that is to be provided to 

the contractor for integration on VXX aircraft. The program’s acquisition strategy relies on 

mature off-the-shelf technologies being placed on an existing aircraft without significant changes 

being made to the aircraft. The program also provided a detailed technical data package with 

the VXX solicitation for competitive offers including describing in detail the systems to be 

integrated into the chosen aircraft, and according to the program manager, VXX offerors were to 

provide detailed solutions demonstrating how their proposed aircraft can meet the VXX 

requirements. This is significant because it allows the government an increased understanding 

of the design considerations in the source selection process. In addition, it is the program’s 

intent that the engineering and manufacturing development phase be contracted under fixedprice incentive contract terms, with a very small portion (less than 2 percent) being cost 

reimbursable.

20

Much remains to be accomplished, though, before VXX will be fielded. As the program proceeds 

through system development and production, it will be important for DOD to continue to 

 18GAO-13-826R. 19 A major defense acquisition program may not receive milestone B approval until the milestone decision authority 

(MDA), among other things, certifies that the program has received a preliminary design review. The MDA may 

waive the applicability of this and other provisions if the MDA determines that without the waiver DOD would be 

unable to meet critical national security objectives. 10 U.S.C. § 2366b.

20The Federal Acquisition Regulation (FAR) authorizes use of fixed-price-incentive contracts when a firm fixed-price 

contract is not appropriate; the nature of the supplies or services being acquired and other circumstances of the 

acquisition are such that the contractor’s assumption of a degree of cost responsibility will provide a positive profit 

incentive for effective cost control and performance. If the contract also includes incentives on technical performance 

and/or delivery, the performance requirements provide a reasonable opportunity for the incentives to have a 

meaningful impact on the contractor’s management of the work. This contract type provides that the government and 

the contractor generally share costs—pursuant to a formula—above the target cost and below the ceiling price. FAR 

authorizes use of a cost reimbursement contract when circumstances do not allow the agency to define its 

requirements sufficiently to allow for a fixed-price type of contract or uncertainties involved in contract performance do 

not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract. When using this 

contract type the government pays for all allowable incurred costs to the extent prescribed in the contract.
Page 9 GAO-14-358R Presidential Helicopter Program

maintain discipline in following best practices. If it does not, then the risks accruing from failures 

to follow those practices could result in significant cost, schedule, and performance problems. 

We are not making recommendations in this report.

Agency Comments and Our Evaluation

DOD did not offer any general comments on a draft of this report, but did provide technical 

comments, which were incorporated where appropriate.

------

We are sending copies of this report to interested congressional committees; the Secretary of 

Defense; the Under Secretary of Defense for Acquisition, Technology, and Logistics; and the 

Secretary of the Navy. This report also is available at no charge on GAO’s website at 

http://www.gao.gov.

Should you or your staff have any questions on the matters covered in this report, please 

contact me at (202) 512-4841 or sullivanm@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this report. Key 

contributors to this report were Bruce H. Thomas, Assistant Director; Bonita Oden, Analyst-inCharge; William C. Allbritton; Marie P. Ahearn; Kenneth E. Patton; and Robert S. Swierczek.

Michael J. Sullivan, Director

Acquisition and Sourcing Management
Page 10 GAO-14-358R Presidential Helicopter Program

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard J. Durbin

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard P. McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Rodney Frelinghuysen

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives

(121154)
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