We have been reviewing the status of the Army's Advanced Attack Helicopter (AH-64) and laser Hellfire missile programs. Although our review is not yet complete, we have several concerns in view of the imminent decision on the merits of starting production of these two weapon systems. New program cost estimates prepared by the Army indicate that AH-64 procurement costs would increase by 40 to 50 percent from the $4.8 billion reported in the September 1981 Selected Acquisition Report. This major increase created an affordability problem and the Army now intends to reduce the total program quantities from 536 to 446 aircraft. With this change, the projected AH-64 unit production cost now exceeds $13 million. The merits of producing the AH-64 and Hellfire must be weighed against resulting reductions in funds available for other programs.

This study focuses on the success of the AAH Program Office in coping with problems and issues in such areas as technology, technical risks, business management, and transitioning to production. It identified the following basic factors which contributed to the success of the AAH program: continuity of key personnel within the program management office; innovative planning and effective management of the competition; continuing Army support of the AAH program as an integral part of force modernization; and intensive management when required. Lessons learned include: Recognition that a design-to-cost program may not serve to discipline cost growth; Fabrication of prototypes during engineering or advanced development is necessary; Subsystem integration on a complex weapon system is facilitated by establishment of an interface control working group; Program office personnel at the test site can improve test continuity and provide managers with timely status reports; The magnitude of the logistics support analysis effort must be clearly stated by the Government and well understood by all contractors and subcontractors; Current spares requirements should be based on the current expected failure rates not on the maturity rate which may not be reached for several years; The success of a weapon system acquisition program is as dependent upon overcoming the chaos of the Federal budgetary process, the degree of agreement obtained among executive departments, and the leadership of the program manager as it is upon hardware development.

GAO has been reviewing the status of the Army's Advanced Attack Helicopter (AH-64) and Laser Hellfire Missile Programs. Although the review is not yet complete, GAO has several concerns in view of the imminent decision on the merits of starting production of these two weapon systems. GAO has five basic concerns: (1) the data currently available for decision purposes includes data derived from tests of two key subsystems, the target acquisition designation sight and the helicopter engine, whose configurations will differ from the subsystems to be made a part of the production aircraft; (2) caution should be used in accepting the AH-64 reported reliability, availability, and maintainability calculations since they may be overstating the helicopter's capability in these areas; (3) the Army's ability to adequately support the helicopter for an extended period after initial deployment is questionable; (4) the Laser Hellfire Missile, although it has generally shown an advantage in testing in a clear environment, still has some serious shortcomings that could limit the AH-64 total system effectiveness; and (5) contractor readiness to begin production is still at a point where it is not without some potential program-inhibiting risks. Collectively, these concerns seem to justify a cautious approach in arriving at a production decision. GAO believes a decision at this time would necessarily be relying on incomplete information, questionable evaluations, and optimistic projections, and would result in considerable risk regarding system cost, performance, reliability, and supportability.

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