BAI Suggests Reconsideration of New Military Helicopter Project

The Board of Audit and Inspection has filed a report suggesting the reconsideration of the Korea Multi-role Helicopter (KMH) project, one of the largest strategic defense initiatives, with the National Assembly and the Department of Defense, Dong A-Ilbo learned on July 26.

The regulatory watchdog group, which began to conduct an audit of the KMH project at the request of the National Assembly last year, enumerated the following problems in its report for the Defense Committee of the National Assembly and the Defense Department: The project’s lack of economic feasibility; flaws in the policy preview of the project; the danger of a strategic vacuum; and flaws in budget accounting. The report was classified as a “Secret II” and has remained confidential.

“The KMH, once implemented, will cost 38.7 trillion won, about eight trillion more than an estimate made by the Korea Development Institute for the Defense Department,” said the BAI in the report.

“It will cost about 24.9-29.7 trillion won, about as much as 13 trillion won less than the project itself, if the government buys Apache or UH-60 fixed rotary-wing aircrafts, helicopters in the same class as the KMH.”

“The mergers and acquisitions of internationally renowned helicopter manufacturers and a decline in the civilian helicopter market will make market prospects for the KMH grim,” the BAI said, requesting reconsideration of the project.

The regulator also said a contingency plan will be needed as the new purchase of helicopters will be completely suspended during the KMH project, creating a vacuum of military readiness.

“Some of the BAI’s concerns make sense,” the Defense Department said. “Nevertheless, since the cost of the KMH project will be determined by an open bid, not a private contract, it will be less than the projections.”

The KMH project is aimed at developing a new model for 477 attack helicopters that will replace old models currently operated by all three branches of the military for the next 30 years. It is the largest defense initiative as of date, which will cost 15 trillion won for the development and mass production of the model by 2012. In November of last year, the National Assembly requested the BAI launch an investigation into the project, citing possible flaws in it.

Young-Hae Choi yhchoi65@donga.com