Exhibit 300 Analysis USDA Forest Service National Helicopters
Exhibit 300 Analysis – Business Case Analysis
USDA – Forest Service National Helicopters
Prepared For:
USDA
Forest Service
Washington DC
August 31, 2011
Prepared By:
Conklin & de Decker Associates, Inc.
Arlington, TX 76012
817 277 6403
www.conklindd.com
Exhibit 300 Analysis USDA Forest Service National Helicopters
Table of Contents
1
INTRODUCTION ..............................................................................................................................................1
2
BENEFIT TO COST ANALYSIS (BCA) OF THE USE OF AIR SUPPORT FOR FIGHTING
WILDLAND FIRES ....................................................................................................................................................3
2.1
3
DETAILED ANALYSIS...................................................................................................................................4
Cost of Fire Suppression (Cost + NVC) – Australian Analysis ........................................................................................ 4
Cost of Fire Suppression (Cost + NVC) – Forest Service Analysis .................................................................................. 5
2009 Large Fire Cost and Acres Destroyed ...................................................................................................................... 5
Land Value per Acre for 2009 Large Fires ....................................................................................................................... 6
Net Value Change of Acres Burnt in 2009 Large Fires..................................................................................................... 6
ANALYSIS OF ACQUISITION AND O&M ALTERNATIVES ..................................................................8
3.1
AVAILABLE ALTERNATIVES ........................................................................................................................8
3.1.1
Ownership .........................................................................................................................................9
3.1.2
Operation ..........................................................................................................................................9
3.1.3
Maintenance.................................................................................................................................... 10
3.1.4
Available alternatives ..................................................................................................................... 10
3.2
Government Owned, Government Operated ................................................................................................................... 10
Government Owned, Contractor Operated ...................................................................................................................... 10
Contractor Owned, Government Operated ...................................................................................................................... 11
Contractor Owned, Contractor Operated......................................................................................................................... 11
COST ANALYSIS ........................................................................................................................................ 11
Government Owned/Government Operated (GO/GO).................................................................... 12
3.2.1
Pilot Costs ....................................................................................................................................................................... 14
3.2.2
Government Owned/Contractor Operated (GO/CO) ...................................................................... 16
3.2.3
Contractor Owned/Government Operated (CO/GO) ...................................................................... 20
Contractor Operation Costs ............................................................................................................................................. 18
Pilot Costs ....................................................................................................................................................................... 22
3.2.4
3.3
3.4
4
Contractor Owned/Contractor Operated (CO/CO) ........................................................................ 23
COST COMPARISON OF ALTERNATIVES ..................................................................................................... 25
5 Year Cost Avoidance - National Helicopter Fleet ........................................................................................................ 25
RECOMMENDATION ................................................................................................................................... 25
BUDGET ANALYSIS ...................................................................................................................................... 26
4.1
4.2
AIRCRAFT REPLACEMENT SCHEDULE ....................................................................................................... 26
Table 4.1 - Aircraft Replacement Schedule .................................................................................................................... 27
FINANCIAL ANALYSIS ............................................................................................................................... 27
Acquisition Cost .............................................................................................................................. 28
4.2.1
Table 4.2 - Aircraft Acquisition Cost Schedule .............................................................................................................. 28
4.2.2
4.3
4.4
O&M Costs ..................................................................................................................................... 29
Table 4.3 - 2010 Costs for Bell 205A1++ & 210 ............................................................................................................ 29
Table 4.4A – FTE Analysis ............................................................................................................................................. 32
Table 4.4B – Program Management ............................................................................................................................... 32
Table 4.5 - Annual Cost of Proposed National Helicopter Program ............................................................................... 33
20-YEAR BUDGET FOR ACQUISITION AND O&M BY YEAR ....................................................................... 34
Table 1 - Summary of Spending for Project Phases ........................................................................................................ 34
BENEFIT TO COST ANALYSIS OF GO/GO PROGRAM .................................................................................. 35
Table 4.7 - Benefit/Cost Analysis ................................................................................................................................... 35
Table of Contents
Exhibit 300 Analysis USDA Forest Service National Helicopters
5
RISK ANALYSIS ............................................................................................................................................. 36
6
AGENCY STRATEGIC GOALS SUPPORTED .......................................................................................... 39
Table of Contents
1
Exhibit 300 Analysis USDA Forest Service National Helicopters
Introduction
The mission of the United States Forest Service (FS) an agency within the Department of
Agriculture (USDA) is to “Sustain the health, diversity, and productivity of the Nation’s forests
and grasslands to meet the needs of current and future generations”. Fighting wildland fires is
a significant part of the Forest Service mission. The primary task of the Forest Service Aviation
program is to support the ground firefighters with both helicopters and fixed wing aircraft. For
2011 the Forest Service resources consist of 179 dedicated aircraft and 300 ready reserve
aircraft.
Helicopter support is provided through a variety of means including aerial delivery of fire
retardant and water, smokejumper operations, rappelling activity, air attack, firefighter and
cargo transport, surveillance, aerial reconnaissance and fire intelligence gathering.
The Forest Service helicopter program operates from dedicated facilities staffed with highly
trained aerial attack firefighters known as “helitack” personnel throughout the Forest Service
regions. The primary focus of these helicopters is fire suppression activities in the region to
which they are assigned. In addition, the Forest Service uses seven (7) National Asset Type 2
helicopters to provide fire suppression support where needed when the intensity of the fires
exceeds the local resources. These seven National use helicopters are “hosted” at established
helitack bases but are not “dedicated” to the region where they are based during the offseason. Instead they provide nationwide support as needed when fire intensity exceeds the
local resources or they can be prepositioned to regions that have the highest likelihood of fire
activity.
The status quo is that the Forest Service has contracted for the use and operation (i.e.
contractor owned and contractor operated) of almost all its helicopters including the seven
National helicopters. At present, the Forest Service is reviewing the number, location and
method of acquisition for these National helicopters. This requires that an Exhibit 300 analysis
be accomplished.
The guidelines to accomplish an Exhibit 300 Aviation Business Case are established by the Office
of Management and Budget (OMB). OMB Circular A-11, Part 7 (Section 300) as revised August
2011 establishes policy for planning, budgeting, acquisition and management of Federal capital
assets, and provides instructions on budget justification and reporting requirements for major
aviation capital assets. OMB provides procedural and analytic guidelines for implementing
specific aspects of these policies as appendices and supplements to this Circular and in other
OMB circulars.
Guidance for the preparation of the required justification documents is contained in Part 7,
Exhibit 300 (updated August 2011) and in the accompanying Capital Programming Guide.
Business Case Analysis
1
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The E-300 Business Case Summary document is a high level document grounded in analysis of
current operations, mission support needs and possible alternatives. The necessary analysis is
contained in two supplementary documents that support the Summary, the Requirements
Analysis and the Business Case Analysis.
This document is the Business Case Analysis portion of the E-300 analysis and is designed to
ensure that the planned investment supports the mission statement and requirements,
provides acquisition and long-term operating budgets for the annual performance plan and is
the most cost effective means of accomplishing the assigned mission. In addition it addresses
the risks and proposed risk mitigation for the planned investment. This is discussed in the
following major sections in this document.
The first section examines the benefit to cost ratio of air support in fighting wildland fires. It
examines the studies that have been accomplished that relate to the cost to benefit ratio of fire
fighting air support on wildland fires. These studies have determined that there is a significant
benefit to using air support to supplement and support the ground fire fighter.
The next section is an analysis of the various methods of acquisition and operation of the
aircraft recommended in the Requirements Analysis. In this section the cost of the four
common alternatives for the Federal Government to procure aviation capability are analyzed:
• Government Owned and Government Operated
• Government Owned and Contractor Operated
• Contractor Owned and Government Operated
• Contractor Owned and Contractor Operated
The third section is the Budget analysis. In this section the least cost alternative from the
previous section is used to develop a budget for the life cycle of the project. In this case the
budget includes the cost of acquisition of the recommended aircraft, the use of contractor
aircraft during the transition period, and the operations costs for the 20-year duration of the
program.
The last section analyzes the risks associated with the planned investment over the proposed
duration of the program. Where there are medium or high risks a risk mitigation strategy is
developed to reduce the risk to a low risk. The cost associated with the risk mitigation plan is
also factored into the life cycle cost analysis and the budget.
Business Case Analysis
2
August 31, 2011
2
Exhibit 300 Analysis USDA Forest Service National Helicopters
Benefit to Cost Analysis (BCA) of the use of Air Support for Fighting Wildland Fires
In the mid-1990s the USFS developed a model based on actual costs of wildland fires with and
without air support to estimate the cost effectiveness of using air support to fight wildland
fires1. This showed clearly that the use of air support is very cost effective. More recently the
Australian Brushfire – CRC group conducted a similar analysis using a comprehensive simulation
model that showed a very similar level of cost effectiveness for using air support when fighting
wildland fires2. It should be noted that only limited additional data is available on this subject
beyond these two studies. The Large Fire Cost Review for FY 2009 3 accomplished by the
Independent Large Fire Cost Review Panel also makes note of this. One of the
recommendations of this study (Recommendation 13 - Metrics) is to “Develop a metric for
estimating values conserved, and comparing them to fire costs, as a way to reflect the true costbenefit of wildland fire suppression”. As a result of the scarcity of data, this analysis is based on
the two studies mentioned above.
Applying the results of these two analyses to the most recent year for which data is available
(2009) shows that the benefit to cost ratio of using air support to fight wildland fires is 7.45. In
other words, for each dollar spent on using air support, $7.45 was saved when compared with
not using air support.
Wildland fires are fought and extinguished by personnel on the ground. However, air support is
a vital element in helping to extinguish these fires. Air support consists of a group of assets that
can be used to fight fires as circumstances (intensity and direction of the fire, terrain, ground
access, availability of ground resources, etc.) dictate. Air support assets include:
- Air tankers
- National helicopters
- Type 1, 2 and 3 helicopters
- Smokejumpers
- IR fire mapping
- Etc.
These air support assets each have different attributes and each has proven itself valuable in
fighting different aspects of a fire. The ground personnel managing the fire suppression effort
as a consequence focus on using the right air support asset for the fire-fighting task they are
faced with. This means that the benefit to cost ratio calculated in this section applies to air
support as a whole including the National Type 2 helicopters.
1
National Study of Airtankers to Support Initial Attack and Large Fire Suppression. Final Report, Phase 1. USDA
Forest Service, Department of Interior. 1995 (Pages 12 – 16).
2
The Cost Effectiveness of Aerial Fire Fighting in Australia. Centre for Risk and Community Safety, RMIT University
and Bushfire Cooperative Research Center. Report A.09.01, April 2009.
3
Large Fire Cost Review for FY 2009. Secretary of Agriculture’s Independent Large Cost Fire Review Panel. August
2010
Business Case Analysis
3
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
2.1 Detailed Analysis
The analysis in both the USFS and the Australian models was accomplished by comparing the
number of acres burnt when air support is used with the number of acres that were or would
have been burnt without air support. For example in the early 1990s USFS study, the data
showed that the use of air support when fighting large fires reduced the number of acres burnt
by about 15% (560,575 acres without air support vs. 474,585 acres with air support).
The cost model used to calculate the benefit to cost ratio uses the “cost plus net value change”
approach. In this model the “cost” is the cost incurred to suppress the fire with or without air
support. The “net value change” (also referred to as the “loss”) is the cost of the destruction
caused by the fire of timber, vegetation, recreational facilities and structures plus the cost of
restoration. Both the USFS and the Australian study use the same cost model with the USFS
study calling the total cost the “Cost plus NVC” while the Australians call it “Cost plus Loss”.
The Australian analysis shows that the “Cost plus NVC” with air support for fire suppression is
an average of 72% of the “Cost plus NVC” without air support, as shown in the following table.
Cost of Fire Suppression (Cost + NVC) – Australian Analysis
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Total
Average
No Air Support
$534,709
$371,482
$332,083
$315,197
$1,553,471
With Air Support
$393,996
$264,540
$236,398
$219,512
$1,114,447
%
74%
71%
71%
70%
72%
The results of this analysis are very similar to the data generated in the Forest Service study
done in the mid-1990s. That study showed the “Cost plus NVC” with air support for fire
suppression ranges from 69% to 106% and averages 74% of the “Cost plus NVC” without air
support, as shown in the following table.
Business Case Analysis
4
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Cost of Fire Suppression (Cost + NVC) – Forest Service Analysis
Value of Acres Burned
With Air
No Air
$64.47
$99.86
$27.62
$30.31
$0.83
$1.07
$31.94
$45.08
$1.93
$2.01
$4.10
$5.52
$1.54
$1.65
$185.49
Suppression Cost
Total Cost
With Air
No Air With Air
No Air
%
California
$71.28
$97.69 $135.75 $197.55 69%
Great Basin
$35.33
$42.42
$62.95
$72.73 87%
Northern
$6.27
$7.20
$7.10
$8.27 86%
Pacific NW
$25.91
$39.22
$57.85
$84.30 69%
Rocky Mt
$3.87
$3.94
$5.79
$5.95 97%
Southwest
$20.67
$28.40 $ 24.77
33.91 73%
Southern
$5.33
$4.81
$6.87
$6.45 106%
Total 1995
$168.67 $223.68 $301.08 $409.17
Average
74%
The results of the Australian and Forest service analyses shows that on average the “Cost plus
NVC” with air support for fire suppression is 73% of the “Cost plus NVC” without air support.
To calculate the benefit to cost ratio of using air support, the following analysis was then
accomplished.
- The Large Fire Cost Review for FY2009 4 report dated August 2010 contains detailed cost
information about the cost of fire suppression and the acres destroyed for the six large
fires that occurred in 2009. This data is as follows:
2009 Large Fire Cost and Acres Destroyed
$16.897
$16.947
$12.122
$34.889
$94.739
$14.226
Acres
Destroyed
6,324
7,418
6,130
89,489
160,577
8,400
Air Support
Cost
$4.916
$3.824
$2.197
$10.164
$16.034
$2.160
$189.820
278,338
$39.295
$95.081
117,761
$23.261
Name of Fire
Fire Suppression Cost ($ Mill)*
Backbone, CA
Big Meadow, CA
Knight, CA
La Brea, CA
Station, CA
Williams Creek, OR
Total
Total (w/o Station)
* Excluding the cost of air support
The value of acres destroyed was established by determining the location of each of the 6 large
fires in 2009, correlating the location with the counties affected and then determining the value
per acre of the land and structures in each of these counties. The value per acre was obtained
from a document published by the USDA National Agricultural Statistical Service.5
4
Large Fire Cost Review for FY 2009. Secretary of Agriculture’s Independent Large Cost Fire Review Panel. August
2010
5 Adjusted 2002 and 2007 NASS Census per Acre Land and Building Values and Rent Schedule Zones for Use with
the 2009 through 2015 Linear Rent Schedule. USDA National Agricultural Statistics Service. WO350. 6/1/2009
Business Case Analysis
5
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The value per acre for the different counties affected by each fire, as is shown in the following
table:
Land Value per Acre for 2009 Large Fires
Name
Backbone
Fire
Location
Six Rivers Forrest
Big Meadow
Knight
Yosemite Nat Park
Stanislaus Nat
La Brea
Los Padres Nat For
Station
Williams Creek
La Canada
Umpqua Nat For
Counties Affected
Del Norte
Humboldt
Mariposa
Alpine
Calaveras
Mariposa
Tuolumne
San Luis Obispo
Santa Barbara
Venture
Kern
Los Angeles
Lane
Douglas
Jackson
Klamath
ST
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
OR
OR
OR
OR
Value
$/Acre
$3,433
$950
$804
$2,000
$1,453
$804
$1,331
$2,141
$2,947
$7,071
$1,453
$12,435
$3,658
$1,648
$2,259
$810
Per Acre
Average
$2,192
$804
$1,397
$3,403
$12,435
$2,094
In 2009 the largest fire (by acreage and cost) was the Station fire. This was a unique fire in that
it took place in the middle of a densely populated suburban area of Los Angeles County where
the value of the land and structures is very high. Therefore this fire was not considered in the
following analysis of the cost effectiveness of the use of air support in fighting the typical
wildland fire.
Using the values per acre shown above and excluding the Station fire, the cost of the burnt
acreage in the 2009 fires can be calculated as follows:
Net Value Change of Acres Burnt in 2009 Large Fires
2009 Season
Backbone, CA
Big Meadow, CA
Knight, CA
La Brea, CA
Williams Creek, OR
Total W/O Station Fire
Business Case Analysis
Acres
$/Acre
6,324
7,418
6,130
89,489
8,400
117,761
$2,192
$804
$1,397
$3,403
$2,094
6
Net Value
Change
$13,862,208
$5,964,072
$8,563,610
$304,531,067
$17,589,600
$350,510,557
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Adding the cost of the Net Value Change to the cost of fire suppression for these fires
(excluding the Station fire) yields the following total “Cost plus NVC”:
Cost of Fire Suppression (excluding cost of Air Support)
Net Value Change of Land
$350.51
$118.34 Million
Total Cost of 2009 Large Fires$468.85 Million
As discussed above the total cost (Cost plus NVC) when using air support is an average of 73%
of the cost when air support is not used. On this basis, the total cost of the 2009 large fires
(excluding the Station fire) would have been $642.26 million without air support.
Therefore the total savings in Cost plus NVC by using air support for the 2009 fires studied is
estimated as follows:
Cost plus NVC without air support $642.26 million
Cost plus NVC with air support
$468.85
Savings by using air support $173.41 million
Using these savings and the cost of the air support discussed above, the Benefit to Cost ratio is
7.45 as shown below.
Savings by using air support $173.41 million
Cost of Air Support $23.26 million
Benefit to Cost ratio 7.45
Business Case Analysis
7
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
3 Analysis of Acquisition and O&M Alternatives
The Requirements Document established the performance, payload and other parameters the
fleet of five (5) National Helicopters must meet. A further analysis established there are a
number of helicopters capable of meeting these requirements, including the Bell 205A1++ or
Bell 212 Single Type 2 helicopters.
The status quo is that the Forest Service has used seven (7) contractor owned, contractor
operated (CO/CO) Type 2 helicopter for the National helicopter mission. The Requirement
Analysis recommended that five (5) Type 2 helicopters be used for the National helicopter
mission.
This section examines the available alternatives to acquire, operate and maintain the
recommended five National Helicopters. As noted above, the National Helicopters in current
use have, since the inception of the National Helicopter program, been provided by Contractor
Owned and Contractor Operated (CO/CO) contracts with various commercial operators. This
approach has been satisfactory from an operational point of view but may not be the most cost
effective.
To accomplish the required cost analysis of the various alternatives, a specific make and model
of helicopter must be used. For this reason the Bell 205A1++ and Bell 212 Single have been
used in the following analysis. Use of these helicopters in this analysis is in no way intended to
imply they are the only makes and models that can meet the stated requirements. In fact,
should the Forest Service decide to purchase the proposed fleet of five (5) national helicopters
the helicopters will be acquired through a free and open competition.
3.1 Available Alternatives
The following alternatives are available for the acquisition, operation and maintenance of these
helicopters:
- Ownership
o Purchase
o Lease to purchase
o Long term operating lease
o Short term (one year) lease
- Operation
o USFS operation
o Contractor operation
- Maintenance
o USFS maintenance
o Contractor maintenance
Business Case Analysis
8
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
3.1.1 Ownership
The ownership alternatives are severely limited by the requirements of the Federal Acquisition
Regulations and OMB Circular A-11 Preparation, Submission and Execution of the Budget. The
regulations in these two documents effectively eliminate the long term operating lease as well
as the lease to purchase. The reasons are as follows:
A lease to purchase arrangement requires the agency per OMB A-11 to have budget authority
in an “… amount equal to the asset cost…”. Since an agency normally would only consider a
lease to purchase arrangement if it did not have the required budget authority to purchase the
aircraft, this OMB requirement effectively eliminates this alternative from consideration.
A long term lease and the attendant attractively low monthly payments requires a long term
commitment by the lessee of at least 5 years without the right to cancel at any time during that
period. In the normal contract for such a lease, the lessee is liable for all remaining payments if
it wishes to cancel the lease prior to its conclusion. This presents two problems. First, per the
Federal Acquisition Regulations, to get budget authority for longer than 1 year requires an act
of Congress, which, historically, has been almost impossible to get. Without this, the lessee
must be able to cancel at the end of each year, which will require a penalty payment. OMB A11 states that for an operating lease, the agency must have budget authority in an “… amount
sufficient to cover first year payments plus cancellation costs…” As discussed above the penalty
payment will normally be equal to the remaining unpaid payments. In short, this requirement
effectively eliminates the long-term lease as a practical acquisition alternative.
This leaves the outright purchase and the short-term lease as the two practical alternatives for
acquisition of the aircraft.
3.1.2 Operation
Two alternatives are available and both are practical. The Forest Service has about fifteen
Helicopter Inspector Pilots on staff that currently do ramp checks, contractor pilot checks, fly
with operators and provide general oversight of the contractors. They are also qualified to fly
the National helicopters and with appropriate scheduling and training should be able to add
flying the National helicopters to their schedule. It should be noted that this approach will also
provide the needed proficiency flying for these pilots. They are required to have at least 100
hours per year. At present, while all are getting some proficiency flying, only two meet the
minimum requirement. Flying the National helicopters would alleviate this problem completely.
The various contractors are of course also able to provide the required pilots since they have
been doing this since the inception of the National helicopter program.
Business Case Analysis
9
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
3.1.3 Maintenance
Two maintenance alternatives are available but only one is practical. Contractor maintenance
has worked well with the Government owned Bell AH-1A Cobras the Forest Service uses for fire
fighting. The Forest Service currently uses a contractor to provide maintenance personnel, a
truck driver, and maintenance and fuel service support for these two aircraft.
The Forest Service has qualified maintenance personnel to maintain the proposed aircraft
during the off-season, but does not have the equipment or personnel to provide maintenance
and fuel truck support during the fire season. Further, the Forest Service does not have either
the personnel openings or the intention to hire personnel and buy equipment necessary for this
capability.
Therefore, for this analysis, the same maintenance approach as currently in use with the Bell
AH-1As will be used: contracted maintenance during the fire season and in-house maintenance
during the off season.
3.1.4 Available alternatives
This leaves the following four alternatives to acquire and operate the National helicopters. In all
cases, the maintenance will be accomplished by a contractor.
- Government owned, Government operated (GO/GO)
- Government owned, Contractor operated (GO/CO)
- Contractor owned, Government operated (CO/GO)
- Contractor owned, Contractor operated (CO/CO)
Each is discussed below.
Government Owned, Government Operated
With this alternative, the Forest Service purchases the aircraft and operates them with Forest
Service pilots. No additional personnel will be required since the Forest Service has fifteen
Helicopter Inspector Pilots on staff that are or can be qualified to fly the mission. Each
Helicopter Inspector Pilot would fly one week in three during the 120 day season. The season is
approximately 17 weeks which means each pilot would fly 5 or 6 weeks each season.
Government Owned, Contractor Operated
With this alternative, the Forest Service would purchase the aircraft and then engage a
contractor to operate the helicopters. Given that the Forest Service has sufficient pilots to
operate the aircraft this is not a likely scenario but it has been included to complete the cost
analysis.
Business Case Analysis
10
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Contractor Owned, Government Operated
Under this option, a contractor would lease the helicopters to the Forest Service on a year-toyear basis and Forest Service pilots would operate the helicopters. This is an approach that has
been used for a number of government aviation operations.
Contractor Owned, Contractor Operated
This approach has been successfully used for the National helicopters since the inception of the
program.
3.2 Cost Analysis
The cost analysis in this section for each alternative is based on one helicopter. The proposed
National Helicopter fleet will consist of 5 helicopters of the same make and model. Therefore
the total program cost for each alternative is obtained by multiplying the costs for one
helicopter by five, as shown in section 3.3.
The cost analysis has been calculated using the instructions contained in Chapter 2, Part III of
the A-76 Cost Comparison Handbook, dated May 2003. The reason for accomplishing the cost
analysis using these guidelines is because the A-76 cost analysis process treats the different
ownership and operating alternatives in a manner that both government and commercial
operators agree is fair and equitable. Costs were examined for a period of five years.
These calculations were done for the Bell 205A1++ for contractor owned helicopters and Bell
212 Single helicopters in the case of Forest Service owned helicopters. As discussed in the
Requirements Analysis, both helicopters have the same performance and payload capabilities
and the Bell 205A1++ is the leading helicopter used by contractors for Type 2 helicopter
contracts. In fact, five of the seven Type 2 helicopters used for the 2010 National helicopter
contract were Bell 205A1++ or its Bell 210 equivalent helicopters. However, few Bell 205A1++
are available for sale and to purchase 5 that are equipped the same is very difficult. For this
reason, this study has assumed that for the government owned alternatives (GO/GO and
GO/CO) the Forest Service would purchase a fleet of five newly refurbished/remanufactured
Bell 212 Singles all equipped the same way. For the contractor owned alternatives (CO/CO and
CO/GO) it has been assumed that the contactors would supply Bell 205A1++ helicopters. It
should be noted that the Bell 212 Single is more expensive to purchase than the Bell 205A1++,
which favors the contractor owned alternatives.
The nominal contract year is 120 days and the average annual utilization used for the analysis is
260 flight hours per year as discussed in the Requirements Analysis.
The following pages show the analysis of each of the alternatives available to obtain the
required services (GO/GO, GO/CO, CO/GO and CO/CO) and the basis for the cost assumptions
used. The analysis, as shown in the detailed cost analysis (Tables 3.1, 3.2, 3.3 and 3.4) shown in
Business Case Analysis
11
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
the appendix, is focused on the cost of one helicopter for a 5-year period. To obtain the
program cost for a fleet of five helicopters the cost for one helicopter is then multiplied by five.
3.2.1 Government Owned/Government Operated (GO/GO)
With this alternative, the USFS purchases the Bell 212 Single. The government provides pilots.
Maintenance and fueling support are provided by a contractor. The total 5-year cost for this
option is as shown below and in Table 3.1 in the appendix.
Total GO/GO Cost (5 Years)
- One Helicopter
- Five Helicopter Fleet
$5,158,388
$25,791,942
The following describes the source of each cost element in this alternative.
Line 1. Fuel & Lubricants - The fuel cost is based on the USFS fuel consumption data for this
aircraft of 90 gallons per hour, as published in the US Forest Service Helicopter Services Hourly
Flight Rates, Fuel Consumption and Weight Reduction Chart (May 16, 2011). The Forest Service
uses Defense Logistics Agency (DLA) fuel when available at a current (June 2011) price of $3.43
per gallon. It also has to purchase commercial fuel on the open market when DLA is not
available at a particular location. The current commercial cost (as published in Helicopter
Services Hourly Flight Rates chart) is $5.79 per gallon. These two costs were combined based
on the assumption that two-thirds of the fuel would be purchased from the DLA and one third
would be sourced commercially. This yields a cost of $4.21 per gallon for fuel for government
operated aircraft.
Added to this is the cost of lubricants. This cost is calculated by the Forest Service in
establishing its flight hour rate at 3.0% of the cost of fuel.
Thus, the total cost of fuel plus lubricants is $4.34 per gallon.
Line 2. Crew Cost (PFH) - These costs are accounted for in Line 9, Crew Costs, because the
aircraft will be flown by government pilots.
Line 3. Aircraft Lease or Rental - This cost is $0, since the aircraft is government owned and
operated under this option.
Line 4. Landing Fees and Tie Downs - This cost is $0, since it is not expected that the aircraft
will use facilities where landing fee are charged. Occasionally, such fees are charged. When they
are, the government reimburses these charges to the operator at cost. Thus, they are the same
whether the aircraft is operated by the Forest Service or a commercial operator.
Business Case Analysis
12
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 5. Maintenance and Spares - The helicopter will be maintained by a contractor during the
fire season. The daily rate shown in line 10 below ($1,604 per day) does not cover the cost of
parts, component overhauls, life limited component replacement, engine overhauls and heavy
maintenance during the off season. This cost is obtained from the detailed analysis
accomplished by Conklin & de Decker in their survey and study of the proposed 2011 Forest
Service Hourly Flight Rates (and as published in the May 16, 2011 Hourly Flight Rate table). The
analysis is contained in a report entitled 2011 Helicopter Flight Hour Rates for Type 1, 2 and 3
Helicopters dated December 15, 2010. The detailed analysis contained in the referenced report
for the Bell 205A1++ shows the following:
- Spare parts $134.00
- Component overhaul and replacement
$205.00
- Engine overhaul and heavy maintenance
$203.00
- Total parts, components, etc $542.00
An additional cost is the cost of labor during the off-season. During this time, heavy
maintenance is accomplished and the helicopter is readied for the next fire season. It is
estimated that half the projected maintenance labor for the year will be expended during this
time. This equates to a total cost of $25,760 or an hourly equivalent of $92.00.
Thus, the cost per flight hour of maintenance for everything not covered by the maintenance
contract discussed in line 10 is
- Total parts, components, etc $542.00
- Offseason labor
$ 92.00
- Total $634.00.
Line 6. Total Direct Operating Cost PFH - This is the sum of the hourly costs shown in lines 1
through 5 ($1,024.27 per hour in year 1).
Line 7. Flight Hours for PWS - This aircraft will fly 260 hours per year.
Line 8. Total Direct Operating Cost - This is the direct operating cost on an annualized basis
(Line 6 x 7) and equals $266,309 for the first year.
Line 9. Crew Cost - This cost item includes the annual cost of the pilots including salary, benefits
and training. This helicopter requires one pilot. To provide 7-day per week coverage for one
helicopter, three Forest Service pilots will be assigned to each helicopter. At any one time, one
Forest Service pilot will be on duty with each helicopter. In addition, one of the other pilots
assigned to that helicopter will be used as the back-up pilot in case the pilot on duty exceeds
the number of flight hours allowed by FAA regulations or is unable to fly for medical reasons.
This back-up pilot does not need to be on-site but is required to be available on-site within 24
hours of receiving notification. This is the same approach as currently in use with contractor
pilots.
Business Case Analysis
13
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The standard contract for each National Helicopter is for 120 days. In addition, each pilot must
be trained and checked out. It is estimated this will require 5 days per pilot. With three pilots
for each helicopter, this adds 15 days to the contract year of 120 days for a total of 135 pilot
days for each helicopter.
The nominal work year for each government pilot consists of 1776 hours. At 8 hours per day,
that equates to 222 available work days.
The cost per day of a full time pilot using a pay grade of GS-12/5 and 36.45% benefits is as
follows (assuming a 222 day work year).
Pilot Costs
Pilot
Benefits (36.45%)
Total/Year
Cost/Day (222 work days)
Grade
GS 12/5
Salary
$77,983
GOGO %
100.0%
36.45%
$
$77,983
$28,425
$106,408
$479
Actual training cost per pilot ranges between $10,000 and $15,000 per year. This yields an
average annual training cost of $12,500 per pilot.
With 135 pilot days required and including the training cost for 3 pilots the total cost for the
flight crew for each helicopter is as follows:
Total Pilot Cost/Year
- Pilot Compensation (135 Days)
- Training (3 Pilots @ $12,500)
- Total
$/Year
$64,707
$37,500
$102,207
Line 10. Maintenance Costs - The Forest Service currently uses a contractor to provide
maintenance personnel, a truck driver and maintenance and fuel service support for the Bell
AH-1A Cobras it owns and uses for fire fighting. The Bell AH-1A has, other than the fuselage,
essentially the same drive-train, engine and systems as the Bell 212 Single. Therefore, the cost
charged by the contractor for these Bell AH-1As is likely to be same or very similar as would be
charged to provide the same maintenance support for the Bell 212 Singles. The current cost for
the Bell AH-1As is $1,604 per day per aircraft for maintenance and fuel service support. This
cost equals $192,480 per year for a 120 day contract
Line 11. Aircraft Lease - This cost is $0, since the aircraft is owned under this option.
Business Case Analysis
14
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 12. Depreciation - The current A-76 Costing Manual requires that rotary wing aircraft be
depreciated to 1.0% of their acquisition value over a 17 year useful life. This yields an annual
depreciation costs as follows:
-
Annual depreciation of ($3,750,000 x 99%) / 17 Years = $218,382 / Year
It should be noted that the required residual value of 1.0% is unrealistic (historically a 35 to 40%
residual value after 17 years is realistic) and the useful life of 17 years is arbitrary (useful life is
anywhere from 10 to 35 years depending on the age of the aircraft). If realistic depreciation
rates were applied, the annual depreciation cost would be much lower (17 years to 35%
residual value yields an annual depreciation cost of $143,400). Nevertheless, the depreciation
cost using the current A-76 Costing Manual has been used for this analysis because it is the
higher cost.
Line 13 Self Insurance - The current A-76 Costing Manual indicates that the only insurance that
needs to be accounted for is liability insurance at 0.7% of the contract administration cost.
Using the overhead cost of $25,776 per year (see Line 14 below) would yield an annual
insurance cost of $180. For an aircraft operation the cost of aircraft hull and liability insurance is
most significant. The previous A-76 Circular in Appendix 6 outlined a realistic approach to
estimating this cost. This estimating procedure which is based on commercial costs has been
used for this analysis.
The cost of self-insurance is based on the Aircraft Cost Evaluator rates published by Conklin &
de Decker Associates in their Volume 1, 2011 database. This database is approved by the GSA
for use in these calculations.
a. Liability = $18,000
b. Casualty (Hull Insurance) = 2.85% x Aircraft Value. The value of the aircraft is
$3,750,000. This yields casualty insurance cost of $106,875.
Line 14. Overhead - The overhead consists of two elements - contract administration and
general overhead.
The only contracted item in this program is the field maintenance of the helicopter during the
fire season. It is assumed that this would be an “add on” to the existing Forest Service
maintenance contract for the two AH-1 helicopters. As a result, contract administration is
estimated at 10% of a GS 12 step 5. With benefits, this equates to $10, 641 for the first year.
The standard A-76 overhead cost factor of 12% of the sum of all government labor costs (lines
2, 5A and 9) was used for this analysis. This cost totals $15,135 for the first year.
Combining these two costs yields an overhead of $25,776.
Business Case Analysis
15
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 15. Cost of Capital - The A-76 procedure specifies that this shall be the annual cost to the
Government of acquiring the funds needed for the capital investment. The annual cost of
capital is the five-year rate identified in OMB Circular A94, Appendix C. Currently this is 3.9
percent. Based on the acquisition cost of $3,750,000 the cost of capital is thus $71,250.
Line 16. Total Fixed Operating Annual Cost - This is a summation of cost elements 9 through 15
and equals $734,971 for the first year.
Line 17. Total In-House Cost (5 Years) - This is a summation of the Direct Operating Cost (line 8)
and the Fixed Operating Cost (line 16) and includes inflation for years 2 through 5. The inflation
rate used is 1.8% for goods and services and 3.4% for salaries, per OMB Circular A-76 and A-94.
This yields a total five-year cost for one helicopter of $5,518,388. For the planned fleet of five
helicopters the 5-year cost is $25,791,842.
3.2.2 Government Owned/Contractor Operated (GO/CO)
With this option, the USFS purchases the Bell 212 Single helicopter. The helicopter is crewed,
operated and maintained by a contractor. The total 5-year cost for this option is as shown
below and in Table 3.2 in the appendix.
Total GO/CO Cost (5 Years)
- One Helicopter
- Five Helicopter Fleet
$ 5,810,573
$29,052,865
Line 1. Fuel & Lubricants - The fuel cost is based on the USFS fuel consumption data for this
aircraft of 90 gallons per hour, as published in the US Forest Service Helicopter Services Hourly
Flight Rates, Fuel Consumption and Weight Reduction Chart (May 16, 2011). The current fuel
cost allowed for commercial operators (as published in Helicopter Services Hourly Flight Rates
chart) is $5.79 per gallon.
Added to this is the cost of lubricants. This cost is calculated by the Forest Service in
establishing its flight hour rate at 3.0% of the cost of fuel.
Thus, the total cost of fuel plus lubricants is $5.96 per gallon. This yields a fuel cost per hour of
$536.40.
Line 2. Crew Cost (PFH) - These costs are accounted for in Line 9, Crew Costs.
Line 3. Aircraft Lease or Rental - This cost is $0, since the aircraft is government owned under
this option.
Business Case Analysis
16
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 4. Landing Fees and Tie Downs - This cost is $0, since it is not expected that the aircraft
will use facilities where landing fee are charged. Occasionally, such fees are charged. When they
are, the government reimburses these charges to the operator at cost. Thus, they are the same
whether the aircraft is operated by the Forest Service or a commercial operator.
Line 5. Maintenance and Spares - The aircraft will be maintained by contractor mechanics
under this option. This data is taken from the USFS flight rates for the Bell 205A1++. The cost
per flight hour of maintenance for this aircraft is $1,183.90.
The hourly rate for the cost for maintenance, parts, overhauls, life limited component
replacement, engine overhauls and heavy maintenance during the off season part of the Flight
Hour Rate published by the Forest Service. This hourly flight rate is based on detailed analysis
accomplished by Conklin & de Decker in their survey and study of the proposed 2011 Forest
Service Hourly Flight Rates (and as published in the May 16, 2011 Hourly Flight Rate table). The
analysis is contained in a report entitled 2011 Helicopter Flight Hour Rates for Type 1, 2 and 3
Helicopters dated December 15, 2010. The detailed analysis contained in the referenced report
for the Bell 205A1++ shows the following:
-
Flight Hour Rate including Fuel at $5.79/gallon
Fuel cost per hour as discussed for Line 1
Total maintenance cost
$1,720.30
$536.40
$1,183.90
Thus the maintenance cost per hour is $1,184.
Line 6. Total Direct Operating Cost PFH - This is the sum of the hourly costs shown in lines 1
through 5 and equals $1,720.40 per hour the first year.
Line 7. Flight Hours for PWS - This aircraft will fly 260 hours per year.
Line 8. Total Direct Operating Cost - This is the direct operating cost on an annualized basis.
(Line 6 x 7). For the first year it is $447,304.
Line 9. Contractor Personnel, G&A and Profit - This cost element consists of pilots and direct
supervisory personnel, general and administrative expenses and profit. Each is discussed below.
Business Case Analysis
17
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Contractor Operation Costs
Pilots (Contract)
Relief Pilot (Contract)
Chief Pilot
Maint Supervisor
Subtotal Salaries
Benefits
Total Payroll
Bonus Pay Pilots
Training
Total Cost
G&A
Profit
Total
Base Salary
$8,500 / Month
$8,500 / Month
$85,000
$70,000
Duration
5 Months
5 Months
6 Months
6 Months
25%
$62 / Flt Hr
$10,000 / Pilot
260 Flt Hrs
12.5%
7.5%
Total Personnel
Per Helo
Salary
2.0
$85,000
0.5
$21,250
0.2
$8,500
0.2
$7,000
$121,750
$30,438
$152,188
$16,120
2.7
$27,000
$195,308
24,413
$14,648
$234,369
Pilots and Supervisory Personnel - The annual cost of the contractor pilots for each helicopter is
estimated at $8,500 per month for a 5 month period. This includes the 120-day season,
training, etc. A total of 2.5 contract pilots will be needed for each helicopter (2 pilots per
aircraft plus one half of one relief pilot to cover the required pilot rest days). This cost is based
on typical medium single helicopter commercial contract pilot monthly rates. Benefits are 25%
benefits. In addition, it also assumes that the pilots share a $62.00 per flight hour incentive
payment that is included in the flight hour rate discussed above.
The 5-helicopter program will be managed by one program chief pilot and one maintenance
supervisor who will each devote 6 months of the year to this contract. Their salaries are typical
commercial operator salaries. Again benefits are 25% of salary. In addition the chief pilot will
also be one of the relief pilots.
Training is estimated to cost $10,000 per pilot to be proficient in the helicopter and enable
them to pass the USFS check ride required to get “carded”.
Total G&A and profit is projected to be 20%. This is the same percentage that is included in the
flight hour rate.
The total cost for the contract personnel is thus $234,369.
Line 10. Maintenance Costs - This cost is $0 since all maintenance is included in the cost shown
for line 5g above.
Line 11. Aircraft Lease - This cost is $0, since the aircraft is owned under this option.
Business Case Analysis
18
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 12. Depreciation - Since the helicopter is owned by the Forest service, the depreciation is
the same as calculated above for line 12 - $218,382.
Line 13 Self Insurance - Since the helicopter is owned by the Forest service, the insurance is the
same as calculated above for line 13 - $18,000 for liability and $106,875 for hull insurance.
Line 14. Overhead - The overhead for this alternative consists of contract administration for the
operations contract and general overhead. This is a significant contracting effort and is
estimated to require 25% of a GS 12 step 5. With benefits, this equates to $26,602 for the first
year.
Line 15. Cost of Capital - The A-76 procedure specifies that this shall be the annual cost to the
Government of acquiring the funds needed for the capital investment. The aircraft must be
purchased by the government and the value was determined as discussed above for item 12.
The annual cost of capital is the five-year rate identified in OMB Circular A94, Appendix C.
Currently this is 3.9 percent. Based on the acquisition cost of $3,750,000 the cost of capital is
thus $71,250.
Line 16. Total Fixed Operating Annual Cost - This is a summation of cost elements 9 through 15
($675,478 for year one).
Line 17. Total In-House Cost (5 Years) - This is a summation of the Direct Operating Cost (line 8)
and the Fixed Operating Cost (line 16).
The total 5-year cost for this option is $29,052,865 for the fleet of five helicopters, as shown
below and in Table 3.2.
Business Case Analysis
19
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
3.2.3 Contractor Owned/Government Operated (CO/GO)
With this option, the USFS leases five Bell 212 Singles from a commercial lessor. In accordance
with the applicable Federal Acquisition Regulations, the lease of the aircraft is for five years
with one year firm plus four one-year options. Pilots are provided by the government and
maintenance is provided by a contractor.
The total 5-year cost for this option is as shown below and in Table 3.3 in the appendix.
Total CO/GO Cost (5 Years)
- One Helicopter
- Five Helicopter Fleet
$5,972,288
$29,861,439
Line 1. Fuel & Lubricants - The fuel cost is based on the USFS fuel consumption data for this
aircraft of 90 gallons per hour, as published in the US Forest Service Helicopter Services Hourly
Flight Rates, Fuel Consumption and Weight Reduction Chart (May 16, 2011). The Forest Service
uses Defense Logistics Agency (DLA) fuel when available at a current (June 2011) price of $3.43
per gallon. It also has to purchase commercial fuel on the open market when DLA is not
available at a particular location. The current commercial cost (as published in Helicopter
Services Hourly Flight Rates chart) is $5.79 per gallon. These two costs were combined based
on the assumption that two-thirds of the fuel would be purchased from the DLA and one third
would be sourced commercially. This yields a cost of $4.21 per gallon for fuel for government
operated aircraft.
Added to this is the cost of lubricants. This cost is calculated by the Forest Service in
establishing its flight hour rate at 3.0% of the cost of fuel.
Thus, the total cost of fuel plus lubricants is $4.34 per gallon.
Line 2. Crew Cost (PFH) - These costs are accounted for in Line 9, Crew Costs, because the
aircraft will be flown by government pilots.
Line 3. Aircraft Lease or Rental - This cost in Line 3 is $0. The monthly lease costs are accounted
for in line 11.
Line 4. Landing Fees and Tie Downs - This cost is $0, since it is not expected that the aircraft
will use facilities where landing fee are charged. Occasionally, such fees are charged. When they
are, the government reimburses these charges to the operator at cost. Thus, they are the same
whether the aircraft is operated by the Forest Service or a commercial operator.
Business Case Analysis
20
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 5. Maintenance and Spares - The aircraft will be maintained by a contractor under this
option. Based on the Forest Service flight hour rate for the Bell 205A1++, a near identical
helicopter, the cost per flight hour of maintenance for this aircraft is $1,183.90. The derivation
of this cost is as follows.
This hourly flight rate is based on detailed analysis accomplished by Conklin & de Decker in
their survey and study of the proposed 2011 Forest Service Hourly Flight Rates (and as
published in the May 16, 2011 Hourly Flight Rate table). The analysis is contained in a report
entitled 2011 Helicopter Flight Hour Rates for Type 1, 2 and 3 Helicopters dated December 15,
2010. The detailed analysis contained in the referenced report for the Bell 205A1++ shows the
following:
-
Flight Hour Rate including Fuel at $5.79/gallon
Less contractor fuel cost per hour
Total maintenance cost
$1,720.30
$536.40
$1,183.90
Thus the maintenance cost per hour is $1,184.
Line 6. Total Direct Operating Cost PFH - This is the sum of the hourly costs shown in lines 1
through 5. The hourly during the first year is $1,574.17.
Line 7. Flight Hours for PWS - This aircraft will fly 260 hours per year.
Line 8. Total Direct Operating Cost - This is the direct operating cost on an annualized basis.
(Line 6 x 7). This equates to an annual variable cost the first year of $409,283.
Line 9. Crew Cost - This cost item includes the annual cost of the pilots including salary, benefits
and training. This helicopter requires one pilot. To provide 7-day per week coverage, three
Forest Service pilots will be assigned to each helicopter. At any one time, one Forest Service
pilot will be on duty with each helicopter. In addition, one of the other pilots assigned to that
helicopter will be used as the back-up pilot in case the pilot on duty exceeds the number of
flight hours allowed by FAA regulations or is unable to fly for medical reasons.
The standard contract for each National Helicopter is for 120 days. In addition, each pilot must
be trained and checked out. It is estimated this will require 5 days per pilot. With three pilots
for each helicopter, this adds 15 days to the contract year of 120 days for a total of 135 pilot
days for each helicopter.
The nominal work year for each pilot consists of 1776 hours. At 8 hours per day, that equates to
222 available work days.
Business Case Analysis
21
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The cost per day of a full time pilot using a pay grade of GS-12/5 and 36.45% benefits is as
follows (assuming a 222 day work year).
Pilot Costs
Pilot
Benefits (36.45%)
Total/Year
Cost/Day (222 work days)
Grade
GS 12/5
Salary
$77,983
GOGO %
100.0%
36.45%
$
$77,983
$28,425
$106,408
$479
Actual training cost per pilot ranges between $10,000 and $15,000 per year. This yields an
average annual training cost of $12,500 per pilot
With 135 pilot days required and including the training cost for 3 pilots the total cost for the
flight crew for each helicopter is as follows:
Total Pilot Cost/Year
- Pilot Compensation (135 Days)
- Training (3 Pilots @ $12,500)
- Total
$/Year
$64,707
$37,500
$102,207
Line 10. Maintenance Costs - This cost is $0 since all maintenance costs are included above.
Line 11. Aircraft Lease - This cost is $80,000 per month for a six-month lease or $480,000 per
year. This is based on budget quote from a major commercial lessor. It is based on a 5-year
lease with one year firm plus 4 one-year options.
Line 12. Depreciation - Depreciation is not applicable since the aircraft is leased.
Line 13 Self Insurance - The lessor requires the lessee (the Forest service) to carry the cost of
insurance. It is based on the Aircraft Cost Evaluator rates published by Conklin & de Decker
Associates in their Volume 1, 2011 database. This database is approved by the GSA for use in
these calculations.
a. Liability = $18,000
b. Casualty (Hull Insurance) = 2.85% x Aircraft Value. The value of the aircraft is $3,750,000. This
yields casualty insurance cost of $106.875
Thus, the total insurance cost is $124,875
Business Case Analysis
22
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 14. Overhead - The overhead consists of two elements - contract administration and
general overhead.
The contracted item in this program is the helicopter and the maintenance. This is a significant
contracting effort and is estimated to require 35% of a GS 12 step 5. With benefits, this equates
to $37,243 for the first year.
The standard A-76 overhead cost factor of 12% of the sum of all government labor costs (lines
2, 5A and 9) was used for this analysis. This cost totals $12,265 for the first year.
Combining these two costs yields an overhead cost of $49,508.
Line 15. Cost of Capital - The cost of capital is not applicable since the aircraft is leased.
Line 16. Total Fixed Operating Annual Cost - This is a summation of cost elements 9 through
15. The fixed annual cost the first year is $756.590.
Line 17. Total In-House Cost (5 Years) - This is a summation of the Direct Operating Cost (line 8)
and the Fixed Operating Cost (line 16).
The total 5-year cost for this option is $29,861,439 for the fleet of five helicopters, as shown
below and in Table 3.3.
3.2.4 Contractor Owned/Contractor Operated (CO/CO)
With this option a contractor provides the helicopter (a Bell 205A1++) and provides the pilots
and all maintenance and other support. This is the current situation. The A-76 cost analysis
shows that the total 5-year cost for this option is as shown below and in Table 3.4 in the
appendix.
Total CO/CO Cost (5 Years)
- One Helicopter
$5,778,664
- Five Helicopters
$28,893,321
Line 1 Contract Cost per Flight Hour - The cost per Flight Hour Rate published by the Forest
Service for the Bell 205A1++ is $1,720.30 per flight hour. This hourly flight rate is based on
detailed analysis accomplished by Conklin & de Decker in their survey and study of the
proposed 2011 Forest Service Hourly Flight Rates (and as published in the May 16, 2011 Hourly
Flight Rate table). The analysis is contained in a report entitled 2011 Helicopter Flight Hour
Rates for Type 1, 2 and 3 Helicopters dated December 15, 2010.
Thus the Flight Hour Rate per hour is $1,720.30. This cost will be inflated at the standard rate of
1.8% per year.
Business Case Analysis
23
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Line 2A Daily Availability Cost - The daily availability cost is based on an analysis of the actual
availability costs paid for the five Bell 205A1++ helicopters used for the 2010 National
helicopter program. These costs are as follows:
-
Total 2010 availability payments for Bell 205A1++
Total contract days
Average 2010 Daily Availability rate
$3,350,014
656
$5,107
About 40% of the daily availability rate is salaries which will inflate at 3.4% per year. The
remainder will inflate at 1.8% per year. This yields a composite daily availability inflation factor
of 2.45%. Thus, the base 2011 daily availability rate is as follows.
-
Inflation 2010 – 2011 2.45%
Projected 2011 Daily Availability rate
$5,232
This yields an availability cost for a 120-day contract year of $627,840 for the first year.
Line 3 Contract Administration - These are the costs that the USFS incur in administrating the
contract. It is based on a formula that establishes the cost of administering this type of contract
as equal to one half of a GS 12/5 salary plus benefits.
Contract Administration Costs
MEO Staffing 10 or less
Benefits (36.45%)
Total Contract Administration Costs per Year
Grade
GS 12/5
Salary
$77,983
COCO %
$
50.0% $38,992
36.45% $14,212
$53,204
Line 4 One-time Conversion - There is no one-time conversion cost involved in this comparison.
Line 5 Gain on Disposal/Transfer of Assets - No assets will be disposed of thus there is no gain
on disposition of assets.
Line 6 Federal Income Tax - This is the tax revenue obtained by the Federal Government by
using a contractor owned and contractor operated aircraft. It is calculated in accordance with
OMB Circular A76 guidelines at a rate of 2.0%. This generates estimated tax revenue of
$21,502.
Line 7 Total Contract Performance Cost - This is the total annual and 5-year cost of
performance of this option by the contractor. The 5-year cost equals $5,778,664 per helicopter
and $28,893,321 for the fleet of five helicopters, as shown in Table 3.4.
Business Case Analysis
24
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
3.3 Cost Comparison of Alternatives
The following table compares the 5-year total cost per helicopter and for the National
helicopter fleet (5 helicopters) for the four alternatives ranked by increasing cost.
5 Year Total
Government Owned/Government Operated
Contractor Owned/Contractor Operated (Status Quo)
Government Owned/Contractor Operated
Contractor Owned/Government Operated
National Helicopters
Each
Fleet (5)
$5,158,388
$25,791,942
$5,778,664
$28,893,321
$5,810,573
$29,052,865
$5,972,288
$29,861,439
This shows clearly that the Government Owned/Government Operated alternative has the
lowest five year cost.
Compared to the alternatives, the GO/GO alternative yields the following cost avoidance over a
five year period for the 5-helicopter fleet:
5 Year Cost Avoidance - National Helicopter Fleet
GO/GO vs.
GO/GO vs.
GO/GO vs.
* Status Quo
CO/CO*
GO/CO
CO/GO
$3,101,379
$3,260,923
$4,069,497
3.4 Recommendation
Based on the preceding analysis it is recommended that the Forest Service both purchase five
(5) helicopter that meet the performance and other requirements specified in section 5.2 of the
Requirements Analysis (such as the refurbished/remanufactured Bell 212 Single) for the
National Helicopter program and then operate these helicopters under a Government
Owned/Government Operated program.
Business Case Analysis
25
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
4
Budget Analysis
The previous section concluded that an outright purchase is the best acquisition alternative for
the proposed fleet of five (5) National helicopters. The previous section also concluded that an
in-house operation using Federal pilots and contract maintenance is the most cost effective
O&M alternative.
The following sections analyzes the aircraft acquisition and replacement schedule, the
acquisition cost, life cycle cost, 20-year budget and establishes the cost tables required for the
Exhibit 300 document. Lastly, this section determines the cost benefit ratio of purchasing and
using the Bell 212 Single in a GO/GO operation as compared with the current contractor owned
and operated (CO/CO) operation. Again, as in the previous section and for the same reasons,
the Bell 212 Single is used in the budget analysis. As also stated previously, if the Forest Service
elects to purchase helicopters for this program, the actual make and model of helicopter
purchased will be determined by a free and open competition.
4.1 Aircraft Replacement Schedule
The goal of the acquisition is to acquire five (5) helicopters that meet the specifications
established in the Requirement Analysis. For this analysis it has been assumed that the Forest
Service will purchase five (5) Bell 212 Single helicopters. As discussed in the previous section the
Bell 212 Single is used for the analysis because it meets all requirements in the specification and
five identically equipped aircraft are relatively easy to acquire. Note that any actual acquisition
by the Forest Service will be based on a full and open competition.
To accomplish this, contractor owned and operated aircraft will be retained until the new
aircraft are placed in service. The notional plan focuses on placing the order for the first two
Bell 212 single helicopters in FY-12. These two helicopters will be ready to enter service with
fully qualified government pilots no later than January 31, 2013 in time for the 2013 fire season.
The other three aircraft will be ordered and delivered in FY-13. These will be ready to enter
service with fully qualified government pilots no later than January 31, 2014 in order to
participate in the 2014 fire season. This delivery schedule is predicated on 6-months between
awarding the contract and first delivery with subsequent deliveries at 3-month intervals, as
illustrated in the following notional purchase, delivery and in-service schedule is as follows:
-
Award contract for 5 helicopters (2 firm + 3 options)
Issue PO for helicopter #1 and #2
Helicopter #1 Delivery
Issue PO for helicopters #3, #4 and #5
Helicopter #2 Delivery
Helicopters #1 and #2 available for 2013 fire season
Helicopter #3 Delivery
Helicopter #4 Delivery
Business Case Analysis
26
March 31, 2012
March 31, 2012
September 30, 2012
October 1, 2012
December 30, 2012
January 31, 2013
March 31, 2013
June 30, 2013
August 31, 2011
-
Exhibit 300 Analysis USDA Forest Service National Helicopters
Helicopter #5 Delivery
September 30, 2013
Helicopters #3, #4 and #5 available for 2014 fire season
January 31, 2014
For the base year of FY-12 the number of contracted aircraft will be reduced from the staus quo
of seven (7) helicopters to the recommended five (5) helicopters, as was determined in the
requirements study. In FY-13 the fleet will consist of three (3) contracted aircraft and two (2)
Forest Service owned and operated aircraft. The final transition to an all government owned
and operated fleet will occur in FY-14. The table below shows the timing of the transition
schedule.
Table 4.1 - Aircraft Replacement Schedule
FY
- Type 2 CO/CO contracts
- Gov’t Owned Helicopter
- Acquisition
- In service
CY
BY
BY+1
BY+2
BY+3
2011
7
2012
5
2013
3
2014
2015
BY + 4
&
Beyond
2
3
2
5
5
5
Because the current aircraft are contracted there will not be any disposal of old aircraft.
4.2 Financial Analysis
The financial analysis examines the following major areas:
§ Acquisition cost and funding profile.
§ Life cycle analysis of the O&M costs of operating the recommended aircraft.
The following operating and financial assumptions were used for the analysis:
Program duration:
Flight hours per year:
Inflation rate (goods and materials)
Inflation rate (salaries)
Cost of money for NPV analysis:
Residual value at end of program:
20 years
260 Hours per aircraft per year.
1.8% per year
3.4% per year
3.9%
35% (2011 $)
The 20-year program duration is based on the Forest Service Working Capital Fund (WCF)
planning cycle.
The number of flight hours per year was established in the Requirements Analysis document.
Business Case Analysis
27
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The inflation rates for salaries and goods and materials are based on OMB Circular A-76
Transmittal Memorandum 25. These inflation rates were applied to all costs, except the lease
and finance costs. The cost of money is based on OMB Circular A-94, Appendix C dated
December 2010.
The residual value of the aircraft uses the data in the Conklin & de Decker Life Cycle Cost
program database. It is based on an analysis of historical resale trends as found in the Aircraft
Blue Book Price Digest and the HeliValue$ Helicopter Blue Book.
4.2.1 Acquisition Cost
The total acquisition cost in 2011 dollars is shown in the following table. It is composed of the
following cost elements.
The cost to purchase the five (5) refurbished/remanufactured Bell 212 Single helicopters was
obtained by quote from Eagle Copters of Calgary, Canada.
The cost of spares is estimated at 5% of the total aircraft acquisition cost. This is based on
experience with similar programs.
An initial group of three pilots needs to be trained on the helicopter prior to delivery and
acceptance of the first helicopter so they can accomplish the acceptance testing, fly the aircraft
back to its home base and check out the remaining pilots. The actual cost of Forest Service pilot
training for this class aircraft averages $12,500 per pilot.
Table 4.2 - Aircraft Acquisition Cost Schedule
Aircraft Purchase
- Bell 212S
- Bell 212S
- Bell 212S
- Bell 212S
- Bell 212S
FY 12
$3,750,000
$3,750,000
FY 13
Total
$3,750,000
$3,750,000
$3,750,000
$3,750,000
$3,750,000
$3,750,000
$3,750,000
$3,750,000
Total Aircraft Purchase
Spares and Training
- Spares, GSE, tools, etc
- Training (Initial Pilot Group)
$7 500 000 $11 250 000 $18 750 000
Total Spares and Training
Total Acquisition (2011 $)
$975 000
$$975 000
$8,475,000 $11,250,000 $19,725,000
$937,500
$37,500
$$-
$937,500
$37,500
The required infrastructure (hangars, office space, fuelling facilities, helipads, etc.) is in place at
the current 7 National helicopter off-season home bases. Five of these will be used for
proposed National helicopter program. Therefore no funding is required to create additional
infrastructure.
Business Case Analysis
28
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
4.2.2 O&M Costs
The O&M cost consists of the following major elements:
CO/CO aircraft:
- Contract daily availability and hourly flight rate.
GO/GO aircraft
- O&M cost of the aircraft.
- Maintenance support contract during the fire season.
- USFS pilots and management personnel flying, training for and managing the aircraft.
The source of the cost used for each of these major cost elements is as follows.
• CO/CO aircraft
Daily availability and flight hour costs
The daily availability and flight hour rate were obtained from the 2010 expenditures for the
four Bell 205A1++ helicopters and one Bell 210 (a more recent version of the Bell 205A1++)
used that year. These costs, contract days and contract hours were as follows:
Table 4.3 - 2010 Costs for Bell 205A1++ & 210
Quantity
Bell 205A1++
Bell 210
Daily Availability (2010 $)
Flight Hour Rate (2010 $)
4
1
5
Contract
Days
530
126
656
Contract
Hours
536.1
105.6
641.7
Availability
Cost
$2,705,214
$644,800
$3,350,014
Flight Hour
Cost
$3,727,318
$844,272
$4,571,590
$5,107
$1,904
These costs were then escalated to 2011 dollars as discussed in section 3.2.4 (Line 2a) and
multiplied by 120 contract days and 260 flight hours:
Daily Availability
-Flight Hour Rate
2010 $
$5107
$1904
Inflation
2.45%
1.80%
2011$
$5232
$1938
2011 Annual Total
$627,840
$503,950
Subsequent years were inflated at the same rates.
• GO/GO aircraft
Business Case Analysis
29
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
O&M Cost of the Aircraft - The analysis of the aircraft O&M costs was accomplished using the
Life Cycle Cost software and database developed by Conklin & de Decker Associates. This
program allows for the analysis of all periodic and continuing costs of operation for up to
twenty years and uses actual maintenance costs and intervals for all heavy and scheduled
maintenance. The software calculates the risk adjusted maintenance life cycle cost of the
aircraft by incorporating the following factors:
-
An aging factor is applied to the cost of all scheduled and unscheduled parts and labor
that increases the cost of maintenance by about X% per year.
A premature removal allowance of 20% of the overhaul/replacement cost of all
components with fixed overhaul or replacement limits is included
An allowance of $20,000 per year is included for replacement and upgrade of avionics to
keep up with developing technology and
The Life Cycle Cost software is in use with over 200 aircraft operators and the GSA Aviation
Management Policy division has also approved this software as an acquisition analysis tool for
government aircraft operators.
The detailed cost elements included in the life cycle cost analysis are as discussed below.
Fuel and Lubricants - The fuel cost is based on the USFS fuel consumption data. The method
used to calculate the cost per gallon is described in detail in section 3.2.1 above. The total cost
of fuel plus lubricants is $4.34 per gallon.
Maintenance Labor - As discussed below, this program will use a maintenance contract during
the fire season. However, a certain amount of maintenance must be accomplished during the
off-season to accomplish heavy/scheduled maintenance, prepare the helicopter for the next
fire season, etc. For this analysis it was assumed that the amount of labor required would be
half the total labor required for the B 212 Single. This equates to 1.04 labor hours per flight
hour. The labor rate is the same as used in the Conklin & de Decker analysis for the
recommended 2011 Helicopter Flight Hour Rates - $87.40 per hour.
- Parts
- Inspections
- Engine restoral
- Major component overhaul
- Life limited component replacement
These costs are all obtained from the Life Cycle Cost program database and have been applied
in the appropriate year taking into account the specified maintenance interval for each of some
50 cost elements.
Business Case Analysis
30
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Other variable cost - This cost accounts for the fact that some airports charge landing, parking
or hangar fees when the helicopters are not at the home base. It also accounts for certain travel
and other expenses. This cost was obtained by subtracting the Flight Hour Rate published by
the Forest Service ($1,720 per hour) from the actual hourly rate paid as discussed above
($1,904 per hour). This yields an hourly cost of $184.
Modernization - This is an annual allowance of $20,000 to pay for avionics and other updates
required to incorporate new technology into the avionics, systems and cockpit displays as well
as to install equipment and avionics mandated by the Forest Service, FAA or manufacturers.
This cost is based on the Conklin & de Decker database.
Navigation and Weather Services - This is an annual allowance of $1,119 to pay for navigation
chart service as well as an on-line weather forecasting service for the helicopter. This cost is
based on the Conklin & de Decker database.
Computerized Maintenance Tracking Service - This is an annual allowance of $2,200 to pay for a
maintenance tracking service software program and annual support fees for the helicopter. This
cost is based on the Conklin & de Decker database.
Maintenance support contract during the fire season - During the fire season, a maintenance
contractor will be used to provide the required maintenance, fuel servicing, etc. As discussed in
the Requirements Document analysis, the cost for this is $1,604 per day per helicopter. For a
120 day contract this equates to a cost of $192,480 per year per helicopter.
USFS pilots and management personnel flying and managing the aircraft - The helicopters will
be flown by USFS pilots. Each helicopter will require 135 pilot days for the season at a cost of
$102,207 as discussed in section 3.2.1. Management of the program is estimated to require 1.1
FTE at an annual cost of $139,600.
The detailed FTE analysis is shown in the following table. Each helicopter requires 135 pilot days
for a 120 fire season. One FTE represent 222 work days per year. Thus, each helicopter requires
0.608 FTE pilots, or 3.40 FTE for five helicopters. Management of the program is estimated to
require a chief pilot, a maintenance supervisor and a contracts administration person to
manage the maintenance contract during the fire season. The chief pilot is estimated to require
0.5 FTE of a GS 13, Step 5 and the maintenance supervisor is estimated to require 0.5 FTE of a
GS 12, Step 5. The contract administration will require 0.1 FTE of a GS 12, Step 5.
Business Case Analysis
31
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Table 4.4A – FTE Analysis
Pilots
- Helicopter #1
- Helicopter #2
- Helicopter #3
- Helicopter #4
- Helicopter #5
Subtotal
Program Management
- Chief Pilot
- Maintenance Supv.
- Contract Admin
Subtotal
Days
Required
135
135
135
135
135
FTE
0.608
0.608
0.608
0.608
0.608
3.040
Remarks
One FTE = 222 Work days
All GS 12 Step 5
0.50
0.50
0.10
1.10
Estimate GS 13 Step 5
Estimate GS 12 Step 5
Estimate GS 12 Step 5
Total FTE
4.14
Adequate personnel resources are available within the Forest Service in Boise and at the
regions that no additional personnel need to be hired.
The cost for the required pilots was discussed in section 3.2.1 and the management personnel
cost is shown in the following table:
Table 4.4B – Program Management
- Chief Pilot
- Maintenance Supv.
- Contract Admin
Subtotal
Benefits
Training (Chief Pilot)
GS Grade
GS 13/5
GS 12/5
GS 12/5
%
50%
50%
10%
36.45%
Total Management Cost
Salary
$92,732
$77,983
$77,983
Total/Year
$46,366
$38,992
$7,798
$93,156
$33,955
$12,500
$139,611
20 Year O&M Cost - The 20-year life cycle cost analysis for the cost elements discussed above
for the aircraft is summarized in the following table. A detailed printout of each cost element by
year is shown in the appendix in Tables 4.6A (fuel and maintenance detail) and Table 4.6B (all
budget elements). All costs are shown in millions of then-year dollars.
Business Case Analysis
32
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Table 4.5 - Annual Cost of Proposed National Helicopter Program
(Then-Year Dollars x $1,000,000)
CO/CO
Helos
FY
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
7
5
3
(B 205A1++)
Cost
GO/GO
Helos
$6.92
$5.78
$3.47
0*
2
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
(B 212 Single)
Cost
$0.14
$1.37
$3.13
$3.22
$3.31
$3.43
$3.46
$3.55
$3.65
$3.78
$3.99
$4.20
$4.96
$5.58
$4.30
$4.46
$5.01
$5.42
$4.78
Total
$6.92
$5.92
$4.84
$3.13
$3.22
$3.31
$3.43
$3.46
$3.55
$3.65
$3.78
$3.99
$4.20
$4.96
$5.58
$4.30
$4.46
$5.01
$5.42
$4.78
* Program management for transition to GO/GO
Business Case Analysis
33
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
4.3 20-Year Budget for Acquisition and O&M by Year
A 20-year budget has been established that combines the acquisition cost, the cost of
operations and maintenance, and the cost of personnel and maintenance support. This is
shown in Table 4.6B in the appendix. The following summary of the 20-year budget is in the
format required for the Exhibit 300 Business Case Summary document as “Table 1: Summary of
Spending for Project Phases”
Table 1 - Summary of Spending for Project Phases
(Reported in then Year $ Million)
Estimates for BY+1 and beyond for planning purposes only and do not represent budget decisions.
Planning:
Acquisition:
Subtotal Planning & Acquisition
Operations & Maintenance
PY
2010 &
Earlier
-
Total
-
**Government FTE Costs
Number of FTE represented by Costs
-
CY
2011
BY
2012
0.025
0.025
6.918
2.478
BY+4
and
Beyond*
(9.211)
(9.211)
49.130
0.025
10.716
10.741
71.185
2.413
2.478
39.919
81.927
0.719
4.141
0.744
4.141
14.730
4.141
16.705
BY+2
2014
BY+3
2015
8.475 11.453
8.475 11.453
5.775 4.472
2.413
6.943 14.250 15.924
-
0.144
1.100
BY+1
2013
0.368
2.316
Total
*
* BY+4 and Beyond is FY’16 through FY’30. Total program is 20 years (FY’11 through FY’30)
**Government FTE Costs should not be included in the amounts provided above
Prepared August 26, 2011
This table shows the expenditures for the current year (CY 2011) for the status quo of seven (7)
National Type helicopters. The transition to the recommended five (5) National helicopter
program starts in BY 2012 (BY = Beyond Year). In 2012 the fleet will consist of five (5) CO/CO
helicopters. In 2013 (BY + 1) the fleet will consist of 3 CO/CO helicopters plus two (2) Forest
Service owned GO/GO helicopters and in 2014 the transition to five (5) GO/GO helicopters will
be complete.
Business Case Analysis
34
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
4.4 Benefit to Cost Analysis of GO/GO Program
A detailed benefit to cost analysis was accomplished by comparing the costs of continuing with
the current (status quo) CO/CO approach using 5 helicopters with the cost of transitioning to
the recommended GO/GO operation where the Forest Service owns and operates five
Bell/Eagle 212 Singles or equivalent. The analysis uses the discounted savings (benefits)
generated through the reduction in operating costs by the government owning and operating
these aircraft. The detailed analysis is shown in Table 4.8 in the appendix.
The benefit to cost analysis (BCA) discussed here is not the same as the benefit to cost analysis
discussed in section 2.0. The BCA discussed in section 2.0 focuses on the benefits of using
airborne support (including the National helicopters) to fight wildland fires. The BCA discussed
in this section examines the benefits of using government owned and government operated
National helicopters instead of the status quo which uses contractor owned and contractor
operated National helicopters.
The following table summarizes the benefits and the costs of the proposed acquisition of the
five (5) helicopters.
Table 4.7 - Benefit/Cost Analysis
FY
Fleet
- Type 2 CO/CO contracts
- B 212S Acquisition
- B 212S In service
- In service fleet
Total Costs
Baseline (CO/CO Contract)
- With inflation (2.45%)
Proposed GO/GO Alt.
- GO/GO B 212 S Costs
- Trans. CO/CO Contract
- Total
- With inflation
Total Benefits
- With Inflation
Discounted Benefits
Investment
- With Inflation
Discounted Investment
Cumulative Cash Flow
Business Case Analysis
BY
2012
BY+1
2013
BY+2
2014
BY+3
2015
BY + 4 &
Beyond
5
2
3
3
2
5
5
5
5
5
5
5
5
Total
20 Years
$5.659
$5.775
$5.659
$5.894
$5.659
$6.016
$5.659
$6.140
$84.879
$108.916
$107.513
$132.740
$0
$5.659
$5.794
$5.915
$1.242
$3.395
$4.637
$4.834
$2.933
$$2.933
$3.127
$2.953
$$2.953
$3.216
$49.020
$49.020
$63.756
$56.283
$9.054
$65.337
$80.848
$(0.140)
$(0.140)
$1.060
$1.020
$2.889
$2.676
$2.924
$2.607
$45.160
$30.027
$51.892
$36.189
$8.475
$8.475
$(8.615)
$11.453
$11.023
$18.617)
$$$(15.941)
$$$(13.335)
$(9.211)
$(4.626)
$10.716
$14.871
$21.318
35
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
The following summary table shows that the acquisition of 5 Forest Service owned helicopters
for this project is very cost effective. Specifically, the benefit to cost ratio is 2.4. This means that
over the planned 20-year life of this program, $2.40 in savings (benefits) is realized for every
$1.00 invested (cost) in the acquisition of the helicopters. Similarly, the return on investment
(ROI) is 13.9%. Finally, the breakeven point occurs at 10 years, which means that the entire
investment in the acquisition is repaid with the savings during the 10th year of the program.
Benefit / Cost Ratio
ROI
13.9%
Breakeven Year
2.4
10
This benefit to cost analysis does not quantify the additional benefits that accrue to the Forest
Service of having five in-house helicopters available year round, not just during the fire season.
These benefits include:
- Support fire fighting activity outside the normal fire season
- Assist with resource management in the region where each helicopter is based during
the off season. This includes accomplishing prescribed burns.
- Support law enforcement activities outside the normal fire season
- Provide support during national emergencies such as hurricane relief
- Allow Forest Service helicopter pilots to maintain their require proficiency level
5
Risk Analysis
Risk factors affecting the performance, cost and schedule for the acquisition, operation and
maintenance of the proposed five (5) National Helicopters were analyzed. This is planned to be
a commercial off the shelf acquisition of Type 2 helicopters for use in the National Helicopter
program by means of a Government Owned/Government Operated (GO/GO) operation. Type 2
helicopters have been successfully in use for the National Helicopter program since the mid90s. The Forest Service also already owns and operates a number of fixed and rotary wing
aircraft and has considerable experience with the ownership and operation of its own aircraft.
In short, there are no untried or unproven aspects to this program and as a consequence all risk
factors except four have low or no risk associated with them. The four that have a medium risk
factor are:
- Life Cycle Cost increase risk (Medium Risk)
- Avionics obsolescence (Medium Risk)
- Airframe aging, obsolescence and inadequate spare parts support (Medium Risk)
- Lack of surge capability during high activity fire seasons (Medium Risk)
The impact of each of these medium risks and a mitigation plan for each is discussed below.
Business Case Analysis
36
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
Life Cycle Cost increase risk (Medium Risk without mitigation. Low Risk with mitigation) - The
planned life cycle for these helicopters is 20 years. During this time the risk is that O & M costs
will increase more than planned based on current costs because of aging, premature failures of
major components, etc. To mitigate this risk a risk-adjusted life cycle cost model was used. The
detailed analysis of the aircraft O&M costs was accomplished using the Life Cycle Cost software
and database developed by Conklin & de Decker Associates. This program allows for the
analysis of all periodic and continuing costs of operation for up to twenty years and uses actual
maintenance costs and intervals for all heavy and scheduled maintenance. The software
calculates the risk adjusted maintenance life cycle cost of the aircraft by incorporating the
following risk factors:
- An aging factor is applied to the cost of all scheduled and unscheduled parts and labor
that increases the cost of maintenance by an average of about 2.75% per year. This is in
addition to any inflation factor.
- A premature removal allowance of 20% of the overhaul/replacement cost of all
components with fixed overhaul or replacement limits is included
This Life Cycle Cost software is in use with over 200 aircraft operators and has proven to be a
successful predictor of long term O&M costs. The GSA Aviation Management Policy division has
also approved this software as an acquisition analysis tool for government aircraft operators.
Avionics obsolescence (Medium Risk without mitigation / Low Risk with mitigation) - The
recommended helicopters for this program were originally manufactured with analog avionics,
radios and cockpit displays. This analog equipment is no longer being manufactured and repair
is becoming more difficult. It is being replaced in newly manufactured aircraft with digital
avionics, radios and displays. To combat the obsolescence of analog equipment the avionics
industry has developed an extensive array of reasonably priced fully compatible digital
replacements for the avionics, radios and displays used on these helicopters. Thus, avionics
obsolescence is best mitigated through the replacement of existing analog displays and radios
with available digital displays and radios. This will be accomplished as part of the acquisition of
the helicopter. The required upgrade will be included in the specification through which the
helicopters will be acquired. The cost of this mitigation is included in the budgeted acquisition
cost of the aircraft in the budget analysis.
Airframe aging, obsolescence and inadequate spare parts support (Medium Risk) - The
recommended helicopters are upgraded, refurbished versions of helicopters that were
originally manufactured 20 to 30 ago. As such, the impact of aging is a real concern in a number
of areas, including fatigue damage, corrosion and spares parts availability.
The Bell 205A1++ and Bell 212 Single are both part of the Bell UH1/204/205/212/412 family of
helicopters. These rugged helicopters have a long and successful history with military,
commercial and government operators, including the commercial operators that supply the
Type 2 helicopters to the Forest Service. These helicopters are considered among the very best
Business Case Analysis
37
August 31, 2011
Exhibit 300 Analysis USDA Forest Service National Helicopters
single engine utility helicopters and no replacement is in sight that is as capable and as cost
effective. As a result, Bell Helicopter and the major operators of these helicopters have been
actively involved in developing comprehensive aging aircraft fatigue and corrosion inspection
programs and appropriate repairs and/or prevention strategies to extend their service life
indefinitely.
The basic program consists of a series of repetitive inspection in all structural areas on the
inside and outside of the helicopter. Most operators accomplish these inspections during the
off-season to insure high availability.
The helicopter recommended for purchase by the Forest Service is the Bell 212 Single. A
comprehensive aging aircraft fatigue and corrosion inspection is done by the manufacturer and
required repairs are made at the time the aircraft are converted to Bell 212 Single status. In
addition all wiring is replaced at the same time. This is part of the acquisition cost of the
aircraft. The cost of the ongoing, repetitive inspections during the off season are included in the
maintenance cost budgeted for the helicopters (see the discussion of the life cycle cost risk
above).
The Bell UH1/204/205/212/412 family of helicopters has been in continuous production since
about 1960. The Bell 412, a four-bladed version of the Bell 212 is currently in commercial
production as is the UH-1Y for the US Marine Corps. Close to 20,000 of all types have been
produced and many thousands are still in service worldwide. As a result, both the engine
manufacturer (Honeywell) and airframe manufacturer (Bell) continue to actively support these
helicopters. In addition, there are numerous others organizations that supply parts and services
for these helicopters. As a result spare parts support is not considered an issue with these
helicopters.
Lack of surge capability during high activity fire seasons (Medium Risk) - Lack of surge capability
during heavy fire seasons has been mitigated by proposing the acquisition of 5 helicopters.
During an average year each helicopter will fly about 260 hours during a 120 day fire season.
Past experience shows that each helicopter can fly as much as 500 hours during a heavy fire
season. This yields a flight hour capacity with five helicopters of 2,500 hours. The number of
hours flown during one of the heaviest fire season in recent memory (2006) was about 2,150
hours. Thus the planned fleet of five helicopters provides a margin of 16% over this.
Business Case Analysis
38
August 31, 2011
6
Exhibit 300 Analysis USDA Forest Service National Helicopters
Agency Strategic Goals Supported
A review of the Department of Agriculture Strategic Plan for the years FY 2007 – 2012 identified
the following strategic goal and three supporting objectives that concern the US Forests, and
Grasslands are supported by the Type 2 National Asset helicopter program.
___________________________________________________________________________
Goals and Objectives for Fiscal Years 2007–2012
Goal 1. Restore, Sustain, and Enhance the Nation’s Forests and Grasslands (Page 9)
(USDA Objectives 6.1, 6.3, 6.4)
Outcome: Forests and grasslands with the capacity to maintain their health, productivity,
diversity, and resistance to unnaturally severe disturbance.
Objective 1.1
Reduce the risk to communities and natural resources from wildfire. (Page 9)
a. Performance Measure: Number and percentage of acres treated to restore fire-adapted
ecosystems that are (1) moved toward desired conditions and (2) maintained in desired
conditions.
1. 2006 Baseline: 991,000 acres (39 percent); 2012 Target: 1.6 million acres (40 percent).
2. 2006 Baseline: 830,000 acres (33 percent); 2012 Target: 2 million acres (50 percent).
b. Performance Measure: Number of acres brought into stewardship contracts.
2006 Baseline: 57,500 acres; 2012 Target: 150,000 acres.
Objective 1.2
Suppress wildfires efficiently and effectively. (Page 10)
a. Performance Measure: Percentage of fires not contained in initial attack that exceed a
stratified cost index.
2006 Baseline: 24 percent; 2012 Target: 14 percent.
Objective 1.3
Build community capacity to suppress and reduce losses from wildfires. (Page 10)
a. Performance Measure: Percentage of acres treated in the wildland-urban interface that have
been identified in community wildfire protection plans or equivalent plans.
2006 Baseline: 17 percent; 2012 Target: 50 percent.
____________________________________________________________________________
The National Asset helicopter program has a primary mission in support of Objective 1.2
“Suppress wildfires efficiently and effectively”.
The National Asset helicopter program can have a secondary mission in support of Objective 1.1
“Reduce the risk to communities and natural resources from wildfire” and 1.3 “Build
community capacity to suppress and reduce losses from wildfires”.
The Strategic Plan identifies the overall performance measures for each objective, but not the
detail performance measures for the National Asset helicopter program. It is expected that
these are available from the program office.
Business Case Analysis
39
August 31, 2011