The US Navy today formally terminated the Lockheed Martin/AgustaWestland VH-71 contract awarded in 2004 to develop a presidential helicopter.

The move comes nearly two months after Secretary of Defense Robert Gates decided to cancel the programme after its budget more than doubled to $13 billion and it was delayed by several years.

The Department of Defense plans to reinvest about $1.2 billion to update the aging Sikorsky VH-3D and VH-60N helicopters in the existing presidential helicopter fleet.

The delays and cost overruns plaguing the VH-71 Kestral have become a rallying cry for reforming the DOD acquisition system.

The aircraft was marketed as a relatively simple adaptation of the successful EH101 helicopter. However, new requirements imposed on the programme after contract award forced the USN to launch a major re-design.

The VH-71 was divided into separate blocks of eight Increment 1 aircraft and about 15 Increment 2 aircraft.

The Lockheed team has mostly completed work on building the first eight Increment 1 aircraft, but the development of the Increment 2 had been on hold pending the DOD’s decision on the future of the programme.