Why Would the Pentagon Kill One of Its Most Effective "Drone" Programs?

The K-MAX robo-supply helicopter has saved countless lives in Afghanistan. But should the military cancel it anyway?

Aug 2, 2014 at 1:15PM

Over three years' service in Afghanistan, a tiny flight of K-MAX unmanned helicopters built by Kaman Aerospace (NYSE:KAMN) and Lockheed Martin (NYSE:LMT), has successfully completed 1,950 sorties, flown 2,150 flight hours, and delivered 4.5 million pounds of cargo to U.S. Marines in the Afghan wilderness -- all without suffering a single loss of life in combat.

So naturally, the Pentagon is killing the program.

Kaman / Lockheed's K-Maxes are getting tied down at the Pentagon. Photo: Wikimedia Commons.

That's the upshot of a report out of DefenseNews.com last week, which noted that the  K-MAX "drone helicopter" project had already "far outlived" the six-month time span it was slated for, when initially started up in December 2011. Turns out, the K-MAX was so successful in side-stepping bomb-lined Afghan roadways, and safely delivering supplies to forward operating bases in Afghanistan that the Marines didn't want it to end.

But now, writes DefenseNews, "[N]o one quite knows what to do next."


IED? Photo: Wikimedia Commons.

What is K-MAX?
The K-MAX is a robotically operated helicopter capable of carrying three tons of cargo at a time, flying at night, and landing within 10 feet of a homing beacon all on its own.  It has probably saved multiple lives, which would otherwise have been lost traveling the highways and byways of Afghanistan to bring supplies to the troops. Over the course of more than a decade of combat in Iraq and Afghanistan, improvised explosive devices, or IEDs, have killed some 3,100 American GIs, and grievously wounded more than 10 times that number.

The roadside bomb problem has vexed the Pentagon so much so that over the course of the conflicts, it's spent more than $75 billion buying new armored vehicles and new bomb-detection technologies -- everything from MRAPs to Packbots -- to defuse the problem. But IEDs mean nothing to K-MAX as it flies above the fray.

Kmax Sling
USMC K-Maxes at base. Photo: Lockheed Martin.

What the K-MAX means to investors
For all of the Marines that loved it, K-MAX was never a huge money maker for Lockheed Martin and Kaman. In fact, over the three years they were in service, the two K-MAXes that Lockheed sold to, and serviced for the Marines, generated barely $62 million in combined revenue for the defense contractors.

But should the Pentagon decide to capitalize upon the success of the pilot program, it could grow in size. USMC is reportedly so thrilled with K-MAX's performance that they want to make the helo-drone a "program of record," enabling continual purchases of K-MAX drones as needed. Lockheed Martin says it would need contracts for at least 16 K-MAXes to make this economical-- an eightfold increase in the size of the program that could swell its revenues to $500 million over a similar three-year period.

Will it happen? With the war in Afghanistan winding down, whether a renewal of K-MAX is in the cards is anyone's guess. Having said that, Lockheed Martin received in February a contract to experiment with using K-MAX to deploy robotic "Squad Mission Support Systems" in hard to reach locations to support vanguard and special forces troops.

This suggests that the Marines' robotic K-MAXes should enjoy their leave time while they have it. The Pentagon may be calling them back up for service very soon.

What's better than delivering supplies by robo-helicopter? Why, using robo-helicopters to deliver robo supply trucks, of course! Photo: Lockheed Martin.

Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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