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The requirements were formulated around an aircraft capable of performing in day, night, and adverse weather, and compatible with all the advanced weapons systems planned for development and fielding into the 1980s.

The Secretary of the Army directed instead that the aircraft's armament systems be upgraded, based on experience with Task Force 118's performance operating armed OH-58D helicopters in the Persian Gulf in support of Operation Prime Chance, and that the aircraft be used primarily for scouting and armed reconnaissance.

However, as the Army tried to get the program off the ground, Congress declined to provide funding for it in the fiscal year 1977 budget and the ASH Project Manager's Office (PM-ASH) was closed on 30 September 1976.

While no development occurred during the next few years, the program survived as a requirement without funding.

Both Bell Helicopter and Hughes Helicopters redesigned their scout aircraft to compete for the contract.

Bell offered a more robust version of the OH-58 in their model 406 aircraft, Initially intended for attack, cavalry, and artillery roles, the Army only approved a low initial production level and confined the role of the OH-58D to field artillery observation.

On 10 July 1980, the Army decided that the NTSH would be a competitive modification program based on developments in the commercial helicopter industry, particularly Hughes Helicopters development of the Hughes 500D which provided significant improvements over the OH-6.

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