Staff Writer (Updated: 5/11/2016):
Following the close of World War 2 in 1945, rotary-wing flight entered a period of advancement and refinement to produce a viable helicopter solution for both military and civilian markets. The Korean War (1950-1953) was the first large-scale combat zone use of helicopters by United States forces who had been entertaining the prospects of vertical flight as early as the 1930s. The Korean War ushered the helicopter in as a Search and Rescue (SAR) mount and transportation of the wounded across Korea's unforgiving terrain.
Years after the close of the war, the United States Army unveiled "Technical Specification 153" in 1960, establishing its Light Observation Helicopter (LOH) program. As the title suggested, the program goal was to stock a dedicated, light-class, rotary-wing system with a multipurpose battlefield role. The helicopter would be called upon to undertake various missions including that of SAR, MEDEVAC, observation, transport, reconnaissance, escort, Close Air Support (CAS) and direct attack.
Famous American flight pioneer Howard Hughes (1905-1976), still alive by this time, was operating an aircraft division through his Hughes Tool front as the Hughes Tool Company - Aircraft Division. Understanding the potentially lucrative government contract waiting for such a system, he positioned his company to deliver. Hughes engineers developed the Hughes "Model 369" and, joining a dozen other firms, submitted their LOH proposal to the US Army.
The United States Army initially selected two designs - one from Bell Helicopters and the other from Fairchild-Hiller. However, the Hughes submission was later added to the fold and all three concerns were funded for development of five prototype vehicles. The Hughes Model 369 was outfitted with an Allison T63-A-5A series turboshaft engine of 252 horsepower and recorded its first flight on February 27th, 1963. Should the Hughes development succeed, Allison Engine Company stood to make its own fair share of profit from the long-term US Army commitment. The United States Army designated the Hughes submission as the "YHO-6A" until a complete rewrite of American military designations occurred in 1962, prompting a change to the model as the "YOH-6A" (as such, serial production would spawn the "OH-6A").
With US Army evaluations of each prototype ongoing, the underpowered Bell offering was formally dropped from contention and the US Army decision favored the Hughes design over the Fairchild-Hiller. It was deemed, based on Hughes' estimates, his units would be most cost effective in the long run. It later turned out that Howard Hughes purposely undervalued his estimate and deceptively won out against Fairchild-Hiller - his reasoning being that a long-term US Army commitment to his helicopter would, over time, make the deal profitable at some point. The US Army charged Hughes for 714 units with the serial production contract formally announced in May of 1965. Sensing its growing battlefield requirements, the US Army then raised the production ceiling to 1,300 units in all. The helicopter was inducted as the OH-6 "Cayuse" and would eventually take on the in-the-field nickname of "Loach" in reference to its "LOH" origins.