The first Model 369 prototype flew on 27 February 1963. Originally designated as the "YHO-6A" according to the Army's designation system, the aircraft was redesignated as the "YOH-6A" in 1962 when the Department of Defense created a Joint designation system for all aircraft. Five prototypes were built, fitted with a Allison T63-A-5A, and delivered to the U.S. Army at Fort Rucker, Alabama to compete against the other ten prototype aircraft submitted by Bell and Fairchild-Hiller. During the course of the competition, the Bell submission, the YOH-4, was eliminated as being underpowered (it used the T63-A-5). The bidding for the LOH contract came down to Fairchild-Hiller and Hughes. Hughes won the competition, and the Army awarded a contract for production in May 1965, with an initial order for 714 that was later increased to 1,300 with an option on another 114. Hughes's price was $19,860 per airframe, less engine, while Hiller's price was $29,415 per airframe, less engine. The Hiller design (designated OH-5A) had a boosted control system, while the Hughes design did not. This would account for some of the price difference. Hughes is reported to have told Jack Real that he lost over $100 million in building 1,370 airframes. It was reported that Howard Hughes had directed his company to submit a bid at a price below the actual production cost of the helicopter in order to secure this order, resulting in substantial losses on the U.S. Army deal, with the anticipation that an extended production cycle would eventually prove financially viable.