However, following extensive evaluations of the type, the Model 1100 did not receive a production contract after Hiller was underbid by the rival Hughes Tool Co. Aircraft Division's OH-6 Cayuse in 1965.

In 1960, Hiller merged with the Electra Corporation and made considerable investments into their production range, developing an improved Model 360 and seeking out other business opportunities for rotorcraft.

[2] Simultaneously, in October 1960, the United States Army issued a request for proposals (RFP) for the Light Observation Helicopter (LOH) program.

[7][8] During 1967, as a result of price escalations for both the OH-6 and associated components, the U.S. Army decided Hughes that could not fulfil the contractual production demands and opted to reopen bids for the LOH program.

[2][7] In 1964, Hiller had been acquired by the Fairchild Engine and Airplane Corporation to become Fairchild-Hiller; shortly thereafter, the new company decided to discontinue its activity on older rotorcraft in order to focus its resources on the FH-1100, which it would market primarily towards civilian customers, as well as to various international military air services.

The rights to the rotorcraft were obtained by Hiller Aviation; while preparations were made to resume quantity production, but wider corporate matters proved disruptive to this ambition.

[7][15] The interior is designed to suit various purposes, from a four-seat configuration intended for executive travel to a more compact five-seat arrangement; provisions for its use as both a military and utility helicopter were made from the onset.

[7][15] The FH-1100 is powered by a single Allison Model 250-C18 turboshaft engine, capable of generating up to 317 shp (236 kW); it provided a considerable boost in performance over that of piston-powered contemporaries.