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Senators Tell USAF to Prove C-27 Cost Claims

Mar. 20, 2012 - 04:12PM   |  
A U.S. Air Force C-27J Spartan taxis after landing at a remote airfield in Qalat, Afghanistan.
A U.S. Air Force C-27J Spartan taxis after landing at a remote airfield in Qalat, Afghanistan. (Master Sgt. Jeffrey Allen / U.S. Air Force)
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U.S. senators are demanding that the Air Force explain the metrics it used to estimate the lifetime cost of operating the C-27J cargo plane, which the service has proposed canceling in the Pentagon’s 2013 budget proposal.

Democrats and Republicans, primarily from states where Air National Guard units fly or are slated to fly the aircraft, questioned the Air Force’s rationale for scrapping the fleet of 21 purchased aircraft.

Thus far, the Air Force has yet to provide congressional defense committees with the metrics it used to determine that each C-27J would cost $308 million over its lifetime, which the Air Force used in its rationale to terminate the program.

Lawmakers and defense analysts have questioned the lifecycle costs, particularly because three Air Force assessments of these costs vary between $111 million and $308 million per aircraft.

Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, and other members of the panel questioned Air Force Secretary Michael Donley and Chief of Staff Gen. Norton Schwartz about the varying C-27J lifecycle cost estimates during a March 20 hearing.

“There’s a big gap there that I don’t think they adequately explained at all here today,” Levin said after the hearing when asked about the $200 million gap in the estimates.

The committee will continue to look at this issue during its markup of the Pentagon’s 2013 budget proposal, he said.

“We’re not going to take any actions until we’ve had a chance to markup the bill,” Levin said.

An Air National Guard unit in Levin’s home state of Michigan is supposed to receive C-27Js.

One Air Force analysis of the Alenia Aermacchi C-27J shows that each plane would cost the service as little as $111 million, but cautions that additional factors could push the estimate above $200 million over a 30-year period.

That estimate is still well below the $308 million figure the service provided to Congress. The number was repeated by Schwartz at a Feb. 28 House Armed Services Committee hearing.

The $111 million lifecycle estimate is listed in a draft cost-benefit analysis of the twin-engine C-27J and the quad-engine Lockheed Martin C-130H. The 2012 Defense Authorization Act required the Air Force to conduct the assessment that gleaned the $111 million figure. Although dated February 2012, the Air Force has not provided the report to Congress. Defense News obtained a copy of the 13-page report on March 19.

The Air Force called that assessment a “draft report” that was prepared by a Pentagon action officer last fall and “pre-dated” for release in February 2012, according to Kevin Williams, deputy director of the Air Force’s studies and analyses, assessments and lessons learned directorate (A-9).

“As it went through the coordination process, it became apparent that the initial number, $111M was incorrect,” Williams wrote in a statement provided by a service spokeswoman. “A more current, updated version of this document is almost fully coordinated and we expect to send it to Congress in the near future.”

Asked about the lower $111 million lifecycle cost estimate during a March 16 briefing at the Pentagon, Williams told reporters and think tank analysts that any reference to that number was “preliminary” and possibly from a “piece of staff work from last fall, where some things were being bounced around.”

“$111 [million] has never been published by anybody in A-9,” he said last week. “It doesn’t exist in any formal, authorized, signed document.”

Still, three separate Air Force reports show a nearly $200 million difference in opinion.

The large discrepancy between the numbers in the three reports have left lawmakers scratching their heads and questioning the reliability of the lifecycle estimates of the C-27J, an aircraft built to shuttle troops and supplies around the battlefield.

“What I’ve seen trickle out of the Air Force over the past six weeks is confusing to say the least,” Sen. Rob Portman, R-Ohio, said during the hearing. “That data has been inadequate, inconsistent. It’s left us all with more questions than answers.”

The Ohio National Guard operates the C-27J and has deployed with the aircraft to Afghanistan.

While the Air Force cites the $308 million figure, an Air Force background paper states one C-27J aircraft will cost $270 million per aircraft. If operated like C-130s, the C-27J could cost as little as $166 million per aircraft.

And yet the newly unveiled draft cost benefit analysis, which the Air Force says was written in the fall, compares the C-27J to the C-130H. The document notes that the $111 million estimate represents “best case” scenarios, when the aircraft is operated like a C-130. The “Air Force Service Cost Position” — which factors in different crew ratios, maintenance, flying hours and basing — could top $200 million.

At the March 20 Senate Armed Services Committee hearing, Schwartz said the C-27J flying hour cost is much higher because contractors maintain the aircraft. The Air Force maintains the C-130.

“There’s a considerable difference in relative expense there that goes into the flying hour calculation,” Schwartz said.

However, Air National Guard and industry officials say the C-27Js that have been flying in Afghanistan since last year have used only a small fraction of the more than $60 million in spare parts the unit deployed with the aircraft. Only about $200,000 has been used, according to these sources.

Also, a November 2011 Air Mobility Master Plan — developed by Air Mobility Command, the division of the Air Force that oversees cargo and tanker aircraft — states the “C-27J training and sustainment (supply chain and maintenance) strategies were assessed by a business case analysis to provide the best value approach for the suitable solutions between organic and contractor support.”

The Air Force has not publicly released the document, which describes the C-27J as “an efficient tool to deliver smaller loads within the Joint Operations Area.”

The lifecycle cost estimates were first questioned by Ohio National Guard Capt. Dave Lohrer, who conducted his own assessment, which disputed the Air Force’s personnel and maintenance projections. Lohrer briefed congressional staffers on his work last week.

Defense News reported Lohrer’s findings on March 12. Since then, the Air Force has questioned his metrics.

“We got the pros, the experts, who actually said, ‘No, that’s not right,’” Williams said last week.

Still, the Air Force has not provided the metrics it used to develop the $308 million C-27J lifecycle cost estimates.

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