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Lawmakers: U.S. Air Force Numbers Lack Credibility

Mar. 25, 2012 - 11:17AM   |  
The U.S. Air Force has faced stiff opposition in Congress for decisions to cancel the C-27J Spartan cargo plane.
The U.S. Air Force has faced stiff opposition in Congress for decisions to cancel the C-27J Spartan cargo plane. (File photo / U.S. Air Force)
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Three years ago, then-U.S. Defense Secretary Robert Gates announced that he was recommending Congress approve the termination or truncation of 33 programs.

With total contract values in the hundreds of millions of dollars, the programs collectively touched just about every state, sending lawmakers on both sides of the aisle into a frenzy over the possibility of losing jobs in their districts.

“[I]t was basically a blitzkrieg on the Hill because everybody’s ox was getting gored,” Gates said on March 14 after accepting the Elliot L. Richardson Prize for Excellence in Public Service from the National Acacemy of Public Administration as he reflected on his 2010 budget proposal. “And that prevented [lawmakers] from forming alliances, and ultimately we were successful.”

It’s unclear whether Gates’ strategy for killing or shrinking programs will apply to the Pentagon’s 2013 budget proposal, which the Defense Department sent to Congress in February.

The Air Force, for example, has faced stiff opposition in Congress for decisions to cancel two programs, the C-27J cargo plane and the Block 30 variant of the Global Hawk UAV.

At congressional hearings over the past two months, Republicans and Democrats have argued against both decisions. Moreover, they’ve called into question the Air Force’s analysis and rationales used to justify those decisions.

This could cause what Air Force and other Pentagon leadership have called a “strategy driven” budget proposal to unravel.

Critics of the plan to cancel the Alenia Aermacchi C-27J have questioned the Air Force’s life-cycle spending estimates, or how much it will cost to purchase and operate one aircraft over a 25-year period.

That argument has been raised not only by the Air National Guard, which is slated to lose at least 21 planes, but also by lawmakers and congressional staffers.

Numerous Air Force documents state the aircraft’s life-cycle cost is somewhere between $111 million and $308 million per aircraft, a broad margin that has created skepticism in both chambers of Congress.

“There’s a big gap there that I don’t think they adequately explained at all here today,” Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, said after a March 20 hearing with Air Force leaders.

As for the Northrop Grumman Global Hawk, the Pentagon changed its requirements for high-altitude reconnaissance, which favored the venerable U-2 spy plane over the UAV. The Air Force also says problems with the Global Hawk sensor drove its decision to cancel the Block 30 version.

The Air Force still plans to buy other versions of the Global Hawk, but plans to retire 18 Block 30s.

The decision puzzled many because last summer top DoD acquisition officials expressed their support for the program to Congress.

“It’s completely inconsistent with what [these officials] said just a few months earlier, that there was no substitute for the Global Hawk,” said Todd Harrison, an analyst with the Center for Strategic and Budgetary Assessments. “I think on some of these decisions, at least the way they’ve communicated them publicly, is creating a credibility problem.”

Also complicating matters: The Air Force had to make “not only some of the most politically controversial decisions but more than any other service,” said Mackenzie Eaglen, an analyst with the conservative American Enterprise Institute.

“Congress is sensitive to these Air Force decisions in particular because they don’t just impact programs,” she said. “They affect entire units and bases around the country and therefore livelihood. This means job loss and future base closure.”

Asked about the Global Hawk decision, Eaglen said it is “equally as flimsy and goes out the window depending on which assumptions or tweaks” are made to the requirement.

The Air Force’s “service cost position” is that one C-27J will cost $308 million over its lifetime. This number is the sum of procurement, development, military construction, operations, personnel and spare parts costs over 25 years divided by the number of aircraft, in this case 38.

The $308 million number, Air Force budget officials said, was finalized in May 2011.

“It’s based on actually how the airplane is laid in; four airplanes per base, nine bases, the number of personnel at each location … all of the things that were essentially the plan for the service, to include the Guard, to base, man, employ, operate the C-27J,” an Air Force official said. “Anything beyond that is an excursion that changes the set of assumptions associated with how we plan to operate, employ, base the C-27J.”

But if you change the assumptions, the life-cycle cost estimate could plummet.

Air Force budget and analysis officials have acknowledged that, when based similarly to the C-130H, using Guard or reserve crews, the C-27J life-cycle cost could fall to $166 million per plane. But this lower number comes into play only if the Air Force buys more than its 38-plane program of record and excludes sunk costs, such as development, military construction and depot standup.

The Air Force argues such a comparison of the C-27J and C-130 was not “appropriate” during the budget process because the basing, manpower and employment factors were what the Air Force would have been required to fund for the existing fleet of C-27J aircraft, according to a senior Air Force official.

Because the C-27J — used to shuttle troops and supplies around the battlefield — will be operated only by the Air National Guard and based at numerous locations in small four-plane squadrons, its costs are more than the C-130s, which are typically part of larger squadrons and spread across the active and reserve components, the Air Force officials said.

The Air Force also notes that the Pentagon’s new strategic guidance, which DoD officials say drove their budget decisions, justify the decision for canceling the C-27J program. Because the strategy calls for fewer ground troops and not fighting two land wars simultaneously, demand for intratheater airlift is less. That also led to the Air Force’s decision to retire 65 C-130s. Both aircraft perform the intratheater airlift mission.

“If you didn’t reduce [the C-27J], you would have to reduce more C-130s or some other intratheater airlift asset,” the Air Force official said.

Since the C-27J costs more, the Air Force opted to eliminate all of the aircraft from the fleet before reducing C-130s.

Further confusing lawmakers is that numerous draft Air Force reports state that the C-27J life-cycle cost is $111 million. The number appeared in at least two draft reports to Congress that have yet to be delivered to lawmakers. The Air Force claims the number is not accurate and was dismissed last fall.

“I challenged it against these guys [other service analysts]a little bit because it wasn’t a good number,” the Air Force official said. “It was a draft report that we were having some pretty vigorous discussions inside the Air Force about and eventually ... people got around to it and said: ‘No, that’s not the right number.’”

But the lower number has raised suspicion in Congress and among analysts.

“There must have been some assumptions that you could plug into their model that result in that number,” Harrison said. “What went into that to make that number and how does it differ because maybe those assumptions are realistic.”

What will ultimately happen to these two programs over the coming months is anyone’s guess.

“This is a classic show-me-the-money issue,” said Gordon Adams, who oversaw defense budgets in the Clinton administration. “It gets very dicey if you’ve made a policy decision that you haven’t backed up with a cost analysis.”

Congressional staffers and think-tank analysts say until they are able to replicate the Air Force’s cost estimate modeling, they will remain skeptical.

Lawmakers have stopped short of saying they will introduce legislation to block the Air Force’s decision. Levin said his committee will seek answers as it continues its review of the Pentagon’s budget submission.

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

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