Tuesday, September 25, 2007

The Airlift Conundrum

The C-5 Galaxy (FAS photo).

According to Air Force Times, Defense Secretary Robert Gates will soon announce that cost overruns on the C-5 Galaxy transport modernization program have now reached 15% of the contract's value, triggering a reporting and review process that raise long-term doubts about the aircraft's operational future.

Two retired senior Air Force leaders, speaking with the Times on the condition of anonymity, confirm that the modernization has "tripped" cost overrun limits set in the Nunn-McCurdy Provision. Under that regulation, the Pentagon must notify Congress when cost increases on major acquisition programs reach 15%, or schedule delays hit six months. If cost overruns hit 25%, the military is required to justify continuing the program, based on its importance to national security and other criteria.

Why does this matter? The C-5, along with the newer C-17, forms the backbone of our strategic airlift fleet, ferrying equipment and supplies to U.S. forces around the globe. There are a total of 111 Galaxies in the Air Force inventory (61 of the original A models and 50 C-5Bs, built during the Reagan Administration); the service hopes to upgrade all aircraft to the C-5M standard under the modernization program, which includes new landing gear, safety equipment, communications systems, and--most importantly--new engines.

With its existing engines, the C-5 is anything but fuel efficient, adding to operating costs that are (reportedly) the highest of any military aircraft. By replacing existing power plants with General Electric CF6-80C2 engines, the C-5M will have significantly greater thrust (22,000 lbs per engine), resulting in shorter take-off rolls, improved climb performance, and longer intervals between in-flight refueling.

But the cost of attaining those capabilities is in dispute. Lockheed claims it can modernize the C-5 fleet at an average cost of $83 million per aircraft, well below Nunn-McCurdy thresholds. However, the Air Force estimates that each modernized C-5 will now run $120 million, meaning that cost overruns may reach 40%, casting a shadow over the future of the upgrade program--and the C-5.

At the Lockheed price, the service can get a modernized C-5 for less than half the price of a new C-17. But the Air Force estimate ($140 million) is roughly two-thirds the cost of a C-17. For a service scrambling to recapitalize its aircraft fleet--in a tough budget environment--it becomes difficult to justify a modernization program that offers only a 33% savings over a newer, more capable transport.

Without the upgrade, the Air Force will be stuck with C-5s that are expensive to operate and maintain, as jet fuel prices continue to climb. Retiring the Galaxy and buying more C-17s would be an optimal solution, but at more than $200 million a copy, it will be difficult to purchase more of the new transports and still fund Air Force acquisitions of other weapons systems, including the F-35 Joint Strike Fighter (JSF).

Meanwhile, the demand for strategic airlift has never been greater--and there's already a shortfall between what we "have" and what the armed forces need to meet global commitments. And that leaves the Air Force with a real conundrum; the service needs modernized C-5s to sustain present capabilities, but the program may be too expensive to sustain. And without the upgrades, current C-5s may be too costly to operate and maintain, hastening their departure from active service. That, in turn, would put more pressure on a smaller number of C-17s and C-5s left to shoulder to load. The purchase of more C-17s would relieve some of that strain, but that would take years--and money the Air Force currently doesn't have.


halojones-fan said...

So let me get this straight:

There isn't _really_ an overspending problem. The Air Force just _thinks_ that there will be--based on nothing beyond their own estimates, and in direct opposition to the contractor's statement.

How the hell do you respond to that? It's as though I were a car salesman, and I offer a car for $20K, but the customer says "well I think the car is actually worth $30K, but $30K is more than I want to spend, so I won't buy a car."

And, of course, I'm sure that the USAF will blame Lockheed for the "cost overrun" that is in fact their own hidebound conservatism biting them on the arse.

Unknown said...

Halo--Obviously, I have long-standing ties to the Air Force, but the issue cuts both ways. Not only does the service provide "low ball" estimates to Congress (knowing that inevitable cost overruns will push the price higher), the contractors play the same game.

If Lockheed was convinced that it can modernize the C-5 fleet for $83 million, they'd announce that their bid was firm, and there wouldn't be any need for this price review/recalculation process that's now on-going.

Bottom line: the AF and Lockheed may push the C-5M program into oblivion, forcing the retirement of the older C-5As, leaving us with an even greater airlift shortfall, and no money to buy additional airlifters.

Galrahn said...

Spook question.

Isn't that what the air force wants? If I remember correctly they have spent two years trying to retire the C-5s, but Congress has not allowed them to?

Or am I off here?

Seems to me if you want to get rid of a program, simply pull a stunt like this and it becomes politically popular to make it go away.

JoeC said...

I think I'm with galrahn on this one. I was under the impression the AF was trying to ditch the Galaxy. I'd be really surprised that there were that many C5s left in inventory, what with operational losses and AMARC doing their duty in reclaiming parts to keep the rest of the beasts flying. http://www.amarcexperience.com/AMARCArticleC5Galaxy.asp

OTOH, what aircraft does the U.S. have that matches the lift capability of the C5? None that I know of. Heck. maybe we could just lease time from Russians on that monster plane they have. At least they don't fly them much either. That one that sat for months down in Houston would be a place to start. Shoot, they'd probably cut us a deal just to get it back in the air!