The Airlifter Conundrum

After a Senate panel hearing purportedly to clarify the C-5 vs. C-17 issue, there still appears to be no real resolution. Sen. Tom Carper (D-Del.), chairman of the panel, began and ended the Sept. 27 hearing on the same note: If C-5 contractor Lockheed Martin can modify the C-5 to achieve at least a 75 percent mission capable rate at “the price they assert they can,” then “we’d be foolish not to modernize all 108 C-5s.” However, the Air Force doesn’t, at this point, believe Lockheed can sustain its price. In fact, Sue Payton, USAF’s top acquisition official, told the panel that the service has declared the C-5 modernization program in a Nunn-McCurdy breach because the cost of the program has “increased more than 50 percent from the original unit cost report of November 2001.” She did add, though, that the Air Force has asked Lockheed for more data. Lockheed VP Larry McQuien told the panel that the company had given USAF a firm fixed price for initial lots and a not-to-exceed option for the remainder. One key issue appears to be the cost for the replacement engine from GE; USAF believes the cost per engine will be greater than anticipated by Lockheed. However, upon questioning, McQuien said that under an FFP contract, the company would have to eat the difference, if any. At the end of the hearing, Air Force Gen. Norton Schwartz, head of US Transportation Command, expressed some frustration with the afternoon’s proceedings: “The question is what do we do with C-17 production. And my concern is that that bit of insurance might expire, if we don’t deal with that issue properly.” Chairman Carper was dismissive, saying, remarkably, “We chose to focus on the need for big aircraft to provide strategic airlift. And as I said earlier, I’m a big fan of the C-17. That’s not what this is about.” (Payton statement; McQuien statement; Schwartz statement)