Washington Watch

April 1, 2008

Requirements, Not “Wishes”

The Air Force has been warning for some time that its budgets, year after year, are falling short of actual need by $20 billion. It looks like Fiscal 2009 will be no exception.

In February, USAF sent to Capitol Hill its “unfunded requirements” list for Fiscal 2009, which begins next Oct. 1. The list totals up to $18.75 billion.

The Air Force document provides a line-by-line description of where and how it would spend that amount, should Congress be inclined to provide it. The other services submitted similar requests.

Such documents have become a tradition in the budget process, as Congress usually asks service Chiefs what they would spend “one more dollar” on, in order of preference, if it were authorized. The documents have become known as annual “wish lists,” implying that the items on them were nice to have, not need to have, in nature.

The Air Force’s request exceeded that of any other service. The Army and Marine Corps each requested less than $5 billion on their lineups.

On USAF’s list:

  • $4 billion for 15 C-17 airlifters.
    • $1 billion for four F-22 fighters and long-lead materials for another 20 or so.
        $800 million for five F-35 fighters.
          $600 million for Global Hawk unmanned aerial vehicles.
            $275 million for A-10 engine upgrades.

          On top of this, USAF seeks money for various classified projects, improved sidearms, maintenance for vehicles, retention bonuses, dorm furniture, and so forth.

          The characterization of the request has changed, too. It used to be called the “Unfunded Priorities List,” but many of the items on it are now well beyond priorities and are simply basic necessities, USAF Chief of Staff Gen. T. Michael Moseley told defense reporters in February.

          Moseley pointed out that some items, such as funds to implement changes in how USAF handles and stores nuclear weapons, are things USAF has been ordered to do, without the money to do it. In fact, the No. 1 item on the list was $183 million for nuclear weapons handling improvements.

          Last year, the list totaled about $17 billion.

          “This year, it’s about $18 billion, and it shouldn’t be lost on you … that we’ve said over and over and over again that our deficit is about a $20 billion bogey,” Moseley pointed out.

          “It’s not a wish list,” he repeated several times.

          Three needs pervade the Unfunded Requirements List. One is to provide replacement aircraft for those either lost or “burned up” in 17 consecutive years of combat operations. Another is to provide logistics support, spare parts, and other measures to keep an aged fleet flying. A third is to deal with new threats not adequately addressed in the baseline budget.

          The 29th item on the list was $1.1 billion to fund contractor logistics support to 95 percent of where the Air Force needs it to be, in order to reduce the workload on “already stressed blue suit maintainers.”

          Another item proposed spending $368 million to allow USAF to cut its energy consumption by three percent annually.

          For $438 million, the Air Force would be able to give its “heavy” aircraft crews—cargo, tanker, and surveillance types—warning of shoulder-fired missiles.

          Maj. Gen. Paul J. Selva, USAF’s strategic planning director, told the Associated Press in February that $20 billion a year of additional procurement funding is needed every year for at least five years, over and above the planned baseline budget.

          The money is necessary, said Selva, to avoid driving what is “already a geriatric Air Force … another 20 years into an era of uncertainty.”

          On the Razor’s Edge

          Even if the Air Force gets an additional four F-22s in the next supplemental budget request—raising the total to 187—the Raptor line will still be in grave danger.

          Approval of four more Raptors would extend the production line only from November 2008 to February 2009. Thus, a new Administration, taking office on Jan. 20, 2009, would have a few days at most to decide to continue the fighter project.

          Defense Secretary Robert M. Gates has said it is likely he will cede the four additional fighters, so as to allow the new President to decide the fate of the program, but the margin would be razor thin.

          Larry Lawson, general manager for the F-22 at Lockheed Martin, said in an interview that work for the longest-lead F-22 vendors—those that supply titanium and aluminum, avionics, and large-scale forgings and castings—will start drying up this fall, around November. Without more orders before then, they will close down production.

          Given the way that Gates and his deputy, Gordon England, have dealt the cards, the incoming Administration won’t even have time to consider the matter, let alone rush an emergency spending measure up to Capitol Hill to prevent work stoppage.

          The current Congress will have to take matters into its own hands and add a number of F-22s to the defense budget in Fiscal 2009 to head off a break in production. If that doesn’t happen, though, Lawson said it’s hard to see how the F-22 line could be restarted.

          “Once you close this door, it doesn’t come back; it’s not recoverable,” he said.

          Mothballing the F-22 tooling wouldn’t do much good, Lawson said, since the workforce needed to build the F-22—about 25,000 people who work “directly” on parts for the airplane, or in assembly—will scatter off to other jobs.

          Lawson called it “pragmatically impossible” to get those workers back even after just a few weeks. Meanwhile, it would be too expensive to keep them on the payroll, hanging around, or building only a few airplanes a year, because the cost of overhead would blast the unit cost of the fighter through the roof.

          Lawson offered the analogy of fixed costs on a car loan as being similar to the overhead dilemma.

          “The payments on the car are the same, whether you have one person riding in it or six,” Lawson said. For that reason, he’d like to see Congress add another year to the multiyear production deal, under which the company has been building 20 F-22s annually. That’s about the minimum number needed to build the fighter economically, Lawson said. At 24 a year—the rate of delivery before the multiyear—the F-22s would be less costly each, because overhead is spread out over more units.

          Gen. Ronald E. Keys, at the time head of Air Combat Command, said that cutting off F-22 production at 183 aircraft meant the service would be eliminating “the cheapest ones,” since the cost of developing the aircraft and setting up the factory has now been amortized and the learning curve has risen dramatically.

          Lawson said he has delivered 12 flawless airplanes—those the Air Force has accepted as having zero defects. The F-22 has also performed beyond USAF’s expectations in wargames, delivering vastly lopsided victories. A USAF official said after recent exercises between the F-22 and the Navy’s F/A-18s that the sea service said it wasn’t inclined to participate again, “just to be slaughtered.”

          If the line closes, bringing the workers back and getting them retrained and recertified for the work would cost billions of dollars. A Pentagon official said that it costs more than $300,000 and many months just to complete a security clearance for just one worker in highly classified projects such as the F-22.

          The Bush Administration has left the F-22 in a kind of limbo. While it budgeted no money for long-lead funding in the 2009 budget request, neither did it request funds to shut down the line. If more orders don’t materialize, “the Air Force will get hit with those shutdown costs without any money to pay for it,” a senior USAF official said.

          Do the Jumbo Limbo

          A DOD decision against fully rehabilitating the entire C-5 Galaxy fleet hasn’t done much to resolve major strategic mobility questions that have dogged the Air Force for years. In fact, it has set the stage for what could be another round of haphazard acquisition of big airlifters.

          John J. Young Jr., the Pentagon’s acquisition chief, decided in mid-February that the C-5 Reliability Enhancement and Re-Engining program, or RERP, was too expensive and not worth doing in its entirety. The program’s cost was soaring, and the Air Force last fall officially declared it in breach of the Nunn-McCurdy law, which requires the Pentagon to certify as “critical” any program whose cost jumps more than 25 percent. The RERP had escalated more than 50 percent, from $11.1 billion to $17.5 billion.

          Along with re-engining, the RERP would perform certain structural and other improvements designed to get the C-5’s reliability—especially its on-time takeoff performance—up by at least 10 percent. However, after weighing the cost of the RERP versus its benefits, Young said it was only worth doing on the 47 C-5B models and its two C-5C models. (The two C models are unique in having no passenger deck above the cargo bay; they are used to move large space vehicles and other outsize gear.) The C-5Bs and Cs are many years younger than the C-5As built in the 1960s. Three aircraft have already been converted to C-5M (modified) configuration and are in test, leaving 47 C-5Bs and the two C-5Cs yet to be done.

          Young said that the remainder, 59 C-5As, can get a parallel upgrade, called the Avionics Modernization Program, but not the RERP. The RERP is now a $7.7 billion program. The Air Force will retain all 111 C-5s of all models.

          Air Force Chief of Staff Gen. T. Michael Moseley told defense reporters in February that the outcome of Young’s review closely matched what the Air Force wanted to do “all along.”

          However, in a letter to members of Congress who have staked positions on the airlift debate, Young wrote that in reviewing the RERP, he considered the option of buying more C-17s instead, and ruled it out.

          The Pentagon “rejected those options as not meeting requirements and more costly for the taxpayer,” he said, adding that buying more C-17s is “unaffordable” in the Pentagon’s long-term spending plan.

          The Pentagon and Congress have been wrestling over whether it’s more cost-effective to perform the C-5 upgrade or simply let the Galaxys age out and replace them with brand-new C-17s. The C-17s aren’t as large as the C-5, but have compiled an exemplary record of reliability.

          By law, the Air Force can’t retire any C-5s until the three C-5Ms in test have had a chance to show what they can do. However, the C-17 production line has been dancing on the edge of closure. Boeing has spent its own money keeping it going, and Congress moved to add 10 more C-17s to the Air Force budget last year.

          This year, the Air Force requested no money for C-17 shutdown, but then put a buy of 15 of the heavy lifters near the top of its Unfunded Priorities List, sent up to Congress not long after it presented its C-17-less baseline budget (see item above).

          Rep. John P. Murtha (D-Pa.), chair of the House Appropriations defense subcommittee, said he would push to get at least 14 C-17s in the Air Force budget for 2009. Such a buy would cost $3.9 billion and push the C-17 inventory out to 204 airplanes.