Washington Watch

Nov. 1, 2003

Running on Empty

By mid-September, USAF’s plan to lease 100 KC-767 tankers had sailed through three Congressional panels and needed only one more approval—that of the Senate Armed Services Committee. It was at that point, however, that problems threw the plan, at least momentarily, into limbo.

The Senate panel vigorously challenged the $16.6 billion deal and then proposed other scenarios for replacing USAF’s aged KC-135s. The upshot was more delay and uncertainty.

At issue was a complex deal between the Air Force and Boeing. The committee chairman, Sen. John Warner (R-Va.), called it an “end run” around normal budgeting processes. He worried that approval would set a precedent for similar maneuvers by other services.

Other members warned that widespread use of leasing would saddle future Congresses with large funding mandates. Sen. Wayne Allard (R-Colo.) said the practice would create a “hidden liability” in the budget and only defer a bow wave of bills.

Warner and Sen. Carl Levin of Michigan, the ranking Democrat, asked the Defense Department to consider other possible solutions. One called for leasing 25 aircraft and buying the rest. The Air Force warned this action would raise the per-airplane cost of the 25 leased aircraft. It further claimed that it couldn’t afford the huge up-front cost to purchase 75 aircraft.

The committee asked the Institute for Defense Analyses to determine whether USAF got the best possible deal from Boeing. In addition, it asked the Air Force to provide new data on KC-135 corrosion problems—a big concern to the service.

Warner planned to put the deal to a vote soon after the Senate panel received answers to its various questions.

In a September letter to the committee, Deputy Defense Secretary Paul D. Wolfowitz re-endorsed the tanker lease as proposed by USAF. The “lease 25/buy 75” option proposed by Warner would oblige the Air Force to spend $10.5 billion more than anticipated in its five-year spending plan, Wolfowitz said. He explained that, though the Senate scheme would save $2.7 billion overall, the need for modern tankers is urgent, and the Pentagon is willing to spend more money to get them faster.

Moreover, Wolfowitz said, changing the terms now will require renegotiating the Boeing deal, which took two years of laborious haggling. This renegotiation represents “the biggest drawback” to the 25/75 idea, Wolfowitz wrote.

The favorable terms obtained from Boeing might disappear, and the whole deal could fall apart, or, as Wolfowitz put it, become “potentially unexecutable.”

Of course, Congress could simply grant up-front, multiyear procurement authority for all 100 aircraft, but it has never done such a thing. It would save $5.5 billion over the life of the acquisition cycle, but USAF would have to find an additional $13 billion in up-front funding.

The Pentagon appears determined to get on with the lease program as soon as possible. Wolfowitz wrote that DOD remains steadfast in its desire to do the deal now.

Airpower Unquestioned

While the lessons learned from Gulf War II can be used both to support or oppose practically any defense program, there’s no argument about the value of airpower, aerial tankers, and network-centric operations, according to the nonpartisan Congressional Research Service.

That view emerged in a June CRS report, “Iraq War: Defense Implications for Congress.” A group of CRS panelists found it was possible to use the events of Gulf War II to either support or undercut practically any system or concept.

However, the panelists stated unequivocally that the war “validated the effectiveness of combat aircraft armed with precision guided weapons.” They went on to say that this truth might “influence discussions about current plans for investing in specific aircraft and munitions programs. ”

The report declared that the war “appears to have demonstrated the value of network-centric operations and timely battlefield intelligence and the potential value of psychological operations.” These capabilities stemmed for the most part from operations in air and space.

The conflict “may reinforce support generated by the war in Afghanistan for increased investment in US special operations forces” and may “highlight questions concerning reserve combat divisions and the potential consequences of extended call-ups of large numbers of reserve forces,” the CRS noted.

The experience in Iraq “may reinforce support for investing in aerial refueling capabilities and increase interest in potential new airlift and sealift technologies. ”

Elsewhere, conclusions were less than ironclad. CRS said that supporters of maintaining 10 Army divisions could point to the fact that 10 divisions plus three Marine divisions handled Iraq nicely and should be sufficient for a two-war scenario. Those wanting a larger Army could argue that too many overseas commitments have forced unduly long call-ups of National Guard and Reserve forces. Those wanting a smaller Army could argue that advances in technology, and the effects achieved with a relatively small force in Iraq, show that a smaller, lighter, faster force of only six divisions will be sufficient in the future, since only three divisions were needed to defeat one of the largest land armies in the world.

Even before this war, said CRS, some experts already had begun speculating about “the degree to which airpower can substitute for ground forces in future conflicts. ”

The war also provided ammunition to advocates of bombers, said CRS, noting that precision guided weaponry “underscored the value of bombers for reducing the need for in-theater bases and for maintaining aircraft with precision guided weapons over the battlefield for long periods of time. ”

These facts, however, can be used to argue that the Air Force “has enough, or more than enough, long-range bombers for fighting regional conflicts, particularly given how precision guided weapons have multiplied the number of targets that each bomber can attack during a single sortie, ” said CRS.

CRS said one could make a case for buying more C-17 transports, given that they demonstrated the value of a strategic airlifter able to move directly to forward areas. On the other hand, the panel said, the wars in Iraq and Afghanistan show that the US will probably fight wars with smaller ground forces in the future, potentially reducing airlift requirements.

The Problem With Space Programs

Satellite and space launch programs of today suffer from delays, setbacks, and massive overruns mainly because of wishful thinking and excessive optimism a decade ago, according to a joint report of the Defense Science Board and Air Force Scientific Advisory Board.

The report, completed in May and released in September by Peter B. Teets, USAF undersecretary and director of the National Reconnaissance Office, says acquisition reforms, insufficient budgets, and an unduly rosy outlook for the space industry all played their roles in undermining critical satellite programs and the Evolved Expendable Launch Vehicle program.

At the same time, the demonstrated value of space systems in Operation Desert Storm and later conflicts ratcheted up demand for space support, and the military space establishment was not prepared to meet it.

“The major problems that we identified in the acquisition of national security space programs were actually embedded in choices and options … in the decade of the ’90s,” said A. Thomas Young, chairman of the joint task force, in a September Pentagon press conference. Though undertaken in good faith, those choices produced effects that were “clearly unintended” but which exerted a “profound adverse impact” on the space infrastructure. These problems “are still somewhat prevalent today,” Young said.

The first big problem was that programs far exceeded the budgets provided, leaving no margin for the inevitable delays and setbacks, Young said. The net result was “underfunded high-risk programs.” At the same time, space leaders were urged to take on more risk in programs, trying to do more with less, because of budget shortfalls.

More risk meant that time-tested “programmatic and engineering practices were in many cases abandoned and resulted in a significant increase in cost, schedule, and mission success risk,” he said.

Acquisition reform caused the near elimination of systems engineering capability in the government, he said, and functions “that are typical and uniquely government responsibilities” were handed off to the contractors— “even the control of requirements.”

The result: A sharp decline in capability to ride herd on programs and keep cost and schedule from spinning out of control. During this period, “the role of the program manager was greatly reduced,” Young observed.

A “robust commercial space market” was anticipated in the latter 1990s, and this was expected to “greatly reduce the cost of national security space, particularly in the space launch arena,” Young explained. It didn’t happen, but the assumption had already been built into the budget.

With no huge commercial demand for launches driving down costs, the unit cost of each government launch went sky-high.

At the same time, companies that wanted to stay in the space business recognized that winning some programs was a “life-or-death” situation. As a result, they lowballed their bids in order to win work. As it turned out, they couldn’t deliver at the price advertised, and programs got into deep trouble.

While this was happening, the proven utility of space communications and intelligence caused military users to generate “a flood of requirements” that overwhelmed the requirements management process.

In short, “cost had replaced mission success” as the prime consideration in space programs, Young observed. Requirements were allowed to mushroom, and the government had lost its ability to manage them. The joint task force recommended changing the emphasis, setting mission success higher than cost. The quality that will result will help reduce costs, Young asserted.

The panel also said that programs should be more realistically funded. “We found way too much optimism,” Young reported. At the outset, space programs tended to be underfunded “between a third and 100 percent,” he charged.

The panel suggested budgeting to the most probable cost “with a 20-25 percent reserve.” This extra is “not a slush fund,” Young said, but a needed buffer to resolve problems as they occur.

Teets said the recommendations were taken to heart and will be central to a new national security space policy that was to be completed this fall.