Protest and Issues Around the Air Force Refueling Tanker (Defense, Security and Strategy)

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DEFENSE, SECURITY AND STRATEGY SERIES

PROTEST AND ISSUES AROUND THE AIR FORCE REFUELING TANKER No part of this digital document may be reproduced, stored in a retrieval system or transmitted in any form or by any means. The publisher has taken reasonable care in the preparation of this digital document, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained herein. This digital document is sold with the clear understanding that the publisher is not engaged in rendering legal, medical or any other professional services.

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DEFENSE, SECURITY AND STRATEGY SERIES

PROTEST AND ISSUES AROUND THE AIR FORCE REFUELING TANKER

WALTER P. ZEINE EDITOR

Nova Science Publishers, Inc. New York

Copyright © 2010 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers‘ use of, or reliance upon, this material. Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works. Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Zeine, Walter P. Protest and issues around the Air Force refueling tanker / Walter P. Zeine. p. cm. Includes index. ISBN 978-1-61470-705-9 (eBook) 1. Airtankers (Military science)--United States. 2. Airplanes--Air refueling--Cost effectiveness. 3. United States. Air Force--Procurement. I. Title. UG1242.T36Z45 2010 358.4--dc22 2009035595

Published by Nova Science Publishers, Inc.  New York

CONTENTS Preface Chapter 1

xi Air Force Air Refueling: The KC-X Aircraft Acquisition Program Christopher Bolkoom and William Knight

Chapter 2

Air Force Procurement: Aerial Refueling Tanker Protest U. S. Government Accountability Office

Chapter 3

Headquarters Air Mobility Command White Paper KCX: The Next Mobility Platform the need for a Flexible Tanker United States Air Force, Air Mobility Command

Index

1 55

69 89

PREFACE KC-X is the first of three planned programs intended to recapitalize the Air Force's air refueling fleet. Eventually, the KC-X program is expected to acquire 179 new, commercial off-the-shelf airliners modified to accomplish air refueling. The program is expected to cost $35 billion. Both Boeing and a consortium consisting of Northrop Grumman and European Aeronautic Deference and Space Company (EADS) competed for KC-X. Boeing offered a variant of the 767-200, while Northrop Grumman submitted a version of the Airbus 330-200. On February 29, 2008, the Air Force awards the KC-X contract to Northrop Grumman. The initial $12.1 billion KC-X contract covers purchase the first 68 KC-45s of the anticipated 179 aircraft. Boeing protested the Air Force's decision to the Government Accountability Office (GAO). GAO upheld the Boeing protest, and in July, Defense Secretary Robert Gates announced that he would reopen the tanker competition. This book explains the protests and issues surrounding the Air Force refueling tanker competition.This book consists of public documents which have been located, gathered, combined, reformatted, and enhanced with a subject index, selectively edited and bound to provide easy access. Chapter 1 - KC-X is the first of three planned programs intended to recapitalize the Air Force‘s air refueling fleet. Eventually, the KC-X program is expected to acquire 179 new, commercial off-the-shelf airliners modified to accomplish air refueling. The program is expected to cost approximately $35 billion. Both Boeing and a consortium consisting of Northrop Grumman and European Aeronautic Defence and Space Company (EADS) competed for KC-X. Boeing offered a variant of the 767200, while Northrop Grumman submitted a version of the Airbus 330-200. On February 29, 2008, the Air Force awarded the KC-X contract to Northrop Grumman. The initial $12.1 billion KC-X contract covers purchase the first 68 KC-45s of the anticipated 179 aircraft. Boeing

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protested the Air Force‘s decision to the Government Accountability Office (GAO). GAO upheld the Boeing protest, and in July, Defense Secretary Robert Gates announced that he would reopen the tanker competition. Chapter 2 - The Boeing Company protested the award of a contract to Northrop Grumman Systems Corporation by the Department of the Air Force for KC-X aerial refueling tankers. Boeing challenged the Air Force‘s technical and cost evaluations, conduct of discussions, and source selection decision. Because Boeing competed for the contract, it is an interested party for purposes of filing a protest. Under the Competition in Contracting Act of 1984, GAO is required to consider protests of contract awards filed by interested parties. In deciding protests, GAO makes a determination of whether the agency‘s actions complied with procurement statutes and regulations. Chapter 3 - The requirement for a flexible Aerial Refueling Aircraft that can operate throughout a battlespace to deliver fuel and/or cargo and/or passengers is rooted in Joint Doctrine. Equipping the Nation‘s new KC-X aircraft with appropriate floors for carrying passengers and cargo, reasonably-sized doors to accommodate standard-sized pallets, and modest defensive systems which allow the aircraft access to an area of operations will ensure success for US Combatant Commanders.

In: Protest and Issues Around the Air Force … ISBN: 978-1-60741-980-8 Editor: Walter P. Zeine © 2010 Nova Science Publishers, Inc.

Chapter 1

AIR FORCE AIR REFUELING: THE KC-X AIRCRAFT ACQUISITION PROGRAM 

Christopher Bolkoom and William Knight SUMMARY KC-X is the first of three planned programs intended to recapitalize the Air Force‘s air refueling fleet. Eventually, the KC-X program is expected to acquire 179 new, commercial off-the-shelf airliners modified to accomplish air refueling. The program is expected to cost approximately $35 billion. Both Boeing and a consortium consisting of Northrop Grumman and European Aeronautic Defence and Space Company (EADS) competed for KC-X. Boeing offered a variant of the 767200, while Northrop Grumman submitted a version of the Airbus 330-200. On February 29, 2008, the Air Force awarded the KC-X contract to Northrop Grumman. The initial $12.1 billion KC-X contract covers purchase the first 68 KC-45s of the anticipated 179 aircraft. Boeing protested the Air Force‘s decision to the Government Accountability Office (GAO). GAO upheld the Boeing protest, and in July, Defense Secretary Robert Gates announced that he would reopen the tanker competition. Air Force in-flight aerial refueling aircraft, often referred to as ―tankers,‖ provide both persistence and range to Department of Defense (DOD) fighters, 

This is an edited, reformatted and augmented version of a CRS Report for Congress publication, CRS Report RL 34398, dated August 4, 2008.

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Christopher Bolkoom and William Knight

bombers, airlift and surveillance aircraft. The Air Force‘s tanker fleet greatly multiplies the effectiveness of DOD air power across the continuum of military operations. Today, the KC-135, which makes up the preponderance of the Air Force‘s tanker force, is among the Air Force‘s oldest aircraft. Potential issues for Congress include:            

How long can the KC-135 fly? What is the lowest cost alternative for KC-135 recapitalization? How many new tankers does the Air Force require? What will KC-X cost? What capabilities should KC-X have? How will KC-X fit with future tanker requirements? Was the competition fair? What are the economic and trade effects of the KC-X program? What is the impact of Boeing‘s contract protest? Why did the GAO sustain the protest? Can DOD split the tanker contract between the competitors? Where does the Air Force plan to base KC-X aircraft?

Government-sponsored analysis concluded that purchasing new, commercial aircraft to recapitalize DOD‘s tanker fleet is the least expensive option for recapitalizing the KC-135 fleet from a life-cycle cost perspective. It is also the most capital intensive option. At least three less capital intensive options could potentially augment the Air Force‘s longer-term KC-X program:   

Buy and convert surplus commercial airliners into military tankers Re-engine some fraction of the KC-135E fleet Develop commercial Fee-For-Service aerial refueling (FFS AR)

INTRODUCTION KC-X is the first of three planned programs intended to recapitalize the Air Force‘s air refueling fleet. Eventually, the KC-X program is expected to acquire 179 new, commercial off-the-shelf airliners modified to accomplish air refueling missions. The program is expected to cost a total of approximately $35 billion. Both Boeing and a consortium consisting of Northrop Grumman and European

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

3

Aeronautic Defense and Space Company(EADS) — the parent company of Airbus — competed for KC-X. Boeing offered a variant of the 767-200, while Northrop Grumman submitted a version of the Airbus 330-200. On February 29, 2008, the Air Force awarded the KC-X contract to Northrop Grumman. The initial $12.1 billion KC-X contract provides for the purchase the first 68 KC-45s of the anticipated 179 aircraft.1 On March 11, 2008, Boeing filed a formal protest of Air Force‘s decision,2 and on June 18, 2008, the Government Accountability Office (GAO) upheld this protest. On July 9, 2008 Defense Secretary Robert Gates announced that he agreed with GAO‘s findings that the tanker competition was flawed and that DOD would therefore reopen KC-X bidding process. Air Force in-flight air refueling aircraft, or ―tankers,‖ enable Department of Defense (DOD) fighters, bombers, airlift and surveillance aircraft fly farther and stay aloft longer. As such, the Air Force‘s tanker fleet greatly multiplies the effectiveness of DOD air power across the full continuum of military operations. Today, the KC135, which makes up the preponderance of the Air Force‘s tanker force, is amongthe Air Force‘s oldest aircraft. Potential issues for Congress include:           

How long will the KC-135 remain a viable air refueling platform? What is the lowest cost alternative for KC-135 recapitalization? How many new tankers does the Air Force require? What will KC-X cost? What capabilities should KC-X have? How will KC-X fit with future tanker requirements? Was the competition fair? What are the economic and trade effects of the KC-X program? What is the impact of Boeing‘s contract protest? Why did the GAO sustain the protest? Where does the Air Force plan to base KC-X aircraft?

Government-sponsored analysis concluded that purchasing new, commercial off-the-shelf aircraft to recapitalize DOD‘s tanker fleet is the least expensive option for recapitalizing the KC-135 fleet from a life-cycle cost perspective. However, this course of action is also capital intensive in the near-term when compared with other potential courses of action. At least four alternatives to the Air Force‘s KC-X acquisition were suggested each of which could potentially still be compatible with the Air Force‘s longer-term KC-X program:

4

Christopher Bolkoom and William Knight    

Use a ―Split-Buy‖ model for future tanker recapitalization Buy and convert surplus commercial airliners into military tankers Re-engine some fraction of the KC-135E fleet Develop commercial Fee-For-Service aerial refueling (FFS AR)

SELECT LEGISLATION FY2009 The Administration‘s KC-X request for FY2009 includes $62 million in advanced procurement funding for five aircraft expected to be procured in FY2010 and delivered in 2012.3 Additionally, the Administration requested $832 million for RDT&E funding to support system development and demonstration.4 In their report 110-652 (H.R. 5658) House authorizers denied the Air Force‘s request for advanced procurement funding. The committee included three provisions related to aerial refueling. Sec. 132 requires the Air Force to maintain at least 46 KC135E aircraft in long-term storage. Sec. 133 repeals an out-of-date section from PL 108-136, and Sec. 134 requires the Secretaryof the Air Force to report on the process used to determine KC-X requirements. The House matched the request for R&D funding. In their report 110-335 (S. 3001) Senate authorizers rejected the Air Force request for advance procurement and instead transferred these funds to KC-X R&D. On July 30, 3008, House Appropriators released a statement summarizing their mark-up of the FY2009 Defense Appropriations Bill. In this press release, the committee ―directs that industrial base concerns be included in the evaluation of the tanker contract award.‖5 Press reporting of this mark-up assert that this provision gives Boeing an advantage in the revised competition for KC-X.6

FY2008 The Administration requested $314 million for KC-X RDT&E, which authorizers fully supported.7 Appropriators, as in FY2007, provided $114 million for RDT&E.8 Additionally, appropriators provided $150 million into a ―Tanker Replacement Transfer Fund‖ thereby providing the Air Force latitude to use the funds as needed in procurement, operations and maintenance, and/or RDT&E as needed to support KC-X acquisition.9

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

5

FY2007 The Administration‘s KC-X request was for $36 million for advanced procurement funding and nearly $204 million for research, development, test, and evaluation (RDT&E). However, authorizers denied the requested procurement funding and cut RDT&E funding to $152 million.10 Appropriators provided at total of $70 million in funding stating, ―the amount provided in the conference agreement was identified in writing by the Department of Defense as the level needed to meet all fiscal year 2007 requirements.‖11

BACKGROUND The KC-X program — currently the Air Force‘s top acquisition priority — is the first of three planned programs intended to recapitalize the Air Force‘s air refueling fleet.12 As part of the KC-X program, the Air Force is expected to acquire 179 new, commercial off-the-shelf airliners modified to accomplish air refueling missions. The Air Force plans to designate the new aircraft as the KC45A.13 Future programs known as KC-Y and KC-Z — each anticipated to replace approximately one-third of the Air Force‘s tanker force — are expected to continue the recapitalization effort over the next several decades. To provide the context of why the Air Force is pursuing the KC-X program today, this section of the report analyzes the role of air refueling aircraft in joint operations, outlines the DOD‘s current air refueling capabilities, and explains key air refueling operational constructs from which tanker requirements are derived. In addition, a review of refueling issues previously faced by Congress is provided in Appendix A.

Air Refueling in Joint Operations Air refueling has played a significant role in our nation‘s national security beginning in the Cold War and continuing into current military operations. Tankers increase the range and flexibility of forces and extend the amount of time combat and surveillance aircraft can stay ―on-station.‖ They also extend the range of fighters, bombers, and other aircraft. According to Air Force leaders, ―Clearly the tanker fleet is really some of the very fiber that holds our Air Force‘s unique

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global capabilities together. It is an essential enabler for getting to the fight and fighting the fight.‖14

Cold War The Air Force initially began to purchase the KC-135 fleet in the mid-1950s to refuel newly acquired B-52 nuclear bombers operated by Strategic Air Command.15 Additionally, air refueling played a significant conventional role in the Vietnam War during the 1960s and 1970s by flying 194,687 sorties (an average of more than 21,000 sorties each year) that refueled 813,378 aircraft with almost 9 billion pounds of jet fuel.16 A brief review of recent conflicts indicates the importance of tanker aircraft. 1991 Persian Gulf During the 1991 Gulf War, tankers contributed to two objectives: ―the speedy deployment of large air forces into the region, and the use of these forces in large and complex air combat operations.‖17 First, nearly 100 tankers formed ―air bridges‖ across the Atlantic and Pacific Oceans that allowed fully loaded fighters and bombers to deploy nonstop from U.S. bases directly into the Persian Gulf region. During combat operations, tankers allowed air defense and command and control aircraft to remain aloft for extended periods of time while extending the range of most attack missions.18 In so doing, 306 tankers flew 16,865 missions while delivering over 800 million pounds of fuel to 51,696 receiver aircraft.19 Recent Operations In1999, 175 air refueling aircraft participated in NATO combat operations in Kosovo by flying 5,215 sorties while transferring more than 253 million pounds of fuel to 23,095 coalition receivers.20 Between September 11, 2001 and the end of 2007, tankers flew 10,400 missions enabling homeland defense air patrols as part of Operation Noble Eagle.21 Combat operations in Afghanistan during 2001 and 2002 required 80 tankers that executed 15,468 sorties while offloading 1.166 billion pounds of fuel to 50,585 aircraft.22 Operation Iraqi Freedom also required a significant tanker contribution, requiring a peak of 305 tankers in March of 2003.23 In 2003, 185 tankers flew 6,193 sorties refueling 28,899 receivers with 376 million pound of fuel.24 Table 1 summarizes tanker contributions to ongoing operations in both Afghanistan and Iraq from 2004 to 2007.

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

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Table 1. Tanker Operations in Iraq and Afghanistan, 2004-2007

Sorties Fuel Offloaded (lbs.) Receivers Refueled

2004 12,465 740 million N/A

2005 12,391 778 million N/A

2006 12,787 871 million 42,083

2007 15,875 946 million 79,798

Source: U.S. Central Air Forces/Combined Air Operations Center Public Affairs Office.

DOD Air Refueling Capabilities Air Force KC-135 Stratotankers and KC-10 Extenders form the preponderance of DOD‘s air refueling capability and the KC-X program is designed to recapitalize this portion of DOD air refueling capability. Both Stratotankers and Extenders can also carry passengers and cargo. However, airlift capability comes at the expense of a corresponding decrease in the amount of fuel they can carry. Further, the Air Force, Navy and Marine Corps also maintain small refueling fleets tailored to meet service-specific requirements.

KC-135 Stratotanker KC-135s first entered service between 1957 and 1965, as Boeing delivered 732 KC-135A Stratotankers to the Air Force. In the 1980s, KC-135As were upgraded to KC-135Es with four Pratt & Whitney TF-33 engines — capable of producing approximately 18,000 pounds of thrust. E-model engines were obtained from surplus commercial Boeing 707 airliners. Beginning in 1982, other KC135As were upgraded to KC-135Rs following modification with four CFM56/F108 turbofans — each capable of generating approximately 22,000 pounds of thrust. Today, the KC-135 fleet averages approximately 46-years of age. Twenty KC-135Rs have been modified with Multi-Point Refueling System wingtip pods so they can simultaneously refuel two probe-equipped aircraft.25 Another eight KC-135Rs have been modified to receive fuel in-flight. On-going modifications are giving KC-135s advanced avionics that improve reliability and meet increasingly stringent global air traffic management requirements.26 KC-135 aircraft specifications are listed in Appendix B. Table 2 summarizes selected operational characteristics of the Air Force‘s KC-10 and KC-135 air refueling aircraft.

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Christopher Bolkoom and William Knight Table 2. KC-135 and KC-10 Operational Capabilities

KC-10A KC-135E KC-135R

Inventory 59 85 418

Fuel Capacity 356,000 lbs. 180,000 lbs. 200,000 lbs.

Passengers 75 54 54

Cargoa 170,000 lbs 83,000 lbs 83,000 lbs

Sources: The Air Force Handbook 2007, pp. 172-175; current KC-135E inventory verified through e-mail with SAF/LL, January 28, 2008. a. Cargo payloads are in lieu of carrying fuel.

KC-10 Extender The KC-10 combines air refueling and long-range cargo capabilities into a single aircraft. The KC-10 is more flexible and more capable than the KC-135 as it can carry much more fuel and can be refueled in the air to increase delivery range or on-station time. It is, however, less maneuverable on the ground than the KC-135. All KC-10s use an advanced flying boom27 that can refuel either boom or probe and drogue receivers on the same flight.28 Additionally, 20 KC-10s have been equipped with wingtip probe and drogue systems similar to ones installed on the KC-135.29 The KC-10 currently averages approximately 23 years of age.30 KC-10 aircraft specifications are listed in Appendix C. Service Organic Air Refueling The Air Force, Marine Corps, and Navy maintain some air refueling capability to facilitate certain organic capabilities. The Air Force operates modified C-130s to refuel Air Force special operations and combat search and rescue helicopters while the Marine Corps uses modified C-130s to refuel Marine helicopters and fighters. Further, some Navy aircraft have been configured to refuel other Navy or Marine Corps aircraft in-flight as a secondary mission. These aircraft give carrier battle groups organic refueling capability when operating independently. However, carrier-based naval aircraft are capable of providing relatively small fuel off-loads in comparison to Air Force tankers. Thus, the Navy primarily relies on the use of Air Force tankers for long-range flight operations.31

Air Refueling Operational Concepts Air refueling aircraft support a wide variety of aviation missions, such as, but not limited to: surveillance, air-lift, long-range bombing, battlefield interdiction, and air superiority. Each of thesemissions requires different aerial refueling

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

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capabilities. Therefore, when planning the acquisition of a tanker fleet, carefulconsideration must be given to a few key attributes. For example, a tanker aircraft‘s method of dispensing fuel – flying boom vs. probe and drogue – is a key factor for mission planners. For some missions, the gross amount of fuel carried by a tanker must be weighed against the number of tankers and the number of refueling points (either boom or hose) that can be brought to bear. Finally, some tankers can themselves be refueled by other tankers while in flight, which can add considerable flexibility to certain air operations.

Boom vs. Probe and Drogue Air Refueling32 Aircraft can be equipped to be refueled from a flying boom (most Air Force aircraft) or with a probe and drogue (most Navy, Marine Corps, and allied aircraft). Mission planners must ensure that tankers in the field are equipped to connect with their intended receiver aircraft. Figure 1 illustrates ―boom‖ air refueling. Both the KC-10 and KC-135, can perform both ―Boom‖ and ―Drogue‖ refueling. However, while KC-10s can refuel either type on the same mission, most KC-135s must be converted from ―Boom‖ refuelingto ―Drogue‖ or vice versa on the ground. This limitation reduces the KC-135s effectiveness in comparison to the KC10 and potentially in comparison to the KC-X which is expected to be equipped to refuel both receiver types on the same mission. Figure 2 illustrates hose and drogue refueling.

Source: USAF Photo by A1C Lonnie Mast. Figure 1. Photo of ―Boom‖ Air Refueling

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Christopher Bolkoom and William Knight

Source: USAF photo by TSgt Erik Gudmundson. Figure 2. Photo of ―Hose and Drogue‖ Air Refueling

Capacity vs. “Booms in the Air” The type and number of receivers (Boom vs Drogue) on a given mission establishes the timing, location and fuel off-load demands for tankers in the field. Thus, the number of tankers required to support a mission is sometimes driven by the tanker‘s offload capacity. Other times, tanker mission requirements are based on maintaining sufficient tankers aloft to match the timing and location of receiving aircraft needs. Planners strive to accomplish air refuelingmissions as efficiently as possible while optimizing the effectiveness of the receiver‘s mission. Therefore, planners must ensure scheduled tankers have sufficient capacity and are scheduled in sufficient numbers to ensure the overall effects desired by joint force commanders.33 Thus, considering the breadth of missions DOD might face, and considering a given amount of money, acquisition officials must weigh whether air forces are best served by a few tankers with lots of fuel, or more tankers, each of which would carry less fuel. Tanker’s Receiver Capability A tanker that is capable of both giving and receiving fuel in flight may also bolster flexibility for air operations. Because of the dynamic nature of military operations, the type of aircraft planned to fly a given mission can change; often at the last minute. Tanker aircraft that themselves can be refueled in the air can help mitigate these last minute changes by serving as an aerial ―consolidation point.‖ Tankers that have the ―wrong‖ refueling method (due to a last minute change in

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

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mission) can off-load their fuel into another tanker that has the ―right‖ refueling method. Optimally, all Air Force tankers would be able to take on fuel while airborne, but acquiring this capability costs money. How many tankers should have this capability, and at what cost?

ISSUES FOR CONGRESS The KC-X program is anticipated to begin recapitalizing the Air Force‘s Eisenhower-era KC-135 fleet, which makes up the preponderance of the Air Force‘s tanker force. Potential issues for Congress surrounding the KC-X program include:           

How long can the KC-135s Fly? What is the lowest cost alternative for KC-135 recapitalization? How many new tankers does the Air Force require? What will KC-X cost? What capabilities should KC-X have? Was the competition fair? What are the economic and trade effects of the KC-X program? What is the impact of Boeing‘s contract protest? Why did the GAO sustain the protest? Can DOD split the tanker contract between the competitors? Where might KC-X aircraft be based?

How Long Can KC-135s Fly? During the controversy that surrounded the Air Force‘s 2001 tanker lease proposal, a Defense Science Board (DSB) task force was formed to study the urgency of recapitalizing the KC-135 fleet. As part of the study, DSB examined the potential longevity of the KC-135 fleet. The 2006 RAND Analysis of Alternatives (AOA) also looked at the technical condition of the KC-135 fleet. The DSB stated that airframe service life, corrosion, and maintenance costs factors would potentially determine the KC-135s operational life expectancy.34

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Airframe Service Life KC-135s, along with their B-52 counterparts, were originally purchased to give the United States a nuclear strategic strike capability. As a result, both fleets of airplanes spent a significant amount of time duringthe Cold War on ground alert. Consequently, in 2004, the average KC-135 airframe had flown only about 17,000 hours of an estimated service life of 36,000 hours (KC-135E) or 39,000 hours (KC-135R). Thus, the DSB concluded that KC-135 airframe were viable until 2040 at ―current usage rates.‖35 The 2006 RAND AOA also concluded that the KC-135 fleet ―can operate into the 2040s,‖ but not without risks.36 Corrosion The 2004 DSB Task Force concluded that corrosion did not pose an ―imminent catastrophic threat to the KC-135 fleet‖ and that the Air Force‘s maintenance practices were postured ―to deal with corrosion and other aging problems.‖37 The task force went on to say, However, because the KC-135s are true first generation turbojet aircraft designed only 50 years from the time man first began to fly, concerns regarding the ability to continue operating these aircraft indefinitely are intuitively well founded.38

Maintenance Costs KC-135 maintenance costs were the subject of widespread concern earlier in this decade. For example, the Government Accountability Office found that KC135 flying hour costs increased by 29% between 1996 and 2002 when adjusted to constant 2002 dollars.39 In contrast, the 2004 DSB task force agreed that KC-135 maintenance costs had increased significantly, but found they had leveled off due to changes the Air Force made in its KC-135 depot processes. Based on the more current data, DSB forecasted more modest growth in the future.40 Outlook While many believe the Air Force can continue to operate some number of KC-135s for many years, concerns are often expressed about potential maintenance problems that may arise in flying 50 to 80 year-old tankers that could possibly result in the entire KC-135 fleet being grounded. The DSB examined this issue and concluded: ―although grounding is possible, the task force assesses the probability as no more likely than that of any other aircraft in the inventory of the Services.‖41

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RAND‘s AOA was less conclusive. For example, the AOA believe it is possible that KC-135 will be able to operate in the 2040s. However, the AOA lacked confidence that future operation could continue without risks of major maintenance cost increases, poor fleet availability or possible fleet-wide grounding. Further, the AOA concluded that ―the nation does not currently have sufficient knowledge about the state of the KC-135 fleet to project its technical condition over the next several decades with high confidence.‖42 RAND recommended more thorough scientific and technical study of the KC-135 to provide a more reliable basis for future assessments of the condition of the KC135 fleet.43

What Is the Lowest Cost Option for Tanker Recapitalization? In 2004, consistent with congressional direction, the Acting Undersecretary for Defense for Acquisition, Technology and Logistics directed the Air Force to conduct an Analysis for Alternatives (AOA) for air refueling. The AOA had two purposes — first, to identify lowest cost options for recapitalizing the Air Force‘s KC-135 fleet; and second, to inform recapitalization timing. The RAND Corporation was subsequently selected to conduct the AOA and the findings were independently reviewed for sufficiency both within DOD and bythe Institute of Defense Analysis.44 RAND considered the following alternatives for recapitalization:        

Newly purchased commercial-derivative tankers Used commercial-derivative tankers Newly purchased military-derivative tankers Newly designed tankers Unmanned aerial vehicles as tankers Stealthy tankers Fleets comprised of a combination of the above options Commercial sources for air refueling45

RAND‘s AOA identified the present value of the full spectrum of costs associated with the various alternatives. While RAND‘s AOA considered alternatives with significant passenger and cargo capability, it considered only the costs associated with air refueling. As such, RAND‘s AOA did not draw conclusions about the impact of various sized aircraft on ramp space and

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infrastructure in operational scenarios. Rather, RAND‘s AOA deferred both matters to ―senior decision maker judgment.‖46 The 2006 AOA presented the following conclusions regarding KC-135 recapitalization: 





  



New commercially-derived tankers of medium to larger size (300,000 to 1,000,000 pound maximum gross takeoff weight) are the most costeffective alternative. Specifically, the AOA found the Airbus 330 and 340 and the Boeing 747, 767, 777, and 787 all to be viable candidates. Small (e.g., Boeing 737 and Airbus 321) and very large (e.g., Airbus 380) are not cost effective alternatives even in mixed fleets with medium to large sized tankers. Used commercial aircraft are not as cost-effective as buying new commercial aircraft. However, the cost penalty is not high enough to exclude this option under certain circumstances. (Note: this option will be discussed later in this chapter). New-design tankers are not a cost-effective alternative. Unmanned tankers are not a cost-effective alternative. ―Stealthy tankers are significantly more expensive than non-stealthy tankers, although they offer some effectiveness benefits.‖ The AOA defers to military judgement to determine if the additional capability exists to justify the increased cost ―There is no compelling reason for the Air Force to outsource aerial refueling.‖ (Note: this option will be discussed later in this chapter.)47

How Many Tankers Does the Air Force Need? Air refueling requirements ultimately derive from the President‘s overall national security strategy. Based on the President‘s strategy, DOD periodically studiestheglobal threat environment and seeks to identify the militaryforcestructure necessary to meet national objectives, and articulates this analysis in the National Military Strategy (NMS) and Quadrennial Defense Review (QDR). Next, in the case of air refueling, DOD examines the status of its fleet and quantifies future air refueling requirements to judge whether current programs are sufficient to support DOD force structure and the President‘s strategy. Over the past several years, DOD has conducted three studies that have reached similar conclusions about the required size of the Air Force‘s air refueling

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fleet. In 2001, DOD released the Tanker Requirements Study 2005 that concluded DOD required 500-600 KC-135R equivalents to meet the NMS in a ―pre-9/11‖ context. During the midst of the Air Force‘s tanker lease controversy, a Defense Science Board (DSB) task force examined air refueling requirements in May of 2004 with a focus of assessing the urgency of initiating KC-135 recapitalization. In June 2004, DOD began its first ―post 9/11‖ review of transportation requirements. The current Mobility Capability Study (MCS) was completed in December 2005 and briefed to Congress in February 2006.

National Military Strategy (NMS) The 2004 DSB task force focused on assessing the ability of the Air Force‘s tanker fleet to meet the NMS. The NMS defined what is commonly referred to as the ―1-4-2-1‖ strategy by stating, The force must be sized to defend the US homeland while continuing to operate in and from four forward regions to deter aggression and coercion and set conditions for future operations. Even when committed to a limited number of lesser contingencies, the Armed Forces must retain the capability to swiftly defeat adversaries in two overlapping military campaigns. Additionally, when the President calls for an enduring result in one of the two, the force must have the capability and capacity to win decisively.48

Accordingly, the DSB task force found that homeland defense could require ―up to 122 KC-135 equivalent tankers ... depending on the number of patrol aircraft aloft.‖49 Additionally, the task force identified that ―the major driver for future aerial refueling needs is the number and type of nearly simultaneous ‗major‘ operations.‖50 As such, the task force examined 2003 operations in Iraq as a basis for informing requirements of a ―major‖ operation. What the task force found was that ―direct and indirect‖ tankers operations in Iraq ―peaked at 319‖ aircraft with 182 aircraft ―forward deployed‖ into Central Command‘s theater.51 Further, the task force observed that ―one can envision major theater campaigns of greater scale and intensity than [Iraq].‖ The task force, however, did not analyze the efficiency of tankers used to support Iraq operations.52 Table 3 summarizes examples of tankers used during recent operations. Based on these studies and assumptions, it has been argued that homeland defense requirements coupled with anytwo of the aforementioned operations call for an air refueling fleet of at least 500 aircraft as reportedly echoed by the Air Force‘s 2005 Tanker Requirement Study.

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Christopher Bolkoom and William Knight Table 3. Tankers Used in Recent Operations Conflict 1991 Persian Gulf War (Iraq/Kuwait) 1998 Balkans/Kosovo 2001 Afghanistan 2003 Iraq

Tankers Utilized 306 175 80 305/319a

Source: CRS compiled from data foundinDSBTaskForce Report on Aerial Refueling Requirements and GAO-04-349. a. DSB reported 319 while GAO cited 305 tankers for Iraq operations.

Mobility Capability Study (MCS) According to the unclassified executive summary of the 2005 MCS, the study assessed the capabilities of the current and projected force by providing a range of potential resource requirements for inter-theater (strategic) airlift, intra-theater (tactical) airlift, and air refueling fleets. The MCS identified a need for between 520 and 640 air refueling aircraft to provide sufficient capability with acceptable risk.53 By the end of FY2008, the Air Force expects to have between 477 and 514 aircraft (0 to 37 KC-135Es,54 418 KC-135Rs, and 59 KC-10s). Thus, by the end of FY2008, the Air Force will potentially possess an air refueling fleet smaller than the one recommended by the MCS. Some analysts criticized the MCS for its methodology and focus. In September 2005, the Government Accountability Office (GAO) listed a number of shortcomings in methodology for the ongoing MCS.55 A more detailed GAO criticism followed in September 2006 after the final MCS was released.56 In light of the criticism, some have called for DOD or an independent agency to conduct another mobility study to rectify the MCS‘s perceived shortcomings. Consequently, Section 1046 of the 2008 National Defense Authorization Act (P.L. 110-181) directed DOD to conduct a comprehensive requirements-based study of fixed-wing airlift to include full-spectrum life-cycle costs of operating current KC-135 and KC-10 fleets, while also analyzing the impact of planned KC-X aircraft. This study is required to forecast requirements for 2012, 2018 and 2024 and is due to Congress by January 10, 2009.57

What Will KC-X Cost? On February 29, 2008, the Air Force awarded the KC-X contract to Northrop Grumman. The initial contract is for $1.5 billion to purchase four KC-45s for

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system design and development and includes five production lot options valued at $10.6 billion to procure an additional 64 aircraft. The Air Force expects the total KC-X program to cost approximately $35 billion.58

What Capabilities Should KC-X Have? Both KC-X competitors have the potential to significantly improve the airlift capability of DOD‘s tanker fleet. One issue was how much airlift capability the air refueling fleet should provide. Also, based on growing threats, some argued that new tankers should be equipped with defensive systems.

Airlift Capability: Doors and Floors The Air Force envisions KC-X to be built from the outset with reinforced floors necessary for carrying either passengers or cargo in the fuselage, a cargo door sized to facilitate loading and off-loading, and defensive systems enabling a KC-X to operate in certain threat environments. Even though airlift is a secondary mission for KC-X, many believe the Air Force should continue to buy tankers that posses an airlift capabability. DOD’s Position Several DOD leaders have pushed for airlift capacity on tankers. Some believe the 2006 QDR signaled support for a passenger and cargo requirement for KC-X as it stated, ―the Department [of Defense] is also considering theacquisition of a future KC-X aircraft that will have defensive systems and provide significant cargo carrying capacity while supporting its aerial refueling mission.‖59 Further, joint doctrine explains the value of having tankers with airlift capability. ―Additionally, all USAF tanker aircraft are capable of performing an airlift role and are used to augment core airlift assets. Under the dual role concept, air refueling aircraft can transport a combination of passengers and cargo while performing air refueling. In some circumstances, it may be more efficient to employ air refueling aircraft strictly in an airlift role. Deploying air refueling units may be tasked to use their organic capacity to transport unit personnel and support equipment or passengers and cargo from other units. Air refueling aircraft may also be used to support USTRANSCOM airlift requirements.‖60

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In April 2006, General Norton Schwartz, who at the time was Commander of U.S. Transportation Command, also expressed a strong preference for a multi-role tanker. ―What we need is a multi-mission tanker that can do both boom and basket refueling, that can do passenger lift, some cargo lift, and have defensive systems that allow the airplane to go wherever we need to take it....if we‘re going to war with Iran or Korea or over Taiwan or a major scenario, the first 15 to 30 days are going to be air refueling intensive. But what I‘m talking about is the global war on terrorism, sir, for the next 15 or 20 or 25 years. That is not an air refueling intensive scenario and that‘s whya multi-mission airplane to me makes sense.‖61

How Tankers with Airlift Capability Might Be Employed General Schwartz also expects the KC-X to ―mitigate wear and tear on the C5 and C-17.‖62 The following scenario is an example of how a KC-X, with doors, floors, and defensive systems might arguably expand the flexibility of the airlift system. A KC-X while flying a scheduled combat air refueling mission, could be subsequently retasked in-flight, land at an airfield located within a threat environment, upload battle casualties, and air evacuate the patients to needed medical care in another theater. This example is sometimes cited to illustrate how a KC-X, with defensive systems not currently found on KC-135s, might provide planners with additional options to execute an unplanned medical evacuation sortie — perhaps while also negating the need to tap a strategic airlift platform. Likewise, this scenario could be applied to the movement of other time-sensitive cargo or passengers. Finally, passenger and cargo capability allows joint commanders the opportunity to deploy aircraft support personnel and associated ground support equipment in tandem with their associated aircraft during aircraft deployment missions.63 By moving the aircraft, crews, support personnel and equipment together, deploying aviation units may be able to achieve operational status more quickly at their destination. Airlift Requirements The Government Accountability Office (GAO) has criticized DOD for including a passenger and cargo requirement in KC-X without conducting required analyses. As a result, GAO made two recommendations to DOD. First, GAO recommended DOD direct the Air Force to determine, through analysis, if there is a gap, shortfall, or redundancy to justify adding a passenger or cargo capability to KC-X and to present results to the Joint Staff‘s Joint Requirement‘s Oversight Council (JROC) for validation. DOD did not concur with this

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recommendation stating they believed the Air Force had presented sufficient analyses to the JROC to justify the addition of a passenger and cargo capability for KC-X. Second, the GAO recommended that DOD direct the Chairman, Joint Chiefs of Staff to notify the Under Secretary of Defense for Acquisition, Technology and Logistics before certifying the KC-X program to Congress. DOD concurred with this recommendation.64 Further, according the Air Force‘s KC-X White Paper, ―preliminary results of the in-progress Mobility Capability Study 06 show that tankers are least in demand when airlift assets are stretched most thin during the early deployment phase of a conflict.‖65 This may be considered significant to some as the strategic airlift fleet is currently expected to grow to 301 aircraft (190 C-17s and 111 C-5s) — near the bottom of the MCS 05 required range of 292 to 383 strategic airlift aircraft.66

Cost of Airlift Capability While many support having an airlift capability on the Air Force‘s next generation tanker, this capability is not without costs. For example, the 2006 RAND Analysis of Alternatives (AOA) pointed out two potential costs to adding this capability will: 



―Require additional structure and systems, which increase the cost of each aircraft.‖67 The AOA found that an air refueling fleet where every aircraft was equipped with airlift capability added 6% to total life-cycle costs compared to a fleet where no tankers were equipped with passenger and cargo capability.68 Increase fleet requirements because ―the weight of the additional structure and systems means that each aircraft can carry less fuel.‖69

Summary of Airlift Analysis The RAND AOA found that the cost-benefit analysis of adding an airlift capability in future tankers to be ―a matter for senior decisionmaker judgment.‖70 The amount of airlift ultimately to be provided by the tanker fleet could have important implications for other air mobility programs. Defensive Systems Defensive systems, such as missile warning devices, radar warning receivers, flares and chaff, facilitate a tanker aircraft‘s primary mission of in-flight air refueling by potentially enabling the tanker to operate closer to its refueling track,

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thus, making more fuel available on each mission. Operations in Iraq and Afghanistan have found tankers operating in an increasingly hostile threat environment. For example, the Air Force points out that tankers operating in U.S. Central Command‘s theater were fired upon 19 times in FY2006. Additionally, defensive systems also increase a tanker‘s capability in its secondary mission of airlift.71

Was the KC-X Competition Fair? In 2006, RAND Corporation concluded an Analysis of Alternatives (AOA) for recapitalizing the Air Force‘s KC-135 fleet. RAND found that purchasing new commercially-derived tankers was the most cost-effective means of initially recapitalizing the fleet.72 As a result, the Air Force released a formal request for proposals (RFP) in early 2007.73 The Boeing Company responded to the RFP with the KC-767, a variant of the commercial 767-200, while Northrop Grumman teamed with European Aeronautic Defense and Space Company (EADS) to offer a tanker version of the Airbus 330-200.

Request for Proposal In January 2007, the Air Force released its formal Request for Proposal (RFP) for the KC-X acquisition program. Assistant Secretary of the Air Force, Sue Payton, reportedly emphasized that the Air Force had completed a rigorous review process for KC-X to ensure the RFP mirrors joint war-fighting requirements.74 The RFP outlined nine primary key performance parameters:         

Air refueling capability Fuel offload and range at least as great as the KC-135 Compliant Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) equipment Airlift capability Ability to take on fuel while airborne Sufficient force protection measures Ability to network into the information available in the battle space Survivability measures (defensive systems, Electro-Magnetic Pulse (EMP) hardening, chemical/biological protection, etc.) Provisioning for a multi-point refueling system to support Navy and Allied aircraft75

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In November 2007, Ms. Payton explained the evaluation criteria that the Air Force used in determining the KC-X competition. The KC-X evaluation factors are: 

   

Factor 1 - Mission Capability. Mission capability includes five subfactors listed in descending order of importance:  Subfactor 1.1 - Key System Requirements  Subfactor 1.2 - Subsystem Integration and Software  Subfactor 1.3 - Product Support  Subfactor 1.4 - Program Management  Subfactor 1.5 - Technology Maturity and Demonstration Factor 2 - Proposal Risk Factor 3 - Past Performance Factor 4 - Cost/Price Factor 5 - Integrated Fleet Air Refueling Assessment76

The Air Force considered the first three KC-X evaluation factors of equal importance. The final two factors were considered of equal importance, but less important relative to the first three criterion. Lastly, the Air Force regarded ―Factors 1, 2, 3, and 5, when combined, [to be] significantly more important than factor 4.‖77

RFP Analysis There was considerable comment in the media questioning whether the draft (December 2006) of the KC-X request for proposal (RFP) was biased toward the capabilities apparent in Boeing‘s KC-767. Close review of this RFP was partially the result of the controversy surrounding the 2001 tanker lease proposal. It is important to note within this context, that the primary consideration in DOD‘s overall weapon acquisition system is designed to be meeting warfighter requirements, not what is most profitable to ―Company X‖ or ―Company Y.‖ Northrop Grumman and Airbus reportedly complained that the original KC-X RFP did not adequately address how the Air Force would evaluate the candidate aircraft‘s airlift capability. Reportedly, they feared that the Air Force might not weight the score of KC-30‘s airlift capabilities in a favorable manner. In the absence of detailed airlift evaluation information, however, Airbus could have offered a smaller aircraft, such as its A300/A310 class, which it might believe corresponded more closely to Air Force requirements.78 Similarly, if Boeing concluded the Air Force desired a larger aircraft with more airlift

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capability, it could have conceivably offered the Boeing 777 aircraft or a larger variant of the Boeing 767 design. Reduced demand for defense-unique systems and the resulting consolidation of the defense industrial base has frequently reduced the number of companies available to provide a given defense article, which can adversely affect competition. Therefore, often some compromise between a warfighter‘s ―perfect world‖ requirements and real world industrial capabilities is unavoidable. However, substantially modifying warfighter requirements or Key Performance Parameters (KPPs)79 to jibe with what industry wants to offer, may appear to some to reflect an imbalance between requirements and capabilities. As DOD refined its final requirement, most observers saw nothing obvious in the KC-X RFP that would inherently bias the contract award in favor of any platform that could be offered by the competitors. The RFP made clear, however, that the aircraft‘s primary mission is refueling DOD and allied aircraft with the flying boom mechanism. Any passenger or cargo carrying capability was deemed a ―secondary mission.‖ Additionally, at the beginning stages of its recapitalization program, the Air Force potentially has great flexibility in pursing the best KC-X match now as requirements for planned programs such as KC-Y and KC-Z can later be adapted to best complement the KC-X selection.

Comparing the Competitors According to many defense analysts, both competitors‘ proposals offered key improvements over the KC-135 by including:     

Receiver in-flight refueling capability Defensive systems Advanced booms capable of refueling both ―boom‖ and ―drogue‖ receivers on the same mission Improved airlift capacity and utility Wing-mounted pods for hose and drogue systems.

However, debate surrounding the competing proposals often focused on differences in size. The following is a brief description of both the Boeing KC767 and Northrop Grumman KC-30 aircraft submissions along with highlights of some issues frequently raised through the media.

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Boeing KC-767 Boeing touted its entrant, a version of the Boeing 767-200 as the ―right-sized‖ tanker. Proponents of the KC-767 argue that it is most similar in size and offload capacity to the KC-135. Further, proponents stated that the KC767‘s smaller ―footprint‖ compared to the competing KC-30 might enable it to better utilize potentially limited ramp space in forward operating locations. Additionally, proponents believed the smaller KC-767 to be potentially more fuel efficient due to its lower gross weight leading to less fuel being burned in transit. 80 Selected KC-767 aircraft specifications are listed in Appendix D. Northrop Grumman KC-30 Northrop Grumman, on the other hand, believed the KC-30, based on the Airbus 330-200, offered superior value in comparison to the KC-767 because of its larger size. KC-30 proponents espoused the aircraft‘s potentially greater fuel offload capability and largerairlift capacityin terms of weight, pallet positions and passengers when compared to the KC-767. As a result, KC-30 proponents believed their aircraft would reduce the number of aircraft required to meet some potential operational scenarios.81 Selected KC-30 aircraft specifications are listed in Appendix E. International Customers Both competitors have secured international customers. Boeing currently has two international customers for the KC-767 — Italy (4) and Japan (4).82 Likewise, Saudi Arabia (3),83 Australia (5), the United Arab Emirates (3), and the United Kingdom (14) plan to buy the KC-30 from Airbus, a division of EADS.84 While some look to the international orders as a potential signpost for how the Air Force‘s KC-X selection should proceed, others will point out that each country has made its selection based on the unique military requirements that face each nation. Likewise, DOD‘s requirements may differ considerably from other nations that have recently purchased tanker aircraft.

What are the Economic and Trade Effects of KC-X? On February 29, 2008, the Air Force awarded the KC-X contract to Northrop Grumman.85 Some Members of Congress have voiced concerns over the Air Force‘s selection of Northrop Grumman. Though a significant portion of the Boeing 767 is manufactured outside of the United States and major components

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of the A330 come from U.S. suppliers, the partnering of Northrop Grumman with the U.S. subsidiary of a Europe-based aerospace company has raised concerns for some. Issues raised by Members in Congress often draw particular attention to Boeing and Airbus disputes currently before the World Trade Organization (WTO), potential effects on the U.S. aviation industrial base, and questioning whether the contract met the requirements of the Buy America Act.

WTO Dispute The U.S. government has alleged that Airbus‘ parent company, European Aeronautic and Defense Company (EADS), received illegal subsidies from European governments. Likewise, the European Union (EU) has charged that Boeing has received illegal subsidies from the United States. Both disputes are being litigated with the World Trade Organization (WTO).86 Reportedly, a WTO ruling regarding the U.S. government charges against EADS may come by summer 2008,87 while the WTO may rule on the EU‘s case against Boeing by November 2008.88 However, some have suggested that an initial ruling may not bring final resolution to the dispute due to the complexity of the cases and the potential for further litigation.89 Some in Congress observe that if the WTO dispute is resolved in favor of the U.S. government,90 that the WTO could under some circumstances allow the United States to apply tariffs to goods manufactured by Airbus — goods that would not otherwise be subject to tariffs. Further, some have expressed concern that American taxpayers could potentially be forced to pay increased costs for the KC-45 as a result of potential tariffs levied on Airbus products. In response to this concern while testifying before Congress in March 2008, Under Secretary of Defense for Acquisition, John Young, stated, ―WTO rulings cannot be passed along to the Air Force or the Department of Defense as a cost on a contract with the Department of Defense. So if there is a ruling [against EADS] and a penalty, it can‘t be passed along to us as a cost.‖91 Others have questioned whether the Air Force‘s award of the KC-X contract to Northrop Grumman could possibly affect the United State‘s leverage in settling the Airbus-Boeing WTO dispute. For example, some in Congress have suggested that the award of a contract of the size of the KC-X program that has the potential to benefit a company our government has lodged a complaint against with the WTO could send mixed signals.92 On the other hand, some have suggested that the political controversy surrounding the award of the KC-X contract to a consortium that involves Airbus may increase the likelihood Airbus will attempt to settle its dispute with Boeingoutside of the WTO process in an effort to secure support from members of Congress. Further, others have speculated that the

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potential financial boost that Airbus may enjoy from the KC-X contract could possibly reduce Airbus‘s need to rely on what some perceive as aircraft launch assistance subsidies.93 Still other observers see only a remote impact of the KC-X contract on the willingness of either Boeing or Airbus to settle the dispute prior to a WTO ruling. For example, Susan Schwab, U.S. Trade representative, reportedly stated, ―the Air Force procurement has no impact on our efforts in Geneva to address the launch aid problem.‖94 Some in Congress have suggested that Congress should block contracts from going to foreign companies accused of funding their programs with illegal subsidies.95 However, some analysts counter that the commercial aircraft industry, like the personal computer and automobile industries, has globalized, drawing on the relative strengths of specialized suppliers of components and expertise from around the world. As a result, the two primary manufacturers, Boeing and Airbus, have both outsourced key parts of their production processes to overseas firms.96 Further, some caution that potential trade legislation may ―have major repercussions‖ that may prove harmful to the U.S. industrial base in the long term.97 To illustrate the impact of globalization on the commercial airliner manufacturing industry, a list of subcontractors, corporate parent domiciles and sub-components found on the commercial variants of the Boeing 767 and Airbus 330 is provided in Appendix F.

U.S. Industrial Base Implications Some in Congress are concerned about the implications of awarding the KCX contract to Northrop Grumman on the United States industrial base. However, during testimony to Congress, Assistant Secretary of the Air Force, Ms. Sue Payton, stated that, ―job creation, location of assembly and manufacturing were not partof thisevaluation criteria, according to the law‖ and that ―industrial capacity was not part of the evaluation criteria.‖98 To some, there are significant differences between the economic impact of the Boeing and Northrop Grumman proposals. Making an authoritative, ―apples-to-apples‖ comparison on the amount of direct and indirect jobs from either contractor‘s proposal is nearly impossible. For example, both companies may have used differing methodology and assumptions in calculating their estimates and estimates are frequently revised. Further, how the contract award may potentially affect the long-term military industrial base is unclear. Boeing‘s KC-X plan calls for aircraft assembly to occur at its Everett, Washington plant. Further, Boeing‘s proposal would convert the 767 into a tanker at its plant in Wichita, Kansas. Boeing claims that 44,000 American workers from 300 U.S. suppliers would be involved in building the KC-767 Advanced Tanker.99

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As of January 1, 2008, Boeing had orders to deliver an additional 52 aircraft in the 767 product line.100 Boeing supporters may contend that losing the KC-X line will result in Boeing‘s 767 line becoming unprofitable and subsequently closing. Others may counter that losing the KC-X may allow Boeing to concentrate more heavily on its 787 commercial airliner — an aircraft that Boeing had received 817 orders for as of January 1, 2008.101 Northrop Grumman plans to assemble the KC-45 in a new plant planned for Mobile, Alabama — a move it believes will result in the creation of 2,000 new jobs. Northrop Grumman originally indicated their proposal would result in 25,000 direct and indirect American jobsbased a Department of Commerce jobs projection model. More recently, Northrop Grumman raised its job estimate to approximately 48,000 direct and indirect jobs and 230 suppliers from 49 states. Northrop Grumman based the revised estimate on feedback received from suppliers and a Department of Labor formula that projects jobs by specific region.102 Further, EADS announced plans in January 2008 to conduct final assembly of all freighter versions of the Airbus 330200 in Mobile, Alabama — raising the potential for creating new domestic jobs if their candidate were chosen for KC-X.103 Some have estimated a market for 200 Airbus 330-200 freighters over the next 10 years and as of January 2008, Airbus had orders for approximately 60 aircraft.104 Thus, proponents of Northrop Grumman‘s KC-X proposal may believe that the long-term economic benefits of obtaining an Airbus commercial airline production line on U.S. soil are potentially substantial.

Buy American Act Some have questioned whether Northrop Grumman‘s proposal satisfies requirements in the Buy American Act105 which requires the federal government to purchase domestically manufactured goods. The statute defines goods to have been domestically manufactured if their components have ―substantially all‖ been mined, produced, or manufactured within the United States. The definition of ―substantially all‖ has been left to the Federal Acquisition Regulations (FAR). In the FAR, a good is considered ―domestic‖ if the cost of domestically produced components exceeds 50% of the value of the whole article.106 One way a KC-X contractor could potentially satisfy requirements of the Buy American Act is by having 50% or more of total cost of their proposed aircraft produced in the United States. Reportedly, approximately 85% of Boeing‘s KC-X proposal would be manufactured in the United States.107 Further, Northrop Grumman claims that ―at least 58 percent‖ of its proposal will be comprised of products manufactured by American companies.108 Based on those calculations, both proposed aircraft would appear to satisfy Buy American Act requirements.

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What Is the Impact of Boeing’s Protest? Throughout the KC-X competition, there has been a great deal of speculation in the media that the award of the KC-X contract would be followed by a bid protest. Competitors are allowed to protest the award of government contracts to the Government Accountability Office.109 Air Force officials debriefed both Boeing and Northrop Grumman officials on how their respective bids were scored in March 2008. On March 11, 2008, Boeing protested the Air Force‘s decision to the GAO.110 On March 26, 2008, both the Air Force and Northrop Grumman separately filed motions for the GAO to dismiss portions of Boeing‘s protest;111 however, the GAO rejected these motions.112 Work on the KC-45A stopped while the GAO considered the protest.113 Boeing‘s protest is based on a perception that the Air Force used a flawed process in the KC-X selection process. For example, in a press release detailing Boeing‘s rationale for protesting, Boeing stated: It is clear that frequent and often unstated changes during the course of the competition — including manipulation of evaluation criteria and application of unstated and unsupported priorities among the key system requirements — resulted in selection of an aircraft that was radically different from that sought by the Air Force.114

Further, Boeing stated that both teams received identical ratings across the five evaluation areas in the KC-X competition. Boeing claims that the Air Force‘s treatment of both Boeing‘s cost estimates and Boeing‘s past experience of building Air Force tankers, if scored differently, could have affected the outcome of the source selection.115 In response to Boeing‘s protest the an Air Force press release stated: Proposals from both offerors were evaluated thoroughly in accordance with the criteria set forth in the Request for Proposals. The proposal from the winning offeror is the one Air Force officials believe will provide the best value to the American taxpayer and to the warfighter. Air Force members followed a carefully structured process, designed to provide transparency, maintain integrity and promote fair competition. Air Force members and the offerors had hundreds of formal exchanges regarding the proposals throughout the evaluation process. Air Force officials provided all offerors with continuous feedback through discussions on the strengths and weaknesses of their proposals. Several independent reviews assessed the process as sound and thorough.116

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Even before the Air Force awarded the KC-X contract to Northrop Grumman, Force leaders openly worried thatanypotential protest could result in KC-X program delays. For example, recently the Air Force‘s acquisition deputy, Lt. Gen. Donald Hoffman, expressed concern that FY2008 dollars could be put at risk by a protest. However, Congress could potentially remedy this situation by shifting the money to the Air Force‘s Tanker Transfer Fund — an account Congress established that essentially allows the Air Force flexibility to later designate the year and account for KC-X expenditures.117 Former Air Force Chief of Staff, Gen. T. Michael Moseley, publically voiced his concern with a possible protest stating, ―look what‘s happened to us with the [CSAR-X] helicopter. We lost $800 million in this protest and lost over a year and a half of operational time because of not being able to field an airplane.‖118 However, defense contractors have a statutory right to protest contract decisions. To many, this right provides both transparency and fairness to the government‘s acquisition process.

Why Did the GAO Sustain the Protest? On June 18, 2008, the GAO announced that it had completed its examination of DOD‘s decision to award Northrop Grumman the KC-X contract (for 80 aircraft) and found that Boeing‘s complaint had merit.119 GAO‘s managing associate general counsel for procurement law, Michael R. Golden, stated: Our review of the record led us to conclude that the Air Force made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustain Boeing‘s protest. We also denied a number of Boeing‘s challenges to the award to Northrop Grumman, because we found that the record did not provide us with the basis to conclude that the agency had violated the legal requirements with respect to those challenges.

The GAO recommended that discussions between the government and the bidders be resumed, that bidders be given the opportunity to submit revised proposals, and that the Air Force make a new decision based on this additional input. The Air Force is not statutorily obliged to heed GAO‘s recommendations but must respond to them within 60 days (August 17, 2008).120 The GAO made clear that it was not passing judgement on the relative merits of the proposed aircraft. Instead, the GAO assessed whether the Air Force complied with statutory and regulatory requirements in evaluating the competing

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bids. GAO cited seven specific reasons for sustaining portions of the Boeing protest, which are summarized below: 1. The Air Force evaluation did not follow the prioritization of technical requirements specified in its own solicitation. Nor did it give credit to the Boeing proposal for satisfying the greater number of non-mandatory technical criteria, though the solicitation expressly requested this. 2. The Air Force used the degree to which the Northrop Grumman bid exceeded a specific key performance objective as an important discriminator between proposals, despite the solicitation‘s provision stating that this would not be the case. 3. Solicitation required that proposed tankers be able to refuel all fixedwing, tanker-compatible Air Force aircraft using existing Air Force procedures. The protest record did not support the Air Force‘s determination that the Northrop Grumman proposal did so. 4. Air Force discussions with each of the bidding companies were unequal and misleading. Boeing was told that it had fully satisfieda key operational utility parameter, yet the Air Force later determined that the Boeing proposal only partially met the requirement. The Air Force continued its discussion with Northrop Grumman on the same key parameter without informing Boeing that its assessment had changed. 5. Northrop Grumman refused to agree to a specific solicitation requirement regarding the development of Air Force maintenance capability within a specified period. The Air Force unreasonably assessed this to be an ―administrative oversight‖ and awarded the contractimproperlyin light of this exception to a material solicitation requirement. 6. The Air Force unreasonably evaluated the military construction (hangers, runways, parking aprons, etc.) required to sustain each of the proposed aircraft. During the protest proceedings, the Air Force conceded that calculations properly performed would have resulted in a most probable life cycle cost for the Boeing offer lower than that for the Northrop Grumman proposal.121 7. The Air Force improperly adjusted upward Boeing‘s estimate of the nonrecurring (i.e., one-time) engineering portion of its most probable life cycle cost value. The Air Force would have been able to do so had it found the cost to be unreasonably low, but it did not. Additionally, the cost model used by the Air Force to adjust this cost estimate was unreasonable.

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Because the 69-page GAO decision contains sensitive proprietary and source selection information, it was issued under a protective order and is not available to the public. The GAO has directed counsel for the parties to identify information that cannot be publicly released so that a redacted version may be released and posted on the agency‘s website ([http://www.gao.gov]). GAO typically releases a redacted public version of a protected decision within two to three weeks after it is issued.122

Can DOD Split the Tanker Contract Between the Competitors? Some suggested that the Air Force should split its KC-X acquisition program between Boeing and Northrop Grumman. Although the Air Force has awarded a contract to acquire the first 68 KC-45s to Northrop Grumman, some may believe future KC-X contracts, or potentially the expected KC-Y and KC-Z follow-on acquisition programs, should be competitively sourced. RAND‘s analysis of alternatives found that, ―a mixed [Air Force tanker] fleet ... has comparable cost-effectiveness, so there is no reason to exclude a priori an Airbus-Boeing mixed buy on cost-effectiveness grounds.‖123 Others, including 66 Members of Congress, have indicated theybelieve that ―the Air Force‘s ―winner take all‖ KC-X competition remains the most cost-effective approach to initiating modernization of the tanker fleet.‖124 Further, some have suggested that the idea of a split buy was promoted by the Northrop Grumman team as a hedge against potentially losing the KC-X deal.125

Arguments Favoring a Split Buy126 A leading proponent of ―split buy‖ KC-X acquisition is Dr. Jacques Gansler, a former Under Secretary of Defense for Acquisition, Technology and Logistics during the Clinton Administration. Dr. Gansler has termed his proposal as ―Competitive Dual Sourcing‖ — a concept that would have Boeing and Northrop Grumman compete annually/periodically — as often as DOD were to reopen bidding — for portions of the KC-X acquisition. Dr. Gansler believes that ―Competitive Dual Sourcing‖ is a particularly good fit for the KC-X program as both competing aircraft already have established worldwide logistics networks. Dr. Gansler‘s analysis is based on comparisons of the cost growth for ten DOD aircraft programs developed without production competition to the cost of seven commercial aircraft produced in a competitive environment. He found the ten single-source DOD acquisition programs had an average cost increase of 46

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percent, while the average of the seven competitively produced commercial airliners had an average cost decrease of 16% over the life of the program. When analyzing potential savings for the KC-X program, Dr. Gansler, assumed a purchase of 100 new tankers with a base price of $125 million dollars and a 75/25 split favoring the best-value candidate.127 Based on these assumptions, he found a competitively sourced tanker acquisition would potentially generate $7.7 billion in cost savings compared to a single source tanker program provided the cost growth averages of the single-source and competitively sourced aircraft programs examined earlier in his study were repeated in the KC-X program.128 Some may counter that Dr. Gansler‘s study does not definitively conclude dual-sourcing will garner savings or that the magnitude of potential savings would outweigh operational costs, thus resulting in a lower life-cycle cost for DOD. However, proponents may counter that the quantity of the Air Force‘s projected KC-X purchase — 179 aircraft compared to 100 aircraft in Dr. Gansler‘s study — could potentially yield greater savings than those found in the study.

Arguments Against a Split Buy129 Opponents have expressed opposition to a split buy acquisition strategy for a variety of reasons. Secretary of the Air Force Michael Wynne reportedly believes the Air Force lacks funding to buy tankers in sufficient numbers to justify a split arrangement as he stated, ―the cost of that would be prohibitive, unless there was sufficient funding to essentially buy between 24 and 30 [annually].‖130 One analyst cited the cost of maintaining separate supply chains and dual training programs for aircrew and mechanics when he stated, ―dual sourcing is a bad idea that would waste billions.‖131 In addition to the costs of operating an air refueling fleet comprised of potentially four aircraft (KC-10, KC-135, KC-30 and KC-767) some in Congress believe a split purchase would add needless operational complexity. Those that hold this view believe the planned fleet — consisting of three tanker aircraft types — will already provide flexibility. Further, some have noted the Air Force plans at least two additional tanker competitions (KC-Y and KC-Z) in the future.132 To some, these potential future programs offer avenues to reopen competition in the future. Further, a senior Air Force official reportedly told members of Congress that shifting to a split-buy acquisition strategy would result in a contract delay of 12 to 18 months while doubling development costs to $4 billion.133

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Where Might KC-X Aircraft Be Based? Aircraft basing decisions are often based on operational considerations, available infrastructure, and environmental impact among other concerns. In January 2008, the Air Force released an ―Air Force Roadmap‖ for each of it major mission areas. The Roadmap lists the following as potential bases ―being considered‖ for new KC-X aircraft: Altus AFB, OK; Andrews AFB, MD; Bangor International Airport, ME; Birmingham International Airport, AL; Edwards AFB, CA; Eielson AFB, AK; Forbes Field, KA; Grand Forks AFB, ND; Grissom Air Reserve Base, IN; Hickam AFB, HI; Lincoln Municipal Airport, NE; MacDill AFB, FL; March Air Reserve Base, CA; McConnell AFB, KS; McGhee Tyson Airport, TN; McGuire AFB, NJ; Pease Air National Guard Base, NH; Phoenix Sky Harbor International Airport, AZ; Pittsburgh International Airport, PA; Rickenbacker International Airport, OH; Salt Lake City International Airport, UT; Scott AFB, IL; Selfridge Air National Guard Base, MI; Seymour Johnson AFB, NC; Sioux Gateway Airport, IA; and Tinker AFB, OK.134 More recently, Air Force Chief of Staff, Gen. T. Michael Moseley, reportedly said that he expects the first KC-45 to go to Edwards AFB, CA, for operational testing. He anticipates the next few aircraft to be assigned to Altus AFB, OK, the current training base for KC-135s, where pilots and boom operators will validate the training syllabi for the KC-45. Gen. Moseley reportedly stated that the first operational KC-45s will goto one of four bases — Fairchild AFB, WA; Grand Forks AFB, ND; MacDill AFB, FL; or McConnell AFB, KA.135

POTENTIAL OPTIONS TO AUGMENT KC-X RECAPITALIZATION RAND‘s 2006 Analysis of Alternative‘s (AOA) concluded that purchasing new, commercial off-the-shelf aircraft to recapitalize DOD‘s tanker fleet is the least expensive option for recapitalizing the KC-135 fleet from a life-cycle cost perspective — a view widely shared among defense analysts. However, this course of action is also capital intensive in the near-term when compared with other potential courses of action. Considering other budget pressures faced by DOD, it might be infeasible to purchase 500 new tanker aircraft. At least three options could be pursued to augment the KC-X program: 

Buy and convert surplus commercial airliners into military tankers

Air Force Air Refueling: The KC-X Aircraft Acquisition Program  

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Re-engine some fraction of the KC-135E fleet Develop commercial Fee-For-Service aerial refueling (FFS AR)

Convert Used Commercial Aircraft into Tankers The Air Force has argued against purchasing surplus commercial aircraft and converting them into military tankers. However, RAND‘s AOA appears to agree with the earlier DSB study — although with distinct caveats — that purchasing used aircraft may merit additional study. RAND‘s AOA found that purchasing used aircraft as tankers is ―generally not as cost effective‖ (as purchasing new aircraft), but ―...close enough in estimated cost to not exclude it from competition.‖136 Some have suggested that surplus DC-10 aircraft, in particular, might offer attractive means of acquiring air refueling capabilities for less money up-front.137 Those that hold this view point out the Air Force already operates the similar KC10 — a commercial derivative that ―retains 88 percent systems commonality with the DC-10.‖138 Thus, significant additional investments may not be required in operations, maintenance, and supply if surplus DC-10s were procured and converted into Air Force tankers. Likewise, some may suggest that surplus aircraft of the designselectedin theKC-X competition may also be worthy of futureconsideration. Both of these options would seem to assuage Air Force concerns of adding additional aircraft types to the air refueling fleet. While it is unlikely that a large portion of the Air Force‘s air refueling fleet could be recapitalized with used commercial aircraft, proponents of this alternative may believe that even a small number of used aircraft could potentially free scarce budget dollars for other DOD priorities. Some have questioned the feasibility of this approach. A 2004 Government Accountability Office (GAO) study pointed out that there can be a wide variance in the amount of use the Air Force could expect from used commercial aircraft — some are relatively new with low flying hours while others are older with high flying hours.139 The GAO also questioned whether owners would be willing to sell the Air Force available suitable aircraft.140 Further, each potential used aircraft may require a unique cost analysis based on airframe service life remaining and the cost of equipping the aircraft to match like-model airplanes already operating in the Air Force‘s fleet. Additionally, given Air Force opposition to ―split-buy‖ proposals, it is unlikely the Air Force would support bringing additional aircraft types into its inventory due to the associated costs for maintenance, spare parts, and crew training.

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A factor of potential significance that has arisen subsequent to most of the independent studies cited in this chapter is the rising operating costs due to increased jet fuel prices. This is of particular importance with older, less fuelefficient aircraft. According to the International Air Transport Association, the average cost of a barrel of jet fuel rose from $34.70 in 2003 to $81.90 in 2006.141 As a result, Northwest Airlines — the last major U.S. passenger airline to operate the DC-10 — announced it would accelerate retirement of its DC-10 fleet.142 In January 2007, Northwest removed the DC-10 from scheduled service replacing it with new airliners expected to provide fuel savings of 35 percent.143 Since the Northwest retired its last DC-10, jet fuel prices have risen 62% to $116.00 per barrel in February 2008.144 Thus, some may question the economic merits of converting older airliners into tankers for the Air Force.

Retire or Re-engine KC-135Es Some have suggested modernizing the KC-135E models into more capable ―R‖ models as an approach to recapitalizing the KC-135 fleet. In contrast, Air Force officials have consistently expressed a desire to retire the ―E‖ model fleet. Both RAND and the DSB made observations about the KC-135 that may be useful in informing decisions about the KC-135E fleet.

Viability of the KC-135E Fleet In a 2001 study the Air Force concluded that the KC-135E fleet is ―structurally viable until 2040.‖145 A 2005 Air Force Study estimated — with numerous caveats — that KC-135E aircraft upgraded to the ―R‖ configuration would remain viable until 2030.146 Further, the 2004 DSB Task force pointed out that the engine struts that attach KC-135E-model engines to the aircraft‘s wing are at the end of their service life. The close proximity of the strut to the engine subjects the struts to high temperatures and corrosive environments. If the KC135Es were to be retained, but not re-engined, a major structural repair would have to be accomplished.147 Recapturing Modernization Costs RAND‘s AOA did not rule out re-engining some KC-135Es. However, the AOA determined conversion would only bolster overall fleet effectiveness by about 2 percent. The study also found that re-engining ―E‖ models was ―not a favorable return on investment unless operated into late 2030s.‖148 Air Force

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leadership believes that dollars necessary to modernize the ―E‖ models are better spent on KC-X. For example, former Secretary of the Air Force, Michael Wynne testified to Congress in October 2007 that, ―One thing that‘s for sure is that wehave 44-year- old tankers. One thingfor sure is that some of those tankers will go to age 75 before we can retire them, simply because of affordability — that we cannot afford the rate of growth. Even if we were to award today, we can forecast that they would be 75 years old. Our plan is to go ahead and put that program into action — retire the KC135Es with the accession of the KC-X. And our plan then is to essentially prolong the best of the KC-135Rs until we can fully replace and amortize those. The KC-10s as well will look like they‘re going to span and work for another 20 to 25 years.‖149

Legislative Action The 2004 National Defense Authorization Act (NDAA) allowed the Air Force to retire 12 KC-135Es.150 However, both the 2005 and 2006 NDAAs prohibited the Air Force from retiring KC-135Es.151 The 2007 NDAA allowed the Air Force to retire no more than 29 KC-135Es in FY2007 while stipulating that all ―E‖ models retired after September 30, 2006 be stored in a manner that would allow their later recall.152 The 2008 NDAA allowed the Air Force to retire an additional 48 aircraft and provided conditional authority to retire the remaining 37 KC135Es upon award of the KC-X contract and after any subsequent protests are settled favorably.153

Fee-For-Service Air Refueling Fee-for-Service air refueling (FFS AR) is a potential program where the Air Force may outsource a portion of its air refueling requirements to a defense contractor. Both the 2004 DSB task force and the 2006 RAND AOA addressed FFS AR although some may question the assumptions RAND‘s analysis was based upon. Additionally, some Air Force officials have questioned how much potential interest there may be in the commercial sector to provide the necessary capital investment required to develop a fleet of aircraft with air refueling capability.154 Currently, there is one commercial FFS AR operator, and the United Kingdom‘s Royal Air Force is planning to recapitalize it‘s aging tanker fleet with a type of FFS AR program. The Air Force has been publically supportive of studying FFS AR, but cautious based on concerns FFS AR may divert funds from

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its KC-X.155 The 2008 National Defense Authorization Act stipulated that DOD must further study the FFS AR concept.

What Independent Studies Say The 2004 DSB task force recommended that the Air Force consider ―arranging for contractors to provide some of the aerial refueling needs.‖156 In contrast, RAND‘s AOA concluded, ―There is no compelling reason for the Air Force to outsource aerial refueling, that is, to purchase aerial-refueling capability from private companies instead of providing it organically.‖157

RAND‘s AOA reached this conclusion based on two underlying assumptions. First, the AOA assumed that ―all tanker aircraft must carry a common wartime set of equipment ... be capable of carrying out wartime missions,‖ and ―be capable of sustaining the high operational tempo associated with wartime.‖158 Thus, the AOA found that based on these requirements, there was ―no demonstrable largescale cost savings associated with tanker outsourcing.‖159 Second, the AOA believed that the fact that contract tanker operators could also use their aircraft to generate revenue through the commercial marketplace (e.g., flying cargo flights) while the Air Force is prohibited from serving commercial markets distorted sideby-side comparisons of FFS AR with organic air refueling assets.

Counter Arguments to RAND’s Assumptions Proponents of FFS AR may point out that while commercial air carriers may have limitations from participating in combat, they can still make a contribution during wartime. For example, United States Transportation Command has access to a large number of commercial airliners during contingencies through the Civil Reserve Air Fleet (CRAF).160 Just as CRAF airliners are able to supplement DOD‘s organic airlift capabilities during surge wartime operations, there may be air refueling contributions FFS AR partners can make during wartime as well. For example, perhaps FFS AR contractors could help keep training pipelines open, refuel homeland defense aircraft, or facilitate deployment across transoceanic air bridges — all missions organic tankers would need to perform during wartime, but missions that would not likely expose civilians to combat. CRAF partners, often receive a portion of DOD‘s contract airlift business in exchange for their participation in the program. Further, CRAF partners remain active in the commercial marketplace. In the same way a FFS AR contractor may desire to

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configure the fuselage of their tankers to carry cargo, thus, giving FFS AR the ability to pursue both government and commercial contracts.

FFS AR Examples Currently, Omega Air Refueling Services operates two converted Boeing 707s as a FFS AR carrier servicing the U.S. Navy. Omega also expects to add a converted DC-10 in 2008.161 Reportedly, Omega would like to perform FFS AR for the Air Force as well.162 The United Kingdom‘s Royal Air Force (RAF) recently signed a $26 million, 27-year contract with Air Tanker to meet its future air refueling needs through a type of FFS AR program known as the Future Strategic Tanker Aircraft (FSTA) program.163 In 2004, Air Tanker, a consortium of companies including the VT Group, European Aeronautic Defense and Space Company (EADS), and RollsRoyce, was selected to manage the FSTA program using the passenger version of the Airbus 330-200.164 FSTA is a private-finance initiative whereby the RAF will pay on a ―tanker-for-hire‖ basis subject to agreed upon minimum usage rates.165 When the planes are not being used by the RAF, Air Tanker would be able to offer them for hire, presumably as transports, in commercial markets.166 However, obtaining financing for the FSTA program was problematic. Service entry is now expected in 2011 for the first of 14 leased aircraft.167 Crewing of the planes has also been viewed by some as controversial. Plans call for flying the planes with a core group of RAF pilots while supplementing those crews with Air Tanker pilots that will be required to maintain ―reserve‖ status with the RAF. This arrangement is expected to provide sufficient RAF aircrew to fill normal peacetime requirements as well as a group of pilots that can fly in either civilian or military status as requirements dictate.168 Legislative Action The 2008 National Defense Authorization Act (NDAA) directs the Air Force to conduct a pilot program of at least five years to evaluate the feasibility of FFS AR (P.L. 110-181). The evaluation requires the Air Force to assess FFS AR across a broad range of mission sets to include testing support, training support to receiver aircraft, homeland defense, deployment support, air bridge support, aeromedical evacuation and emergency air refueling while integrating FFS AR into Air Mobility Command‘s day-to-day operations. Further Congress has required the Air Force to submit an annual report to Congressional defense committeeshighlighting key operational metrics and assessing theimpactof FFSAR on the Air Force‘s flying hour program and aircrew training. Finally, the 2008 NDAA requires the Comptroller General‘s office to conduct an annual

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review with recommendations for improvement of the Air Force‘s FFS AR pilot program as well as a final analysis of the pilot program upon program completion (P.L. 110-181).169 Reportedly, the Air Force plans to release a request for information to gauge industry interest and cost projections for the required FFS AR pilot program.170

APPENDIX A. PREVIOUS ISSUE FOR CONGRESS One issue of significant interest to earlier sessions of Congress involved the controversy that surrounded earlier DOD attempts to replace some KC-135s using a proposed lease program

Modernization Controversy Modernizing or replacing the Air Force tanker fleet has been a point of contention for more than a decade. In 1996, the General Accounting Office (GAO) asserted that the long-term viability of the KC-135 fleet was questionable and advocated expeditiously studying replacement options. DOD countered that KC-135 airframe hours were low and that the Air Force could sustain the fleet for another 35 years.171 In 2001, the Air Force reported that the KC-135 fleet would incur ―significant cost increases‖ between 2001 and 2040, but ―no economic crisis is on the horizon...there appears to be no run-away cost-growth,‖ and ―the fleet is structurally viable to 2040.‖172 At that time, the Air Force position on tanker modernization was to conduct an analysis of alternatives (AOA) to determine the optimal replacement option for KC-135s. It would begin recapitalization in the 2012 time frame to meet KC-135 retirement by 2040 when the Air Force expects the KC-135 to reach the end of its service life. Section 8159 of the FY2002 National Defense Appropriations Act (P.L. 107117) authorized the Air Force to lease 100 Boeing KC-767 aircraft to replace some of the oldest and least capable KC-135s — the ―E-models.‖ This proposal proved controversial because section 8159 appeared to depart from traditional acquisition processes and weaken congressional oversight. The Government Accountability Office also concluded that a lease would cost more than procuringthe aircraft.173 Further, many found Air Force arguments in favor of the lease to contradict its position of just a year prior. Congress debated the proposed lease in four hearings, culminating with a pair of Senate hearings in September

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2003.174 Subsequently, alleged and admitted ethical violations by government and industry representatives involved in the lease proposal added to the controversy. The FY2004 Defense Authorization Act (P.L. 108-136, Sec.135) forged a compromise between opponents and proponents of the KC-767 by giving the Air Force permission to lease 20 tanker aircraft and purchase an additional 80 aircraft. Section 134 of this act prohibited the Air Force from retiring in FY2004 more than 12 KC-135Es. In September 2004, the Air Force announced it had grounded 29 KC135Es due to safety concerns. Conferees also mandated that the Air Force conduct an air refueling AOA and that an independent assessment be conducted on the condition of the KC-135E fleet. On February 1, 2004, former Deputy Secretary of Defense Paul Wolfowitz requested that the Defense Science Board (DSB) conduct the independent analysis of the KC-135E fleet, and on February 24, 2004, former acting Undersecretary of Defense for Acquisition Michael Wynne directed the Air Force to conduct an aerial refueling AOA. Although it had the statutory authority to proceed, DOD did not request any funds for FY2005 to lease 20 aircraft or procure 80 aircraft. Defense Department leaders instead deferred executing either action until the completion of the DSB report, and an internal investigation by the DOD Inspector General (IG) on potential improprieties by Boeing Company executives and whether these activities negatively effected the tanker lease program. On April 20, 2004, Darleen A. Druyan, the former lead Air Force negotiator on the tanker lease program, pleaded guilty to one charge of criminal conspiracy. Ms. Druyan admitted to secretly negotiating an executive job with the Boeing company while still overseeing the $23 billion deal between the Air Force and Boeing.175 Lease supporters argued that Ms. Druyan was a single ―bad apple‖ and that her actions did not negate the KC-767‘s merits. Reportedly In February 2005, however, the DOD IG found that Air Force Secretary James Roche misused his office when he lobbied the Office of Management and Budget (OMB) to support the lease concept.176 The IG‘s final report found that four other senior DOD officials were guilty of evading OMB and DOD acquisition regulations that are designed to demonstrate best business practices and to provide accountability. The DOD IG found that senior DOD officials knowingly misrepresented the state of the KC-135 fleet and air refueling requirements.177

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APPENDIX B. KC-135R SYSTEM DESCRIPTION Power plant: Wingspan: Length: Height: Passengers Cargo Pallets Maximum Fuel Capacity

Four CFM International CFM-56 turbofans 130 feet, 10 inches 136 feet, 3 inches 41 feet, 8 inches 54 6 200,000 pounds

Source: USAF Fact Sheet, KC-135 Stratotanker, online at [http://www.af.mil/factsheets/factsheet. asp?id=110] and The Air Force Handbook: 2007.

Source: USAF photo by SSgt Suzanne Day. Figure 3. KC-135 Refueling Air Force Fighters

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APPENDIX C. KC-10 SYSTEM DESCRIPTION Power plant: Wingspan: Length: Height: Passengers Cargo Pallets Maximum Fuel Capacity

Three General Electric CF6-50C2 turbofans 165 feet, 4.5 inches 181 feet, 7 inches 58 feet, 1 inch 75 27 356,000 pounds

Source: USAF Fact Sheet, KC-10 Extender, September, [http://www.af.mil/factsheets/factsheet.asp?id=109].

Source: USAF photo. Figure 4. KC-10 Refueling Air Force Fighters

2006,

online

at

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APPENDIX D. KC-767 SYSTEM DESCRIPTION Wingspan: Length: Height: Passengers Cargo Pallets Patients Maximum Fuel Capacity

156 feet, 1 inch 159 feet, 2 inches 52 feet 190 19 97 for aeromedical evacuation more than 200,000 pounds

Source: The Boeing Company online at [http://www.boeing.com/ids/globaltanker/ usaf/KC_767/specs. html].

Source: Jane‘s All The World‘s Aircraft at [http://www.janes.com]. Source: Northrop Grumman, pamphlet, ―KC-30 Tanker: Total Air Mobility.‖ Figure 5. Artist Impression of KC-767

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

APPENDIX E. KC-30 SYSTEM DESCRIPTION Wingspan: Length: Height: Passengers Cargo Pallets Patients Maximum Fuel Capacity

197 feet, 10 inches 192 feet, 11 inches 57 feet, 1 inch 226 32 108 for aeromedical evacuation 245,000 pounds

Source: Northrop Grumman, pamphlet, ―KC-30 Tanker: Total Air Mobility.‖

Source: Jane‘s All The World‘s Aircraft at [http://www.janes.com] Figure 6. Artist Impression of KC-30

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APPENDIX F. KEY SUPPLIERS FOR COMMERCIAL VARIANTS OF THE BOEING 767 AND AIRBUS 330 Table 4. Suppliers and Corporate Parent Domiciles forComponents Incorporated into the Boeing 767 Supplier Aero Vodochody Alenia

Parent Country Czech Republic Italy

Avcorp

Canada

Boeing Canada

Canada

Bombardier (Learjet)

Canada

Bombardier (Canadair) Daido Steel Embraer Fuji

Canada

Fujukawa Aluminum GKN Aerospace (Westland Aerospace, formerly BP Chemicals; with Lucas Aertspace Cargo Systems) Goodrich (Cleveland Pneumatic) Hitco Carbon Composites IPTN Kaman Aerospace

Japan United Kingdom

steel sheets flap supports wing fairings, main landing gear doors forgings and extensions flap track fairings

United States

main landing gear

United States

flap track fairings

Indonesia United States

flaps, keel beams (for Mitsubishi) wing trailing edges

Japan Brazil Japan

Component(s) airframe parts (for BAE Systems) wing control surfaces, flaps and leading-edge slats, wingtips, elevators, fin rudder, nose radome front and rear spar stiffeners, floor grid details and assemblies, aft strut fairings fixed trailing edge panels, composite wing-to-body fairings, engine strut fairings wing trailing edge support structures rear fuselage, pressure bulkhead

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

Supplier Kawasaki Heavy Industries Korean Aerospace (Samsung) LMI Aerospace

45

Table 4. (Continued) Parent Country Component(s) Japan center-fuselage body panels, exit hatches, wing in-spar ribs Republic of Korea wing trailing edges United States

Lunn Industries (Alcore) Menasco Aerospace Mitsubishi Heavy Industries

United States

Nihon Kokuki (Nippi)

Japan

PPG Industries

United States

Shin Meiwa

Japan

United States Japan

skins, wing panels, floor beams, curtain tracks leading edge slat core assemblies (for ASTA) nose landing gear unit rear fuselage body panels, stringers, passenger and cargo doors, dorsal fin wing in-spar ribs, various structural components for Mitsubishi landing light lens assemblies, cockpit windows tailplane trailing edges (for Northrop Gumman/Vought)

Source: Teal Group Note: Commercial variants powered by engines manufactured by either General Electric, Pratt & Whitney, or Rolls Royce.

Table 5. Suppliers and Corporate Parent Domiciles for Components Incorporated into the Airbus 330/350178 Supplier Advanced Technology and Research (ATR) Corp. Aerostructures Corp. (Now Vought)

Parent Domicile United States

Component(s) graphite epoxy underwing fairings (for Aerostructures Corp.)

United States

AHF-Ducommun

United States

inner spoilers/airbrakes, center spar, upper wing skin panels, inner and outer wingbox leading edge assemblies (for BAE), outer flaps, flap track shrouds, spoiler parts (for DASA-EADS) leading edge wing skins

46

Christopher Bolkoom and William Knight

Supplier Boeing (Aerospace Technologies of Australia)

Bombardier (Canadair)

BTR Aerospace CC Industries Ciba-Geigy Corp. Dowty Aerospace Canada Dowty Rotol (with Cleveland Pneumatic) Fairchild Dornier Fischer Advanced Composite Components GKN Aerospace (formerly BP Advanced Materials) General Engineering Hawker de Havilland, Australia Heath Techna Aerospace IPTN

Table 5. (Continued) Parent Domicile Component(s) United States main gear doors, floor support structure, pressurization bulkhead between passenger cabin, main landing gear compartment (for Aérospatiale-EADS) Canada leading edge wing assemblies, nose gear bay and doors, nose bottom fuselage, rear sealed frame, ventral beam, pressurized lateral floor, aft pressure bulkhead (for AérospatialeEADS), inboard front spar assembly (for BAE) Canada main landing gear fairings United States outer rear spar, main landing gear support, ribs (for BAE) Federal Republic HTA/6376 prepreg on wings of Germany Canada center landing gear United Kingdom

design and manufacture of main landing gear

Federal Republic of Germany Federal Republic of Germany

fuselage and wing components, interior panels interior components (for DASAEADS)

United Kingdom

composite panels (for BAE)

Unknown Australia

side stay fairing wingtips, winglets, wing root fillet, ribs (for BAE) composite components (for BAE)

United States Indonesia

flap track carriages, sheet metal parts (for BAE)

Air Force Air Refueling: The KC-X Aircraft Acquisition Program

Supplier Korean Aerospace Industries (Daewoo) Korean Air (with Silat) Marion Composites

47

Table 5. (Continued) Parent Domicile Component(s) Republic of Korea wing components Republic of Korea

Japan

upper fuselage panels of Section 15 (for Aérospatiale-EADS) flap track fairings (for Aerostructures Corp.) large ribs (for BAE) nose landing gear, wheels and brakes (option) cargo doors

United States United States

cockpit windows titanium on A350

Belgium Japan France

tailcones (for DASA) wing fairings rear upper panels of center fuselage section composite belly fairing full-span leading edge slats, slat tracks avionics access doors

United States

Marvin Group Messier-HispanoBugatti Mitsubishi Heavy Industries PPG Industries RTI International Metals SABCA Shin Meiwa Socea

United States France

SOCATA SONACA

France Belgium

Xian Aircraft Co. (AVIC-1)

Peoples Republic of China

Source: Teal Group Note: Commercial variants of both aircraft types are powered by engines manufactured by either General Electric, Pratt & Whitney, or Rolls Royce.

End Notes 1

―Tanker Contract Award Announced,‖ Air Force Print News, February 29, 2008, online at [http://www.af.mil/news/story.asp?id=123088392]. Boeing News Release, ―Boeing Protests U.S. Air Force Tanker Contract Award,‖ March 11, 2008, online at [http://www.boeing.com/ids/globaltanker/news/2008/q1/080311b_ nr.html]. 3 ―Aircraft Procurement, Air Force, Volume 1,‖ USAF Committee Staff Procurement Backup Book, FY2009 Budget Estimates, February 2008, pp. 2-33. 4 ―Research, Development, Test and Evaluation (RDT&E), Descriptive Summaries, Volume 2, Budget Activities 4-6,‖ Department of the Air Force FY2009 Budget Estimates, February 2008, p. 987. 5 [http://appropriations.house.gov/pdf/MurthaSubMarkup07-30-08.pdf] 2

48 6

Christopher Bolkoom and William Knight

Les Blumenthal. ―Boeing Tanker Bid Gets Big Boost.‖ Seattle Times. July 31, 2008. John Doyle. ―Appropriators to USAF: Consider tanker‘s industrial base concerns.‖ AerospaceDaily & Defense Report. August 1, 2008. 7 H.Rept. 110-477, Conference Report to Accompany H.R. 1585, p. 797. 8 H.Rept. 110-434, Conference Report to Accompany H.R. 3222, pp. 308. 9 Ibid, Section 8112, p. 46. 10 H.Rept. 109-702, Conference Report to Accompany H.R. 5122. 11 H.Rept. 109-676, Conference Report to Accompany H.R. 5631, p. 315. 12 Major General (USAF) Larry Spencer, ―FY09 President‘s Budget: ‗America‘s Edge: Global Vigilance, Reach and Power,‖ FY2009 Budget Rollout Brief, February 4, 2008, Slide 8, online at [http://www.saffm.hq.af.mil/shared/media/document/AFD-080204-089.pdf]. 13 ―Now All We Need is the Aircraft,‖ Air Force Association Daily Report, January 24, 2008. 14 A. Butler, ―Air Force Mulling Replacement for Aging, Maintenance-Needy KC-135,‖ Inside the Air Force, May 4, 2001. 15 Richard K. Smith, 75 Years of Inflight Refueling: Highlights 1923-1998, Air Force History and Museum Program, 1998, pp. 44-45. 16 Ibid, p. 60. 17 Thomas A Keaney and Elliot A. Cohen, Gulf War Air Power Survey Summary Report, Washington, D.C., 1993, p. 190. 18 Ibid. 19 GAO-04-349, Military Aircraft: DOD Needs to Determine Its Aerial Refueling Requirements, June 2004, p. 10. 20 Ibid. 21 ―Noble Eagle Sorties Continue,‖ Air Force Association Daily Report, January 4, 2008, online at [http://dailyreport.afa.org/AFA/datapoints/2008/]. 22 GAO-04-349, p. 10. 23 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, pp. 2728. 24 GAO-04-349, p. 10. 25 Probe and drogue air refueling is accomplished by a probe-equipped receiver flying the receiver aircraft‘s probe into the tanker‘s drogue — a basket attached to the end of a flexible hose or the tankers boom. Once connected, the tanker transfers fuel to the receiver aircraft. 26 Susan H. H. Young, ―Gallery of USAF Weapons,‖ Air Force Magazine, May 2007, p. 145. 27 Boom in-flight air refueling is accomplished by an Air Force Airman known as the Boom Operator, flying the tanker‘s refueling boom into the receiver‘s receptacle. Once connected, the tanker pumps fuel from its fuel tanks into the receiver‘s fuel tanks. 28 Ibid. 29 The Air Force Handbook 2007, pp. 172-175. 30 ―Age of the Active Duty Fleet,‖ Air Force Magazine, May 2007, p. 63. 31 Department of the Navy (N78) provided to CRS by email September 2, 2005. 32 For more information on aerial refueling methods, see CRS Report RL32910, Air Force Aerial Refueling Methods: Flying Boom versus Hose-and-Drogue, by Christopher Bolkcom. 33 Ibid. 34 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. iv. 35 Ibid. 36 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary,‖ RAND Corporation, 2006, pp. 15-16. 37 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. iv. 38 Ibid., p. 17. 39 GAO-04-349, ―Military Aircraft, DOD needs to Determine Its Aerial Refueling Requirements,‖ June 2004, p. 13. 40 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, pp. iv-v. 41 Ibid, p. 18.

Air Force Air Refueling: The KC-X Aircraft Acquisition Program 42

49

Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization,Executive Summary,‖ RAND Corporation, 2006, p. 16. 43 Ibid. 44 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization,Executive Summary,‖ RAND Corporation, 2006, p. 1. 45 Ibid, pp. 7-8. 46 Ibid, p. 9. 47 Ibid, pp. 12-13. 48 ―The National Military Strategy of the United States of America,‖ 2004, p. 4. 49 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. 28. 50 Ibid, p. 27. 51 Ibid. 52 Ibid. 53 ―Headquarters Air Mobility Command White Paper, KC-X: The Next Mobility Platform, The Need for a Flexible Tanker,‖ February 28, 2007, p. 4. 54 Section 135, 2008 National Defense Authorization Act allows the Air Force to retire 48 KC-135Es immediately and provides contingent authority to retire the remaining 37 KC135Es provided the KC-X contract has been awarded and any subsequent protests resolved. See H.Rept. 110-477, December 6, 2007, pp. 30-31. 55 Defense Transportation: Opportunities Exist to Enhance the Credibility of the Current and Future Mobility Capabilities Studies, Government Accountability Office, September, 2005. 56 Defense Transportation: Study Limitations Raise Questions About the Adequacy and Completeness of the Mobility Capabilities Study and Report, GAO, September 2006. 57 H.Rept. 110-477, December 6, 2007, pp. 313-316. 58 Transcript, DOD News Briefing with Secretary of the Air Force Michael Wynne, Gen. Duncan McNabb, Sue Payton, and Gen. Arthur Lichte, Arlington, VA, February 29, 2008, online at [http://www.defenselink.mil/transcripts/transcript.aspx?transcriptid=4163]. 59 ―Quadrennial Defense Review Report,‖ February 6, 2006, p. 54. 60 Joint Publication 3-17, ―Joint Doctrine, Tactics, Techniques, and Procedures for Air Mobility Operations,‖ August 14, 2002, pp. V-1 and V-2. 61 ―Senate Armed Services Subcommittee on Seapower Holds Hearing on FY2007 Budget: Transportation Command.‖ CQ Congressional Transcripts. April 4, 2006. 62 General Norton A. Schwartz (USAF), Commander, U.S. Transportation Command, Written Statement before the Senate Homeland Security and Governmental Affairs Committee, Federal Financial Management, Government Information, Federal Services, and International Security Subcommittee, September 27, 2007, p. 6. 63 Air Force Doctrine Document 2-6, Air Mobility Operations, March 1, 2006, p. 48. 64 GAO-07-367R, ―Defense Acquisitions: Air Force Decision to Include a Passenger andCargo Capability in Its Replacement Refueling Aircraft Was Made without RequiredAnalysis,‖ March 6, 2007, p. 17. 65 ―Headquarters Air Mobility Command White Paper, KC-X: The Next Mobility Platform,The Need for a Flexible Tanker,‖ February 28, 2007, p. 6. 66 Ibid, p. 4. 67 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization,Executive Summary,‖ RAND Corporation, 2006, p. 9. 68 Ibid, p. 14. 69 Ibid, p. 9. 70 Ibid. 71 ―Headquarters Air Mobility Command White Paper, KC-X: The Next Mobility Platform, The Need for a Flexible Tanker,‖ February 28, 2007, p. 3. 72 KC-135 Recapitalization Analysis of Alternatives. Briefing to Congress. January 26-27, 2006. 73 ―Air Force Posts KC-X Request for Proposals,‖ Air Force Print News Today, January 31, 2007, online at [http://www.af.mil/news/story.asp?id=123039360].

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Air Force Posts KC-X Request for Proposals,‖ Air Force Print News Today, Press Release 070107, January 30, 2007, online at [http://www.af.mil/pressreleases/ story_print.asp?id=123039273]. 75 Ibid. 76 USAF slide obtained from ―Performance Comes First,‖ Air Force Association Daily Report, November 21, 2007, online at [http://dailyreport.afa.org/AFA/Reports/ 2007/Month11/Day21/1028factors.htm]. 77 Ibid. 78 The last A300/A310 class aircraft were produced in 2007 and the A300/A310 production line was terminated. However, if Airbus believed that a smaller sized tanker was more compatible with Air Force requirements and therefore more competitive than a larger A330 class aircraft, Airbus could have taken steps to keep the line available for production. 79 Key Performance Parameters (KPP) are defined as ―those attributes or characteristics ofa system that are considered critical or essential to the development of an effective militarycapability and those attributes that make a significant contribution to the key characteristicsas defined in the Joint Operations Concept.‖ Defense Acquisitions University Glossary ofDefense Acquisitions Acronyms and Terms, 12th Edition, online at [https://akss.dau.mil/pv/glossary.aspx]. 80 Online at [http://www.boeing.com]. 81 ―KC-30 Tanker: Total Air Mobility,‖ online at [http://www.northropgrumman.com/kc30]. 82 ―The Boeing Company: Boeing 767 Military Versions,‖ Jane’s All The World’s Aircraft, March 14, 2007, online at [http://www.janes.com]. 83 Marcus Weisgerber, ―Saudi Arabia to Buy Three Airbus A-330 Multirole Tankers, EADSSays,‖ Inside the Air Force, January 4, 2008. 84 ―Airbus Industrie: Airbus Multirole Tanker Transport (MRTT),‖ Jane’s All The World’s Aircraft, January 21, 2008, online at [http://www.janes.com]. 85 ―Tanker Contract Award Announced,‖ Air Force Print News, February 29, 2008, onlineat [http://www.af.mil/news/story.asp?id=123088392]. 86 For an overview of the Boeing/Airbus WTO trade dispute, see CRS Report RL34381, European Union — U.S. Trade and Investment Relations: Key Issues, coordinated by Raymond J. Ahearn. 87 ―Schwab Says Airbus WTO Case Unaffected by Tanker Decision,‖ Inside U.S. Trade, March 7, 2008, online at [http://www.insidetrade.com/secure/dsply_nl_txt.asp?f=wto2002. ask&dh=106446419&q=]. 88 Timothy R. Homan, ―WTO Rulings Could Fuel Legislative Fight Brewing Over Tanker Contract,‖ CQ Today, March 6, 2008, p. 3. 89 Robert Herzstein, ―Don‘t Expect the WTO to Resolve the Boeing-Airbus Dispute,‖ European Affairs, Spring/Summer 2006, online at [http://www.europeanaffairs.org/ current_issue/2006_spring_summer/2006_spring_summer_08.php4]. 90 Any possible retaliation sanctioned by the WTO could take many months, if not years, to materialize. At this point in time, retaliation is very much hypothetical, as is guessing which sectors or products may potentially be retaliated against. 91 Transcript from the House Armed Services Subcommittee on Air and Land Forces and Subcommittee on Sea and Expeditionary Forces Hold Joint Hearing on the Department of the Navy and Air Force Tactical Aviation Programs, March 11, 2008. 92 Ibid. 93 ―Schwab Says Airbus WTO Case Unaffected by Tanker Decision,‖ Inside U.S. Trade, March 7, 2008, online at [http://www.insidetrade.com/secure/dsply_nl_txt.asp?f=wto2002. ask&dh=106446419&q=]. 94 Ibid. 95 John M. Donnelly, ―Air Force Contract Draws More Fire,‖ CQ Today, March 4, 2008, pp. 1, 4. 96 Gary Clyde Hufbauer, ―Boeingvs. Airbus: Fighting the Last War,‖ Op-ed in Handelsblatt, June 19, 2007, online at [http://www.petersoninstitute.org/publications/ opeds/ print.cfm?doc=pub& ResearchID=773]. 97 Timothy R. Homan, ―WTO Rulings Could Fuel Legislative Fight Brewing Over Tanker Contract,‖ CQ Today, March 6, 2008, p. 3.

Air Force Air Refueling: The KC-X Aircraft Acquisition Program 98

51

Transcript from Hearing on Contract Award for Tanker Replacement Program, Committee on Appropriations, Subcommittee on Defense, United States House of Representatives, March 5, 2008. 99 Boeing press release, ―Boeing KC-767 Tanker Win Would Benefit Arizona Economy,‖November 26, 2007. 100 ―The Boeing Company: Boeing 767,‖ Jane’s All the World’s Aircraft, February 15, 2008,online at [http://www.janes.com]. 101 ―The Boeing Company: Boeing 787 Dreamliner,‖ Jane’s All the World’s Aircraft, February 20, 2008, online at [http://www.janes.com]. 102 Press release, ―Northrop Grumman Updates Job Projections for Air Force KC-45A Program,‖ March 11, 2008, online at [http://www.irconnect.com/noc/press/pages/ news_releases.html?d=138001]. 103 Jen DiMascio, ―Airbus Vows to Boost Business in Alabama If it Can Make Tankers There,‖ Defense Daily, Vol. 237, Issue 9, January 15, 2008. 104 ―Airbus 330,‖ Jane’s All the World’s Aircraft,” February 19, 2008, online at [http://www.janes.com]. 105 For more information, see CRS Report 97-765, The Buy American Act: Requiring Government Purchases to Come from Domestic Sources, by John R. Luckey. 106 FAR § 25.101. Members have occasionally attempted to codify a definition of ―substantially all.‖ The most recent example is S. 581, introduced in the Senate by Senator Russell D. Feingold on February 14, 2007. The bill would have accepted goods as domestically produced ―if the cost of the domestic components of such articles, materials, or supplies exceeds 75 percent of the total cost of all components of such articles, materials, or supplies.‖ 107 Eric Rosenburg, ―Boeing Duels for Tanker Deal,‖ Seattle Post-Intelligencer, September 30, 2007, online at [http://seattlepi.nwsource.com/business/333751_tanker01.html]. 108 ―Northrop Grumman‘s KC-45 Tanker: Making the Right Choice,‖ January 25, 2007, online at [http://www.northropgrumman.com/kc45/benefits/choice.html]. 109 For more information on ―Protest‖ process see GAO-06-797SP, ―Bid Protest at GAO: A Descriptive Guide,‖ Eighth Edition, 2006. 110 Boeing News Release, ―Boeing Protests U.S. Air Force Tanker Contract Award,‖ March 11, 2008, online at [http://www.boeing.com/ids/globaltanker/news/2008/q1/080311b_ nr.html]. 111 Andrea Shalal-Esa, ―Air Force,Northrop Ask GAO to Dismiss Boeing Protest,‖ Reuters, March 26, 2008. 112 Susanna Ray and Edmond Lococo, ―Northrop Loses Effort to Dismiss Boeing Protest,‖ Bloomberg News, April 2, 2008, online at [http://www.bloomberg.com/apps/news?pid= newsarchive&sid=a2hruo2xpyFQ]. 113 Sean Reily, ―Air Force Keeps Tanker Freeze,‖ Mobile Press-Register, March 18, 2008, online at [http://www.al.com/press-register/stories/index.ssf?/base/news/120583171412090. xml&coll=3]. 114 Boeing Company News Release, ―Boeing Protests U.S. Air Force Tanker Contract Award,‖ March 11, 2008, online at [http://www.boeing.com/news/releases/2008/q1/ 080311b_nr.html]. 115 Ibid. 116 ―Air Force Officials Respond to Boeing Protest,‖ Air Force Print News Today, March 12, 2008, online at [http://www.af.mil/news/story_print.asp?id=123089878]. 117 Marcus Weisgerber, ―Hoffman: Industry KC-X Tanker Protest Could Put Funding at Risk,‖ Inside the Air Force, February 22, 2008. 118 David A. Fulghum, ―Moselely Looks Forward to GettingFirst NewTankers,‖ Aerospace Daily & Defense Report, February 29, 2008, p.2. 119 GAO, ―Statement Regarding the Bid Protest Decision Resolving the Aerial Refueling Tanker Protest By The Boeing Company B-311344 et al.,‖ Government Accountability Office (Washington, D.C.), June 18, 2008. Available on the World Wide Web at [http://www.gao.gov/press/boeingstmt.pdf].

52 120

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GAO also recommended that the Air Force consider amending its proposal solicitation before engaging the companies in the discussions, that it reimburse Boeing for the cost of filing and pursuing the protest, and that it terminate the existing contract with Northrop Grumman if Boeing‘s proposal is ultimately selected. 121 Life cycle cost refers to the total cost of owning, operating, maintaining, and disposing of a given asset. It is often referred to as ―cradle-to-grave‖ cost. Life cycle costs are calculated within a range, from lowest to highest. The ―most probable‖ cost is the one calculated to have the statistically highest probability of being true. 122 For additional information on the GAO bid protest decision process, see Bid Protests at GAO: a Descriptive Guide, Eighth Ed., 2006 (GAO-06-797SP), available on the World Wide Web at [http://www.gao.gov/decisions/bidpro/bid/d06797sp.pdf]. 123 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary,‖ RAND Corporation, 2006, p. 12. 124 Letter from Members of the House of Representatives to Secretary of the Air Force Michael Wynne, October 2, 2007, online at [http://www.insidedefense.com/ secure/data_extra/pdf6/dplus2007_3355_1.pdf]. 125 Demetri Sevastopulo, ―U.S. Air Force Will Not Split Tanker Contract,‖ Financial Times, August 6, 2007. 126 Many of the arguments in favor of a split-buy are consistent with arguments for the JSF F-136 Alternate Engine. For more information on this program, see CRS Report RL33390, Proposed Termination of Joint Strike Fighter (JSF) F136 Alternate Engine, by Anthony Murch and Christopher Bolkcom. 127 Dr. Gansler‘s analysis considered a 75/25 split to be illustrative and found other splits such as 60/40, etc. could be expected to produce similar savings. 128 Jacques S. Gansler and William Lucyshyn, ―Competition in the USAF Tanker Replacement Program,‖ presentation slides, June 12, 2006, slides 18-19, 24, 35, and 40. 129 Many argued that DOD should have split the award of the Joint Strike Fighter (JSF) program between the competitors. DOD chose instead to award the contract to a single team. Many of the arguments for this decision are consistent with arguments against a split purchase of tankers. For more information, see CRS Report RL31360, Joint Strike Fighter (JSF): Potential National Security Questions Pertaining to a Single Production Line, by Christopher Bolkcom and Daniel Else. 130 Andrea Shalal-Esa, ―U.S. Air Force Sees Single Tanker Winner,‖ Reuters, December 4, 2007. 131 George Talbot, ―Lawmakers: Don‘t Split Tanker Contract; Boeing Supporters — 14 Senators and 48 Representatives — Write to Air Force,‖ Mobile Press-Register, October 13, 2007. 132 Letter from Senators to Secretary of the Air Force Michael Wynne, October 10, 2007, online at [http://www.insidedefense.com/secure/data_extra/pdf6/dplus2007_3355_2.pdf]. 133 Andrea Shalal-Esa, ―Split Buy of U.S. Tankers Could Save Billions - Study,‖ Reuters, August 3, 2007. 134 ―Air Force Roadmap,‖ online at [http://www.af.mil/library/airforceroadmap/globalreach. asp]. 135 David A.Fulghum, ―MoselelyLooks Forward to Getting First New Tankers,‖ AerospaceDaily & Defense Report, February 29, 2008, p.2. 136 Ibid, p. 12. 137 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. 36. 138 USAF Fact Sheet, KC-10 Extender, September 2006, online at [http://www.af.mil/ factsheets/factsheet.asp?id=109]. 139 Military Aircraft: DOD Needs to Determine Its Aerial Refueling Aircraft Requirements, GAO-04349, Washington, D.C., June 2004, p. 27. 140 Ibid. 141 ―IATA Economic Briefing: Airline Fuel and Labour Cost Share,‖ International Air Transport Association, June 2007, p. 1, online at [http://www.iata.org/NR/rdonlyres/ 4A49F6DA-2B1248A9-A283-E035AEA5D165/0/Airline_Labour_Cost_Share.pdf].

Air Force Air Refueling: The KC-X Aircraft Acquisition Program 142

53

Perry Flint, Air Transport World‘s Daily News, June 29, 2006, online at [http://www.atwonline.com/news/other.html?issueDate=6/29/2006]. 143 Press Release, ―Northwest Brings Customer Comforts of Airbus A330 Aircraft to Twin CitiesHonolulu route: Airline Completes Retirement of DC-10 Fleet After 34 Years of Service,‖ Minneapolis, January 8, 2007, online at [http://www.nwa.com/corpinfo/newsc/ 2007/pr010820071733.html]. 144 ―Jet Fuel Price Monitor,‖ International Air Transport Association, February 15, 2008, online at [http://www.iata.org/whatwedo/economics/fuel_monitor/index.htm]. 145 KC-135 Economic Service Life Study. Technical Report. February 9, 2001. 146 KC-135 Assessment Report. Air Force Fleet Viability Board. September 2005. 147 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, pp. iv-v. 148 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization,Executive Summary,‖ RAND Corporation, 2006, p. 15. 149 House Armed Services Committee Holds Hearing on Air Force Strategic Initiatives, October 24, 2007. 150 H.Rept. 108-354, Section 134, Conference Report to Accompany H.R. 1588, p. 23. 151 H.Rept. 108-767, Section 131, Conference Report to Accompany H.R. 4200, p. 19 andH.Rept. 109-360, Section 132, Conference Report to Accompany H.R. 1815, p. 28. 152 H.Rept. 109-702, Section 135, Conference Report to Accompany H.R. 5122, p. 33. 153 H.Rept. 110-477, Section 135, Conference Report to Accompany H.R. 1585, pp. 30-31. 154 ―Filler‘ Up,‖ Defense Daily, February 19, 2008, Volume 237, Issue 32. 155 Caitlin Harrington, ―USAF Pushes for ‗Fee-For-Service‘ Aerial Refueling Programme,‖ Jane’s Defence Weekly, October 31, 2007, online at [http://www.janes.com]. 156 Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. ix. 157 Michael Kennedy et al., ―Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary,‖ RAND Corporation, 2006, p. 13. 158 Ibid. 159 Ibid. 160 For more on CRAF see CRS Report RL33692, Civil Reserve Air Fleet (CRAF), by William Knight and Christopher Bolkcom. 161 [http://www.omegaairrefueling.com]. 162 Caitlin Harrington, ―USAF Pushes for ‗Fee-For-Service‘ Aerial Refueling Programme,‖ Jane’s Defence Weekly, October 31, 2007, online at [http://www.janes.com]. 163 Tim Hepner and Golnar Motevalli, ―Britain Signs Air Tanker Deal,‖ Reuters, March 27, 2008. 164 ―Airbuse A330 - EADS KC-330 Tanker/Transport,‖ Jane’s Aircraft Upgrades, August 17, 2007, online at [http://www.janes.com]. 165 Keri Smith, ―Air Tanker Remains Confident FSTA is on Track,‖Jane’s Defence Weekly, October 31, 2007, online at [http://www.janes.com]. 166 Nick Cook, ―Tanker PFI is a Pathfinder for Procurement,‖ Jane’s International Defence Review, January, 1, 2003, online at [http://www.janes.com]. 167 Tim Hepner and Golnar Motevalli, ―Britain Signs Air Tanker Deal,‖ Reuters, March 27, 2008. 168 Nick Cook, ―Tanker PFI is a Pathfinder for Procurement,‖ Jane’s International Defence Review, January, 1, 2003, online at [http://www.janes.com]. 169 H.Rept. 110-477, Section 1081, Conference Report to Accompany H.R. 1585, pp. 335-336. 170 ―Filler‘ Up,‖ Defense Daily, February 19, 2008, Volume 237, Issue 32. 171 GAO/NSIAD-96-160. 172 ―KC-135 Economic Service Life Study,‖ Technical Report F34601-96-C-0111, February 9, 2001. 173 Neil P. Curtan, Military Aircraft: Observations on the Proposed Lease of Aerial Refueling Aircraft by the Air Force, GAO-03-1143T, Washington, D.C., September3, 2003. 174 See CRS Report RL32056, The Air Force KC-767 Tanker Lease Proposal: Key Issues for Congress, coordinated by Christopher Bolkcom. 175 R. Merle, ―Ex-Pentagon Official Admits Job Deal,‖ Washington Post, April 21, 2004. 176 R. Jeffrey Smith, ―Roche Cited for 2 Ethics Violations,‖ Washington Post, February 10, 2005.

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Management Accountability Review of the Boeing KC-767A Tanker Program, Office of the Inspector General of the Department of Defense, OIG-2004-171, May 13, 2005. 178 The Airbus 350 is a planned model that will be similar in size to the Airbus 330. It was originally expected to be a derivative of the Airbus 330, but is now expected to be a new design aircraft.

In: Protest and Issues Around the Air Force … ISBN: 978-1-60741-980-8 Editor: Walter P. Zeine © 2010 Nova Science Publishers, Inc.

Chapter 2

AIR FORCE PROCUREMENT: AERIAL REFUELING TANKER PROTEST 

U.S. Government Accountability Office GAO’S ROLE UNDER THE COMPETITION IN CONTRACTING ACT The Boeing Company protested the award of a contract to Northrop Grumman Systems Corporation by the Department of the Air Force for KC-X aerial refueling tankers. Boeing challenged the Air Force‘s technical and cost evaluations, conduct of discussions, and source selection decision. Because Boeing competed for the contract, it is an interested party for purposes of filing a protest. Under the Competition in Contracting Act of 1984, GAO is required to consider protests of contract awards filed by interested parties. In deciding protests, GAO makes a determination of whether the agency‘s actions complied with procurement statutes and regulations.



This is an edited, reformatted and augmented version of a U. S. Government Accountability Office publication, Report GAO-08-991T, dated July 2008.

56

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GAO’S RECOMMENDATIONS In its decision, GAO recommends that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with GAO‘s decision. GAO further recommends that, if the Air Force believed that the solicitation does not adequately state its needs, the agency should amend the solicitation prior to conducting further discussions with the offerors. GAO recommends that if Boeing‘s proposal is ultimately selected for award, the Air Force should terminate the contract awarded to Northrop Grumman.

GAO’S FINDINGS Review of the extensive record, including a hearing, led GAO to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. The errors included not assessing the relative merits of the proposals in accordance with the evaluation rules and criteria identified in the solicitation, not having documentation to support certain aspects of the evaluation, conducting unequal and misleading discussions with Boeing, and having errors or unsupported conclusions in the cost evaluation. Accordingly, GAO sustained Boeing‘s protest. The redacted decision is at www.gao.gov/decisions/bidpro/311344.htm. Mr. Chairman, Mr. Ranking Minority Member, and Members of the Subcommittee: Thank you for the opportunity to be here today to discuss the June 18, 2008 decision of GAO in response to The Boeing Company‘s protest of the Air Force‘s award of the aerial refueling tanker contract. GAO has been deciding bid protests since the 1920s. The Competition in Contracting Act of 1984 (CICA) now provides specific statutory authority for our bid protest function. The Act codified GAO‘s role as a quasi-judicial forum to provide an objective, independent, and impartial process for the resolution of disputes concerning the awards of federal contracts. We handle protests following the procedures set out in the Bid Protest Regulations in Part 21 of Title 4 of the Code of Federal Regulations. We conduct outreach and exchange views with the

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Department of Defense (DoD) and civilian agencies on a regular basis with regard to best practices and lessons learned from our bid protest decisions. In Fiscal Year 2007, we received nearly 1,300 bid protests challenging procurements across the federal government. GAO received between 700 and 775 protests of DoD procurements over each of the past 5 years. Because there are often multiple protests of a single procurement action, we would estimate that 750 protests would involve approximately 500 defense procurements—out of the many tens of thousands of defense procurement actions that could be protested each year. Bid protest statistics and a detailed breakdown by DoD components are included in our appendices to this statement. The bid protest process is a legal one, and both the process and the resulting product differ from those associated with the reports that GAO issues in connection with its program audits and reviews. Protests are handled solely by GAO‘s Office of General Counsel (OGC), not by its audit teams. In developing the record, OGC provides all protest parties—the protester, the awardee, and the contracting agency—an opportunity to present their positions. In some cases, OGC conducts a hearing to further develop the record. Under CICA, as amended, we have 100 calendar days to decide a protest. The product of a protest before GAO—our legal decision—does not address broad programmatic issues such as whether or not a weapons program is being managed effectively or consistent with best practices. Instead, a bid protest decision addresses specific allegations challenging particular procurement actions as contrary to procurement laws, regulations and the evaluation scheme set forth in the solicitation. We sustain a protest when we find that the procuring agency has not complied with procurement laws, regulations, and the solicitation‘s evaluation scheme, and that this prejudiced the protester‘s chances of winning the contract. With that background, my testimony today will summarize our recently issued decision in the Boeing protest of the Air Force‘s award of a contract to Northrop Grumman Systems Corporation. The tanker procurement is a large and complex one, and Boeing advanced numerous protest grounds, which required us to use almost all of the 100 calendar days allowed by CICA to resolve the protest. In this regard, Boeing supplemented its initial protest seven times, raising more than 20 main challenges to the agency‘s evaluation and source selection. Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustained Boeing‘s protest. We also denied a number of Boeing‘s challenges to the award to Northrop Grumman, because we found that the record did not

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provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges. Several other points should be noted. First, our protest decision does not reflect any view on the merits of Boeing‘s and Northrop Grumman‘s proposed tankers or the firms‘ proposals. Judgments about which company will more successfully meet the Air Force‘s needs are for the Air Force, not GAO, to make. Second, bias, undue influence or other intentional wrongdoing was not alleged by Boeing in its protest, nor did GAO see any evidence of such intentional wrongful conduct by the Air Force in this procurement. Third, this statement is based on the public version of our decision. A limited amount of information that is proprietary to the parties or source selection sensitive has been redacted from the decision, but none of the redacted information is critical to understanding the decision. Finally, we made a number of recommendations to the Air Force in sustaining the protest. By statute, the Air Force has 60 days to inform our Office of the Air Force‘s actions in response to our recommendations. We recognize that acquiring new aerial refueling tankers is a critical need for the Air Force and the nation. We think that it is important that the Air Force act with all due dispatch to correct the procurement flaws indicated in our decision and to move forward to meet the agency‘s mission needs.

BACKGROUND Aerial refueling is a key element supporting the effectiveness of DoD‘s air power in military operations and is, as such, an important component of national security. The Air Force‘s tanker fleet, consisting of the medium-sized KC-135 and larger KC-10, is old; the KC-135 aircraft currently has an average age of 46 years and is the oldest combat weapon system in the agency‘s inventory. To begin replacing the aging refueling tanker fleet, the Air Force established a threepronged approach under which it intended to first conduct a procurement to replace the older KC-135 tankers, while maintaining the remaining KC-135 and KC-10 tankers; the first procurement, which is the acquisition that is the subject of our decision, was identified by the Air Force as the KC-X procurement or program. Although the Air Force intends to ultimately procure up to 179 KC-X aircraft, the agency‘s solicitation that led to the contract award at issue here provided for an initial contract for system development and demonstration of the KC-X aircraft and procurement of up to 80 aircraft. The solicitation provided that award of the

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contract would be on a ―best value‖ basis, and stated a detailed evaluation scheme that identified technical and cost factors and their relative weights. With respect to the cost factor, the solicitation provided that the Air Force would calculate a ―most probable life cycle cost‖ estimate for each offeror‘s proposal, including military construction and fuel costs. In addition, the solicitation provided a detailed system requirements document that identified minimum requirements (called key performance parameter thresholds) that offerors must satisfy to receive award. The solicitation also identified desired features and performance characteristics of the aircraft (which the solicitation identified, in certain cases, as ―objectives‖ that offerors were encouraged, but were not required, to provide). The Air Force received proposals and conducted numerous rounds of negotiations with Boeing and Northrop Grumman. The agency selected Northrop Grumman‘s proposal for award on February 29, 2008, and Boeing filed its protest with our Office on March 11. In accordance with our Bid Protest Regulations, we obtained a report from the Air Force and comments on that report from Boeing and Northrop Grumman. The documentary record produced by the Air Force in this protest was voluminous and complex. Our Office also conducted a 5-day hearing to receive testimony from a number of Air Force witnesses to complete and explain the record. Neither Boeing nor Northrop Grumman produced any witnesses at the hearing, although each was invited to do so. Following the hearing, we received further comments from the parties, addressing the hearing testimony as well as all other aspects of the record.

THE LEGAL STANDARD Procuring agencies are obligated to conduct proposal evaluations in accordance with the evaluation scheme set forth in the solicitation. Such proposal evaluation judgments are by their nature often subjective; nevertheless, the exercise of these judgments in the evaluation of proposals must be reasonable and must bear a rational relationship to the announced criteria upon which the successful competitor is to be selected. In order for GAO to perform a meaningful review, the protest record must contain adequate documentation showing the bases for the agency‘s evaluation conclusions and source selection decision. In negotiated procurements, when procuring agencies conduct discussions with offerors with respect to their proposals, the discussions must be meaningful and fair, and they must not be misleading.

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Judgments about which offeror will most successfully meet governmental needs are for the procuring agencies. Our protest decisions are limited to the record we develop, shaped by the allegations raised by the protester and the responses put forward by the agency and awardee, and measured against the criteria established for the procurement by applicable statutes, regulations, and the agency‘s solicitation.

GAO’S REVIEW OF THE RECORD As discussed above, each of the parties—the Air Force, Boeing, and Northrop Grumman—had a full and complete opportunity to submit argument and evidence for the record. The documentary evidence in the record was voluminous. From our review of the record, including the hearing testimony of 11 Air Force witnesses, GAO found a number of significant errors in the Air Force‘s technical and cost evaluation and that the agency conducted misleading and unequal discussions with Boeing. First, we found that, although the solicitation identified the relative order of importance of the requirements and features of the aircraft solicited by the Air Force, the record did not show that the Air Force, in its evaluation and source selection decision, applied the identified relative weighting in assessing the merits of the firms‘ proposals. In comparing Boeing‘s assessed advantages against Northrop Grumman‘s assessed advantages, the Air Force did not account for the fact that many of Boeing‘s assessed advantages were derived from requirements and features of the aircraft which the solicitation identified as being more important than those from which Northrop Grumman‘s assessed advantages were derived. Moreover, the solicitation requested that offerors propose to satisfy as many of the solicitation‘s desired aircraft features and performance as possible, but the record did not show that the Air Force in its evaluation or source selection decision credited Boeing with satisfying far more of these features and functions than did Northrop Grumman. Second, we found that a key discriminator relied upon by the Air Force in its selection of Northrop Grumman‘s proposal for award was not consistent with the terms of the solicitation. Specifically, the Air Force credited Northrop Grumman for proposing to exceed a solicitation key performance parameter objective for fuel offload versus unrefueled range (that is, the amount of fuel a tanker could offload to a receiver aircraft at a given distance of flight by the tanker without itself refueling) to a greater extent than Boeing proposed, but the solicitation

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plainly provided that no consideration would be given for proposing to exceed key performance parameter objectives. Third, we found that the record did not show that the Air Force reasonably determined that Northrop Grumman‘s proposed aircraft could refuel all current Air Force fixed-wing, tanker-compatible aircraft using current Air Force procedures, as was required by the solicitation. During the procurement, the Air Force twice informed Northrop Grumman that the proposed maximum operating velocity for that firm‘s proposed aircraft would not be sufficient under current Air Force procedures to achieve overrun speeds for various Air Force aircraft. (In aerial refueling operations, if a receiver aircraft overruns the tanker during the final phase of rendezvous, the tanker and receiver pilots are directed to adjust to specified overrun speeds, and after overtaking the receiver aircraft, the tanker will decelerate to a refueling airspeed.) In response to the Air Force‘s concerns, Northrop Grumman promised a solution to allow its aircraft to achieve the required overrun speeds. The record did not show that the Air Force reasonably evaluated the capability of Northrop Grumman‘s proposed aircraft to achieve the necessary overrun speed in accordance with current Air Force procedures. In addition, we found that the Air Force did not reasonably evaluate the capability of Northrop Grumman‘s proposed aircraft to initiate emergency breakaway procedures, consistent with current Air Force procedures, with respect to a current fixed-wing, tanker-compatible Air Force aircraft. A breakaway maneuver is an emergency procedure that is done when any tanker or receiver aircraft crewmember perceives an unsafe condition that requires immediate separation of the aircraft. In such a situation, the tanker pilot is directed to accelerate, and if necessary to also climb, to achieve separation from the receiver aircraft. Fourth, we found that the Air Force conducted misleading and unequal discussions with Boeing. The agency informed Boeing during the procurement that it had fully satisfied a key performance parameter objective relating to operational utility. Later, the Air Force decided that Boeing had not fully satisfied this particular objective, but did not tell Boeing this, which would have afforded Boeing the opportunity to further address this. GAO concluded that it was improper for the Air Force, after informing Boeing that it had fully met this objective, to change this evaluation conclusion without providing Boeing the opportunity to address this requirement in discussions. In contrast, Northrop Grumman, whose proposal was evaluated as only partially meeting this requirement, received continued discussions addressing this same matter during the procurement.

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Fifth, GAO found that the Air Force improperly accepted Northrop Grumman‘s proposal, even though that firm took exception to a material solicitation requirement. Specifically, the solicitation required offerors to plan and support the agency to achieve initial organic depot-level maintenance within 2 years after delivery of the first full-rate production aircraft. Northrop Grumman was informed several times by the Air Force that the firm had not committed to the required 2-year timeframe, but Northrop Grumman refused to commit to the required schedule. GAO concluded that Northrop Grumman‘s refusal to do so could not considered an ―administrative oversight‖ as was found by the Air Force in its evaluation. Sixth, we found that the Air Force did not reasonably evaluate military construction costs in evaluating the firms‘ cost proposals. The solicitation provided that the Air Force would calculate a most probable life cycle cost estimate for each offeror. A most probable life cycle cost estimate reflects the agency‘s independent estimate of all contract, budgetary, and other government costs associated with all phases of the aircraft‘s life cycle from system development and demonstration through production and deployment and operations and support; military construction costs were specifically identified as a cost that the agency would evaluate in calculating the firms‘ most probable life cycle costs. Because the agency believed that its anticipated requirements could not be reasonably ascertained, the Air Force established a notional (hypothetical) plan, identifying a number of different types of airbases, to provide for a common basis for evaluating military construction costs. GAO found that, in addition to four errors related to military construction costs that the Air Force conceded during the protest, the record otherwise showed that the agency‘s military construction cost evaluation was flawed, because the agency‘s evaluation did not account for the offerors‘ specific proposals and because the record did not otherwise support the reasonableness of the agency‘s notional plan. Seventh, we found that the Air Force improperly increased Boeing‘s estimated non-recurring engineering costs in calculating that firm‘s most probable life cycle cost. Specifically, the Air Force assigned a moderate risk to Boeing‘s system development and demonstration costs, because, despite several efforts to obtain support from Boeing for its proposed non-recurring engineering costs, Boeing had not sufficiently supported its estimate. Although we found the Air Force‘s assignment of a moderate cost risk reasonable, GAO also found that the Air Force unreasonably increased Boeing‘s estimated non-recurring engineering costs in calculating the firm‘s most probable life cycle cost where the Air Force did not find that Boeing‘s estimated costs were unrealistic or not probable.

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Finally, GAO found unreasonable the Air Force‘s use of a simulation model to determine the amount by which Boeing‘s non-recurring engineering costs should be increased in calculating that firm‘s most probable life cycle cost. Although such simulation models can be useful evaluation tools, here the Air Force used as data inputs in the model the percentage of cost growth associated with weapons systems at an overall program level, and there was no indication that these inputs would be a reliable predictor of anticipated growth in Boeing‘s non-recurring engineering costs. There were two other aspects of the Air Force‘s evaluation that GAO found troubling, but which did not factor into our sustaining the protest. Specifically, GAO received much argument and hearing testimony addressing the Air Force‘s evaluation of the fuel costs associated with the firms‘ proposed aircraft, and the record indicated that the agency did not do much more than assess whether the offerors‘ proposed fuel burn rates (gallons of fuel burned per hour) were reasonable. The record also showed that even a small increase in the amount of fuel that is burned per hour by a particular aircraft would have a dramatic impact on the overall fuel costs. Although we did not sustain Boeing‘s challenge to the Air Force‘s evaluation of the firms‘ respective fuel burn rates, we suggested that this was a matter that the agency may wish to review to ascertain whether a more detailed analysis of the fuel costs was appropriate. Similarly, the Air Force evaluated a weakness for Northrop Grumman‘s boom approach but concluded that this evaluated concern posed a low schedule or cost risk. Because the record did not contain any documentation explaining why the Air Force‘s evaluated concern with Northrop Grumman‘s proposed boom design represented low risk, we received hearing testimony addressing the agency‘s evaluation. Although the record, including the hearing testimony, indicated that some analyses of the impact of the agency‘s evaluated concerns with Northrop Grumman‘s boom may have been performed, little detail was provided. Here too, we did not find a sufficient basis in the record to sustain Boeing‘s challenge, but suggested that this was another matter that the agency may wish to review further. In sum, GAO concluded from its review of the record that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. Accordingly, GAO sustained Boeing‘s protest. GAO also denied a number of Boeing‘s challenges to the award to Northrop Grumman, because the record did not provide a basis to conclude that the agency had violated the legal requirements with respect to those challenges.

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OUR RECOMMENDATIONS GAO recommends that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with this decision. If the Air Force believes that the solicitation does not adequately state its needs, the agency should amend the solicitation prior to conducting further discussions with the offerors. If Boeing‘s proposal is selected for award, the Air Force should terminate the contract awarded to Northrop Grumman. GAO also recommended that Boeing be reimbursed the reasonable costs of filing and pursuing the protest, including reasonable attorneys‘ fees. Mr. Chairman this concludes our prepared statement. I would be happy to respond to any questions regarding our bid protest decision that you or other Members of the subcommittee may have.

APPENDIX I: STATISTICS FOR ALL GAO BID PROTESTS 2004-2008 Statistics for All GAO Bid Protests

Fiscal Year 2004 2005 2006 2007 2008b a

Total Casesa

Dismissalsa

Merit Resultsa (Sustain + Deny)

Protests Sustaineda

1354 1262 1223 1277 1071

989 956 974 942 845

365 306 249 335 226

75 71 72 91 49

These figures represent the number of protests. Often there are multiple protests filed for a single procurement action. b These figures cover the period between October 1, 2007 to June 27, 2008.

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APPENDIX II: 2004-08 STATISTICS FOR GAO BID PROTESTS INVOLVING DOD COMPONENTS

Merit Resultsa (Sustain + Deny)

Protests Sustaineda

Air Force Army Defense Logistics Agency Marine Corps Navy DOD (Misc.) Defense -Total

Dismissalsa

Component

Total Casesa

2004 DOD Component Statistics

132 324 115 14 112 34 731

84 245 103 10 64 12 518

48 79 12 4 48 22 213

3 18 1 3 11 0 36

Air Force Army Defense Logistics Agency Marine Corps Navy DOD (Misc.) Defense -Total

127 282 121 12 135 29 706

93 223 108 4 105 19 552

Merit Resultsa (Sustain + Deny) Protests Sustaineda

Dismissalsa

Component

Total Casesa

2005 DOD Component Statistics

34 59 13 8 30 10 154

13 7 0 1 5 2 28

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Air Force Army Defense Logistics Agency Marine Corps Navy DOD (Misc.) Defense Total a

148 334 70 32 101 54 739

105 277 62 29 73 42 588

Merit Resultsa (Sustain + Deny) Protests Sustaineda

Dismissalsa

Component

Total Casesa

2006 DOD Component Statistics

43 57 8 3 28 12 151

13 12 3 1 4 5 38

These figures represent the number of protests. Often there are multiple protests filed for a single procurement action.

a

Dismissalsa

Air Force Army Defense Logistics Agency Marine Corps Navy DOD (Misc.) Defense Total

136 323 97 20 129 70 775

103 242 80 18 96 36 575

Merit Resultsa (Sustain + Deny) Protests Sustaineda

Component

Total Casesa

2007 DOD Component Statistics

33 81 17 2 33 34 200

16 22 0 0 8 16 62

These figures represent the number of protests. Often there are multiple protests filed for a single procurement action.

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Component

Total Casesa

Dismissalsa

Merit Resultsa (Sustain + Deny)

Protests Sustaineda

2008 DOD Component Statisticsb

Air Force Army Defense Logistics Agency Marine Corps Navy DOD (Misc.) Defense Total

122 309 57 11 93 38 630

101 247 50 10 61 36 505

21 62 7 1 32 2 125

9 9 1 0 8 0 27

a

These figures represent the number of protests. Often there are multiple protests filed for a single procurement action. b These figures cover the period between October 1, 2007 to June 27, 2008.

GAO’s Mission The Government Accountability Office, the audit, evaluation, and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO‘s commitment to good government is reflected in its core values of accountability, integrity, and reliability.

In: Protest and Issues Around the Air Force … ISBN: 978-1-60741-980-8 Editor: Walter P. Zeine © 2010 Nova Science Publishers, Inc.

Chapter 3

HEADQUARTERS AIR MOBILITY COMMAND WHITE PAPER KC-X: THE NEXT MOBILITY PLATFORM THE NEED FOR A FLEXIBLE TANKER *

United States Air Force Air Mobility Command The requirement for a flexible Aerial Refueling Aircraft that can operate throughout a battlespace to deliver fuel and/or cargo and/or passengers is rooted in Joint Doctrine. Equipping the Nation‘s new KC-X aircraft with appropriate floors for carrying passengers and cargo, reasonably-sized doors to accommodate standard-sized pallets, and modest defensive systems which allow the aircraft access to an area of operations will ensure success for US Combatant Commanders. General Norton A. Schwartz, Commander, US Transportation Command, is on record stating his need for tanker flexibility: ―I am looking for versatility; single-mission airplanes don‘t give that. The Secretary of Defense went to Baghdad in a C-17. Would I send [him] to Baghdad in a C-17 if I had a KC-X? Probably not, I would use the C-17 in a better way.‖ ―If I had a properly *

This is an edited, reformatted and augmented version of a U. S. Air Force, Air Mobility Command publication, http://www.amc.af.mil/shared/media/document/AFD-070227-044.pdf

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configured tanker that had doors and floors, could carry passengers, and defensive systems, I could…return the C-17 either to moving cargo or reduce the tempo.‖ General Michael Moseley, speaking to reporters during a 13 Dec 06 Pentagon briefing, noted the dual-role tanker would bolster the service's lift toolbox. "When you need a tanker, it is a tanker. When you don't need hundreds of tankers, then you use it in the mobility" role, the four-star said. "So to build an air bridge, if you need an air bridge for [B-2 bombers] for global strike, you need it as a tanker. You don't need it as a cargo carrying airplane – that's the beauty of having it both ways." The requirement for this flexibility is well documented and proven in past conflicts. For example, during Operations DESERT SHIELD and DESERT STORM, the United Nations efforts to end the Iraqi occupation of Kuwait, KC10s and KC-135s logged over 141,000 flying hours, delivering 1.2 billion pounds of fuel during some 85,000 refuelings and carrying nearly 17,000 passengers and 10,200 tons of cargo. During Operation DESERT SORTIE, the redeployment of forces back to the US from the Middle East in 1991, KC-10As and KC-135s flew 11,714 hours on 4,925 sorties delivering 34 million gallons of fuel and additionally conducted 2,894 airlift sorties. Without appropriate floors for carrying passengers and cargo, this would not have been possible and many more aircraft would have been required to bring US troops home. US Joint Publications recognize this fact and have transferred these valuable lessons into current doctrine. For example, JP 3-17 ―Joint Doctrine and Joint Tactics, Techniques, and Procedures for Air Mobility‖ states, ―…all USAF tanker aircraft are capable of performing an airlift role and are used to augment core airlift assets. Under the dual role concept, air refueling aircraft can transport a combination of passengers and cargo while performing air refueling. In some circumstances, it may be more efficient to employ air refueling aircraft strictly in an airlift role. Deploying air refueling units may be tasked to use their organic capacity to transport unit personnel and support equipment or passengers and cargo from other units.‖ In order to comply with Joint Doctrine, the Nation‘s newest tanker requires appropriate floors and reasonably-sized doors to perform airlift missions when required by Combatant Commanders. We also have to operate this weapon system in a threat environment requiring defensive systems. It may be instructive to establish a functional capability for what is meant by "floors", "doors", and "defensive systems": Cargo floor capabilities: The aircraft shall be capable of efficiently transporting equipment and personnel and fit seamlessly into the Defense Transportation System. The aircraft‘s entire main cargo deck must be convertible

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to an all cargo configuration that accommodates 463L pallets, an all passenger configuration (plus baggage) (or equivalent Aeromedical Evacuation (AE) capability to include ambulatory and/or patient support pallets) and must optimize a full range of palletized cargo, passengers, and AE configurations that fully and efficiently utilize all available main deck space. Cargo door capabilities: With aircraft power on, a powered door that permits a 463L pallet access on the wide dimension, or coupled on the short-side to be loadable with room to turn (to line up inside) shall be provided. Height of door opening shall not limit height of cargo within the dimensions of all loadable positions in the aircraft. Defensive System capabilities: Self Protection Measures (SPM) shall provide automated IR threat protection levels…and SPM shall provide automated RF detection and warning as described in the KC-X Threat Summary Appendix, Sections 4.1 and 4.2. During OIF/OEF, the Air Force has seen a dramatic threat increase in the operating environment facing the mobility mission. For example, during FY 06, US tankers were fired upon 19 times in the CENTCOM AOR – the threat is real and the requirement for our aircraft to operate in those areas is well documented. Aircraft operating in this environment must possess onboard, aircraft selfprotection systems to ensure safe and effective mobility operations. Current threats dictate the need for self-protection devices (i.e., LAIRCM) designed to protect the aircraft from IR guided weapons such as MANPADS. In the near future we anticipate mobility aircraft will face a proliferation of mobile RF-guided tactical SAMs, will need a situation-awareness suite to avoid the threat, and will need to develop countermeasures on a limited basis to survive engagements on high priority missions (i.e., ASACMS – Advanced Situation Awareness and Countermeasure System). Without Defensive Systems, tanker aircraft are forced to operate from locations further from the fight in order to mitigate risk, which in turn increases receiver transit time and fuel required. During a Troops-In-Contact (TIC) situation or a Combat Search and Rescue (CSAR) mission where Close Air Support assets are required to be on station in the Weapons Engagement Zone (WEZ), tanker assets based closer to the fight can better support those assets by operating closer to their receivers at altitudes in the WEZ. This in turn decreases off-station air refueling time for the CAS assets and decreases the likelihood an enemy could achieve a "soft kill" by taking CAS assets out of the fight during a critical time. Defensive Systems on tankers represents a risk-mitigation strategy throughout the battlespace for all participants.

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During cargo or AE missions, tanker aircraft equipped with Defensive Systems would be able to deliver cargo and personnel directly to and from higher threat locations. This capability increases the cargo and personnel movement volume and velocity into/out of higher threat locations, thus relieving some of the strain on US C-17 and C-130 fleets. In short, failure to equip the KC-X with Defensive Systems, the equivalent of ―up-armor‖ for ground troops, is irresponsible in light of the knowledge that such provision enables mobility assets and their customers to conduct responsive air operations in increasingly hostile environments.

TANKER FLOORS, DOORS, AND DEFENSIVE SYSTEMS IN THE MOBILITY CAPABILITY STUDY The Mobility Capability Study (MCS) and subsequent excursions in the past year (MCS-06) highlight the nation‘s need for strategic and theater mobility capability in airlift and aerial refueling. It‘s important to recognize that current plans for future force structure are funded only to support the bottom of the MCS range in each mission area. MCS calls for 292 to 383 strategic tails (C-17s and ―fully modernized‖ C-5s). The US currently has a program for 190 C-17s and 111 aging C-5s. The efforts to modernize the C-5s are partially funded, and not yet completed with new Avionics Modernization Program (AMP) or Reliability Enhancements and Re-Engining Program (RERP). This effectively maintains the Air Force at the very bottom of the MCS range without a capability to respond to MCS excursions dealing with multiple homeland defense events or coincident/overlapping small scale security postures for humanitarian relief, disaster response, or non-combatant evacuation operations if needed during Major Contingency Operations. The MCS calls for a combined total of 395 to 472 platforms (C-17s, C-130s, and/or JCAs) to meet the Nation‘s Theater lift capabilities in Combatant Commanders‘ areas of responsibility (AOR) around the globe. With the retirement of the C-130E by 2014 due to problems already seen in current groundings and restrictions, the Air Force will be left with a reduced C-130H and C-130J fleet, and possibly a limited number of Joint Cargo Aircraft (JCA) to fill the theater lift gaps – again living at the very bottom of the MCS range for the foreseeable future. While the KC-X is not designed to take the place of a dedicated intratheater platform (like C-130s) it can serve an invaluable role as a

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transload platform for commercial missions which will not deliver to threatened locations. The air refueling tanker fleet currently includes 114 KC-135Es, 415 KC135Rs, and 59 KC-10s. With the retirement of the KC-135E models, the US will be left with 474 tankers and a need to acquire KC-X assets to get us into the MCS required range of 520 to 640 aircraft. Again, the nation‘s mobility force structure finds itself at the bottom of the acceptable MCS risk range. To mitigate this risk in the future requires a readiness and flexibility to respond in unprecedented ways. Already the global war on terror (GWOT) has required TRANSCOM to posture C-17s forward in theater and use tankers to move cargo, passengers, and patients. When equipped at the bottom of the MCS range in all mission areas, the ability of each aircraft to perform more than a single role is imperative. Only with floors, doors, and defensive systems on its new tankers, will US airpower be able to answer this imperative across the spectrum of missions in all environments. In addition to tanker requirements to self-deploy, serve as a dual role platform, and be designated as an aeromedical-response platform, our force must also respond to transload requirements when our CRAF partners must stop short of the AOR because of threats. The KC-X with floors, doors, and defensive systems makes an ideal platform to effect that transload. Since the KC-X shares its status as a commercial derivative asset with CRAF participants, the loads will be compatible – a velocity advantage. With Defensive Systems, the KC-X can take commercial loads (40%+ of bulk cargo and 95%+ of passengers) forward into theater to meet campaign objectives. Such operations also free C-17s (currently used in the transload mission area) to move the outsize and oversize cargo so vital to U.S. armed forces on the ground. Since the GWOT era began, KC-10s and KC-135s have contributed to move a total of 197,027 passengers and 50,491 short tons of cargo which has relieved the C-17s from flying 3312 missions to support those missions. It is unthinkable we would replace such robust capacity with a platform unable to contribute in this way. A KC-X with floors, doors, and defensive systems hedges against shortfalls and improves velocity of the organic airlift fleet. Without this flexibility and combat capability, our entire mobility force structure will operate at the lowest acceptable levels of capability and assume significant risk whenever more capability is needed. In a secondary mission capability, the MCS specifically lists passengers, cargo and medical evacuation (MEDEVAC) as roles for the tanker. Tankers in the employment and deployment roles are well positioned to support designated MEDEVAC missions when properly equipped. In the warfighting scenarios used

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for MCS, the deployed tanker fleet is also well postured to support transshipment operations. The value of this additional capability is a function of restrictions placed on the CRAF from operating in anti-access conditions. The more CRAF is restricted, the greater the utility of the tanker fleet in moving cargo and passengers forward to support combat operations. With a 50-passenger limit and a planning payload of 13 tons, the KC-135 has limited capability in this regard. But even this limited capability, when coupled with the availability of aircraft not tasked against their primary air-refueling mission, represents a notable capability for the mobility fleet. Future tankers, with increased passenger and cargo capability, will only enhance the benefits of this mission area. In MCS scenarios that call for Major Combat Operations and heightened Homeland Defense air sovereignty levels, tankers have to relocate within CONUS to be postured to support the North American Defense Command (NORAD) mission. MCS assumed that CONUS-based tankers would relocate to other CONUS tanker bases without drawing resources from the common-user lift pool to do so. Moving these units will require cargo and passenger handling capabilities. Floors and doors are needed for this mission. Tanker augmentation of these airlift missions offers the potential to fully exploit the capabilities of the tanker fleet.

MOBILITY CAPABILITY STUDY 2006 (MCS 06) Preliminary results of the in-progress MCS-06 show that tankers are least in demand when airlift assets are stretched most thin during the early deployment phase of a conflict. Tankers available to augment airlift missions during that critical time represent a capability that cannot be ignored. This capability is used to reduce stress on the organic airlift fleet in addition to when CRAF must transload in an anti-access environment discussed previously. From January to December of 2005, 40%-50% of all planned airlift missions had only bulk cargo and/or passengers; these missions could have been flown by tanker aircraft. Using tankers to fly bulk cargo, or bulk cargo and passengers, reduce reliance on overburdened airlift assets, potentially extend the service life of the airlift fleet, and free up C-5s and C-17s to move oversize and outsize cargo – which they uniquely have the capacity to move.

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SUMMARY The need for the capabilities discussed above is rooted in Joint doctrine and has been expected of our tanker fleet since the first flying boom of the 1950‘s. Having defensive systems on the KC-X allows it to operate closer to the threats and reduces the strain on other theater and strategic mobility assets. The need for this capability was approved by the JROC (Capabilities Development Document (CDD)) on 27 Dec 06 and is part of the KC-X Request for Proposal (RFP). Daily, US Combatant Commanders count on tankers to carry patients, passengers, and cargo and would be hamstrung without this flexibility. The two most recent Mobility Capability Studies found that future tankers, with increased passenger and cargo capability, will enhance the benefits of our Joint Force. AMC is continually evaluating the potential for future greater contributions of the KC-X as a total mobility platform.

ANNEX A – HISTORY Sep 1955 – Boeing received the first order for the KC-135A tanker. The first aircraft (#55-3118) flew on 31 Aug 1956. The initial production Stratotanker was delivered to Castle AFB, CA, in June 1957. The 732nd and final KC-135 was delivered to the Air Force in 1965. Jan 1980 – CFM56-2 selected to re-engine USAF and FAF KC-135A, new designation is KC-135R. 1981 – 157 KC-135As operated by the Air Reserve Component were modified to replace their J57 engines with TF33-PW-102 engines from American Airlines. New designation is KC-135E. 17 Mar 81 – The long awaited KC-10, the Advanced Tanker-Cargo Aircraft (ATCA) proposed by Strategic Air Command in 1967, was delivered to the command some 39 months after the Air Force selected the plane over Boeing‘s 747. The Air Force version of the McDonnell Douglas wide-body commercial aircraft was manufactured with military avionics, an aerial refueling boom, equipment for probe and drogue-type fueling, a refueling receptacle and a station for the refueling operator. In addition, the KC-10 had six fuel tanks with a total capacity of 356,000 pounds of fuel and the ability to transfer 1,500 gallons per

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minutes. When performing in its secondary mission, the KC-10 could transport up to 75 people and approximately 170,000 pounds of cargo over a non-refueled range of about 4,400 miles. 1 Oct 82 – KC-10As supported the longest non-stop F-15 deployment ever while, at the same time, demonstrating the Extender‘s versatility. One KC-10, carrying 50,000 pounds of cargo and 50 passengers, refueled six F-15s flying between Kadena AB, Japan and Eglin AFB, FL, while a second launched from Elmendorf AFB, Alaska to refuel the tanker and the fighters. 14-24 Feb 83 – Operation EARLY CALL, in Egypt, demonstrated the KC10‘s dual importance as a tanker and a cargo carrier. Three KC-10s were stationed at Cairo West Airport to refuel E-3A aircraft being used to monitor Libyan air traffic and preparations for a possible attack on Khartoum by the regime of Muammar Qadhafi. During their 10-day deployment, the KC-10s flew 21 air refueling sorties – servicing both American and Egyptian aircraft- and also carried cargo. 7 Aug 90-28 Feb 91 – During Operations DESERT SHIELD and DESERT STORM, the United Nations efforts to end the Iraqi occupation of Kuwait, KC10s and KC-135s logged over 141,000 flying hours, delivering 1.2 billion pounds of fuel during some 85,000 refuelings and carrying nearly 17,000 passengers and 6,500 tons of cargo. KC-10s carried 1,111 passengers and 12,129 tons of cargo through 10 Mar 91. DOD Report to Congress, Conduct of the Persian Gulf War, Apr 1992 – KC-10 and KC-135 tanker aircraft also played a vital role in cargo and passenger movement. These aircraft moved more than 4,800 tons of cargo and more than 14,200 passengers to support strategic bomber and tanker operations alone. Part of this effort was conducted by shuttles established on a scheduled basis to improve resupply efforts to the Pacific, European, and SWA theaters. Additionally, KC10s transported more than 1,600 tons of cargo and more than 2,500 passengers in a dual-role capacity for USAF and USMC fighter unit moves, providing refueling support and airlift for the units on the same sorties. Finally, up to 20 KC-10s also were assigned for pure airlift sorties, moving more than 3,800 tons of cargo and more than 4,900 passengers in this capacity. The importance of air refueling to Operations DESERT SHIELD and DESERT STORM went far beyond airlift support. Over 300 KC-135s and KC-10s were used during Operation DESERT SHIELD; they flew more than 17,000 sorties, to include more than 11,500 air

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refueling sorties and nearly 75,000 hours; refueled more than 33,000 receivers, including 5,500 Navy and USMC aircraft with nearly 70 million gallons of fuel in six months. Tankers surpassed this effort during the six weeks of Operation DESERT STORM when they flew almost 17,000 sorties (more than 15,000 of these air refueling sorties) logged more than 66,000 hours, and refueled almost 52,000 aircraft with more than 125 million gallons of fuel. Approximately 12 percent of the fuel and 17 percent of the sorties supported the Navy and USMC. It is interesting to note that nearly every air-refueling capable aircraft used USAF tankers at some point during the war. 6 Apr 92 – Following the Kurdish uprising against Saddam Hussein, the United Nations mounted the relief effort PROVIDE COMFORT. Through the end of May 1992, KC-135s flew 905 sorties lasting 1,668 hours to deliver 4.5 million gallons of fuel to aircraft protecting the Kurds and also flew 2,984 airlift sorties. Through June 1992, KC-10s contributed to the airlift total of 2,083 missions, transporting 23,901 passengers and 101,365 tons of cargo. 1992 – Overhaul of KC-135 cockpit begins. PACER CRAG (Compass, Radar, and GPS) begins. The heart of this modification is a state of the art flight management system. This modification allows the navigator to be removed from the crew compliment. 22 Jul 94 – After President Clinton directed ―an immediate and massive increase‖ in US relief efforts to assist Rwandan refugees, the Air Mobility Command launched a large and complex humanitarian operation over vast distances. AMC aircraft first landed at Goma, Zaire, on the 23d and began operating into Entebbe, Uganda, the eventual hub of the operation, on 24 July. Through 11 September, AMC flew 700 Operation SUPPORT HOPE airlift missions, transporting over 11,000 passengers and 23,000 short tons for a total of 43 million passenger miles and 62 million ton miles. Nearly 400 KC-135 missions air refueled the C-5s and C-141s. KC-10s also flew several dozen missions to ferry fuel from Harare, Zimbabwe, to Entebbe where it was offloaded on the ground. 7-11 Nov 03 – When no strategic airlifters were available, four KC-135s from the 92d Air Refueling Wing at Fairchild AFB, WA, and one KC-135 from the 22nd Air Refueling Wing at McConnell AFB, KS, transported the India Company of the 3d Marine Battalion at Camp Lejeune, NC, to Djibouti. Djibouti was headquarters for the Combined Joint Task Force – Horn of Africa, the

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multinational force responsible for eradicating the trans-national terrorist networks operating in the Horn of Africa region. The Marines were needed to provide security at Djibouti International Airport. The five KC-135s airlifted 169 Marines and 9 short tons of cargo. 4-23 Nov 06 – In one of the largest presidential support airlifts ever, Air Mobility Command flew 474 airlift and air refueling sorties to transport 2,723 passengers and 2,417 short tons of cargo on behalf of President George W. Bush‘s official visits to Singapore, Vietnam, and Indonesia from 16-20 Nov 06. C-17s performed 299 sorties or 63 percent of the total sorties flown. Since AMC‘s activation on 1 June 92, the command‘s presidential support airlift mission had been nicknamed Operation PHOENIX BANNER. Given the large number of sorties, the long distances to the aerial ports of debarkation, and the heavy commitments of C-17s to the wars in Iraq and Afghanistan, the 2006 Pacific PHOENIX BANNER resulted in the first-ever use of KC-10 tankers in an airlift role to support presidential travel requirements. White House communications equipment, unlike most other presidential cargo, can be palletized, and this made it well-suited for airlift by KC-10s. To move the communications gear from Andrews Air Force Base, Maryland, to Singapore and Vietnam, KC-10s flew 94 sorties to transport 396 passengers and 283 short tons of cargo. The tankers did not airlift communications equipment to Indonesia because Jakarta‘s Halim Perdanakusuma International Airport lacked cargo-handling equipment capable of unloading palletized cargo from KC-10 aircraft. KC-135 Stratotankers refueled the KC-10s over the northwestern United States and off the US west coast on 39 sorties. The Pacific PHOENIX BANNER also signified the first time that C-5s had not been scheduled as primary airlifters on a major presidential trip overseas, mainly because modernization and maintenance schedules curtailed the availability of C-5s to fly operational missions. Operation Enduring Freedom (OEF) – Afghanistan: Grand Forks AFB (319 ARW) led tanker packages to three locations. For period Oct-Dec 2001 moved 516 passengers and 76.8 short tons of cargo on KC-135R/T aircraft. FY 2006 SAFIRE Events for OIF – AMC assets shot at over 200 times; number of SAFIRE events is 2nd only to helicopters Operation Iraqi Freedom Lesson Learned – Tanker Employment in a Threat Environment: Air mobility tankers are no longer able to keep separation from threats. The forward movement of ground troops without securing land, and

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the disintegration of what was once known as the enemy‘s forward edge of the battle area (FEBA), requires the tanker force to penetrate hostile territory. Air Force Tactics Techniques and Procedures (AFTTP) need to reflect this requirement and tanker systems must include real-time cockpit information and counter measures to both infrared and radar guided missile systems. OIF Swap Out – Iraq: Because of threats, a typical A-10 squadron swap-out uses 3 C-17s to move 66.6 short tons (includes WRSK kit to follow fighters) and 41 passengers. The remaining 198 personnel are moved by commercial airlift to intermediate airfields. They are then transloaded to either a C-17 or C-130 aircraft for the last leg. KC-X with airlift capability and Defensive Systems could accomplish dual role deployment freeing the C-17, C-130 and commercial airlift for other missions and speeding up deployment timelines. TSUNAMI Relief Thailand (26 Dec 2004): PACAF KC-135 aircraft carrying humanitarian relief was the first military aircraft on scene. Six Ship KC-10 Deployments: Operations package of 55 PAX, 12.5 TONS + maintenance package 88 PAX and 68.3 TONS – all but 4.8 TONS carried organically The Mobility Air Force (MAF) is currently engaged in air operations in hostile airspace in and en route to foreign airfields and will remain so for the foreseeable future We have seen a dramatic threat increase in the operating environment facing the mobility mission (most significant threat increase of all mission areas) Aircraft operating in this environment must possess onboard self-protection systems to ensure safe and effective mobility operations Current threats dictate the need for self-protection devices (i.e., LAIRCM) designed to protect the aircraft from IR guided weapons such as MANPADS In the near future we anticipate mobility aircraft will face mobile RF guided weapons such as the tactical SAMs being proliferated, and will need a situation awareness suite to avoid the threat and countermeasures on a limited basis to survive engagements on high priority missions (i.e., ASACMS-Advanced Situation Awareness and Countermeasure System) Lack of Defensive Systems on tanker aircraft limits the MAF's capability as a force enabler to the Combat Air Force (CAF); Tanker aircraft are forced to operate from locations further from the fight in order to mitigate risk, which in turn decreases the amount of fuel available to receivers

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ANNEX B – JOINT AND SERVICE DOCTRINE The National Military Strategy of the United States of America, “A Strategy for Today; A Vision for Tomorrow” (2004) Overlapping major combat operations place major demands on strategic mobility. Achieving objectives in such operations requires robust sealift, airlift, aerial refueling and pre-positioned assets. Strategic mobility that supports these operations also requires supporting equipment to store, move and distribute materiel and an information infrastructure to provide real-time visibility of the entire logistics chain.

Joint Publication 1-02, "DOD Dictionary of Military and Associated Terms. As Amended Through 8 Aug 06 Force Extension: Tankers escorting fighters are force extended when they are refueled by other tankers while en route to their destination. Force extension is normally required when tankers are acting in a dual-role capacity because their cargo will likely preclude carrying enough fuel for the tanker and receivers to reach the final destination. On global attack missions, force extension can also be used to extend the effective range, payload, and loiter time of combat aircraft due to the increased offload capacity of the force extended tanker. See also air refueling; dual-role tanker. Dual-role tankers: Dual-role tankers carry support personnel, supplies, and equipment for the deploying force while escorting and/or refueling combat aircraft to the area of responsibility. Dual-role tankers can minimize the total lift requirement while providing critical cargo and personnel at the combat aircraft's time of arrival.

Joint Publication 3-17, “Joint Doctrine and Joint Tactics, Techniques, and Procedures for Air Mobility” (14 Aug 02 Incorporating Change 1 14 Apr 06) The bulk of the Air Force‘s air mobility fleet consists of aircraft designed or modified to serve a broad range of military airlift operating requirements. Additionally, the Services operate more specialized fixed-wing transports which,

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though not originally acquired to meet a broad range of essential intratheater airlift missions, are capable of performing parts of it quite effectively. Refueling platforms act as augmentation to the airlift fleet. This capability is most important during the deployment phase when airlift requirements are highest and requirements for theater support refuelings are the lowest. Additionally, all USAF tanker aircraft are capable of performing an airlift role and are used to augment core airlift assets. Under the dual-role concept, air refueling aircraft can transport a combination of passengers and cargo while performing air refueling. In some circumstances, it may be more efficient to employ air refueling aircraft strictly in an airlift role. Deploying air refueling units may be tasked to use their organic capacity to transport unit personnel and support equipment or passengers and cargo from other units. Air refueling aircraft may also be used to support USTRANSCOM airlift requirements such as routine channel operations or SAAMs.

Joint Publication 4-01, “Joint Doctrine for the Defense Transportation System” (19 March 2003) Air Mobility Command: As a transportation component command of USTRANSCOM, AMC is the designated lead major command for Air Force air mobility issues and standards and is responsible for all CONUS-based commonuser airlift service air mobility assets. AMC is responsible for maintaining international air tenders and the Worldwide Express (WWX) small parcel contract. AMC C-5, C-17, C-130, KC-10, and KC-135 aircraft are stationed in CONUS and operate through a combination of active, Air Force Reserve, and Air National Guard resources (when mobilized) to provide common-user air mobility under the COCOM of the Commander, USTRANSCOM. Additionally, AMC trains, equips, and operates CONUS-gained C-130s, C-9s, and operational support airlift (OSA) air mobility assets until they are assigned or attached to a geographic combatant commander. During a contingency or major operation, a number of these shorter-range air frames would normally be attached to a geographic combatant commander to create or supplement the theater air mobility capability. AMC air mobility forces conduct both intertheater and intratheater common user operations. Under certain conditions, AMC longer-range aircraft may be temporarily attached to a geographic combatant commander (even if only on a mission-by-mission basis) to provide additional theater capability.

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Air Force Doctrine Document (AFDD) 2-6: Air Mobility Operations Airland: Airland delivery occurs when a transport or tanker aircraft lands and unloads its cargo. Airland delivery, as opposed to airdrop, is the preferred method of aerial delivery when conditions permit, because it is the most efficient, safest, and least expensive way to deliver personnel and cargo. It minimizes the risk of injury to personnel and damage to equipment, eliminates payload dispersal, and offers an increased availability of resources. Flexibility and Versatility: Air mobility enables commanders to simultaneously exploit mass, maneuver, and surprise (flexibility), thereby influencing effects at the strategic, operational, or tactical levels of war (versatility), often at the same time. Air mobility allows commanders to quickly position, concentrate, or reposition forces wherever and whenever needed. Air mobility forces are critical enablers to creating effects of deterrence, dissuasion, and destruction. The flexibility and versatility of air mobility forces allow the concentration of desired effects at the right time and the right place, and then permit rapid shift of forces when capabilities are needed elsewhere. For example, in a multiple theater scenario, tanker forces might provide primary combat support to strike and intelligence, surveillance, and reconnaissance aircraft in one theater, while airlift aircraft are primarily deploying medical units to the second in support of a humanitarian relief operation. When the operations in the first theater are complete the tankers could quickly reposition to perform evacuation flights from the second theater to the continental United States (CONUS). ADDITIONAL TANKER ROLES: All tanker aircraft are capable of performing additional roles such as passenger lift, cargo movement, and aeromedical evacuation when modified. Some are modified to act as a communications link facilitating Command and Control (C2) and Intelligence, Surveillance and Reconnaissance (ISR) missions. When tankers transport a combination of passengers or cargo while performing air refueling, it is specifically called ―dual role.‖ C2 of air mobility aircraft performing multiple role missions on the same sortie must be vested in one authority, normally the COMAFFOR. Aircraft Deployment Support: Air refueling assets extend the range of deploying combat and combat support aircraft, often allowing them to fly with few or no stops en route to an AOR. Air refueling increases the deterrent effect of CONUS based forces and allows rapid response to regional crises. The capability of aircraft to fly non-stop to a theater may eliminate the need to obtain landing rights from countries remaining neutral in a conflict. Successful execution of the

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Air and Space Expeditionary Task Force (AETF) concept is dependent on deployment support. The deployment support operation is considered a separate and distinct operation because the coordination, communication, and search and rescue responsibilities differ based on receiver capabilities. Normally, this operation is associated with the movement of fighter aircraft between theaters in the form of missions named "Coronets." Deployments of heavy aircraft (bombers, airlifters) normally use an air bridge operation to support the deployment. Coronets move fighter aircraft in support of contingencies, rotations, exercises, or aircraft movements for logistics purposes. These flights often include a cargo and passenger carrying element as well as the refueling. They normally have long lead times for planning, tasking, and execution, and the tanker portion of the flight is normally planned by the 18 AF Tanker Airlift Control Center (TACC). Coronet operations usually have a higher priority than routine training operations. Depending on operational requirements, the 18 AF TACC may position tanker aircraft and crews in preparation for deployment and may coordinate with the theater Air Mobility Operations Control Center (AMOCC) or Air Operations Center (AOC) for air refueling support, if required. Typically the tanker aircraft accompanies the receivers for the majority of the flight, especially during an oceanic crossing. Patient Support Pallet (PSP): The PSP provides litter capability on the KC135 and expands litter capacity on the C-17. The PSP is a modified 463L pallet with litter positions and seats and is centrally managed by AMC. It is designed to support steady-state theater operational requirements as well as evacuation on opportune airlift without integral litter capability. As a result, the PSP increases the number of aircraft capable of performing AE missions.

Air Mobility Master Plan (2006) KC-135 Roadmap – Although not its primary mission, the KC-135 is employed for opportune airlift and aeromedical evacuation; defensive systems are required for operations in threat conditions. KC-10 Roadmap – Air refueling operations may be used to support global attack; air bridge; deployment; redeployment; homeland defense; theater support to joint, allied, and coalition air forces; and specialized national defense missions. The KC-10A is uniquely capable of meeting these capability demands, It is used to conduct simultaneous cargo and air refueling missions using the centerline air refueling drogue or boom, or wingtip drogues. With its receiver capability, it can

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be used for force extension operations – the refueling of one tanker by another tanker – thus reduce the number of tankers used for deployment support.

ANNEX C – FROM THE FIELD Deployment and Redeployment – ―Every deployer and redeployer carries cargo and passengers, usually three pallets of cargo and 15 to 30 passengers. We routinely use our tankers to deliver maintenance parts and people to repair broken aircraft that are away from home station; we are doing that today (9 Feb 07) and did it last month. These missions can be for broken tankers or other types of aircraft. My data indicates that last year 92 ARW aircraft moved almost 500K lbs of cargo most of that to and from our deployed locations, and almost 2500 passengers‖ 92nd Operations Group Commander (KC-135R), Fairchild AFB, WA Numbers, Velocity, and Precision – ―The 580+ tankers in today‘s Air Force inventory represent the preponderance of the air mobility force structure, fly the fastest, and travel the furthest unrefueled distance of any AMC major weapon system. Those attributes in those numbers around the globe allow responsiveness to meet all mobility missions (air refueling, force projection, force extension, cargo movement, passenger movement, aeromedical evacuation, humanitarian support, disaster relief, etc.) when our nation demands a rapid response.‖ AMC/A9 “DEFENSIVE SYSTEMS” – The tanker fleet no longer operates in safe air refueling airspace, well away from the FEBA and the threat of SAMs, shoulderlaunched weaponry, etc. Rather, tankers are directly involved in the "fight" providing necessary fuel to aircraft in support of land and air component commanders throughout an AOR. Case in point, McConnell AFB KC-135s conducted low altitude Special Operations Air Refuelings (SOARs) in the AOR and have been integral in prosecuting warfighter requirements. In 2006 alone, McConnell SOAR missions ISO OIF and OEF enabled: 127 Strike Assists 3,119 detainees captured (523 persons of importance) 841 Enemy killed in Action 251 transmitting devices destroyed 2 hostages rescued 137 weapons caches confiscated

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Another example highlighting the utility Defensive Systems aboard the tanker: Following a receiver or UAV divert into a "hostile" area which required a "rescue" mission, tanker aircraft in AOR were available to deliver a rescue team and parts, but were unable to proceed due to a lack of required Defensive system. Consequently, days passed waiting for airlift to be assigned. (22nd Operations Group McConnell AFB, KS) “FLOORS & DOORS” – The tanker fleet also provides tremendous support of aeromedical evacuation operations: A KC-135 aircrew executed swap out of a Jordanian medical team to/from Afghanistan; supported 24 C-17 missions to complete mission A KC-135 aircrew transported wounded OIF/OEF veterans to CONUS in time for Thanksgiving; ensured critical patients airlifted on time to proper medical facilities from PACOM theater to CONUS A KC-135 aircrew conducted a critical aeromedical evacuation mission for seriously burned troops returning from OIF (22nd Operations Group McConnell AFB, KS)

ANNEX D – AIRLIFT REQUIREMENT INFORMATION Airlift Capability (KPP #4). The aircraft shall be capable of efficiently transporting equipment and personnel and fit seamlessly into the Defense Transportation System (THRESHOLD, KPP) The aircraft‘s entire main cargo deck must be convertible to an all cargo configuration that accommodates 463L pallets (THRESHOLD, KPP), an all passenger configuration (plus baggage) (or equivalent AE capability to include ambulatory and /or patient support pallets) (THRESHOLD, KPP), and must optimize a full range of palletized cargo, passengers, and AE configurations that fully and efficiently utilize all available main deck space (THRESHOLD, KPP). Ground operations shall not require external aircraft structural support devices (e.g., tail stand) (THRESHOLD). The aircraft must be visible to and appropriately synchronized by the joint deployment and distribution enterprise. Rationale: Augment airlift fleet, meet expeditionary requirements of emerging military strategy and enable operational objectives. Supports Global Mobility CONOPS, JP 3-17, and AFDD 2-6.2. Satisfies Air Refueling Initial Capabilities Document (ICD) requirement for airlift and Aeromedical Evacuation,

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Air Mobility Master Plan (AMMP) 2006 and Government Accountability Office (GAO) Report to Congress on utility of dual-role aircraft. Current AMC KC-135R Unit Type Code and Log For listings for air crew, maintenance, and operations support. Key Characteristics Enabled: enduring/persistent, fast, and agile.

Expeditionary,

adaptable/tailorable,

Aeromedical Evacuation (KSA #2). Capability to provide air transport and care in the air, using existing Patient Support Pallets (PSP), for 50 patients total, either 16 litter/34 ambulatory patients for up to 14 hours (THRESHOLD, KSA) or 24 litter/26 ambulatory patients for up to 16 hours (OBJECTIVE). The aircraft shall have the capability to accept the seat rail litter stanchions used on the C-17 (THRESHOLD). The aircraft shall be equipped with integral equipment to configure for 5 aeromedical crewmembers (THRESHOLD). Rationale: Required IAW AMC AE Vision for integral AE capability on any appropriate airframe; required by the Air Refueling ICD; required IAW AMC/SG planning factors for AE patient loads (AE crews are based on this number). AE crews consist of two flight nurses and 3 AE technicians. Litter Capability. The aircraft shall be capable of using the existing PSPs and the existing Litter Station Augmentation Set (LSAS) (THRESHOLD). PSPs are a roll on/roll off system built on a standard 463L (108‖ x 88‖) pallet and configurable with litter stations, seats, or a combination. The LSAS is a kit containing 9 C-17 litter stations providing 27 litter positions. The aircraft shall have the capability to accept the litter stanchions used on the C-17 aircraft (THRESHOLD). A litter station should be capable of supporting up to 250 lbs in the top litter position, and 275 lbs each in the middle and bottom litter positions. Aircraft shall have integral (carried onboard at all times) capability to position six litter patients off the floor using two three-tier litter stations that are secured to structural hard points/recessed fittings in the aircraft floor (THRESHOLD). Rationale: Required IAW AMC Aeromedical Evacuation (AE) Vision for integral AE capability on any appropriate airframe; required by the Air Refueling ICD; required IAW AMC/SG planning factors for AE patient loads (AE crews are based on this number). Communication Gateway: The KC-X shall have the capability to accept roll-on, roll-off, plug and play, communication relay equipment, such as Roll-On-

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Beyond Line of Sight Enhancement (ROBE) and the Multi-Mission Payload (MMP) (THRESHOLD). The KC-X shall have a common interface panel for connecting Air Force communication gateway equipment to the aircraft (THRESHOLD), and provisions for future growth (THRESHOLD). The aircraft should have the ability to receive data from the communication gateway equipment and integrate the data (up to SECRET) into cockpit displays (OBJECTIVE). Rationale: Improved connectivity required by AMMP 2006; operational necessity.

INDEX 9 9/11, 15

A accountability, 39, 67 activation, 78 administrative, 29, 62 aerospace, 24 aggression, 15 aging, 12, 35, 58, 72 air carriers, 36 air traffic, 7, 76 aircraft, ix, xii, 1, 9, 32, 33, 37, 42, 43, 47, 48, 49, 50, 51, 52, 53, 69, 71, 72, 75, 79, 82, 86 American Airlines, 75 analysts, 16, 22, 25, 32 annual review, 38 ants, 22 AOC, 83 application, 27 appropriations, 47 argument, 60, 63 armed forces, 73 Armed Forces, 15 Army, 65, 66, 67 assessment, 29, 39 assets, 17, 19, 36, 70, 71, 72, 73, 74, 75, 78, 80, 81, 82

assumptions, 15, 25, 31, 35, 36 ATM, 20 authority, 35, 39, 49, 56, 82 availability, 13, 74, 78, 82 aviation, 8, 18, 24

B baggage, 71, 85 benefits, 14, 26, 51, 74, 75 bias, 22, 58 Boeing, xi, xii, 1, 2, 3, 4, 7, 11, 14, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 37, 38, 39, 42, 44, 46, 47, 48, 50, 51, 52, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 75 burn, 63

C campaigns, 15 candidates, 14 capital intensive, 2, 3, 32 cargo, xii, 7, 8, 13, 17, 18, 19, 22, 36, 37, 45, 47, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 80, 81, 82, 83, 84, 85 carrier, 8, 37, 76 CAS, 71 CENTCOM, 71 Chief of Staff, 28, 32 civilian, 37, 57 Clinton Administration, 30

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CNS, 20 coercion, 15 Cold War, 5, 6, 12 Committee on Appropriations, 51 communication, 83, 86 competition, xi, xii, 1, 2, 3, 4, 11, 21, 22, 27, 28, 30, 31, 33, 56, 57, 63 competitor, 59 complement, 22 complexity, 24, 31 components, 23, 25, 26, 45, 46, 47, 51, 57 concentration, 82 confidence, 13 configuration, 34, 71, 85 conflict, 19, 74, 82 Congress, 1, 2, 3, 5, 11, 15, 16, 19, 23, 24, 25, 28, 30, 31, 35, 37, 38, 49, 53, 67, 76, 86 connectivity, 87 consolidation, 10, 22 construction, 29, 59, 62 contractors, 28, 36 contracts, 25, 27, 30, 37, 56 conversion, 34 corrosion, 11, 12 corrosive, 34 cost saving, 31, 36 cost-benefit analysis, 19 cost-effective, 14, 20, 30 costs, 11, 12, 13, 16, 19, 24, 31, 33, 34, 52, 59, 62, 63, 64 countermeasures, 71, 79

D decisions, 28, 32, 34, 52, 56, 57, 60, 67 defense, 6, 15, 22, 28, 32, 35, 36, 37, 57, 72, 83 Defense Authorization Act, 39 definition, 26, 51 delivery, 8, 62, 82 Department of Commerce, 26 Department of Defense (DOD), 1, 3, 5, 24, 54, 57 destruction, 82 detainees, 84

detection, 71 deterrence, 82 disaster, 72, 84 disaster relief, 84 disputes, 24, 56

E economic crisis, 38 economics, 53 employment, 73 engines, 7, 34, 45, 47, 75 enterprise, 85 environment, 14, 18, 20, 30, 70, 71, 74, 79 environmental impact, 32 epoxy, 45 evacuation, 18, 37, 42, 43, 72, 73, 82, 83, 84, 85 expenditures, 28 expertise, 25

F federal government, 26, 57, 67 feedback, 26, 27 fiber, 5 fighters, 1, 3, 5, 6, 8, 76, 79, 80 flexibility, 5, 9, 10, 18, 22, 28, 31, 69, 70, 73, 75, 82 flight, 1, 3, 7, 8, 9, 10, 18, 19, 22, 48, 60, 77, 83, 86 fuel, xii, 6, 7, 8, 9, 10, 19, 20, 23, 34, 48, 53, 59, 60, 63, 69, 70, 71, 75, 76, 77, 79, 80, 84 funding, 4, 5, 25, 31, 67 funds, 4, 35, 39, 67

G Gates, Robert, xi, xii, 1, 3 gauge, 38 General Accounting Office, 38 General Electric, 41, 45, 47 globalization, 25 government, 24, 26, 27, 28, 37, 39, 57, 62, 67

Index Government Accountability Office (GAO), 1, 3, 12, 16, 18, 27, 33, 38, 49, 51, 55, 67, 86 GPS, 77 graphite, 45 grounding, 12, 13 groups, 8 growth, 12, 30, 31, 35, 38, 63, 87 guessing, 50 guilty, 39 Gulf War, 6, 16, 48, 76 GWOT, 73

H hearing, 56, 57, 59, 60, 63 helicopters, 8, 78 high temperature, 34 Homeland Security, 49 hostile environment, 72 House, 4, 50, 51, 52, 53 hub, 77 humanitarian, 72, 77, 79, 82, 84 Hussein,Saddam, 77

I ICD, 85, 86 industrial, 4, 22, 24, 25, 48 industry, 22, 25, 38, 39 infrared, 79 infrastructure, 14, 32, 80 Inspector General, 39, 54 integrity, 27, 67 intelligence, 82 interface, 87 investment, 34, 35

J jet fuel, 6, 34 job creation, 25 jobs, 25, 26 Joint Chiefs, 19 judge, 14

91

judgment, 14, 19

L land, 18, 78, 84 large-scale, 36 law, 25, 28 laws, 57 leadership, 35 legislation, 25 life cycle, 29, 59, 62, 63 life expectancy, 11 life-cycle cost, 2, 3, 16, 19, 31, 32 litigation, 24 logistics, 30, 80, 83 long distance, 78 longevity, 11 low risk, 63

M maintenance, 4, 11, 12, 13, 29, 33, 48, 62, 78, 79, 84, 86 management, 7, 77 manipulation, 27 manufactured goods, 26 manufacturing, 25 Marine Corps, 7, 8, 9, 65, 66, 67 Marines, 78 market, 26 markets, 36, 37 MCS, 15, 16, 19, 72, 73, 74 measures, 20, 79 media, 21, 22, 27, 48 medical care, 18 military, 2, 3, 4, 5, 10, 13, 14, 15, 23, 25, 29, 32, 33, 37, 58, 59, 62, 75, 79, 80, 85 missions, 2, 5, 6, 8, 10, 18, 36, 70, 71, 72, 73, 74, 77, 78, 79, 80, 81, 82, 83, 84, 85 Mitsubishi, 44, 45, 47 MMP, 87 mobility, 16, 19, 70, 71, 72, 73, 74, 75, 78, 79, 80, 81, 82, 84 models, 34, 35, 38, 63, 73

92

Index

modernization, 30, 38, 78 money, 10, 11, 28, 33 movement, 18, 72, 76, 78, 82, 83, 84

N nation, 5, 13, 23, 58, 72, 73, 84 National Defense Authorization Act, 16, 35, 36, 37, 49 National Guard, 32, 81 national security, 5, 14, 58 NATO, 6 Navy, 7, 8, 9, 20, 37, 48, 50, 65, 66, 67, 77 negotiating, 39 network, 20 next generation, 19 normal, 37 nuclear, 6, 12 nurses, 86

O observations, 34 OEF, 71, 78, 84, 85 Office of Management and Budget (OMB), 39 off-the-shelf, xi, 1, 2, 3, 5, 32 Operation Enduring Freedom, 78 Operation Iraqi Freedom (OIF), 6, 71, 78, 79, 84, 85 operator, 35, 75 opposition, 31, 33 organic, 8, 17, 36, 62, 70, 73, 74, 81 OSA, 81 outsourcing, 36 oversight, 29, 38, 62, 67

P PACER, 77 palletized, 71, 78, 85 parameter, 29, 59, 60, 61 passenger, 13, 17, 18, 19, 22, 34, 37, 45, 46, 71, 74, 75, 76, 77, 82, 83, 84, 85 patients, 18, 73, 75, 85, 86

penalty, 14, 24 Pentagon, 53, 70 Persian Gulf War, 16, 76 pilots, 32, 37, 61 pipelines, 36 planning, 9, 35, 74, 83, 86 platforms, 72, 81 ports, 78 power, 2, 3, 58, 71 power plant, 40, 41 preference, 18 present value, 13 President Clinton, 77 presidential travel, 78 pressure, 44, 46 prices, 34 private, 36, 37 probability, 12, 52 probe, 7, 8, 9, 48, 75 production, 17, 25, 26, 30, 50, 62, 75 program, xi, 1, 2, 3, 5, 7, 11, 17, 19, 20, 22, 24, 28, 30, 31, 32, 35, 36, 37, 38, 39, 52, 57, 58, 63, 72 protection, 20, 71, 79 PSP, 83, 86 public funds, 67

Q questioning, 21, 24

R R&D, 4 radar, 19, 79 rail, 86 range, 1, 5, 6, 8, 16, 19, 20, 37, 52, 60, 71, 72, 73, 76, 80, 81, 82, 85 ratings, 27 recall, 35 receptacle, 48, 75 redundancy, 18 refugees, 77 regulations, xii, 39, 55, 57, 60

Index regulatory requirements, 28 reliability, 7, 67, 72 repair, 34, 84 resources, 74, 81, 82 responsiveness, 84 retaliation, 50 retirement, 34, 38, 72, 73 revenue, 36 risk, 16, 28, 62, 63, 71, 73, 79, 82 risks, 12, 13 rotations, 83 RTI International, 47

S safety, 39 savings, 31, 34, 52 search, 8, 83 Secretary of Defense, 19, 24, 30, 39, 69 security, 5, 14, 58, 72, 78 Senate, 4, 38, 49, 51 separation, 61, 78 September 11, 6 situation awareness, 79 sovereignty, 74 spectrum, 13, 16, 73 speculation, 27 speed, 61 statutes, xii, 55, 60 statutory, 28, 39, 56 strain, 72, 75 stress, 74 subjective, 59 subsidies, 24, 25 superiority, 8 suppliers, 24, 25, 26 supply, 31, 33 supply chain, 31 surplus, 2, 4, 7, 32, 33 surprise, 82 surveillance, 2, 3, 5, 8, 82

93

T tankers, xii, 1, 2, 3, 4, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 27, 29, 31, 32, 33, 34, 35, 36, 48, 52, 55, 58, 70, 71, 73, 74, 75, 77, 78, 80, 82, 84 tanks, 48, 75 tariffs, 24 task force, 11, 12, 15, 35, 36 taxpayers, 24 technicians, 86 territory, 79 terrorism, 18 terrorist, 78 testimony, 25, 57, 59, 60, 63 threat, 12, 14, 17, 18, 20, 70, 71, 72, 79, 83, 84 threatened, 73 threats, 17, 71, 73, 75, 78, 79 thresholds, 59 timing, 10, 13 titanium, 47 trade, 2, 3, 11, 25, 50 traffic, 7, 76 training, 31, 32, 33, 36, 37, 83 training programs, 31 transcript, 49 transcripts, 49 transfer, 75 transparency, 27, 28 transport, 17, 70, 76, 78, 81, 82, 86 transportation, 15, 81 transshipment, 74 travel, 78, 84

U unclassified, 16

V validation, 18 values, 67 variance, 33

94

Index

vehicles, 13 velocity, 61, 72, 73 versatility, 69, 76, 82 veterans, 85 visible, 85

wear, 18 witnesses, 59, 60 workers, 25 World Trade Organization (WYO), 24, 50 writing, 5 wrongdoing, 58

W Y war, 18, 20, 73, 77, 82 war on terror, 18, 73 weapons, 57, 63, 71, 79, 84

yield, 31