<i>Yes. This insult to the taxpayers looks like it is going to happen</i>
<b>Aircraft Program Cuts Could Mean Billions In Unplanned Costs</b> (Posted: Friday, March 04, 2005)
[Defense Daily, March 4, 2005]
By Nathan Hodge
In a hearing before the House Armed Services Committee's (HASC) tactical air and land forces subcommittee yesterday, a top Air Force official said that termination of a multi- year contract to buy C-130J airlifters from Lockheed Martin [LMT] could cost as much as $1 billion, double previous estimates.
Lt. Gen. John Corley, principal deputy, Office of the Assistant Secretary of the Air Force (Acquisition), said cancellation of C-130J multiyear contract would require "sizeable sums of money," although estimates of those costs have yet to be finalized.
"The number could be $500 million up toward $1 billion, perhaps," Corley said. "We would have to pay an increase in terms of production costs, because the anticipation was for a certain number of KC-130Js for the Marine Corps; now, within a modification of that number of aircraft, there would be an additional cost to that. There would be a cost to modify our existing fleet of C-130s that we had anticipated retiring due to their center wingbox problems and their age. There would be additional overhead costs."
All those costs and cancellation fees, Corley said, still need to be tallied: "I do not have exact numbers, and I'm sure that's why the secretary [Defense Secretary Donald Rumsfeld] had previously said we need to go back and take a hard look and scrub [numbers] on this."
With proposed cuts to major military aircraft programs projected to cost taxpayers significantly more than anticipated, legislators are pressing the Defense Department for better numbers on the FY '06 aviation budget request.
Of particular concern to lawmakers: the F/A-22 Raptor air superiority fighter and the C-130J, both aircraft made by Lockheed Martin. In its FY '06 budget request, the department proposed limiting the buy of the Raptor to around 179 aircraft, and ending production of the aircraft in 2008 at around 179. The C-130J program was terminated in the FY '06 request, saving a projected $4.9 billion through FY '11.
According to Rep. Curt Weldon (R-Pa.), a senior member of HASC, the proposed budget could mean billions in unanticipated costs.
"Government estimates of termination costs and other costs are very preliminary, but indications are that costs could be substantial," Weldon said in a forceful opening statement. "These costs include: cancellation ceiling costs, equitable adjustment costs to reflect fewer aircraft than planned, F/A-22 overhead cost increases, and increased costs to procure the 12 KC-130Js in the FY '06 budget request."
<b>The sum total of those costs, Weldon said, "could exceed $2 billion."</b>
Weldon also criticized the department for proposing the "unprecedented" step of canceling its multiyear C-130J contract.
<b>"I wonder what that's going to cost the taxpayer," he said. "Termination of a multiyear contract for a major weapons system for the convenience of the government would be unprecedented.</b> If this decision is sustained in the congressional budget process, only 53 of the Air Force's planned 168 C-130Js would be procured, and only 33 of the Marine Corps' requirement for 51 aircraft would be met."
Those costs, Weldon added, "do not include the prospect that increased force structure costs could be required to modernize older C-130 fleets in the Air Force and the Marine Corps to meet force structure requirements."
The hearing, which coincided with the release of a new report by the Government Accountability Office, also brought renewed scrutiny to another Lockheed Martin program, multi- service F-35 Joint Strike Fighter. <b>According to GAO, the Defense Department has failed to come up with a proper "business case" for JSF. </b>
"The Joint Strike Fighter program must reassess its business case now," said Michael Sullivan, GAO director of acquisition and sourcing management for JSF. <b>"Increased development costs, delayed schedule and reduced quantities have made the Joint Strike Fighter business case unexecutable."</b>
Sullivan noted: "In 1996, when the program began, development was to cost $25 billion over 12 years, completing in 2008. Today, those costs are estimated at nearly $45 billion, and will take 17 years, completing in 2013. This reflects and 81 percent increase in estimated development cost and a five-year delay in development schedule."
Allen Li, the GAO director charged with studying the F/A-22, offered similar criticism of the Air Force's management of the Raptor program.
"Issued in December, Program Budget Decision 753 places much of the F/A-22's modernization plans in doubt," Li said. "This is because it terminates aircraft procurement after FY '08. Many of the advanced capabilities coming out of modernization had been planned for aircraft that may not be bought."
In other words, plans to add an air-to-ground attack capability to the F/A-22--originally conceived as the F-22, an air-to-air fighter--may not work.
"The bottom line of this capability, and the decision, is possibly that the F/A-22 will only be an F-22, that the robust ground-attack capability that had been planned may no longer be available," Li said.
THE RAMPTOR ENGINEERING TEAM <img src=icon_smile_big.gif border=0 align=middle>
"Who cares if it works? Does it look good on the ramp?"
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