Order Code RL34398
Air Force Air Refueling: The KC-X Aircraft
Acquisition Program
Updated August 4, 2008
Christopher Bolkcom and William Knight
Foreign Affairs, Defense, and Trade Division
Air Force Air Refueling: The KC-X Aircraft
Acquisition Program
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,
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:
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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:
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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)
This report will be updated as conditions warrant.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Select Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Air Refueling in Joint Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cold War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1991 Persian Gulf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DOD Air Refueling Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
KC-135 Stratotanker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
KC-10 Extender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Service Organic Air Refueling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Air Refueling Operational Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Boom vs. Probe and Drogue Air Refueling . . . . . . . . . . . . . . . . . . . . . . 7
Capacity vs. “Booms in the Air” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Tanker’s Receiver Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
How Long Can KC-135s Fly? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Airframe Service Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Corrosion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Maintenance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
What Is the Lowest Cost Option for Tanker Recapitalization? . . . . . . . . . . 11
How Many Tankers Does the Air Force Need? . . . . . . . . . . . . . . . . . . . . . . 12
National Military Strategy (NMS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mobility Capability Study (MCS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
What Will KC-X Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
What Capabilities Should KC-X Have? . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Airlift Capability: Doors and Floors . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Defensive Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Was the KC-X Competition Fair? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Request for Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
RFP Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Comparing the Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
What are the Economic and Trade Effects of KC-X? . . . . . . . . . . . . . . . . . 21
WTO Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
U.S. Industrial Base Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Buy American Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
What Is the Impact of Boeing’s Protest? . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Why Did the GAO Sustain the Protest? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Can DoD Split the Tanker Contract Between the Competitors? . . . . . . . . . 29
Arguments Favoring a Split Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Arguments Against a Split Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Where Might KC-X Aircraft Be Based? . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Potential Options to Augment KC-X Recapitalization . . . . . . . . . . . . . . . . . . . . 32
Convert Used Commercial Aircraft into Tankers . . . . . . . . . . . . . . . . . . . . 32
Retire or Re-engine KC-135Es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Viability of the KC-135E Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Recapturing Modernization Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Fee-For-Service Air Refueling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
What Independent Studies Say . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Counter Arguments to RAND’s Assumptions . . . . . . . . . . . . . . . . . . . 36
FFS AR Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix A. Previous Issue for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Modernization Controversy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Appendix B. KC-135R System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Appendix C. KC-10 System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Appendix D. KC-767 System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Appendix E. KC-30 System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appendix F. Key Suppliers for Commercial Variants of the Boeing 767 and
Airbus 330 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
List of Figures
Figure 1. Photo of “Boom” Air Refueling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 2. Photo of “Hose and Drogue” Air Refueling . . . . . . . . . . . . . . . . . . . . . . 8
Figure 3. KC-135 Refueling Air Force Fighters . . . . . . . . . . . . . . . . . . . . . . . . . 40
Figure 4. KC-10 Refueling Air Force Fighters . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Figure 5. Artist Impression of KC-767 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Figure 6. Artist Impression of KC-30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
List of Tables
Table 1. Tanker Operations in Iraq and Afghanistan, 2004-2007 . . . . . . . . . . . . . 5
Table 2. KC-135 and KC-10 Operational Capabilities . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Tankers Used in Recent Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 4: Suppliers and Corporate Parent Domiciles for Components Incorporated
into the Boeing 767 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table 5: Suppliers and Corporate Parent Domiciles for Components Incorporated
into the Airbus 330/350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Air Force Air Refueling: The KC-X Aircraft
Acquisition Program
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 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 among the
Air Force’s oldest aircraft. Potential issues for Congress include:
!
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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?
1
“Tanker Contract Award Announced,” Air Force Print News, February 29, 2008, online
at [http://www.af.mil/news/story.asp?id=123088392].
2
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].
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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:
!
!
!
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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 Secretary of 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
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.
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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
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 KC-45A.13 Future
programs known as KC-Y and KC-Z — each anticipated to replace approximately
5
[http://appropriations.house.gov/pdf/MurthaSubMarkup07-30-08.pdf]
6
Les Blumenthal. “Boeing Tanker Bid Gets Big Boost.” Seattle Times. July 31, 2008. John
Doyle. “Appropriators to USAF: Consider tanker’s industrial base concerns.” Aerospace
Daily & 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.
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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 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
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
17
Ibid, p. 60.
Thomas A Keaney and Elliot A. Cohen, Gulf War Air Power Survey Summary Report,
Washington, D.C., 1993, p. 190.
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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. In 1999, 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.
Table 1. Tanker Operations in Iraq and Afghanistan, 2004-2007
Sorties
Fuel Offloaded (lbs.)
Receivers Refueled
2004
2005
2006
2007
12,465
12,391
12,787
15,875
740 million
778 million
871 million
946 million
N/A
N/A
42,083
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 servicespecific requirements.
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. 27-28.
24
GAO-04-349, p. 10.
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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, KC135As 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
KC-135As 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 KC135Rs have been modified to receive fuel in-flight. On-going modifications are
giving KC-135s advanced avionics that improve reliability and meet increasingly
KC-135 aircraft
stringent global air traffic management requirements.26
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.
Table 2. KC-135 and KC-10 Operational Capabilities
Inventory
Fuel Capacity
Passengers
Cargoa
KC-10A
59
356,000 lbs.
75
170,000 lbs
KC-135E
85
180,000 lbs.
54
83,000 lbs
KC-135R
418
200,000 lbs.
54
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
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.
CRS-7
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 these missions requires different aerial refueling capabilities.
Therefore, when planning the acquisition of a tanker fleet, careful consideration 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 Refueling.32 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.
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.
CRS-8
Figure 1. Photo of “Boom” Air Refueling
Source: USAF Photo by A1C Lonnie Mast.
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” refueling to “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.
Figure 2. Photo of “Hose and Drogue” Air Refueling
Source: USAF photo by TSgt Erik Gudmundson.
CRS-9
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
refueling missions 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 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:
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33
Ibid.
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?
CRS-10
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
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 during the 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 KC-135 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
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
39
Ibid., p. 17.
GAO-04-349, “Military Aircraft, DOD needs to Determine Its Aerial Refueling
Requirements,” June 2004, p. 13.
CRS-11
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
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 KC-135 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 by the Institute of Defense Analysis.44
RAND considered the following alternatives for recapitalization:
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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
40
Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004,
pp. iv-v.
41
Ibid, p. 18.
42
Michael Kennedy et al., “Analysis of Alternatives (AoA) for KC-135 Recapitalization,
Executive Summary,” RAND Corporation, 2006, p. 16.
43
44
Ibid.
Michael Kennedy et al., “Analysis of Alternatives (AoA) for KC-135 Recapitalization,
Executive Summary,” RAND Corporation, 2006, p. 1.
CRS-12
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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 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:
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New commercially-derived tankers of medium to larger size
(300,000 to 1,000,000 pound maximum gross takeoff weight) are the
most cost-effective 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 report).
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 report.)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
studies the global threat environment and seeks to identify the military force structure
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.
45
Ibid, pp. 7-8.
46
Ibid, p. 9.
47
Ibid, pp. 12-13.
CRS-13
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 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.
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.
CRS-14
Table 3. Tankers Used in Recent Operations
Conflict
Tankers Utilized
1991 Persian Gulf War (Iraq/Kuwait)
306
1998 Balkans/Kosovo
175
2001 Afghanistan
80
2003 Iraq
305/319a
Source: CRS compiled from data found in DSB Task Force Report on Aerial Refueling Requirements
and GAO-04-349.
a. DSB reported 319 while GAO cited 305 tankers for Iraq operations.
Based on these studies and assumptions, it has been argued that homeland
defense requirements coupled with any two 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.
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 intertheater (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
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.
CRS-15
National Defense Authorization Act (P.L. 110-181) directed DOD to conduct a
comprehensive requirements-based study of fixed-wing airlift to include fullspectrum 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 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
the acquisition 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
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.
CRS-16
support equipment or passengers and cargo from other units. Air refueling
aircraft may also be used to support USTRANSCOM airlift requirements.”60
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 why a 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 C-5 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 KCX 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
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.
CRS-17
Requirement’s Oversight Council (JROC) for validation. DOD did not concur with
this 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:
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“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
64
GAO-07-367R, “Defense Acquisitions: Air Force Decision to Include a Passenger and
Cargo Capability in Its Replacement Refueling Aircraft Was Made without Required
Analysis,” 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.
CRS-18
mission of in-flight air refueling by potentially enabling the tanker to operate closer
to its refueling track, 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 warfighting requirements.74 The RFP outlined nine primary key performance parameters:
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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.)
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].
74
“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].
CRS-19
!
Provisioning for a multi-point refueling system to support Navy and
Allied aircraft75
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
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
78
Ibid.
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(continued...)
CRS-20
concluded the Air Force desired a larger aircraft with more airlift 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 KC-767
and Northrop Grumman KC-30 aircraft submissions along with highlights of some
issues frequently raised through the media.
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
78
(...continued)
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 of
a system that are considered critical or essential to the development of an effective military
capability and those attributes that make a significant contribution to the key characteristics
as defined in the Joint Operations Concept.” Defense Acquisitions University Glossary of
Defense Acquisitions Acronyms and Terms, 12th Edition, online at [https://akss.dau.mil/pv/
glossary.aspx].
CRS-21
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 larger airlift capacity in 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 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
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, EADS
Says,” 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, online
at [http://www.af.mil/news/story.asp?id=123088392].
CRS-22
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 summer2008,87
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
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.
CRS-23
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 Boeing outside of the WTO process in an effort to secure support from members
of Congress. Further, others have speculated that the 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 KC-X 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 part of this evaluation criteria, according to the law” and that
“industrial capacity was not part of the evaluation criteria.”98 To some, there are
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, “Boeing vs. 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.
98
Transcript from Hearing on Contract Award for Tanker Replacement Program, Committee
(continued...)
CRS-24
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
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 jobs based 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
98
(...continued)
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.
CRS-25
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.
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
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.
CRS-26
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
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.
CRS-27
independent reviews assessed the process as sound and thorough.116
Even before the Air Force awarded the KC-X contract to Northrop Grumman,
Force leaders openly worried that any potential 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.
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 Getting First New Tankers,” 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].
CRS-28
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 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 fixed-wing,
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 satisfied a 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 contract improperly in 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
120
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.
CRS-29
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
non-recurring (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.
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 they believe 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
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,
(continued...)
CRS-30
Arguments Favoring a Split Buy.126 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
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 Buy.129 Opponents have expressed opposition
to a split buy acquisition strategy for a variety of reasons. Secretary of the Air Force
125
(...continued)
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.
CRS-31
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
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
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].
CRS-32
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 go to 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
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 KC-10
— 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
135
David A. Fulghum, “Moselely Looks Forward to Getting First New Tankers,” Aerospace
Daily & 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].
CRS-33
into Air Force tankers. Likewise, some may suggest that surplus aircraft of the
design selected in the KC-X competition may also be worthy of future consideration.
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.
A factor of potential significance that has arisen subsequent to most of the
independent studies cited in this report is the rising operating costs due to increased
jet fuel prices. This is of particular importance with older, less fuel-efficient 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.
139
Military Aircraft: DOD Needs to Determine Its Aerial Refueling Aircraft Requirements,
GAO-04-349, 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-2B12-48A9-A283-E035AEA5D165/0/Airline_Labour_Cost_Share.pdf].
142
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
Cities-Honolulu 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].
CRS-34
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 KC-135Es
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 reengining some KC-135Es. However, the AOA determined conversion would only
bolster overall fleet effectiveness by about 2 percent. The study also found that reengining “E” models was “not a favorable return on investment unless operated into
late 2030s.”148 Air Force 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 we have 44-year- old tankers. One thing for 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 KC-135Es
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
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.
CRS-35
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 KC-135Es 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 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
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 and
H.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.
CRS-36
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 large-scale 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 side-by-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 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
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,
(continued...)
CRS-37
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
committees highlighting key operational metrics and assessing the impact of FFS AR
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 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
163
(...continued)
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. 335336.
170
“Filler’ Up,” Defense Daily, February 19, 2008, Volume 237, Issue 32.
CRS-38
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.
107-117) 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 procuring the
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 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
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., September 3, 2003.
174
See CRS Report RL32056, The Air Force KC-767 Tanker Lease Proposal: Key Issues
for Congress, coordinated by Christopher Bolkcom.
CRS-39
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
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.
177
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.
CRS-40
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.
Figure 3. KC-135 Refueling Air Force Fighters
Source: USAF photo by SSgt Suzanne Day.
CRS-41
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,
[http://www.af.mil/factsheets/factsheet.asp?id=109].
September,
2006,
Figure 4. KC-10 Refueling Air Force Fighters
Source: USAF photo.
online
at
CRS-42
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].
Figure 5. Artist Impression of KC-767
Source: Jane’s All The World’s Aircraft at [http://www.janes.com].
CRS-43
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.”
Figure 6. Artist Impression of KC-30
Source: Jane’s All The World’s Aircraft at [http://www.janes.com]
CRS-44
Appendix F. Key Suppliers for Commercial Variants
of the Boeing 767 and Airbus 330
Table 4: Suppliers and Corporate Parent Domiciles for
Components Incorporated into the Boeing 767
Supplier
Aero Vodochody
Parent
Country
Czech Republic
Component(s)
airframe parts (for BAE Systems)
Alenia
Italy
wing control surfaces, flaps and leadingedge slats, wingtips, elevators, fin
rudder, nose radome
Avcorp
Canada
front and rear spar stiffeners, floor grid
details and assemblies, aft strut fairings
Boeing Canada
Canada
fixed trailing edge panels, composite
wing-to-body fairings, engine strut
fairings
Bombardier (Learjet)
Canada
wing trailing edge support structures
Bombardier (Canadair)
Canada
rear fuselage, pressure bulkhead
Daido Steel
Japan
steel sheets
Embraer
Brazil
flap supports
Fuji
Japan
wing fairings, main landing gear doors
Fujukawa Aluminum
Japan
forgings and extensions
GKN Aerospace
(Westland Aerospace,
formerly BP
Chemicals; with Lucas
Aertspace Cargo
Systems)
United Kingdom
flap track fairings
Goodrich (Cleveland
Pneumatic)
United States
main landing gear
Hitco Carbon
Composites
United States
flap track fairings
IPTN
Indonesia
Kaman Aerospace
United States
Kawasaki Heavy
Industries
Japan
Korean Aerospace
(Samsung)
Republic of
Korea
flaps, keel beams (for Mitsubishi)
wing trailing edges
center-fuselage body panels, exit
hatches, wing in-spar ribs
wing trailing edges
CRS-45
Parent
Country
Component(s)
LMI Aerospace
United States
skins, wing panels, floor beams, curtain
tracks
Lunn Industries
(Alcore)
United States
leading edge slat core assemblies (for
ASTA)
Menasco Aerospace
United States
nose landing gear unit
Supplier
Mitsubishi Heavy
Industries
Japan
rear fuselage body panels, stringers,
passenger and cargo doors, dorsal fin
Nihon Kokuki (Nippi)
Japan
wing in-spar ribs, various structural
components for Mitsubishi
PPG Industries
Shin Meiwa
United States
landing light lens assemblies, cockpit
windows
Japan
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
Parent
Domicile
Advanced Technology
and Research (ATR)
Corp.
United States
graphite epoxy underwing fairings (for
Aerostructures Corp.)
Aerostructures Corp.
(Now Vought)
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)
AHF-Ducommun
United States
leading edge wing skins
United States
main gear doors, floor support structure,
pressurization bulkhead between
passenger cabin, main landing gear
compartment (for Aérospatiale-EADS)
Boeing (Aerospace
Technologies of
Australia)
178
Component(s)
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.
CRS-46
Parent
Domicile
Component(s)
Bombardier (Canadair)
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 Aérospatiale-EADS),
inboard front spar assembly (for BAE)
BTR Aerospace
Canada
main landing gear fairings
Supplier
CC Industries
United States
Ciba-Geigy Corp.
Federal
Republic of
Germany
Dowty Aerospace
Canada
Canada
Dowty Rotol (with
Cleveland Pneumatic)
outer rear spar, main landing gear
support, ribs (for BAE)
HTA/6376 prepreg on wings
center landing gear
United Kingdom
design and manufacture of main landing
gear
Fairchild Dornier
Federal
Republic of
Germany
fuselage and wing components, interior
panels
Fischer Advanced
Composite
Components
Federal
Republic of
Germany
interior components (for DASA-EADS)
GKN Aerospace
(formerly BP
Advanced Materials)
United Kingdom
General Engineering
Unknown
side stay fairing
Hawker de Havilland,
Australia
Australia
wingtips, winglets, wing root fillet, ribs
(for BAE)
Heath Techna
Aerospace
IPTN
United States
Indonesia
composite panels (for BAE)
composite components (for BAE)
flap track carriages, sheet metal parts
(for BAE)
Korean Aerospace
Industries (Daewoo)
Republic of
Korea
wing components
Korean Air (with Silat)
Republic of
Korea
upper fuselage panels of Section 15 (for
Aérospatiale-EADS)
Marion Composites
United States
flap track fairings (for Aerostructures
Corp.)
Marvin Group
United States
large ribs (for BAE)
CRS-47
Supplier
Parent
Domicile
Component(s)
Messier-HispanoBugatti
France
nose landing gear, wheels and brakes
(option)
Mitsubishi Heavy
Industries
Japan
cargo doors
PPG Industries
United States
cockpit windows
RTI International
Metals
United States
titanium on A350
SABCA
Belgium
tailcones (for DASA)
Shin Meiwa
Japan
wing fairings
Socea
France
rear upper panels of center fuselage
section
SOCATA
France
composite belly fairing
SONACA
Belgium
Xian Aircraft Co.
(AVIC-1)
Peoples
Republic of
China
full-span leading edge slats, slat tracks
avionics access doors
Source: Teal Group
Note: Commercial variants of both aircraft types are powered by engines manufactured by either
General Electric, Pratt & Whitney, or Rolls Royce.Air Force KC-X Tanker Aircraft Program:
Background and Issues for Congress
Ronald O'Rourke
Specialist in Naval Affairs
July 30, 2009
Congressional Research Service
7-5700
www.crs.gov
RL34398
CRS Report for Congress
Prepared for Members and Committees of Congress
Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Summary
The Administration’s proposed FY2010 defense budget requests $439.6 million in Air Force
research and development funding to begin a new program for acquiring new 179 KC-X aerial
refueling tankers. The 179 KC-Xs, which could be procured at an annual rate of 12 to 18 aircraft
and cost roughly $200 million each, would replace roughly one-third of the Air Force’s aging
fleet of KC-135 aerial refueling tankers. The Air Force and the U.S. Transportation Command
state that replacing the KC-135s is their highest recapitalization priority.
The two expected competitors for the KC-X program are Boeing, which is expected to offer a
KC-X based on the Boeing 767 or Boeing 777 commercial airliner, and an industry team
consisting of Northrop Grumman and the European Aeronautic Defense and Space Company
(EADS—the parent company of Airbus), which is expected to offer a KC-X based on the Airbus
A330 commercial airliner. A Boeing KC-X would be assembled in Seattle, while a
Northrop/EADS KC-X would be assembled in Mobile, AL.
The administration’s proposed new KC-X program follows previous unsuccessful attempts by the
Department of Defense (DOD) to implement a KC-X acquisition program for replacing the KC135s. The history of those earlier attempts forms an important part of the context for the
Administration’s proposed new KC-X program, particularly in terms of defining the capabilities
that are needed in the KC-X and designing and conducting a fair competition between aircraft
offered by Boeing and Northrop/EADS.
The issue for Congress in FY2010 is whether to approve, reject, or modify the Administration’s
request for FY2010 research and development funding for the new KC-X program, and whether
to take any action to define the acquisition strategy for the new KC-X program. Key acquisitionstrategy issues include whether to procure one KC-X design or two, and (if only one design is to
be procured, as the Administration prefers), how to structure and conduct the competition for
determining the winning design.
The House and Senate Armed Services Committees, in their markups of the FY2009 defense
authorization bill (H.R. 2647/S. 1390), both recommend approving the Administration’s request
for $439.6 million in research and development funding for the KC-X program.
Section 1044 of H.R. 2647 would repeal Section 1081 of the FY2008 defense authorization act
(H.R. 4986/P.L. 110-181 of January 28, 2008), which directed the Secretary of the Air Force to
conduct a pilot program of at least five years’ duration to assess the feasibility and advisability of
utilizing commercial fee-for-service air refueling tanker aircraft for Air Force operations.
Section 1058 of S. 1390 would amend Section 1081 of the FY2008 defense authorization act
(H.R. 4986/P.L. 110-181 of January 28, 2008), to make changes intended to facilitate the
implementation of a fee-for-service air refueling support pilot program.
Congressional Research Service
Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Contents
Introduction ................................................................................................................................1
Background ................................................................................................................................1
Roles and Missions of Aerial Refueling Aircraft....................................................................1
Current Fleet of Large Aerial Refueling Aircraft....................................................................2
KC-135 Stratotanker .......................................................................................................2
KC-10 Extender ..............................................................................................................3
Earlier Attempts at a KC-X Program to Replace the KC-135s................................................3
Leasing Authority of 2002...............................................................................................4
Leasing and Purchasing Authority of 2003 ......................................................................4
Developments in 2004 and 2005 .....................................................................................4
RAND Study of 2006......................................................................................................5
KC-X Competition of 2007-2008 ....................................................................................5
Administration’s Proposed New KC-X Acquisition Program .................................................6
FY2010 Funding Request................................................................................................6
Number of Aircraft Contemplated ...................................................................................6
Potential Cost of Program ...............................................................................................6
Administration Plan: Competition for a Single Design.....................................................7
Expected Competitors .....................................................................................................7
DOD Statements on KC-X as a High Priority ..................................................................7
Industrial Base ......................................................................................................................8
Employment Effects as Asserted for 2007-2008 Competition ..........................................8
Domestic Content as Discussed in 2007-2008 Competition .............................................9
FY2009 Legislative Provisions..............................................................................................9
Issues for Congress ................................................................................................................... 10
Build One Design Or Two? ................................................................................................. 11
Summary of Arguments ................................................................................................ 11
Potential Intermediate Alternative Building One Design at Two Sites ............................ 13
Terms for a Competition...................................................................................................... 13
Lowest Price vs. Best Value .......................................................................................... 13
Performance Requirements and Evaluation Factors ....................................................... 14
Air Force or OSD Management of Competition............................................................. 16
Legislative Activity for FY2010 ................................................................................................ 16
FY2010 Funding Request.................................................................................................... 16
FY2010 Defense Authorization Bill (H.R. 2647/S. 1390) .................................................... 16
House ........................................................................................................................... 16
Senate........................................................................................................................... 18
Tables
Table D-1. Boeing 767 Suppliers............................................................................................... 28
Table D-2. Airbus 330/350 Suppliers......................................................................................... 29
Congressional Research Service
Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Appendixes
Appendix A. Section 8159 of FY2002 Defense Appropriations Act ........................................... 20
Appendix B. Section 135 of FY2004 Defense Authorization Act ............................................... 22
Appendix C. KC-X Competition of 2007-2008.......................................................................... 24
Appendix D. Boeing 767 and Airbus 330 Suppliers ................................................................... 28
Appendix E. Potential Longevity of KC-135 Fleet..................................................................... 31
Contacts
Author Contact Information ...................................................................................................... 34
Acknowledgments .................................................................................................................... 34
Congressional Research Service
Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Introduction
The Administration’s proposed FY2010 defense budget requests $439.6 million in Air Force
research and development funding to begin a new program for acquiring new 179 KC-X aerial
refueling tankers.1 The 179 KC-Xs, which could be procured at an annual rate of 12 to 18 aircraft
and cost roughly $200 million each, would replace roughly one-third of the Air Force’s aging
fleet of KC-135 aerial refueling tankers. The Air Force and the U.S. Transportation Command
state that replacing the KC-135s is their highest recapitalization priority.
The two expected competitors for the KC-X program are Boeing, which is expected to offer a
KC-X based on the Boeing 767 or Boeing 777 commercial airliner, and an industry team
consisting of Northrop Grumman and the European Aeronautic Defense and Space Company
(EADS—the parent company of Airbus), which is expected to offer a KC-X based on the Airbus
A330 commercial airliner. A Boeing KC-X would be assembled in Seattle, while a
Northrop/EADS KC-X would be assembled in Mobile, AL.
The administration’s proposed new KC-X program follows previous unsuccessful attempts by the
Department of Defense (DOD) to implement a KC-X acquisition program for replacing the KC135s. The history of those earlier attempts forms an important part of the context for the
Administration’s proposed new KC-X program, particularly in terms of defining the capabilities
that are needed in the KC-X and designing and conducting a fair competition between aircraft
offered by Boeing and Northrop/EADS.
The issue for Congress in FY2010 is whether to approve, reject, or modify the Administration’s
request for FY2010 research and development funding for the new KC-X program, and whether
to take any action to define the acquisition strategy for the new KC-X program. Key acquisitionstrategy issues include whether to procure one KC-X design or two, and (if only one design is to
be procured, as the Administration prefers), how to structure and conduct the competition for
determining the winning design. Congress’ decision on this issue could affect DOD capabilities
and funding requirements, and the aircraft manufacturing industrial base.
Background
Roles and Missions of Aerial Refueling Aircraft
Aerial refueling aircraft—commonly called tankers—provide in-flight refueling services to
bombers, fighters, strike fighters, airlift aircraft, surveillance aircraft, and other types of aircraft
flown by the Air Force, Navy, and Marine Corps. Tankers enable other aircraft to deploy quickly
to distant theaters of operation, and to remain in the air longer while operating in those theaters.
Aerial refueling capability is a critical component of the U.S. military’s ability to project power
overseas and to operate military aircraft in theater with maximum effectiveness.
1
In the designation KC-X, C means a cargo-type aircraft, K means that the aircraft is specifically an aerial refueling
tanker, and X means the design of the aircraft has not been determined.
Congressional Research Service
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Current Fleet of Large Aerial Refueling Aircraft
KC-135 Stratotanker
The Air Force’s current fleet of large tankers consists mostly of KC-135 Stratotankers. The Air
Force states that, as of September 2008, a total of 453 KC-135s were in the inventory of the Air
Force (182 aircraft), the Air National Guard (206 aircraft), and the Air Force Reserve (65
aircraft).2 Somewhat confusingly, the Air Force also states that the service’s Air Mobility
Command (AMC) as of September 2008 managed an inventory of more than 481 Stratotankers,
including 294 flown by the Air National Guard and Air Force Reserve in support of AMC
missions.3 The commander of the U.S. Transportation Command, in February 2009 testimony to
Congress, mentioned a figure of 415 KC-135s.4 The Air Force states that:
The KC-135 Stratotanker provides the core aerial refueling capability for the United States
Air Force and has excelled in this role for more than 50 years. This unique asset enhances the
Air Force’s capability to accomplish its primary missions of Global Reach and Global
Power. It also provides aerial refueling support to Air Force, Navy and Marine Corps and
allied nation aircraft. The KC-135 is also capable of transporting litter and ambulatory
patients using patient support pallets during aeromedical evacuations.5
The KC-135s are among the oldest of the Air Force’s aircraft. The first production KC-135 was
delivered to the Air Force in 1957, and the final one was delivered in 1965.6 DOD and Air Force
documents for FY2010 state variously that average age of the KC-135 fleet in 2009 is more than
45 years,7 47 years,8 48 years,9 or more than 48 years.10 The aircraft have received various
2
Air Force Fact sheet on the KC-135, available online at http://www.af.mil/information/factsheets/factsheet.asp?fsID=
110. The fact sheet was accessed by CRS on July 29, 2009, at which time it carried a date of September 2008.
3
Air Force Fact sheet on the KC-135, available online at http://www.af.mil/information/factsheets/factsheet.asp?fsID=
110. The fact sheet was accessed by CRS on July 29, 2009, at which time it carried a date of September 2008.
4
Statement of General Duncan J. McNabb, USAF Commander, United States Transportation Command, Before the
House Armed Services Air & Land Forces and Seapower & Expeditionary Forces Subcommittees [Hearing] On the
State of the Command, February 25, 2009, p. 6.
5
Air Force Fact sheet on the KC-135, available online at http://www.af.mil/information/factsheets/factsheet.asp?fsID=
110. The fact sheet was accessed by CRS on July 29, 2009, at which time it carried a date of September 2008.
6
A total of 732 KC-135s were delivered to the Air Force.
7
See, for example, Department of Defense, Fiscal Year 2010 Budget Request, Summary Justification, May 2009, p. 150, or United States Air Force, FY 2010 Budget Overview, SAF/FMB, May 2009, p. 48.
8
See, for example, Department of Defense, Fiscal Year 2010 Budget Request, Summary Justification, May 2009, p. 116.
9
See, for example, Department of the Air Force, Fiscal Year (FY) 2010 Budget Estimates, Research , Development,
Test and Evaluation (RDY&E) Descriptive Summaries, Volume II, Budget Activities 4 – 6, May 2009, Exhibit R-2,
RDT&E Budget Item Justification, [PE]0605221F, KC-X, Next Generation Aerial Refueling Aircraft, page 1 of 8
(page 559 of the overall document).
10
See, for example, Department of the Air Force, Presentation to the House Armed Services Committee Subcommittee
on Air and Land Forces, United States House of Representatives, Combined Statement of: Lieutenant General Daniel J.
Darnell, Air Force Deputy Chief Of Staff For Air, Space and Information Operations, Plans And Requirements
(AF/A3/5) Lieutenant General Mark D. Shackelford, Military Deputy, Office of the Assistant Secretary of the Air
Force for Acquisition (SAF/AQ) Lieutenant General Raymond E. Johns, Jr., Air Force Deputy Chief of Staff for
Strategic Plans And Programs (AF/A8), May 20, 2009, p. 17.
Congressional Research Service
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
upgrades and modifications over the years, including new engines.11 For a discussion of the
potential longevity of the KC-135 fleet, see Appendix E.
KC-10 Extender
The Air Force as of September 2008 also operated 59 KC-10 Extender aerial refueling aircraft.
The KC-10s are much younger than the KC-135s—the first KC-10 entered service in 1981.12
Earlier Attempts at a KC-X Program to Replace the KC-135s
The advanced age of the KC-135 fleet, and what to do about it, has been a matter of concern for
policymakers since at least 1996.13 The Obama Administration’s proposed new KC-X program
follows previous unsuccessful attempts by DOD to implement a KC-X acquisition program for
replacing the KC-135s. The history of those earlier attempts, summarized below, forms an
important part of the context for the Administration’s proposed new KC-X program, particularly
11
Air Force Fact sheet on the KC-135, available online at http://www.af.mil/information/factsheets/factsheet.asp?fsID=
110. The fact sheet was accessed by CRS on July 29, 2009, at which time it carried a date of September 2008. The fact
sheet states that:
Of the original KC-135A's, more than 415 have been modified with new CFM-56 engines produced by CFMInternational. The re-engined tanker, designated either the KC-135R or KC-135T, can offload 50 percent more
fuel, is 25 percent more fuel efficient, costs 25 percent less to operate and is 96 percent quieter than the KC-135A.
Under another modification program, 157 Air Force Reserve and Air National Guard tankers were re-engined with
the TF-33-PW-102 engines. The re-engined tanker, designated the KC-135E, is 14 percent more fuel efficient than
the KC-135A and can offload 20 percent more fuel.
Through the years, the KC-135 has been altered to do other jobs ranging from flying command post missions to
reconnaissance. RC-135s are used for special reconnaissance and Air Force Materiel Command’s NKC-135A’s
are flown in test programs. Air Combat Command operates the OC-135 as an observation platform in compliance
with the Open Skies Treaty.
The KC-135R/T model aircraft continue to undergo life-cycle upgrades to expand its capabilities and improve its
reliability. Among these are improved communications, navigation, auto-pilot and surveillance equipment to meet
future civil air traffic control needs.
12
Air Force fact sheet on the KC-135, available online at http://www.af.mil/information/factsheets/factsheet.asp?id=
109. ]. The fact sheet was accessed by CRS on July 29, 2009, at which time it carried a date of September 2008. The
fact sheet states that:
The KC-10 Extender is an Air Mobility Command advanced tanker and cargo aircraft designed to provide
increased global mobility for U.S. armed forces. Although the KC-l0’s primary mission is aerial refueling, it can
combine the tasks of a tanker and cargo aircraft by refueling fighters and simultaneously carry the fighter support
personnel and equipment on overseas deployments. The KC-10 is also capable of transporting litter and
ambulatory patients using patient support pallets during aeromedical evacuations.
The KC-10 can transport up to 75 people and nearly 170,000 pounds (76,560 kilograms) of cargo a distance of
about 4,400 miles (7,040 kilometers) unrefueled.
In addition to KC-135s and KC-10s, the Air Force, Marine Corps, and Navy operate additional smaller refueling
aircraft. The Air Force uses modified C-130s to refuel Air Force special operations and combat search and rescue
helicopters. The Marine Corps uses modified C-130s to refuel Marine helicopters and fighters. Some Navy aircraft
have been configured to give them a secondary capability to refuel other Navy or Marine Corps aircraft in flight.
13
In 1996, the General Accounting Office (now the Government Accountability Office) asserted that the long-term
viability of the KC-135 fleet was questionable and advocated expeditiously studying replacement options. (General
Accounting Office, U.S. Combat Airpower[:]Aging Refueling Aircraft Are Costly to Maintain and Operate,
GAO/NSIAD-06-160, August 1996.) DOD countered at the time that KC-135 airframe hours were low and that the Air
Force could sustain the fleet for another 35 years.
Congressional Research Service
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
in terms of defining the capabilities that are needed in the KC-X and designing and conducting a
fair competition between aircraft offered by Boeing and Northrop/EADS.
Leasing Authority of 2002
In response to concerns about the aging KC-135 fleet, Section 8159 of the FY2002 defense
appropriations act (H.R. 3338/P.L. 107-117 of January 10, 2002) authorized the Air Force to lease
up to 100 Boeing 767s (and also up to four Boeing 737s) for not more than 10 years. The leased
767s were to be modified into aerial refueling tankers and used as replacements for KC-135Es—
the oldest and least capable KC-135s. For the text of Section 8159, see Appendix A.
The leasing arrangement authorized by Section 8159 became a matter of debate, in part because it
appeared to depart from traditional acquisition processes and, some observers argued, had the
potential for weakening congressional oversight of tanker acquisition. The General Accounting
Office (now the Government Accountability Office) concluded that a lease would cost more than
procuring the aircraft.14 Other observers argued that Air Force arguments in favor of the lease
contradicted the service’s position of just a year prior regarding the urgency for replacing the KC135s.15 Congress examined the leasing arrangement in four hearings, culminating with two Senate
committee hearings in September 2003.16
Leasing and Purchasing Authority of 2003
Section 135 of the FY2004 defense authorization act (H.R. 1588/P.L. 108-136 of November 24,
2003) legislated a compromise between leasing proponents and opponents by authorizing the
Secretary of the Air Force to lease up to 20 tankers, and to use a multiyear procurement (MYP)
arrangement beginning as early as FY2004 to procure up to 80 tankers using incremental funding.
Section 135 also required the Secretary of Defense to conduct a study to identify alternative
means for maintaining and providing training for leased or purchased tankers. For the text of
Section 135, see Appendix B. Another provision of the act—Section 134—prohibited the Air
Force from retiring more than 12 KC-135Es in FY2004.
Developments in 2004 and 2005
On February 1, 2004, Deputy Secretary of Defense Paul Wolfowitz requested that the Defense
Science Board (DSB) conduct an independent analysis of the KC-135E fleet. On February 24,
2004, acting Undersecretary of Defense for Acquisition Michael Wynne directed the Air Force to
14
General Accounting Office, Military Aircraft[:] Observations on the Air Force’s Plan to Lease Aerial Refueling
Aircraft, Statement of Neal P. Curtin, Director, Defense Capabilities and Management, Testimony before the
Committee on Commerce, Science, and Transportation, United States Senate, GAO-031143T, September 3, 2003, 22
pp.
15
In 2001, the Air Force reported that the KC-135 fleet would incur “significant cost increases” between 2001 and
2040, but that “no economic crisis is on the horizon ... there appears to be no run-away cost-growth,” and that “the fleet
is structurally viable to 2040.” (KC-135 Economic Service Life Study, Technical Report F34601-96-C-0111, February
9, 2001.) 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. The service would begin recapitalization in the 2012 time
frame to meet KC-135 retirement by 2040, when the Air Force expected the KC-135 to reach the end of its service life.
16
For a discussion, see CRS Report RL32056, The Air Force KC-767 Tanker Lease Proposal: Key Issues For
Congress, by Christopher Bolkcom.
Congressional Research Service
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
conduct an aerial refueling AOA. DOD deferred using the authority granted in Section 135 until
the completion of both the DSB report and an internal investigation by the DOD Inspector
General (IG) on potential improprieties by Boeing Company executives.17
RAND Study of 2006
In 2006, RAND Corporation concluded an Analysis of Alternatives (AOA) for recapitalizing the
Air Force’s KC-135 fleet. The AOA concluded that purchasing new commercially-derived tankers
was the most cost-effective means of initially recapitalizing the fleet. 18
KC-X Competition of 2007-2008
Consistent with the findings of the 2006 RAND report, the Air Force in early 2007 released a
formal request for proposals (RFP) for the procurement of 179 new KC-X tankers.19 Boeing
responded to the RFP with the KC-767—a tanker variant of the Boeing 767-200 commercial
airliner. A team consisting of Northrop Grumman and EADS responded to the RFP with the KC30 (later called the KC-45)—a tanker version of the Airbus 330-200 commercial airliner. A March
2009 GAO report summarizes subsequent events:
On February 29, 2008, the Air Force selected a consortium consisting of Northrop Grumman
and the European Aeronautic Defense and Space Company (EADS)—the parent company of
Airbus—over Boeing to build the KC-X tankers. In March 2008, Boeing filed a bid protest
with GAO. On June 18, 2008, GAO sustained Boeing’s protest and, consistent with that
decision, recommended that the Air Force reopen discussions with the offerors, obtain
revised proposals, re-evaluate the revised proposals, and make a new source selection
decision. In July 2008, the Secretary of Defense stated that there would be a new solicitation
requesting revised proposals from industry, and the Undersecretary of Defense for
Acquisition, Technology and Logistics would replace the Air Force as the source selection
authority. DOD expected to award the new contract by December 31, 2008. However, on
September 10, 2008, the Secretary announced his decision to terminate the second
competition noting there was not enough time for DOD to complete a competition that would
be viewed as fair and competitive in such a highly-charged environment by January 2009,
when the next administration would take office. He stated that rather than handing the next
administration an incomplete and possibly contested process, the next team should review
the military requirements objectively and craft a new acquisition strategy. Further, he added
17
On April 20, 2004, Darleen A. Druyan, the former lead Air Force negotiator on the tanker lease proposal, 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 leasing arrangement between the Air Force and Boeing.( R.
Merle, “Ex-Pentagon Official Admits Job Deal,” Washington Post, April 21, 2004.) Lease supporters argued that Ms.
Druyan was a single “bad apple” and that her actions did not negate the merits of leasing Boeing 767s for use as
tankers. In February 2005, however, the DOD IG reportedly concluded that Air Force Secretary James Roche misused
his office when he lobbied the Office of Management and Budget (OMB) to support the lease concept. (R. Jeffrey
Smith, “Roche Cited for 2 Ethics Violations,” Washington Post, February 10, 2005.) The IG’s final report concluded
that four other senior DOD officials were guilty of evading Office of Management and Budget (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.( Department of Defense, Office of the Inspector General, Management Accountability Review of the
Boeing KC-767A Tanker Program, OIG-2004-171, May 13, 2005.)
18
KC-135 Recapitalization Analysis of Alternatives. Briefing to Congress, January 26-27, 2006.
19
“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 KC-X Tanker Aircraft Program: Background and Issues for Congress
that DOD plans to continue funding the program in the fiscal year 2010 through 2015
budget. The Chief of Staff of the Air Force stated that a new KC-X competition could take
the new administration between 8 months and 4 years to complete.20
For additional discussion of the RFP, Boeing’s protest, and GAO’s ruling on Boeing’s protest, see
Appendix C.
Administration’s Proposed New KC-X Acquisition Program
FY2010 Funding Request
The Administration’s proposed FY2010 defense budget requests $439.6 million in Air Force
research and development funding to begin a new program for acquiring new 179 KC-X aerial
refueling tankers.21
Number of Aircraft Contemplated
The proposed new KC-X program envisages replacing the KC-135 fleet in three stages, of which
the 179 new KC-Xs would represent the first stage, replacing roughly one-third of the KC-135
fleet. The replacement tankers to be procured in second and third stages of the effort would be
designated KC-Ys and KC-Zs.
Potential Cost of Program
A March 2009 GAO report states that the procurement cost of 179 KC-Xs could be about $35
billion,22 or an average of about $195 million per aircraft. The Air Force testified in May 2009
that it has budgeted about $3.5 billion per year for a projected procurement rate of 12 to 18
aircraft per year,23 which would equate to an average cost of about $195 million to $290 million
per aircraft. GAO states that, when the projected KC-Ys and KC-Zs are added in, the KC-135
replacement effort “is expected to involve the procurement of about 600 aircraft over 40 years at
a cost that could exceed $100 billion,”24 or an average cost of roughly $170 million per aircraft.
20
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-09326SP, March 2009, p. 156.
21
The requested funding is found in the Air Force’s research development, test and evaluation (RDT&E) account in PE
(i.e., program element, meaning line item) 0605221F, KC-X, Next Generation Aerial Refueling Aircraft.
22
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-09326SP, March 2009, p. 156.
23
Department of the Air Force, Presentation to the House Armed Services Committee Subcommittee on Air and Land
Forces, United States House of Representatives, Combined Statement of: Lieutenant General Daniel J. Darnell, Air
Force Deputy Chief Of Staff For Air, Space and Information Operations, Plans And Requirements (AF/A3/5)
Lieutenant General Mark D. Shackelford, Military Deputy, Office of the Assistant Secretary of the Air Force for
Acquisition (SAF/AQ) Lieutenant General Raymond E. Johns, Jr., Air Force Deputy Chief of Staff for Strategic Plans
And Programs (AF/A8), May 20, 2009, p. 17
24
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-09326SP, March 2009, p. 156.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Administration Plan: Competition for a Single Design
The Administration wants to build a single KC-X design, and wants to conduct a competition to
select that design. The Air Force testified in May 2009 that:
The Air Force and the Department of Defense have been considering options for conducting
a new source selection since the previous competition was terminated by the Secretary of
Defense in September 2008. It is the Air Force’s desire to begin the competition in Summer
2009 and award a contract in early 2010.25
On July 27, 2009, it was reported that:
The Pentagon has notified prospective bidders that the long-awaited draft request for
proposals for the U.S. Air Force’s KC-135 replacement competition is now planned for
release in mid-September—with a formal draft likely to follow in October. If this schedule
holds, selection of the winning replacement refueling tanker design could be in mid-2010.
That is roughly a six-month slip from earlier plans for the program.26
Expected Competitors
Boeing is expected to offer a KC-X based on either the Boeing 767 or Boeing 777, while the
Northrop/EADS team is expected to offer a KC-X based on the Airbus A330.
DOD Statements on KC-X as a High Priority
DOD states that “with the average age of the [KC-135] inventory over 45 years old, a new Tanker
has become an operational necessity as well as a financially prudent decision to meet refueling
requirements.”27 The U.S. Transportation Command testified in February 2009 that:
My number one recapitalization priority is replacing the fleet of 415 Eisenhower-era KC135s with a new platform to preserve a unique asymmetric advantage for our nation. The
KC-X with multipoint refueling allowing same sortie service to Air Force, Navy, Marine and
coalition aircraft will address the significant risk we are currently carrying in air capacity and
address further capability risks associated with an airframe that is almost 50 years old - and
will be over 80 years old by the time we recapitalize all of them. The ability to carry cargo
and operate forward with defensive systems will be a game changer when the aircraft is not
needed as a tanker. Further delays in replacing this aircraft will add significant risk to our
ability to rapidly project combat power to support the nation and our allies. It is imperative to
expedite a smart, steady reinvestment program.28
25
Department of the Air Force, Presentation to the House Armed Services Committee Subcommittee on Air and Land
Forces, United States House of Representatives, Combined Statement of: Lieutenant General Daniel J. Darnell, Air
Force Deputy Chief Of Staff For Air, Space and Information Operations, Plans And Requirements (AF/A3/5)
Lieutenant General Mark D. Shackelford, Military Deputy, Office of the Assistant Secretary of the Air Force for
Acquisition (SAF/AQ) Lieutenant General Raymond E. Johns, Jr., Air Force Deputy Chief of Staff for Strategic Plans
And Programs (AF/A8), May 20, 2009, p. 17.
26
“Tanker RFP,” Aerospace Daily & Defense Report, July 27, 2009: 1. See also Amy Butler, “Draft Tanker RFP Slips
Into Fall,” Aerospace Daily & Defense Report, July 16, 2009: 1-2; and David Morgan, “Pentagon Eyes September For
Next Step In Aerial Tanker,” Reuters.com, July 15, 2009.
27
Department of Defense, Fiscal Year 2010 Budget Request, Summary Justification, May 2009, p. 1-50.
28
Statement of General Duncan J. McNabb, USAF, Commander, United States Transportation Command, Before the
(continued...)
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
The Air Force testified in May 2009 that:
The KC-X remains the Air Force’s highest procurement and recapitalization priority. Air
refueling is critical to the entire Joint and Coalition team’s ability to project combat power
around the world. The current fleet of Eisenhower-era KC-135s averages over 48 years old.
KC-X tankers will provide increased aircraft availability, more adaptable technology, more
flexible employment options, and greater overall capability than the current fleet of KC135R/T tankers. The KC-X will be able to refuel receptacle and probe-equipped aircraft on
every mission and to receive fuel in-flight plus carry cargo, passengers, & conduct
aeromedical evacuation. The KC-X will also be equipped with defensive systems to enhance
its utility to the warfighter.
The KC-X program is based on a planned purchase of 179 aircraft and is the first of up to
three recapitalization programs to replace the entire legacy fleet. The Air Force has budgeted
approximately $3.5 billion per year for a projected annual production rate of 12-18 aircraft.
But even with this level of investment, it will take several decades to replace the 400+ KC135s. Given the age of the fleet and the time required to recapitalize, it is absolutely critical
for the Air Force to move forward now on this program.29
Industrial Base
Employment Effects as Asserted for 2007-2008 Competition
Boeing’s plan for the 2007-2008 KC-X competition called for 767s to be assembled at the Boeing
plant in Everett, WA and be converted into tankers (KC-767s) at Boeing’s plant in Wichita, KS.
Boeing claimed that 44,000 U.S. workers from 300 U.S. suppliers would be involved in building
the KC-767.30
The Northrop/EADS plan for the 2007-2008 KC-X competition called for assembling its KC-X
(originally called the KC-30, and later the KC-45) at a new plant planned for Mobile, AL.
Northrop/EADS stated that assembling KC-Xs there would create 2,000 new jobs. Northrop
originally stated that its proposal would result in 25,000 direct and indirect U.S. jobs—a
calculation that Northrop/EADS stated was based a Department of Commerce employment
model. Subsequently, Northrop raised its job estimate to approximately 48,000 direct and indirect
jobs and 230 suppliers from 49 states. Northrop based the revised estimate on feedback received
from suppliers and a Department of Labor employment model.31 In January 2008, EADS
(...continued)
House Armed Services Air & Land Forces and Seapower & Expeditionary Forces Subcommittees [Hearing] On the
State of the Command, February 25, 2009, pp 6-7.
29
Department of the Air Force, Presentation to the House Armed Services Committee Subcommittee on Air and Land
Forces, United States House of Representatives, Combined Statement of: Lieutenant General Daniel J. Darnell, Air
Force Deputy Chief Of Staff For Air, Space and Information Operations, Plans And Requirements (AF/A3/5)
Lieutenant General Mark D. Shackelford, Military Deputy, Office of the Assistant Secretary of the Air Force for
Acquisition (SAF/AQ) Lieutenant General Raymond E. Johns, Jr., Air Force Deputy Chief of Staff for Strategic Plans
And Programs (AF/A8), May 20, 2009, p. 17.
30
Boeing press release, “Boeing KC-767 Tanker Win Would Benefit Arizona Economy,” November 26, 2007.
31
Press release, “Northrop Grumman Updates Job Projections for Air Force KC-45A Program,” March 11, 2008,
available online at http://www.irconnect.com/noc/press/pages/news_releases.html?d=138001.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
announced that it would conduct final assembly of all commercial freighter versions of the Airbus
330-200 at the Mobile, AL, facility, increasing the potential number of new jobs that would be
created at Mobile if the Northrop/EADS KC-X were selected. 32
Domestic Content as Discussed in 2007-2008 Competition
In the 2007-2008 KC-X competition, some observers questioned whether the Northrop/EADS
proposal satisfied requirements in the Buy American Act, 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. 33 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. 34
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 in the 2007-2008 competition would have
been manufactured in the United States.35 Northrop/EADS stated that “at least 58 percent” of its
proposal in the 2007-2008 KC-X competition would be comprised of products manufactured by
U.S.36 For a listing of Boeing 767 and Airbus A330 suppliers, see Appendix D.
FY2009 Legislative Provisions
The FY2009 defense authorization act (S. 3001/P.L. 110-417 of October 14, 2008) contained
three provisions relating to Air Force tanker aircraft:
•
Section 131 amended an earlier provision—Section 135(b) of the FY2007
defense authorization act (H.R. 5122/P.L. 109-364 of October 17, 2006)—to
require the Air Force to maintain at least 74 of the KC-135Es that are retired by
the Air Force after September 30, 2006, in a condition that would allow recall of
that aircraft to future service in the Air Force Reserve, Air National Guard, or
active forces aerial refueling force structure. (Section 135(b) had originally
required that each KC-135E retired after September 30, 2006, be maintained in
such a condition.)
•
Section 132 repealed Section 135 of the FY2004 defense authorization act (H.R.
1588/P.L. 108-136 of November 24, 2003)—the provision discussed earlier (see
32
Jen DiMascio, “Airbus Vows to Boost Business in Alabama If it Can Make Tankers There,” Defense Daily, January
15, 2008. Some observers have estimated a market for 200 Airbus 330-200 freighters over the next 10 years. As of
January 2008, Airbus had orders for approximately 60 aircraft. (“Airbus 330,” Jane’s All the World’s Aircraft,
February 19, 2008, available online at http://www.janes.com.)
33
For more information on the Buy American Act, see CRS Report 97-765, The Buy American Act: Requiring
Government Procurements to Come from Domestic Sources, by John R. Luckey.
34
FAR § 25.101.
35
Eric Rosenburg, “Boeing Duels for Tanker Deal,” Seattle Post-Intelligencer, September 30, 2007, available online at
http://seattlepi.nwsource.com/business/333751_tanker01.html.
36
“Northrop Grumman’s KC-45 Tanker: Making the Right Choice,” January 25, 2007, available online at
http://www.northropgrumman.com/kc45/benefits/choice.html.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
“Leasing and Purchasing Authority of 2003”) that authorized the Secretary of the
Air Force to lease up to 20 tankers, and to use a multiyear procurement (MYP)
arrangement beginning as early as FY2004 to procure up to 80 tankers using
incremental funding.
•
Section 133 required the Secretary of Defense to submit a report to the
congressional defense committees by March 1, 2009, regarding the KC-X
competition was terminated on September 10, 2008.
The text of Section 133 is as follows:
SEC. 133. REPORTS ON KC-(X) TANKER AIRCRAFT REQUIREMENTS.
(a) Report Required- Not later than March 1, 2009, the Secretary of Defense shall submit to
the congressional defense committees a report regarding the competition for the KC-(X)
tanker aircraft that was terminated on September 10, 2008. The report shall include the
following:
(1) An examination of original requirements for the KC-(X) tanker aircraft, including an
explanation for the use of the KC-135R tanker aircraft as the baseline for the KC-(X) tanker
aircraft.
(2) A summary of commercial derivative or commercial off-the-shelf aircraft available as
potential aerial refueling platforms using aerial refueling capabilities (such as range, offload
at range, and passenger and cargo capacity) in each of the following ranges:
(A) Maximum gross take-off weight that is less than 300,000 pounds.
(B) Maximum gross take-off weight in the range from 301,000 pounds maximum gross takeoff weight to 550,000 pound maximum gross take-off weight.
(C) Maximum gross take-off weight in the range from 551,000 pounds maximum gross takeoff weight to 1,000,000 pound maximum gross take-off weight.
(D) Maximum gross take-off weight that is greater than 1,000,000 pounds.
(b) Reassessment Required- The Secretary of Defense shall reassess the requirements for
aerial refueling that were validated by the Joint Requirements Oversight Council on
December 27, 2006. Not later than 30 days after the reassessment, the Secretary shall submit
to the congressional defense committees a report containing the complete results of the
reassessment.
Issues for Congress
The issue for Congress in FY2010 is whether to approve, reject, or modify the Administration’s
request for FY2010 research and development funding for the new KC-X program, and whether
to take any action to define the acquisition strategy for the new KC-X program. Key acquisitionstrategy issues include whether to procure one KC-X design or two, and (if only one design is to
be procured, as the Administration prefers), how to structure and conduct the competition for
determining the winning design.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Build One Design Or Two?
The Administration wants to build only one KC-X design. Some observers, including some
Members of Congress, have expressed interest building two designs (i.e., both a Boeing and
Northrop/EADS design).
Summary of Arguments
The Administration and other supporters of building a single design could argue one or more of
the following:
•
Building two designs would increase KC-X development costs by requiring the
development of two aircraft, increase KC-X procurement costs by splitting the
production learning curve for the program between two sources, and increase
KC-X life-cycle operating and support costs by requiring the Air Force to
maintain two sets of KC-X training, maintenance, and support, facilities. Air
Force Secretary Michael Donley testified to the Senate Appropriations
Committee on June 4, 2009, that procuring two KC-X designs would nearly
double the program’s estimated $35 billion procurement cost.37 If two KC-X
designs are built, the Air Force for some time will bear the costs of operating four
different types of tankers—KC-135s, KC-10s, and the two KC-X designs.
•
KC-X procurement costs will be constrained (and KC-X production quality and
schedule adherence will be maintained) with production of a single design
because the KC-X builder will understand that its performance in building KCXs will influence DOD thinking on whether to use that firm to build KC-Ys and
KC-Zs, or to execute other DOD acquisition programs. Since tankers are based
on commercial airliners, building a single KC-X design now will not prevent
DOD from holding an effective competition in future years for KC-Ys and KCZs.
•
DOD cannot afford to procure more than about 18 KC-Xs per year without
reducing funding for other defense programs, so producing a second KC-X
design for the purpose of being able to produce more than 18 KC-Xs per year is
not important.
•
DOD has learned lessons from the 2007-2008 KC-X competition, and
consequently will be able to structure and conduct a new KC-X competition that
is fair to both sides and whose result, if challenged, will be upheld by GAO.
Supporters of building two designs could argue one or more of the following:
•
Building two designs would permit annual competition in the production of KCXs, which will constrain KC-X procurement costs (and ensure production quality
and schedule adherence) more effectively than using single source to produce all
KC-Xs. 38 The Navy is contemplating continued production of its two Littoral
37
See, for example, Marina Malenic, “Air Force Says Tanker Split But Would Nearly Double Program Cost,” Defense
Daily, June 5, 2009: 1-2.
38
Among those who make this argument is Jacques Gansler, who served as Under Secretary of Defense for
Acquisition, Technology and Logistics during the Clinton Administration, believes competitive dual sourcing is a good
(continued...)
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Combat Ship (LCS) designs in part for this reason.39 The 2006 RAND analysis of
alternatives for the KC-X found that, “a mixed [Air Force tanker] fleet ... has
(...continued)
fit for the KC-X program, since both competing aircraft already have established worldwide logistics networks. Gansler
in 2006 compared 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 that the ten single-source DOD acquisition
programs had an average cost increase of 46%, while the seven competitively produced commercial airliners had an
average cost decrease of 16% over the life of the program. For the KC-X program, 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. (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.) 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. (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.)
John Lehman, who was Secretary of the Navy during the Reagan Administration and is a strong supporter of using
competition in procurement, cited Gansler’s study in a June 8, 2009, opinion column advocating the use of competition
in the KC-X program. The column also stated:
One such opportunity [for improving defense acquisition] is the current competition to replace the 45-year-old
U.S. Air Force tanker fleet. This is a source selection between Boeing and Northrop Grumman conducted to award
another 40 years of competition-free monopoly to the winner of the beauty contest. Under these Pentagon rules,
the contestants are judged on which can produce the best fantasy about how low their prices will be in future
decades, free of competition, producing their wondrous but still unbuilt airplane....
The air tanker program is a perfect candidate to return to the competitive cost control of yore.
Bureaucrats will argue against it for the following reasons:
•
With a planned buy of only 179 it is not big enough to split. No. The Navy got huge benefits
from competing frigates, destroyers, cruisers and submarines with total numbers far lower than
the tanker.
•
Split competition requires freezing designs and fixed-price contracts, which prevents change
orders. Yes.
•
Operating and maintaining two types of aircraft is more difficult and costly than one. No. The
Air Force proved that wrong when they made the case for expeditionary air wings now
successfully operating five or more different aircraft types.
•
The two candidates, the A330 and B767 derivatives, are too different to compete apples to
apples. No. It is easy to normalize range/payload/etc. to compete fairly every year with
different airplanes.
•
Managing two contractors is more work than one. Yes.
In such a common-sense procurement, the government gets huge benefits: Just as in the “Toyota
culture” of constant innovation, the two contractors will be under constant pressure to improve
ideas and productivity, knowing their competitor is doing the same, and the price can be expected
to drop each year.
In past successful split programs, the final design was locked, so the contractors could bid fixedprice. As technology advanced, there were block upgrades after two to five years where the design
specifications were modified to incorporate innovations; the new design was frozen again until the
next block upgrade.
(John Lehman, “When 2 Is Cheaper Than 1,” DefenseNews.com, June 8, 2009.)
For more on the LCS program, see CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background,
Oversight Issues, and Options for Congress, by Ronald O'Rourke
39
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
comparable cost-effectiveness, so there is no reason to exclude a priori an AirbusBoeing mixed buy on cost-effectiveness grounds.”40
•
Producing two KC-X designs will enhance DOD’s potential for using
competition in the future for the procurement of KC-Ys and KC-Zs,
•
Building two designs would make possible a combined annual KC-X production
rate at the Boeing and Northrop/EADS facilities of up to 36 aircraft per year,
which would permit the Air Force to replace KC-135s more quickly, reducing the
risk that KC-135s might reach the end of their service lives before they are
replaced, and reducing more quickly KC-135 maintenance costs.
•
In light of past difficulties in structuring and conducting a KC-X competition that
is fair to both sides, building both designs would permit the KC-X program to
proceed more expeditiously.
Potential Intermediate Alternative Building One Design at Two Sites
An alternative to building one design or two would be to have the two competitors build a single
design—an approach that the Navy uses for the production of surface combatants and attack
submarines. Under this approach, DOD would select a single design to build (either the Boeing
design or the Northrop/EADS design), and that design would be built by both Boeing and
Northrop/EADS. Advocates could argue that this approach would avoid the added development
and operation and support costs associated with building two designs, and that if each KC-X were
produced jointly by Boeing and Northrop/EADS (similar to how each Virginia-class attack
submarine is built jointly by General Dynamics and Northrop),41 it could avoid some of the added
costs of splitting the production learning curve between two sites. Advocates could also argue that
having both firms build a single design would provide a potential for building up to 36 KC-Xs per
year, should policymakers determine that such a rate is affordable. 42
Terms for a Competition
If a single KC-X design is to be built, an additional issue for Congress is how DOD should
structure and conduct the competition so as to ensure that it fair to both sides and will withstand
any protest by the losing bidder.
Lowest Price vs. Best Value
One issue is whether DOD should select the winning design on the basis of lowest cost (and
technically acceptable) or best value. The question is significant because some observers believe
that a selection based on lowest cost might be more likely to favor one design, while a selection
based on best value might be more likely to favor another. Advocates of a competition based on
40
Michael Kennedy et al., Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary, RAND
Corporation, 2006, p. 12.
41
For a discussion of the joint production approach for Virginnia-class attack submarines, see CRS Report RL32418,
Navy Attack Submarine Procurement: Background and Issues for Congress, by Ronald O'Rourke
42
For an article discussing the possibility of building one KC-X design at multiple sites, see John M. Doyle, “Rep.
Taylor Suggests Multiple Tanker Assembly Sites,” Aerospace Daily & Defense Report,” May 20, 2009: 5.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
lowest cost might argue that it would be easier to design and implement, and easier to defend in
the event of a protest.43 Advocates of a competition based on best value might argue that it would
have a higher likelihood of taking into account considerations that are not strictly cost related, but
nevertheless important to meeting Air Force requirements for its future tanker fleet
Performance Requirements and Evaluation Factors
An additional question regarding the terms of the competition concerns the performance
requirements for the KC-X and the evaluation factors that will be used in the KC-X competition.
A March 6, 2009, news report stated:
The restart of the Air Force next-generation tanker competition took a major step forward
last week when the Joint Requirements Oversight Council revalidated the program’s
requirements, according to defense officials.
43
A May 1, 2009, news article that provided a perspective in favor of basing the decision on lowest cost stated:
The Pentagon should set price above bonus capabilities when selecting a winner in the $35 billion competition to
build a new fleet of aerial-refueling aircraft, the military’s former top acquisition official said this week in his last
hours on the job.
Meeting with reporters on his last day on the job—April 27—Pentagon acquisition chief John Young said this
method would generate less controversy and be less burdensome on taxpayers. Young’s successor, Ashton Carter,
took the oath of office later that day.
“The government could possibly go and successfully have a best-value competition on tanker, but not with 800
requirements, almost all of which are tradeable,” Young said during the April 27 meeting at the Pentagon. “To
successfully do that, the government is going to have to articulate ... a smaller set of requirements and be crystal
clear about the relative priorities of those requirements.”
Last fall, a military official laid out two courses of action the Pentagon could take when awarding a contract. The
first is called “lowest price, technically acceptable,” and the second, “best value.”
The first strategy requires a bidder to meet a number of threshold requirements. If those benchmarks are met, the
final decision is made based on price. The second strategy requires bidders to meet the threshold requirements and
a number of supporting requirements. The decision is made by who meets the most secondary requirements.
Since last fall, Air Force requirements and acquisition officials have been working to whittle down the massive list
of tanker requirements. A lack of clarity in the lengthy list is what ultimately led the Government Accountability
Office to sustain a protest filed by Boeing, which lost the competition to Northrop Grumman-EADS in February
2008.
In March, Inside the Air Force reported that the service had nearly halved the number of “evaluation elements” it
will use when evaluating proposals for the KC-X tanker.
“I think the government can successfully go down that route and succeed, but there’s no question it could be
controversial,” Young said this week.
If both competitors meet the desired requirements, the Pentagon should ultimately choose the less expensive
proposal, he said.
“If they are technically acceptable—[and] meet the requirements—ask people for their best price to meet those
requirements and pick [a winner] that way,” Young said. “That gets the best deal for the taxpayer.
“I’m struggling to see what the downside of that is,” he continued. “I think, given the clearly demonstrated
propensity for controversy in this space, you may have to go to those strategies.”
Taking his views a step further, Young said he penned a memo to acquisition officials noting this best-price
strategy could prove useful when evaluating future competitions. In some cases, the Pentagon is paying more for
capabilities it does not need.
“Once I have something that meets my articulated, prioritized technical requirements, I ought to go get the best
price for the taxpayer,” he said. “What is the downside to that?”
(Marcus Weisgerber, “Young Claims USAF Should Make Price Top Factor In KC-X Competition,” Inside the Air
Force, May 1, 2009.)
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The JROC—chaired by Vice Chairman of the Joint Chiefs of Staff Marine Corps Gen. James
Cartwright—discussed the KC-135 tanker replacement program during a Feb. 26 meeting at
the Pentagon, according to sources. At press time (March 5), a JROC memorandum had not
been signed, according to one defense official.
The JROC must validate a requirement before a major, high-budget program enters the
acquisition phase.
“The requirement didn’t change,” Air Mobility Command chief Gen. Arthur Lichte told
reporters last week when speaking about the tanker competition, not the JROC meeting....
Over the last few months, AMC requirements officials have been refining a list of more than
800 sub-requirements that were part of the original request for proposals
“We’ve gone back over and scrubbed them so as to make sure that, when we put a
requirement out there, we didn’t make too many sub-requirements,” Lichte said at the same
conference in Florida.
“We want to make sure we’re specific where we need to be specific [and] consolidate some
of those requirements,” he said during a Feb. 26 briefing.
For instance, “if we wanted defensive systems, we could describe that in maybe 25 different
requirements,” Lichte said, noting a cleaned -up version could instead state the new tanker
needs a Large Aircraft Infrared Countermeasure system.
“I think we’ve got [the requirements] to the right level and now we’re waiting for OSD to
make the final decision and to go forward with whatever acquisition strategy that we’re
going to have,” he said. 44
A March 20, 2009, news report stated:
The Air Force has simplified the evaluation factors it plans to use when it re-examines bids
for the KC-X next-generation tanker replacement program, according to service officials.
This comes as Defense Secretary Robert Gates this week reaffirmed his position against
buying two different aerial refueling aircraft.
Service officials hope trimming more than 800 “evaluation elements” will “clarify and
condense” the new request for proposals, making it “more understandable to solicitors,” one
service official said this week.
“We’re somewhere around half of the evaluation elements that we had before,” the official
said. “I think industry will find a much clearer depiction of what it is we’re asking for, but
the basic requirements have not changed.”
Air Force officials briefed the Joint Requirements Oversight Council late last month on the
service’s process for clarifying and condensing evaluation factors, according to the official.
The panel reaffirmed the fundamental next-generation tanker requirements as stated in the
analysis of alternatives and capabilities development document remain sound.
“Nothing has fundamentally changed,” the official said.
44
Marcus Weisgerber, “JROC Revalidates Air Force KC-X Tanker Program Requirements,” Inside the Air Force,
March 6, 2009.
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At press time (March 19), the group has not issued a JROC memorandum.45
Air Force or OSD Management of Competition
An additional question is whether the KC-X competition will be managed by the Air Force or by
the Office of the Secretary of Defense. 46
Legislative Activity for FY2010
FY2010 Funding Request
The Administration’s proposed FY2010 defense budget requests $439.6 million in Air Force
research and development funding to begin a new program for acquiring new 179 KC-X aerial
refueling tankers. The requested funding is found in the Air Force’s research development, test
and evaluation (RDT&E) account in PE (i.e., program element, meaning line item) 0605221F,
KC-X, Next Generation Aerial Refueling Aircraft.
FY2010 Defense Authorization Bill (H.R. 2647/S. 1390)
House
The House Armed Services Committee, in its report (H.Rept. 111-166 of June 18, 2009) on H.R.
2647, recommends approving the Administration’s request for $439.6 million in research and
development funding for the KC-X program. (Page 190, line 88) The committee’s report states:
KC–X
The committee notes that the KC–X program is planned to replace the Department of the Air
Force’s KC–135 aerial refueling tanker fleet, which now has an average aircraft age of 47
years. The committee also notes that the KC–X program has been subject to delays resulting
from contractor protests to the Government Accountability Office, and believes that further
delay in the acquisition of the KC–X aerial refueling tanker could jeopardize Department of
Defense requirements for global mobility. Accordingly, the committee strongly urges the
Department to include the necessary funds in its Future Years Defense Program to rapidly
conduct source selection and to award a KC–X aerial refueling tanker contract as
expeditiously as possible. (Pages 100-101)
The report also states:
KC–X tanker replacement program
45
Marcus Weisgerber, “Air Force Simplifies KC-X Evaluation Factors That Will Appear In RFP,” Inside the Air
Force, March 20, 2009.
46
For an article discussing the issue of who will manage the KC-X competition, see Amy Butler, “USAF Could Lose
Oversight Of Next Tanker Duel,” Aerospace Daily & Defense Report, May 18, 2009: 4.
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The committee believes that the Department of Defense should implement measures to
ensure competition throughout the lifecycle of the KC–X tanker replacement program to
ensure that the program delivers the best capability to the warfighter and the best value to the
U.S. Government. Accordingly, the committee urges the Secretary of Defense to utilize as
many of the competitive measures specified in subsection (b) of section 202 of the Weapon
Systems Acquisition Reform Act of 2009 (Public Law 111–23) as is practicable when
developing the acquisition strategy and source selection plan. The committee notes that the
intent of section 202 is to require the Secretary of Defense to plan for persistent competition
to control program costs and improve the reliability of the KC–X tanker acquired by the
Department throughout the program’s lifecycle, including development, procurement, and
sustainment. (Page 203)
Section 1032 of H.R. 2647 requires Secretary of Defense shall submit to the congressional
defense committees a report on the force structure findings of the 2010 Quadrennial Defense
Review (QDR). The report is to include the analyses used to determine and support the findings
on force structure, and description of any changes from the previous quadrennial defense review
to the minimum military requirements for major military capabilities. Regarding Section 1032,
the committee’s report states:
The committee expects that the analyses submitted will include details on all elements of the
force structure discussed in the QDR report, and particularly the following:...
(3) A description of the factors that informed decisions regarding aerial refueling aircraft
force structure, including: the modeling, simulations, and analyses used to determine the
number and type of aerial refueling aircraft necessary to meet the national defense strategy;
the force sizing constructs used including peak demand; the number and type of aerial
refueling aircraft necessary to meet the national security objective; the changes made, and
supporting rationale for the changes made, to the aerial refueling aircraft force structure from
that proposed in MCS–05; and the operational risks associated with the planned aerial
refueling aircraft fleet, based on requirements of combatant commanders, and measures
planned to address those risks;... (Page 388)
Section 1044 of H.R. 2647 would repeal Section 1081 of the FY2008 defense authorization act
(H.R. 4986/P.L. 110-181 of January 28, 2008), which directed the Secretary of the Air Force to
conduct a pilot program of at least five years’ duration to assess the feasibility and advisability of
utilizing commercial fee-for-service air refueling tanker aircraft for Air Force operations.
Regarding Section 1044, the committee’s report states:
The committee is aware that the Air Force has conducted initial analysis to develop the
program structure for the pilot program, based on two diverse options, and has received
feedback from potential providers in the aviation industry. However, based on its review of
data gathered to date, the committee is concerned that the pilot program will be a costly
alternative with little operational benefit and is not in the best interest of the Air Force. (Page
391)
The committee’s report also states:
Fee for Service Refueling
The budget request contained $10.0 million for a fee-for-service refueling pilot program. The
committee recommends eliminating the funds for the pilot program.
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A provision is included elsewhere in this title [Section 1044] that would repeal the
requirement to conduct a fee-for-service pilot program. (Page 284; see also page 282 for the
recommended line-item reduction)
Senate
Division D of S. 1390 as reported by the Senate Armed Services Committee (S.Rept. 111-35 of
July 2, 2009) presents the detailed line-item funding tables that in previous years have been
included in the Senate Armed Services Committee’s report on the defense authorization bill.
Division D recommends approving the Administration’s request for $439.6 million in research
and development funding for the KC-X program. (Page 687 of the printed bill, line 88) The
committee’s report states:
KC–X tanker replacement program
The committee regards the need to modernize the current fleet of KC–135 aerial refueling
tanker aircraft as a vital national security priority and supports the KC-X tanker
recapitalization program, as well as efforts by the Air Force both to maintain the existing
fleet and augment capability with aerial fee-for-service, if it proves cost-effective under the
pending pilot program. Given the troubled history of the program, the committee expects that
the Department of Defense will pursue a process of procuring replacement tankers that will
ensure that the joint warfighter receives the best capability at the best price. The committee
believes that this can only be achieved by an acquisition strategy that does not pre-determine
the outcome of the competition and a competition that is fair and open. In addition, the
committee believes that, in accordance with the principles of the Weapon Systems
Acquisition Reform Act of 2009 (Public Law 111–23) and as a means of improving
contractor performance, the Department of Defense must ensure that the acquisition strategy
of the KC–X program includes measures that ensure competition, or the option of
competition, throughout the life cycle of the program, where appropriate and cost-effective.
(Page 99)
Section 1058 of S. 1390 would amend Section 1081 of the FY2008 defense authorization act
(H.R. 4986/P.L. 110-181 of January 28, 2008), which directed the Secretary of the Air Force to
conduct a pilot program of at least five years’ duration to assess the feasibility and advisability of
utilizing commercial fee-for-service air refueling tanker aircraft for Air Force operations. The
committee’s report states:
The committee recommends a provision [Section 1058] that would provide an exemption to
the 5–year limitation on multiyear contracts and make other minor changes to enable the Air
Force to implement a fee-for-service air refueling support pilot program.
Section 1081 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law
110–181) directed the Secretary of the Air Force to conduct a pilot program to assess the
feasibility and advisability of utilizing commercial fee-for-service air refueling tanker
aircraft for Air Force operations.
The Air Force has been working with the private sector to implement this pilot program. The
Air Force has informed the committee that results from their formal request for information
process indicate that a multiyear contract that exceeds the current 5-year limit would be
necessary to promote adequate competition and reduce program costs. The Air Force needs
to have authority to make commitments for the 8-year pilot program in order to issue a
request for proposal. The Air Force also needs to be able to offer carriers insurance coverage
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similar to that provided to civil reserve air fleet (CRAF) program partners. This provision
would provide the Air Force with those authorities. (Page 179)
The text of Section 1058 is as follows:
SEC. 1058. MULTIYEAR CONTRACTS UNDER PILOT PROGRAM ON
COMMERCIAL FEE-FOR-SERVICE AIR REFUELING SUPPORT FOR THE AIR
FORCE.
(a) Multiyear Contracts Authorized- The Secretary of the Air Force may enter into one or
more multiyear contracts, beginning with the fiscal year 2011 program year, for purposes of
conducting the pilot program on utilizing commercial fee-for-service air refueling tanker
aircraft for Air Force operations required by section 1081 of the National Defense
Authorization Act for Fiscal Year 2008 (P.L. 110-181; 122 Stat. 335).
(b) Compliance With Law Applicable to Multiyear Contracts- Any contract entered into
under subsection (a) shall be entered into in accordance with the provisions of section 2306c
of title 10, United States Code, except that—
(1) the term of the contract may not be more than 8 years;
(2) notwithstanding subsection 2306c(b) of title 10, United States Code, the authority under
subsection 2306c(a) of title 10, United States Code, shall apply to the fee-for-service air
refueling pilot program;
(3) the contract may contain a clause setting forth a cancellation ceiling in excess of
$100,000,000; and
(4) the contract may provide for an unfunded contingent liability in excess of $20,000,000.
(c) Compliance With Law Applicable to Service Contracts- A contract entered into under
subsection (a) shall be entered into in accordance with the provisions of section 2401 of title
10, United States Code, except that—
(1) the Secretary shall not be required to certify to the congressional defense committees that
the contract is the most cost-effective means of obtaining commercial fee-for-service air
refueling tanker aircraft for Air Force operations; and
(2) the Secretary shall not be required to certify to the congressional defense committees that
there is no alternative for meeting urgent operational requirements other than making the
contract.
(d) Limitation on Amount- The amount of a contract under subsection (a) may not exceed
$999,999,999.
(e) Provision of Government Insurance- A commercial air operator contracting with the
Department of Defense under the pilot program referred to in subsection (a) shall be eligible
to receive government provided insurance pursuant to chapter 443 of title 49, United States
Code, if commercial insurance is unavailable on reasonable terms and conditions.
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Appendix A. Section 8159 of FY2002 Defense
Appropriations Act
The text of section 8159 of the FY2002 defense appropriations act (H.R. 3338/P.L. 107-117 of
January 10, 2002) is as follows:
SEC. 8159. MULTI-YEAR AIRCRAFT LEASE PILOT PROGRAM. (a) The Secretary of
the Air Force may, from funds provided in this Act or any future appropriations Act,
establish and make payments on a multi-year pilot program for leasing general purpose
Boeing 767 aircraft and Boeing 737 aircraft in commercial configuration.
(b) Sections 2401 and 2401a of title 10, United States Code, shall not apply to any aircraft
lease authorized by this section.
(c) Under the aircraft lease Pilot Program authorized by this section:
(1) The Secretary may include terms and conditions in lease agreements that are customary
in aircraft leases by a non-Government lessor to a non-Government lessee, but only those
that are not inconsistent with any of the terms and conditions mandated herein.
(2) The term of any individual lease agreement into which the Secretary enters under this
section shall not exceed 10 years, inclusive of any options to renew or extend the initial lease
term.
(3) The Secretary may provide for special payments in a lessor if the Secretary terminates or
cancels the lease prior to the expiration of its term. Such special payments shall not exceed
an amount equal to the value of 1 year’s lease payment under the lease.
(4) Subchapter IV of chapter 15 of title 31, United States Code shall apply to the lease
transactions under this section, except that the limitation in section 1553(b)(2) shall not
apply.
(5) The Secretary shall lease aircraft under terms and conditions consistent with this section
and consistent with the criteria for an operating lease as defined in OMB Circular A-11, as in
effect at the time of the lease.
(6) Lease arrangements authorized by this section may not commence until:
(A) The Secretary submits a report to the congressional defense committees outlining the
plans for implementing the Pilot Program. The report shall describe the terms and conditions
of proposed contracts and describe the expected savings, if any, comparing total costs,
including operation, support, acquisition, and financing, of the lease, including modification,
with the outright purchase of the aircraft as modified.
(B) A period of not less than 30 calendar days has elapsed after submitting the report.
(7) Not later than 1 year after the date on which the first aircraft is delivered under this Pilot
Program, and yearly thereafter on the anniversary of the first delivery, the Secretary shall
submit a report to the congressional defense committees describing the status of the Pilot
Program. The Report will be based on at least 6 months of experience in operating the Pilot
Program.
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(8) The Air Force shall accept delivery of the aircraft in a general purpose configuration.
(9) At the conclusion of the lease term, each aircraft obtained under that lease may be
returned to the contractor in the same configuration in which the aircraft was delivered.
(10) The present value of the total payments over the duration of each lease entered into
under this authority shall not exceed 90 percent of the fair market value of the aircraft
obtained under that lease.
(d) No lease entered into under this authority shall provide for—
(1) the modification of the general purpose aircraft from the commercial configuration,
unless and until separate authority for such conversion is enacted and only to the extent
budget authority is provided in advance in appropriations Acts for that purpose; or
(2) the purchase of the aircraft by, or the transfer of ownership to, the Air Force.
(e) The authority granted to the Secretary of the Air Force by this section is separate from
and in addition to, and shall not be construed to impair or otherwise affect, the authority of
the Secretary to procure transportation or enter into leases under a provision of law other
than this section.
(f) The authority provided under this section may be used to lease not more than a total of
100 Boeing 767 aircraft and 4 Boeing 737 aircraft for the purposes specified herein.
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Appendix B. Section 135 of FY2004 Defense
Authorization Act
The text of Section 135 of the FY2004 defense authorization act ((H.R. 1588/P.L. 108-136 of
November 24, 2003) is as follows:
SEC. 135. PROCUREMENT OF TANKER AIRCRAFT.
(a) LEASED AIRCRAFT- The Secretary of the Air Force may lease no more than 20 tanker
aircraft under the multiyear aircraft lease pilot program referred to in subsection (d).
(b) MULTIYEAR PROCUREMENT AUTHORITY- (1) Beginning with the fiscal year 2004
program year, the Secretary of the Air Force may, in accordance with section 2306b of title
10, United States Code, enter into a multiyear contract for the purchase of tanker aircraft
necessary to meet the requirements of the Air Force for which leasing of tanker aircraft is
provided for under the multiyear aircraft lease pilot program but for which the number of
tanker aircraft leased under the authority of subsection (a) is insufficient.
(2) The total number of tanker aircraft purchased through a multiyear contract under this
subsection may not exceed 80.
(3) Notwithstanding subsection (k) of section 2306b of title 10, United States Code, a
contract under this subsection may be for any period not in excess of 10 program years.
(4) A multiyear contract under this subsection may be initiated or continued for any fiscal
year for which sufficient funds are available to pay the costs of such contract for that fiscal
year, without regard to whether funds are available to pay the costs of such contract for any
subsequent fiscal year. Such contract shall provide, however, that performance under the
contract during the subsequent year or years of the contract is contingent upon the
appropriation of funds and shall also provide for a cancellation payment to be made to the
contractor if such appropriations are not made.
(c) STUDY OF LONG-TERM TANKER AIRCRAFT MAINTENANCE AND TRAINING
REQUIREMENTS- (1) The Secretary of Defense shall carry out a study to identify
alternative means for meeting the long-term requirements of the Air Force for—
(A) the maintenance of tanker aircraft leased under the multiyear aircraft lease pilot program
or purchased under subsection (b); and
(B) training in the operation of tanker aircraft leased under the multiyear aircraft lease pilot
program or purchased under subsection (b).
(2) Not later than April 1, 2004, the Secretary of Defense shall submit a report on the results
of the study to the congressional defense committees.
(d) MULTIYEAR AIRCRAFT LEASE PILOT PROGRAM DEFINED- In this section, the
term `multiyear aircraft lease pilot program’ means the aerial refueling aircraft program
authorized under section 8159 of the Department of Defense Appropriations Act, 2002
(division A of P.L. 107-117; 115 Stat. 2284).
(e) SENSE OF CONGRESS- It is the sense of Congress that, in budgeting for a program to
acquire new tanker aircraft for the Air Force, the President should ensure that sufficient
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budgetary resources are provided to the Department of Defense to fully execute the program
and to further ensure that all other critical defense programs are fully and properly funded.
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Appendix C. KC-X Competition of 2007-2008
This appendix provides additional information and discussion on the KC-X competition of 20072008.
Request for Proposal
In January 2007, the Air Force released its formal 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. 47 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
aircraft48
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
47
“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.
48
Ibid.
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•
Factor 3—Past Performance
•
Factor 4—Cost/Price
•
Factor 5—Integrated Fleet Air Refueling Assessment49
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.”50
Boeing Protest
Air Force officials debriefed both Boeing and Northrop 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. 51 On March 26, 2008, both the Air Force and Northrop separately filed motions for the
GAO to dismiss portions of Boeing’s protest.52 GAO rejected these motions. 53 Work on the KC45A stopped while the GAO considered the protest.54
Boeing’s protest was 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.55
Boeing stated that both teams received identical ratings across the five evaluation areas in the
KC-X competition. Boeing claimed 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.56 In response to Boeing’s protest, 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
49
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.
50
Ibid.
51
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.
52
Andrea Shalal-Esa, “Air Force, Northrop Ask GAO to Dismiss Boeing Protest,” Reuters, March 26, 2008.
53
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.
54
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.
55
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.
56
Ibid.
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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.57
GAO Ruling on Protest
On June 18, 2008, the GAO announced that it had completed its examination of DOD’s decision
to award Northrop the KC-X contract (for 80 aircraft) and found that Boeing’s complaint had
merit.58 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.
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 (i.e., by August 17, 2008).59
GAO made clear that it was not passing judgment on the relative merits of the proposed aircraft.
Instead, GAO stated that it assessed whether the Air Force complied with statutory and regulatory
requirements in evaluating the competing 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 nonmandatory 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 fixed-wing, 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 satisfied a key operational utility parameter, yet the Air Force later determined that the
57
“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.
58
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.
59
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.
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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 contract improperly in 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.60
7.
The Air Force improperly adjusted upward Boeing’s estimate of the non-recurring (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.
60
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.
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Appendix D. Boeing 767 and Airbus 330 Suppliers
Table D-1. Boeing 767 Suppliers
Supplier
Aero Vodochody
Parent
Country
Czech Republic
Alenia
Italy
Avcorp
Canada
Boeing Canada
Canada
Bombardier (Learjet)
Bombardier (Canadair)
Daido Steel
Embraer
Fuji
Fujukawa Aluminum
GKN Aerospace
(Westland Aerospace,
formerly BP Chemicals;
with Lucas Aertspace
Cargo Systems)
Goodrich (Cleveland
Pneumatic)
Hitco Carbon
Composites
IPTN
Kaman Aerospace
Kawasaki Heavy
Industries
Korean Aerospace
(Samsung)
LMI Aerospace
Lunn Industries (Alcore)
Menasco Aerospace
Mitsubishi Heavy
Industries
Nihon Kokuki (Nippi)
PPG Industries
Shin Meiwa
Canada
Canada
Japan
Brazil
Japan
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
steel sheets
flap supports
wing fairings, main landing gear doors
forgings and extensions
United Kingdom
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
Republic of Korea
United States
United States
United States
Japan
Japan
United States
Japan
center-fuselage body panels, exit hatches, wing in-spar ribs
wing trailing edges
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.
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Table D-2. Airbus 330/350 Suppliers61
Supplier
Parent
Domicile
Component(s)
Advanced Technology
and Research (ATR)
Corp.
United States
graphite epoxy underwing fairings (for Aerostructures
Corp.)
Aerostructures Corp.
(Now Vought)
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 DASAEADS)
AHF-Ducommun
United States
leading edge wing skins
Boeing (Aerospace
Technologies of
Australia)
United States
main gear doors, floor support structure, pressurization
bulkhead between passenger cabin, main landing gear
compartment (for Aérospatiale-EADS)
Bombardier (Canadair)
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
Aérospatiale-EADS), inboard front spar assembly (for BAE)
BTR Aerospace
Canada
main landing gear fairings
CC Industries
United States
Ciba-Geigy Corp.
Federal Republic of
Germany
Dowty Aerospace
Canada
Canada
Dowty Rotol (with
Cleveland Pneumatic)
United Kingdom
outer rear spar, main landing gear support, ribs (for BAE)
HTA/6376 prepreg on wings
center landing gear
design and manufacture of main landing gear
Fairchild Dornier
Federal Republic of
Germany
fuselage and wing components, interior panels
Fischer Advanced
Composite Components
Federal Republic of
Germany
interior components (for DASA-EADS)
GKN Aerospace
(formerly BP Advanced
Materials)
United Kingdom
composite panels (for BAE)
General Engineering
Unknown
side stay fairing
Hawker de Havilland,
Australia
Australia
wingtips, winglets, wing root fillet, ribs (for BAE)
Heath Techna
Aerospace
United States
IPTN
Indonesia
composite components (for BAE)
flap track carriages, sheet metal parts (for BAE)
Korean Aerospace
Industries (Daewoo)
Republic of Korea
wing components
Korean Air (with Silat)
Republic of Korea
upper fuselage panels of Section 15 (for Aérospatiale-EADS)
Marion Composites
United States
flap track fairings (for Aerostructures Corp.)
61
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.
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Supplier
Marvin Group
Parent
Domicile
United States
Component(s)
large ribs (for BAE)
Messier-Hispano-Bugatti
France
nose landing gear, wheels and brakes (option)
Mitsubishi Heavy
Industries
Japan
cargo doors
PPG Industries
United States
cockpit windows
RTI International Metals
United States
titanium on A350
SABCA
Belgium
tailcones (for DASA)
Shin Meiwa
Japan
wing fairings
Socea
France
rear upper panels of center fuselage section
SOCATA
France
composite belly fairing
SONACA
Belgium
full-span leading edge slats, slat tracks
Xian Aircraft Co. (AVIC1)
Peoples Republic of
China
avionics access doors
Source: Teal Group
Note: Commercial variants of both aircraft types are powered by engines manufactured by either General
Electric, Pratt & Whitney, or Rolls Royce.
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Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress
Appendix E. Potential Longevity of KC-135 Fleet
2004 DSB Report and 2006 RAND Analysis
A 2004 Defense Science Board (DSB) task force report examined, among other things, the
potential longevity of the KC-135 fleet.62 The 2006 RAND Analysis of Alternatives (AOA) on
aerial refueling also examined the technical condition of the KC-135 fleet.
The DSB report stated that airframe service life, corrosion, and maintenance costs factors would
potentially determine the KC-135s operational life expectancy. Each of these factors is discussed
briefly below.
Airframe Service Life
KC-135s, along with their associated B-52 bombers, were originally purchased to give the United
States a strategic nuclear strike capability. As a result, both fleets of airplanes spent a significant
amount of time during the 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 (KC135E) or 39,000 hours (KC-135R). On this basis, the DSB report concluded that KC-135
airframes were viable until 2040 at “current usage rates.”63 The 2006 RAND AOA similarly
concluded that the KC-135 fleet “can operate into the 2040s,” but not without risks.64
Corrosion
The 2004 DSB report 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,”65 but also stated:
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.66
Maintenance Costs
A 2004 GAO report stated that KC-135 flying hour costs increased in real (i.e., inflation-adjusted)
terms by 29% between 1996 and 2002.67 The DSB report agreed that KC-135 maintenance costs
had increased significantly, but found that they had leveled off due to Air Force changes in KC62
63
Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. iv.
Ibid.
64
Michael Kennedy et al., Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary, RAND
Corporation, 2006, pp. 15-16.
65
Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, p. iv.
66
Ibid., p. 17.
67
General Accounting Office, Military Aircraft[:] DOD needs to Determine Its Aerial Refueling Requirements, GAO04-439, June 2004, p. 13.
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135 depot processes. The DSB report forecasted modest growth in maintenance costs in the
future.68
Risks Of Flying Older Aircraft
Some observers express about potential problems that may arise in flying 50- to 80-year-old
tankers that could possibly ground the entire KC-135 fleet. The DSB report examined the issue
and concluded that “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.”69 The 2006 RAND
analysis expressed a belief that it is possible that KC-135s will be able to operate into the 2040s,
but the report expressed a lack of confidence that KC-135s could continue to be operated that
long without risks of major maintenance cost increases, poor fleet availability, or possible fleetwide grounding. The RAND analysis 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.”70 The analysis 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 KC-135 fleet. 71
2009 News Reports on 2001 DOD Study
A March 13, 2009 news report on a 2001 DOD study on the KC-135 fleet stated:
The cost of maintaining geriatric KC-135 Stratotankers into the 2040s will likely increase
nearly 50 percent over the next 30 years to account for major structural and engine
improvements needed simply to keep the venerable aircraft flying, according to documents
obtained by Inside the Air Force.
The overall annual maintenance will rise from $2.1 billion in fiscal year 2001 to $3 billion in
2040, according to the KC-135 Economic Service Life Study. In all, it will cost the Air Force
more than $103 billion to operate and maintain Stratotankers between 2001 and 2040—
almost triple the cost of buying nearly 200 new KC-X refuelers, according to the report,
which makes its projections using calendar year 2000 dollar amounts....
This is the first time the results of the 2001 study have been reported in full, although some
details have been referenced in a number of Congressional Research Service reports.
The study was conducted before the major boom in tanker missions following the Sept. 11,
2001, terrorist attacks. Since then, tanker missions have increased dramatically to support
combat operations in Afghanistan and Iraq, in addition to refueling fighter jets that
constantly patrol the skies over the United States as part of Operation Noble Eagle.
Air Force Materiel Command chief Gen. Arthur Lichte said he stands behind the 2001 study,
claiming its predictions have been “right on the mark.”
68
69
Defense Science Board Task Force Report on Aerial Refueling Requirements, May 2004, pp. iv-v.
Ibid, p. 18.
70
Michael Kennedy et al., “Analysis of Alternatives (AoA) for KC-135 Recapitalization, Executive Summary,” RAND
Corporation, 2006, p. 16.
71
Ibid.
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“We have pretty high confidence that the things that [the study] suggested to do in the
outyears will come true,” Lichte said during a Feb. 26 briefing with reporters at a conference
in Florida.
While the “structural integrity of the KC-135 fleet remains strong,” costs associated with
maintaining that level of integrity will contribute to the nearly $1 billion jump in in
maintenance costs. In 2001, structure-related upkeep costs were reported at $321 million.
That specific maintenance will increase to $1.1 billion annually in 2040, according to the
report.
Overhauling the R-model tanker’s General Electric F108 engines over the next 30 years is
expected to jump from $13 million to $66 million, the report states.
All KC-135s will need to have their outer skin replaced beginning in 2018 due to corrosion,
according to the report and Lichte....
“Depot level airframe and engine maintenance are the primary cost divers to sustain the KC135 fleet through 2040,” the report states.72
A March 6, 2009, news report stated:
Many of the Air Force’s geriatric, Eisenhower-era KC-135 tanker aircraft fleet will have to
have their “skin” replaced beginning around 2018, according to the top general in charge of
Air Mobility Command.
“There was an independent study ... that starts to look at ... the 2018 time frame and
beyond—you need to start thinking about re-skinning the aircraft, the fuselage itself in the
back” of the plane, Gen. Arthur Lichte said in a Feb. 26 briefing with reporters. The study
was conducted in 2000 and published in February 2001.
Over the years, corrosion has built up where rivets hold the skin to the frame of the aircraft.
Thus, the service will likely need to begin improvements late in the decade, he said, noting
the study has been “right on the mark” with all of its other predictions.
“We have pretty high confidence that the things that [the study] suggested to do in the
outyears will come true as well,” Lichte said.
The revelation comes as the Air Force awaits word from the Office of the Secretary of
Defense on when to restart the service’s KC-X next-generation tanker competition. The Air
Force has scrubbed its requirements for the aircraft so that they will be presented in a clearer
fashion, according to Lichte....
In February 2005, then-Pentagon acquisition chief Michael Wynne asked for a paper
detailing what technical and maintenance issues still needed to be addressed that are not part
of a major KC-135 aircraft re-engine effort. A group of subject matter experts was then
assembled to project future maintenance needs out to 2050. The study revealed 44 KC-135
repair issues.
72
Marcus Weisgerber, “Report: KC-135 Maintenance Could Reach $3 Billion Per Year By 2040,” Inside the Air
Force, March 13, 2009.
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“This was a qualitative assessment that relied on engineering judgment, experience and
historical data to estimate future sustainment needs,” according to documents provided by
AMC.
Today it costs $7 million for each KC-135 aircraft that goes through the maintenance depot
every five years, according to Lichte. The service sends about 72 planes through the depot
each year.
“If you can get rid of those [KC-]135s sooner, or have fewer to put through that time period
of re-skinning, then you save some money,” he said.
In addition to new skin, the study found the planes will all need new wiring in the 2020s and
2030s. Also in the 2030s, a large portion of the depot maintenance remains unknown,
according to the documents.73
Author Contact Information
Ronald O'Rourke
Specialist in Naval Affairs
rorourke@crs.loc.gov, 7-7610
Acknowledgments
The current version of this report incorporates passages from the January 9, 2009 version. The January 9,
2009, version was the final version written by Christopher Bolkcom, Specialist in Military Aviation, who
died on May 1, 2009.
73
Marcus Weisgerber, “Air Force Will Likely Need to Re-Skin Its KC-135 In The 2018 Time Frame,” Inside the Air
Force, March 6, 2009. Ellipses as in original.
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