[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
            AIRCRAFT CANNIBALIZATION: AN EXPENSIVE APPETITE?
=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                   VETERANS AFFAIRS AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 22, 2001
                               __________

                           Serial No. 107-70
                               __________

       Printed for the use of the Committee on Government Reform






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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   ------ ------
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
------ ------                            (Independent)


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

 Subcommittee on National Security, Veterans Affairs and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
ADAM H. PUTNAM, Florida              DENNIS J. KUCINICH, Ohio
BENJAMIN A. GILMAN, New York         BERNARD SANDERS, Vermont
ILEANA ROS-LEHTINEN, Florida         THOMAS H. ALLEN, Maine
JOHN M. McHUGH, New York             TOM LANTOS, California
STEVEN C. LaTOURETTE, Ohio           JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
DAVE WELDON, Florida                 ------ ------
C.L. ``BUTCH'' OTTER, Idaho          ------ ------
EDWARD L. SCHROCK, Virginia

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
                Robert Newman, Professional Staff Member
                           Jason Chung, Clerk
                    David Rapallo, Minority Counsel










                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 22, 2001.....................................     1
Statement of:
    Curtin, Neal, Director, Defense Capabilities and Management, 
      General Accounting Office, accompanied by William Meredith, 
      Assistant Director, Defense Capabilities and Management, 
      General Accounting Office..................................     6
    Zettler, Lieutenant General Michael E., Deputy Chief of Staff 
      for Installation and Logistics, U.S. Air Force; Lieutenant 
      General Charles S. Mahan, Jr., Deputy Chief of Staff for 
      Logistics, U.S. Army; and Rear Admiral Kenneth F. 
      Heimgartner, Director, Fleet Readiness, U.S. Navy..........    38
Letters, statements, etc., submitted for the record by:
    Curtin, Neal, Director, Defense Capabilities and Management, 
      General Accounting Office, prepared statement of...........     9
    Heimgartner, Rear Admiral Kenneth F., Director, Fleet 
      Readiness, U.S. Navy, prepared statement of................    69
    Mahan, Lieutenant General Charles S., Jr., Deputy Chief of 
      Staff for Logistics, U.S. Army, prepared statement of......    52
    Zettler, Lieutenant General Michael E., Deputy Chief of Staff 
      for Installation and Logistics, U.S. Air Force, prepared 
      statement of...............................................    40











            AIRCRAFT CANNIBALIZATION: AN EXPENSIVE APPETITE?

                              ----------                              


                         TUESDAY, MAY 22, 2001

                  House of Representatives,
Subcommittee on National Security, Veterans Affairs 
                       and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:03 a.m., in 
room 2247, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Putnam, McHugh, Gilman, 
Lewis, Schrock, Kucinich, and Tierney.
    Staff present: Lawrence Halloran, staff director/counsel; 
Robert Newman and Thomas Costa, professional staff members; J. 
Vincent Chase, chief investigator; Jason Chung, clerk; David 
Rapallo, minority counsel; and Earley Green, minority assistant 
clerk.
    Mr. Shays. I would like to call this hearing to order.
    When the military mission must go forward, but a repair 
part is not available, maintenance personnel are forced to take 
the part from a nearby aircraft, crippling one so another can 
fly. The practice is called cannibalization, and it is eating 
into Army, Navy, Marine, and Air Force readiness.
    The pernicious effect of longstanding inventory control 
weaknesses at the Department of Defense [DOD], cannibalization 
causes more problems than it solves. Maintenance crews must 
perform twice the work to complete a single repair, often using 
costly overtime under deadline pressure. Morale suffers; 
maintainers burn out. The cycle accelerates as less experienced 
personnel are more likely to resort to cannibalization as a 
diagnostic tool, substituting parts just to find a problem 
rather than fix it.
    For forward-deployed units, some cannibalization is 
inevitable, even desirable, to maintain fully mission-capable 
aircraft, but the practice now reaches all the way back to 
Reserve components and training units. An inefficient, 
attenuated spare parts supply line cannot meet the growing 
unpredictable needs of an aging air fleet.
    According to the General Accounting Office [GAO], 
management of the Pentagon's 64 billion spare parts inventory 
has posed a high risk of waste and abuse since 1990. In March, 
Comptroller General David Walker told this subcommittee, DOD 
``continues to spend more than necessary to procure and manage 
inventory,'' yet still experiences equipment readiness problems 
because of a lack of key spare parts. Aircraft mission-capable 
rates continue to decline.
    So we asked GAO to assess the extent to which the services 
resorted to cannibalization over the past 5 years, why, and 
what was being done to minimize the costly practice. 
Unfortunately, efforts to address the problem have been 
hampered by a failure to define the problem. The Air Force 
measures cannibalizations per 100 flights or sorties while the 
Navy and Marine Corps log so-called ``canns'' per 100 flight 
hours, making comparisons and accurate totals all but 
impossible. Up to half of all Navy cannibalizations may go 
unreported. The Army defines three different types of 
cannibalization, but does not collect servicewide data on any.
    Nevertheless, reports and anecdotes are legion as to the 
extent and impact of hollowing out perfectly good aircraft so 
that others can fly. Two years ago, when we visited Seattle's 
Whidbey Naval Air Station, pilots in that reconnaissance 
squadron said less than half their 12 aircraft were usually 
operational, and cannibalization was not the exception but the 
norm. Chances are the EP-3 aircraft sitting on the tarmac on 
Hainan Island needed parts scavenged from one or more planes to 
be ready to fly.
    Air National Guard units struggle to keep more than half 
their A-10 Warthogs mission-capable at any given time. Routine 
cannibalization is required to maintain even that level of 
readiness.
    Figuratively, robbing Peter to repair Paul, cannibalization 
at least doubles the risks and costs of straightforward 
maintenance. The plane being repaired gets a used part. The 
cannibalized plane then gets a new part it never should have 
needed. Overworked aircraft maintainers toil twice as hard, 
taking at least one plane out of service for every one they 
fix.
    Unchecked aircraft cannibalization masks systemic inventory 
control weaknesses. It is an appetite the military services can 
no longer afford to indulge.
    Testimony today from GAO and from the Navy, Army, and Air 
Force offer some hope more spare parts are getting to the right 
place at the right time to meet needs of a fully mission-
capable force. We truly welcome their testimony and we look 
forward to their continued efforts to address this problem.
    At this time I would like to recognize the ranking member 
of the committee, Dennis Kucinich.
    Mr. Kucinich. I thank the chairman, and I want to welcome 
our distinguished witnesses from the General Accounting Office 
and from the three services.
    As Mr. Curtin indicated in his written testimony, 
cannibalization or raiding an aircraft's parts in order to fix 
another aircraft is a practice that wastes time and money, 
reduces morale and personnel retention, renders expensive 
equipment unusable, and risks mechanical side effects. Clearly, 
it is an issue that needs addressing.
    To do so effectively, we must examine cannibalization in 
the context of larger, more fundamental questions. The first is 
obvious: Why are maintenance crews pulling items off aircraft 
rather than from stock supply shelves? Why is there a shortage 
of spare parts?
    GAO's examination of the Department of Defense's inventory 
management practices sheds light on this question. In 1990, GAO 
issued a report describing Federal Government programs with the 
greatest potential for waste, fraud, and abuse. This was the 
first of what GAO called its high-risk series. In the 1990 
report, GAO said that management of DOD inventory was one of 
those high-risk programs.
    Since then, GAO has issued updates of its high-risk report 
every 2 years, and DOD inventory management has been on the 
list every time. In January, GAO issued its update for the 
107th Congress. Again, GAO said the Pentagon's inventory 
management process was ``one of the most serious weaknesses in 
DOD's logistics operations.''
    GAO found that about half of DOD's $64 billion inventory 
exceeds war reserve or current operating requirements. GAO also 
concluded that, as of September 1999, the Department ordered 
$1.6 billion worth of inventory not based on current 
requirements. Not only is DOD ordering too much inventory, but 
it is ordering items it does not need.
    What about aircraft cannibalization? The services say they 
do not have spare parts. This is clearly not due to a lack of 
funding since DOD is wasting billions on unnecessary items. 
What accounts for the so-called spare parts shortage then? In 
its January report, GAO came to this conclusion: ``The aircraft 
spare part shortages were due in part to DOD's weaknesses in 
forecasting inventory requirements and the failure of DOD's 
logistics system to achieve expected inventory management 
improvements.''
    This is the same problem that has plagued the Pentagon 
since 1990. Indeed, U.S. Comptroller General David Walker said 
the same thing when he testified before us in March, but more 
bluntly, ``DOD may have the item. They may not know where it is 
or they may not know how many they have. And what's the result 
of that? They may order it when they don't need it. They may 
not be able to access it when they need it for operational 
purposes.''
    One would think that, after more than a decade, improvement 
would be imminent. But at the same March hearing, Chairman 
Shays asked David Warren, a GAO Defense Specialist, about DOD 
initiatives in this area. Mr. Warren replied that the 
likelihood was ``very great'' that these reforms were destined 
to fail.
    A more fundamental, and perhaps more important, question 
concerns DOD's overall aircraft acquisition strategy. In its 
written testimony, GAO raised the problem of aging aircraft and 
its relationship to cannibalization. As aircraft age, they tend 
to break more often. They take longer to inspect and maintain, 
and they're less available for operations. One can see how 
cannibalization and its attendant negative effects could 
increase as a result.
    The Pentagon's current plan for acquiring replacement 
planes, however, will not reduce the average age of each 
aircraft. As GAO has pointed out elsewhere, the Pentagon is 
investing in extremely expensive programs that will yield very 
few aircraft. The F-22 program, for example, originally planned 
for the purchase of 880 planes at $40 billion. Because of the 
Pentagon's inability to accurately predict costs or meet 
testing hurdles, we now expect fewer than 339 planes, and these 
will cost over $64 billion. Rather than updating our fleet, the 
F-22 purchase will actually increase the average age of each 
aircraft.
    But let me reiterate: The Pentagon is spending $24 billion 
more than it planned to buy 64 percent fewer planes. It is 
spending over $60 billion for an older arsenal of fighters, one 
more prone to the management problems that prompt 
cannibalization.
    So we also need to ask why the Pentagon is proceeding on 
this course. If these purchases are simply to result in a fleet 
that breaks down more and flies less, does it not make sense to 
buy more aircraft that, although less sophisticated, may be 
more reliable? Currently, defense spending is approaching the 
average levels of the cold war in the 1970's. Yet, the Pentagon 
is seeking billions of dollars more. Congress deserves 
reassurance that this money is going toward a force that is 
more effective, not less.
    My point, then, is that our examination of the problem of 
cannibalization must necessarily take place in the context of 
the Pentagon's overall mode of operation and culture. 
Cannibalization and other such problems are the symptom of 
systemic issues, and these need to be addressed.
    I thank the Chair.
    Mr. Shays. I thank the gentleman and at this time recognize 
Ron Lewis, the gentleman from Kentucky. Mr. Gilman.
    Mr. Gilman. Thank you, Mr. Chairman, and thank you for 
conducting this very critical hearing. I want to commend our 
committee for examining the increasingly widespread problem of 
aircraft cannibalization in the Nation's military, and I hope 
we will also look at the cannibalization of equipment in other 
portions of our Armed Forces.
    Over the last 10 years, our military forces have had to 
function in an environment of increased overseas deployments 
and reduced operational budgets. As operational tempo has 
increased, so has the frequency of malfunctions and the 
breakdowns in sensitive, high-maintenance military equipment, 
particularly aircraft, but not limited to aircraft.
    Faced with the lack of extra spare parts, military forces 
in the field are often forced to cannibalize fully functioning 
aircraft in a particular unit to keep the rest of the aircraft 
in that unit operational. This has had the effect of reducing 
our overall strength in our airwings, subsequently affecting 
their ability to effectively carry out their missions.
    Not only does cannibalization affect our airwings, as I 
indicated, but it has also had an impact upon the effectiveness 
of our anti-drug war with regard to equipment which the DOD 
furnishes to our drug-producing nations' police agencies. This 
problem has been pervasive throughout all of the service 
branches and has worsened in recent years. A tank commander in 
our Germany's forces recently commented to me that similar 
cannibalization in our tank equipment, where our tanks had to 
be cannibalized due to a lack of spare parts, affected their 
overall efficiency and capability.
    I look forward, Mr. Chairman, to hearing the testimony of 
today's witnesses in the hopes that we can begin to find a 
workable solution to this ongoing cannibalization problem, 
which dilutes our military strength, dampens the morale of our 
forces, and places unnecessary risks on our Armed Forces 
personnel. Thank you, Mr. Chairman.
    Mr. Shays. Thank you, Mr. Gilman. I appreciate your being 
here.
    The vice chairman of the committee, Mr. Putnam.
    Mr. Putnam. No, thank you, Mr. Chairman.
    Mr. Shays. OK. I would like to recognize at this time John 
McHugh, who also sits on the Armed Services Committee.
    Mr. McHugh. Thank you, Mr. Chairman. I don't have a 
prepared statement, but I want to echo the comments of my 
colleague from the great State of New York, Mr. Gilman, in 
emphasizing the importance of this hearing. I want to thank 
you, Mr. Chairman, for the leadership in convening this, I 
think, very, very important session.
    The chairman was kind in mentioning I am a member of the 
Armed Services Committee. I have the honor of serving as 
chairman of that Personnel Subcommittee on that particular 
body. Obviously, anything, as the GAO report suggests, that 
affects the morale of our men and women in uniform is important 
to me, but this is a wider issue. This is an issue of, as Mr. 
Kucinich said, our duty to the taxpayers, but I think even more 
to the point, it is a vital issue of our national security and 
the safety of the men and women that we ask to serve our 
interests all across this planet with respect to the equipment 
that they either work on or utilize in the pursuit of that 
national interest.
    So, Mr. Chairman, you are to be thanked for the effort to 
focus on this, to ensure that where there are systemic problems 
not arising out of a budgetary shortfall, that we take every 
step to resolve them for the betterment of all parts of the 
system, from the people of this country to the people who serve 
this country. So, again, Mr. Chairman, my appreciation, and I 
yield back.
    Mr. Shays. Thank you very much. I appreciate all the 
Members who are here.
    At this time we will call our first panel and recognize 
Neal Curtin, who is the Director, Defense Capabilities and 
Management, General Accounting Office, accompanied by William 
Meredith, Assistant Director, Defense Capabilities and 
Management, GAO.
    Gentlemen, I would like to swear you in, and then we will 
just do some business. If you would just stand and raise your 
right hands--is there anyone else who might testify with you?
    Mr. Curtin. I don't think so.
    Mr. Shays. OK.
    [Witnesses sworn.]
    Mr. Shays. For the record, both our witnesses have answered 
in the affirmative.
    I think we have a statement from you, Mr. Curtin, but both 
will participate in answering questions.
    If I could just deal with the requirement of asking 
unanimous consent that all members of the subcommittee be 
permitted to place an opening statement in the record and that 
the record remain open for 3 days for that purpose. Without 
objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statement in the record, and 
without objection, so ordered.
    Mr. Curtin, Neal Curtin, we welcome your testimony, and we 
will do 5 minutes and then we will roll it over 5, but we would 
like you to be done before the 10 minutes.

 STATEMENT OF NEAL CURTIN, DIRECTOR, DEFENSE CAPABILITIES AND 
 MANAGEMENT, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY WILLIAM 
    MEREDITH, ASSISTANT DIRECTOR, DEFENSE CAPABILITIES AND 
             MANAGEMENT, GENERAL ACCOUNTING OFFICE

    Mr. Curtin. Thank you, Mr. Chairman and members of the 
subcommittee. It's a pleasure to be here today to talk about 
this issue, and I share your concern about the importance of 
this and hope that this hearing will help get at some of the 
bottom-line issues here.
    As you said, my testimony today is based on work that was 
requested by the subcommittee to look at four aspects of 
cannibalization as it relates to military aircraft. Mr. Gilman 
is right that it's not just an aircraft problem, but the focus 
of our work on aircraft, I think, is kind of keying on the main 
issues right now.
    We looked at four things: the extent that the military 
services are using cannibalization to repair aircraft, the 
impacts that cannibalization has and the reasons for it, and 
what the services are doing to address it. We should have a 
report on this later this summer, hopefully, with 
recommendations aimed at tackling some of the issues that we'll 
discuss today. But we're in a good position now to summarize 
our findings for the committee and this hearing today.
    Cannibalization, as you said, is taking a part off of one 
aircraft to replace a broken part on another aircraft. The 
chart that's on page 7 of my prepared statement, and that we've 
blown up over here, I think illustrates it pretty well. It 
illustrates, too, one of the adverse impacts of cannibalization 
in that you've doubled at least the workload, and we'll talk 
about how it may be more than doubles the workload because of 
some of the things that happen during that cannibalization 
process. I'll talk at some length about this adverse impact. I 
think that's really the key to our findings.
    But let me start out with a few pieces of data on what we 
found regarding the extent and causes of cannibalization. We 
looked at the Army, Air Force, and Navy, and the Navy data 
included Marine Corps data, for the last 5 years, fiscal year 
1996 through 2000. And for just the Navy and Air Force 
aircraft, we found a total of 850,000 reported cannibalization 
actions during that 5-year period. That's about 170,000 
cannibalizations per year. I mention that's just Navy and Air 
Force.
    The reason the Army is not included in those numbers is 
that they do not collect and consolidate complete data on 
cannibalizations in a way that can be used at headquarters 
level. Not only does that make it impossible for analysts like 
us to get a handle on what's going on in the Army, it seems to 
me it makes it pretty difficult for Army managers to understand 
and address the issue as well.
    But, even in the other services, even in the Navy and 
Marines and Air Force, we found indications that the data may 
be underreported. So that 850,000 may not be all the 
cannibalizations that are going on.
    Two Navy studies in the past couple of years have 
highlighted the underreporting. In fact, one of the studies 
said that it may be as much as half; that the reported 
cannibalizations may only be half of what's actually going on 
out there.
    Why the level of cannibalization? What's causing this? The 
main thing that is leading to this is really the two ongoing 
phenomenon here. One is the push, and the important push, for 
readiness to meet training requirements, to meet operational 
requirements, to keep OPTEMPO at the levels that we've expected 
out of our service, on the one hand. Then, on the other hand is 
this supply system which is not being as responsive as it needs 
to be to provide the spare parts to maintain those high 
operational tempos.
    If you didn't care how high your readiness was, when a part 
broke, you'd wait until somewhere along the way the supply 
system feeds it. On the other hand, if the supply system was 
working well, you could maintain high readiness without having 
to resort to cannibalization. But those two things together are 
what drives the bulk of the cannibalizations.
    Now why aren't spare parts available? As some of the panel 
members have already pointed out, GAO's tried to tackle that 
inventory management problem in the military services for a 
long time, and spare parts, of course, is a big part of that. 
Since 1990, we've had it on our high-risk list, and as recently 
as earlier this spring, the Comptroller General testified 
before this committee on the continuing problems of inventory 
management. It's on the high-risk list again, and it's one of 
the key management challenges facing the Department. The 
ultimate answers are still not within our reach, as far as we 
can tell.
    There are other reasons, too, for cannibalization besides 
the spare parts systems: Inexperienced or inadequately trained 
maintenance personnel, outdated maintenance manuals, lack of 
testing equipment in many cases, all contribute to the 
cannibalizations.
    Let me return to the effects related to cannibalization 
because I think these are really the key. The good effect of 
them is that they do help maintain readiness levels. They do 
help to get planes in the air at the time the pilots are ready 
to do a training mission or an operational mission. But it 
comes at a very high cost, and it's kind of a hidden cost. The 
extra maintenance hours that were recorded by Air Force and 
Navy, again just Air Force and Navy, during that 5-year period 
associated strictly with cannibalizations total about 5.3 
million hours. That's the equivalent of almost 500 additional 
maintenance personnel working full time during that 5-year 
period. That cost doesn't necessarily show up anywhere in the 
balance sheets. We don't pay overtime to the maintenance 
personnel.
    So what you've got is an extra workload on top of a work 
force that's already somewhat shorthanded and already stressed 
at fairly operational tempo levels. There have been several 
studies that have documented the adverse morale impact that 
has, and, in fact, that it can contribute to retention problems 
among maintenance personnel.
    You know, this extra work, sometimes late at night, on 
weekends, takes a toll on a work force, especially when they're 
returning from a deployment. The Navy has a regular 6-month 
deployment cycle, and even in the Air Force now, and the Army 
as well, because of the operations going on overseas, soldiers 
are frequently deployed. When they come home, at their home 
station they want to spend some time with their families, and 
instead, in many cases they're working long hours at their home 
stations.
    While we haven't been able to make a direct link from 
cannibalization to retention problems, because there's a myriad 
of things that affect why someone decides to stay or leave the 
services, clearly, cannibalizations are a factor that's 
contributing to the frustration that's out there among the work 
force.
    There's some other adverse impacts of cannibalization, too. 
Anytime you take parts off an aircraft, you risk damaging not 
only those parts, but parts around it. Sometimes you have to 
remove other parts to get at the part you really need, and you 
run the risk of additional rework and damage to those as well 
and to the wiring that connects it all.
    Moreover, when aircraft are cannibalized for long periods--
and we have a couple of examples in my statement and on the 
posterboards over here--they can become virtually unusable 
without a major rebuild, and that's what happened to the F-18's 
pictured here. Some of them have been in cannibalization status 
for years, not just months but years. One of them had over 400 
parts removed for cannibalization and eventually had to be 
actually shipped by truck to the depot to be rebuilt.
    The services generally consider cannibalization what I'd 
call a necessary evil. They'd rather not have to do it, but 
until they get the spare parts they need and get the system 
feeding them what they need when they need it at the place they 
need it, they have an incentive to do what's necessary to 
maintain adequate levels of readiness.
    Service policies all call for minimizing the use of 
cannibalization, but there are really no incentives or guidance 
to meet that goal. The real incentives are on the other side to 
push for that high maintenance level, that high readiness 
level.
    Mr. Chairman, let me stop there. I think that summarizes 
the key points of my statement. We would be glad to take 
questions from the panel.
    [The prepared statement of Mr. Curtin follows:]
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    Mr. Shays. Thank you. It's my intent to start with Mr. 
Gilman and then we'll go to Mr. Kucinich and then we'll go to 
the other Republicans.
    Mr. Gilman. Thank you, Mr. Chairman. And, Mr. Curtin, we 
thank you for your testimony.
    Why is the full magnitude of cannibalization not known? The 
GAO report points out that we don't have any full information 
with regard to the extensiveness of cannibalization. It would 
seem to me that would be a very critical issue that we ought to 
be able to resolve quite quickly.
    Mr. Curtin. I agree. First of all, you have the Army who 
captures some of this data at the local level, but we're not 
convinced that the local units capture it all either, but they 
don't surface it in any way that's aggregated or could be used 
for management purposes.
    And then in the other services, what we have seen, even 
though the Navy and the Air Force have a system for capturing 
data, we've seen many cases, anecdotal for the most part, but 
also based on prior studies, that the data just doesn't get 
entered into these systems sometimes.
    Mr. Gilman. Well, why are there different measures for 
cannibalization? It would seem to me that, if this is a 
critical issue, there ought to be a standard by the Department 
of Defense for all of the agencies and for all of the 
departments, and to have similar methods of reporting, similar 
criteria.
    Mr. Curtin. Yes, it makes a lot of sense. There are some 
reasons why the Navy and Air Force do it differently, and you 
may want to explore that with the next panel. It would be a lot 
better from an OSD, from a Secretary of Defense management 
level, to have a common way of looking at these across all the 
services; there's no question about it.
    Mr. Gilman. Well, who in the Defense Department is in 
charge of all of this?
    Mr. Curtin. Well, I'm not sure there is much of an OSD-
level focus on it. There are readiness aspects to this. There 
are logistics aspects to it, and it gets fragmented, frankly. 
The services have been left for the most part to deal with 
cannibalization as they see fit. Most of the services have 
chosen to delegate authority and guidance and everything on 
cannibalization down to lower levels, leave it up to the local 
commanders to decide how much cannibalization to do, with just 
that general policy guidance that says try to minimize it. And 
the result is what we've seen.
    Mr. Gilman. Mr. Curtin, are you telling us that there's no 
one in the Department of Defense who has the responsibility of 
making certain that equipment is not being cannibalized?
    Mr. Curtin. Unless you're aware of anyone?
    Mr. Meredith. No, I'm not aware of any central control.
    Mr. Gilman. No central control?
    Mr. Meredith. No central control that I'm aware of.
    Mr. Gilman. That's a major failing, and, Mr. Chairman, I 
hope we look into that aspect.
    I recently visited an auto parts central agency for the 
whole Northeast, and I was amazed how they can get parts out to 
their dealers, and there are hundreds of thousands of dealers 
nationwide, parts within a 24-hour period. It would seem to me, 
with the money we spend in defense, we ought to be able to get 
parts out across the world quite quickly to prevent 
cannibalization, and I would hope you could come up with some 
recommendations for us. We appreciate the report and we 
appreciate your review, but maybe you can also provide some 
good, sound recommendations to the Department of Defense to 
correct this.
    We have been upgrading Vietnam era Huey helicopters to new 
Huey II upgraded status in our drug war in Columbia. Yet, the 
poor condition of the Hueys has made these upgrades very 
costly. The equipment is costly in itself, and they have been 
slow and inefficient. In addition, their supplying 1952 Korean 
era 50-caliber ammunition to protect the Blackhawks, new 
Blackhawks, where we spend millions of dollars on that 
equipment in Columbia, hasn't worked either.
    So something is wrong with the kind of supplies we're 
sending out. Something is wrong with the kind of spare parts 
for equipment. As I mentioned earlier, and you have re-
emphasized, it does not apply to any one segment of our 
military forces, but it is across the board. I think if we had 
a full total of the cannibalizations and the cost to our Armed 
Forces, I think it would be something that would make this even 
more critical, and should be brought to the attention of our 
Chief Executive.
    Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman. Mr. Kucinich.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    I, first, want to for a moment reflect on things that were 
said by two colleagues here. What Mr. McHugh had to say 
concerning the effect on the men and women who serve is 
something that needs to be kept uppermost in mind. It seems to 
me that, at least on the ground level, this would drive 
mechanics crazy. Did you spend much time talking to mechanics?
    Mr. Curtin. Yes, we got up to several squadrons, and you're 
right, when you get down to that level, you hear the griping 
coming out, and I have to be careful sometimes of griping----
    Mr. Kucinich. I understand. These are my constituents.
    Mr. Curtin [continuing]. But a lot of it's real.
    Mr. Kucinich. But I also have to say that mechanics are the 
ones who would know exactly what is going on because they have 
to deal with the reality of it, and in a way it is 
counterintuitive to the working mechanic: On the one hand, 
you're told to keep a plane in repair and then, on the other 
hand, you're told to start picking it clean, so that you can 
provide for others. At the same time, the real issue is, you 
know, what about the parts, which goes back to what Mr. Gilman 
said.
    We are urged in so many different ways to try to run 
government like a business, at least to try to have business 
principles of management and inventory. I think Mr. Gilman put 
it well, but I have to say that if we're talking auto parts or 
Auto Zone, or any of those companies that stock parts, you get 
them like that. It seems to me, with the defense budget being 
what it is, we might want to transit to a more sensible 
inventory management approach.
    Mr. Curtin. A lot of the problem seems to be in the high-
cost parts that don't break very often. Those are the tough 
ones. How much are you willing to invest in keeping this part 
in your stocks when it may or may not break very often? As 
planes get older, and those parts that never used to break 
before now they're starting to break because the fleet is a lot 
older than we expected it to have to be, those become the real 
sticky problems.
    Mr. Kucinich. Well, is it fair to say that a large portion 
of the cannibalizations occur in tactical-type aircraft?
    Mr. Curtin. Yes. Yes, of course, you have 1,200-and-some F-
16's in the Air Force. So you have so many planes that you do 
get a high number of cannibalizations associated with that. The 
rate of cannibalizations per flight for the F-16's is not one 
of the highest one. The F-15's are above average in rate and in 
total.
    Mr. Kucinich. You're familiar with the report that GAO 
issued in February, ``Tactical Aircraft Modernization Plans 
Will Not Reduce Average Age of Aircraft''?
    Mr. Curtin. Yes.
    Mr. Kucinich. And it basically described the Pentagon's 
future acquisition plans and it found that, ``the Navy and Air 
Force will not be able to procure enough new tactical aircraft 
to reduce the average age of tactical aircraft.'' Rather than 
reduce the average age, Pentagon plans will increase it, isn't 
that right?
    Mr. Curtin. Because you're buying fewer of the more 
expensive new ones and you still have a lot of the old ones in 
your inventory. So, yes, the average age will--all the old ones 
are just getting older.
    Mr. Kucinich. And we have three different aircraft 
development programs going on right now, is that right?
    Mr. Curtin. As of today. We'll see what the Secretary of 
Defense comes up with in his strategy studies.
    Mr. Kucinich. In the next minute that I have, in the case 
of the F-22, for example, even if everything works out as 
planned, we will not be able to reduce the average age of 
aircraft, correct?
    Mr. Curtin. I believe that's what the report said, yes.
    Mr. Kucinich. Well, page 11 of your report, ``As aircraft 
age, they tend to break more often, take longer to inspect and 
maintain, and they're less available for training and 
operations.'' So if nothing else changes in the types and 
number of aircraft the Pentagon plans to acquire, is it logical 
to assume that the problem of cannibalization could become even 
more aggravated?
    Mr. Curtin. Yes, if everything else stays as it is now, no 
question.
    Mr. Kucinich. So, in your opinion, could cannibalization be 
more likely for future planes, such as the F-22, which are 
extremely complicated technologically and which are extremely 
expensive compared with other planes?
    Mr. Curtin. Well, I think that's the key. We've got to 
avoid that. We've got to find--we've got to fix this system. We 
can't go another 10 years or 20 years with the inventory system 
shortchanging everybody.
    Mr. Kucinich. But if we don't fix it, that is what we're 
headed for, right?
    Mr. Curtin. That's where we're headed, exactly.
    Mr. Kucinich. So you think it is important that we look at 
these future aircraft programs when reviewing the 
cannibalization problem?
    Mr. Curtin. No question.
    Mr. Kucinich. Do I have another minute here?
    The February GAO report recommended that DOD in its 2001 
quadrennial defense review ``consider alternatives to the 
current tactical aircraft modernization plans.'' One 
alternative, I suppose, would be cutting the F-22 program or at 
least scaling it down? Is that a possibility?
    Mr. Curtin. It appears to be on the table, but I don't know 
how much of a possibility----
    Mr. Kucinich. OK. I thank the gentleman.
    Mr. Shays. Mr. McHugh.
    Mr. McHugh. Thank you, Mr. Chairman.
    Gentlemen, I understand you have not completed your report 
as yet, and that makes the discussion of final conclusions 
somewhat difficult, somewhat problematic. So let me start with 
a general question. When you do issue your final report, to 
what extent do you envision yourselves being able to, aside 
from assessing how each service handles the reporting, your 
very accurate determination of the effects of it, are you going 
to be able to determine between those reasons that are fiscally 
driven and those that are systemic or management-driven?
    Because that seems to me to be a very key difference here 
in terms of what do we need to do both as a subcommittee and as 
a Congress to help resolve this. Money, it's either easy or 
hard, you know. We understand the cause of that. Systemic 
issues are quite something else.
    Mr. Curtin. Yes. It's going to be very difficult for us to 
quantify what happens if you put ``X'' dollars into the system 
in one end, what the improvement in cannibalization will you 
get at the other end. I think our focus is going to be on the 
management side. Regardless of how much money the Congress 
chooses to give the Department of Defense, it should be spent 
on the right things and in the right way, and that's where the 
improvements in the management system for supply, for inventory 
on spare parts, but also in tackling this cannibalization 
problem more directly.
    Most of the efforts underway in the services now, to the 
extent there are efforts, are aimed at the inventory system, 
aimed at fixing the long-term fixes to the inventory system. 
There's nobody focusing too much on what to do about 
cannibalization in the meantime. Until that supply system 
starts providing you better responsiveness on the parts you 
need, what do you do about the cannibalization? That's where 
we'd like to see some more attention paid, and it needs to be 
probably at the--certainly at the service level, maybe at the 
OSD level, to really get a handle across the military on what's 
going on here. So a strategy for tackling, you know, other 
things we can do in the meantime to fix this cannibalization, 
because of the impact it has on the personnel.
    Mr. McHugh. So the suggestion that I hear you making is 
that this is not just a supply management problem in that there 
are apparently reasons for cannibalization at the base level, 
at the facility level, that may have nothing to do with the 
availability of the part?
    Mr. Curtin. Yes, there really are, and the extent of that 
we don't know because the data just isn't there. The reasons 
for cannibalization aren't always recorded. The Navy does a 
little better job on reasons. The Army, of course, doesn't have 
anything. The Air Force has some data.
    Mr. McHugh. I don't mean to interrupt you, but I'm on the 
yellow light here.
    Can you give me just a couple of ideas, a couple of 
thoughts as to what those reasons for cannibalization at the 
management level may be other than inventory?
    Mr. Curtin. Something we would call cannibalization for 
convenience happens quite a bit. A pilot is ready to taxi out 
for a training flight and something breaks on the plane. If it 
can be fairly quickly fixed, they'll try to replace that part 
right there on the flight line. Even if that part is in the 
system, it may be right on the base, it may be a mile away at 
the other side of the base in the hangar, but the plane is out 
on the flight line, they'll pull it off a nearby plane and fix 
it, get that pilot out. So he gets his training slot. It's kind 
of a quick turnaround. We call it a cannibalization for 
convenience.
    Mr. McHugh. I don't know as a pilot would agree that's 
convenience. You lose your training slot and you've lost a 
lot----
    Mr. Curtin. Yes.
    Mr. McHugh [continuing]. But I understand. I understand 
your point.
    Mr. Curtin. We want to hit those training requirements.
    Mr. McHugh. Yes, I understand.
    Mr. Curtin. Other things that happen: Diagnostics, 
sometimes the maintenance people have never seen this kind of 
problem or they're new; they haven't been familiar with that 
kind of problem. They're not sure if that part's broken or not. 
They'll take a part off a working plane--they know that part 
was working--and try that, plug that in, see if that fixes the 
problem. So instead of being able to figure out the problem, 
they do some cannibalization to diagnose it.
    A big problem with test equipment out there and a fair 
amount of cannibalizations seem to be happening because the 
test equipment is not giving you the results you need, and you 
need to find some way of fixing the problem. So you pull a part 
you know is working. Those kinds of things are going on.
    Mr. McHugh. Refresh my memory; when will the final report 
be done?
    Mr. Curtin. This summer, probably by July, is our target.
    Mr. McHugh. I'm looking forward to seeing it. Thank you. 
Thank you, Mr. Chairman.
    Mr. Shays. I was going to recognize Mr. Putnam, but, Mr. 
Gilman, did you want to----
    Mr. Gilman. Just one more question, if you would.
    Mr. Shays. Sure.
    Mr. Gilman. I note in your testimony you talk about the C-
5's, and I happen to have a large squadron of C-5's up at 
Stuart Airport in Newburgh. They provide all the logistics of 
our manpower overseas, and yet you rate them as one of the 
highest needs for maintenance. I note here in your testimony 
that--well, your chart shows that they have 49 percent of 
cannibalization rate in the year 2000, and it was 51 percent in 
the year 1999. You say for the C-5's alone there are 31,400 
manhours used to perform cannibalization and 126 aircraft. When 
you add up the cost of all of that on this kind of equipment, 
where we've spent hundreds of millions of dollars for each 
unit, billions of dollars, as a matter of fact, each unit, it 
just doesn't make economic sense to allow this to continue. I 
hope you can make some very critical recommendations for DOD in 
your subsequent report.
    Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman. I might point out to the 
gentleman that we are seeking to have a meeting with the 
Secretary because we think this is a gigantic problem. We think 
that security clearances, the backlog that we have there is 
just truly outrageous, and we need to wake up some people in 
DOD to get them to tell us what they need us to do to make a 
difference.
    Mr. Gilman. Thank you, Mr. Chairman. I would like to work 
with you on that approach.
    Mr. Shays. Thank you.
    Mr. Putnam.
    Mr. Putnam. Thank you, Mr. Chairman. Thank you, Mr. Curtin, 
for your work on this. I would like to followup on some of Mr. 
McHugh's questions about the difference between an episodic or 
a systemic problem with inventory management.
    One of your potential causes for this cannibalization rate 
was a lack of training, and that is something that we spend an 
awful lot of time in the Congress talking about. To what degree 
have you determined that lack of adequate training for 
maintenance personnel contributes to this?
    Mr. Curtin. Yes, I don't think we can quantify that, but 
what we do know, that there is a shortage of personnel in 
aviation maintenance, especially at the senior levels. They're 
the levels that actually train the younger mechanics as they 
come on. Without that good senior leadership, you don't get the 
on-the-job training that you need at the lower levels. With the 
turnover they have been experiencing and the loss of staff, 
they're in kind of a constant flux of bringing in new people. I 
mean, the basically training, I think, that's done of mechanics 
is fine, but where you really learn is on the job, and that 
part is suffering a little bit.
    Mr. Putnam. Are you able to determine the parts that are 
most frequently cannibalized? You make the distinction between 
the small bits and then you take it up a notch if you can't--
you know, these aren't Ford Explorers. There's only 1,200 F-
16's spread around the whole planet. Having a back storeroom 
full of carburetors for a Ford Explorer is very different than 
having one full of F-16 replacement parts. So at what point do 
we strike the balance between sound, just-in-time inventory and 
having the parts? And how many of these parts are routine or, 
for an F-16, cheap replacement parts? And how many are 
substantial, very expensive, very technical types of pieces of 
equipment?
    Mr. Curtin. See, part of the problem in getting a good 
handle on this is that there is no one answer. There is no 
single solution to it. There are a lot of small, cheap parts 
that we ought to have handy; we should never have to 
cannibalization some of the nickel-and-dime things. But, on the 
other hand, with this aging fleet, some parts that just have 
never broken--the way you get spare parts in the system is 
through a demand history. Parts break; you order them; the 
supply system produces them. Part of the problem is that things 
are breaking now because of the age of the aircraft that just 
haven't broken before or haven't broken in the numbers that 
they're breaking now.
    And the other side of this aging problem is that many of 
the manufacturers who originally provided the parts for these 
planes have gone out of business or have left the defense 
industry, have gone into other things, and it's hard to find 
anybody willing to make some of these parts anymore. So it's 
very complex. To say how much are these tough ones where you 
don't have a producer out there who can supply them, it's 
almost case by case, and that's what's made it hard--frankly, 
that's what's made it hard for DOD to solve this problem, is 
because it is not easy when----
    Mr. Putnam. I mean, did you evaluate, and if you did, is 
there a difference between Guard and Reserve units and active-
duty units in terms of their cannibalization rates?
    Mr. Curtin. Well, we've focused just on the active, and I 
can't imagine that the Reserves are in any better situation, 
and sometimes you see the Reserves getting resourced at lower 
levels, depending on what their role is. So they may have even 
a worse problem, but this focused on the active.
    Mr. Putnam. And one final question, because I've got the 
yellow light, too: The B-1B requires the most cannibalization 
per hundred sorties. Is that because there was such a short 
production run? I contrast that with the B-52, which has a much 
lower rate even though it is considerably older. Is that 
because there are so many B-52's around in the bone yards to 
provide spare parts?
    Mr. Curtin. Well, it's probably a good question for the Air 
Force after me, but I would make one comment. I think the bulk 
of the problems with the B-1B are in the electronic counter 
measures systems, and I can remember GAO reports back on the 
original B-1A program when it was first killed that the 
electronic counter measuring system was the problem system in 
development and all the way through. And the same thing 
happened with the B-1B. The electronic counter measures system 
never quite worked the way it was supposed to and was always a 
problem, and that seems to be where most of the 
cannibalizations are now. It's just been a problem system, a 
problem component.
    Mr. Putnam. Thank you. Thank you, Mr. Chairman.
    Mr. Shays. Thank you.
    Mr. Curtin, I would like you to just explain to me why it 
is so difficult for us to get a handle on inventory in general 
and this whole issue of cannibalization. What becomes the 
disincentives to resolving this issue?
    Mr. Curtin. There's a couple of things going on. One, 
you've got the individual services who have developed their 
systems years ago, back--the system is not too different than 
it was for World War II and thereafter. So you don't really 
have as much of an OSD level, as much of a DOD inventory system 
as you do individual services, and that gets wrapped up in 
title 10 and all the responsibilities of the services.
    Mr. Shays. That is one issue. What is another one?
    Mr. Curtin. I think it's, to some extent, the size of the 
Department of Defense. There's no other corporation in the 
world that's got the number of activities, the number of pieces 
of equipment, the management challenges that the Department of 
Defense has. Some of it has to do with the way we purchased 
equipment, the way we acquire weapons systems, and what you 
see, even with one aircraft, the F-18 aircraft, there must be 
20 different lots of F-18's that have been built over the 
years, and each one has some common parts, but brings in new 
parts. So you've got a multiplier effect of the number of 
things that can go wrong even within one squadron. Certainly 
within a wing you have old planes, new planes, all within one 
wing. So it's all those kinds of things----
    Mr. Shays. Is another factor that we just don't have that 
many of any particular--I mean, I look at the analogy of an 
automobile and how we can get it out, but there is an incentive 
to have a certain number of parts on hand because you know you 
are going to send out hundreds each day. But I am just 
wondering, does this make it more of a challenge, if you only 
have 200 planes or 300 planes?
    Mr. Curtin. It is a challenge because different parts break 
at different times on different planes. It is not that 
predictable, unfortunately.
    Mr. Shays. Well, that is another issue. It is not 
predictable, but I am asking something else. See, you have 
given me another issue; it is not predictable. But the other 
issue is, does having so few of the particular aircraft make it 
more difficult rather than----
    Mr. Curtin. Yes.
    Mr. Shays. OK.
    Mr. Curtin. No question, yes.
    Mr. McHugh. Mr. Chairman.
    Mr. Shays. Yes?
    Mr. McHugh. Would you yield for 1 second?
    Mr. Shays. Sure. Definitely.
    Mr. McHugh. I think you have raised a very important point. 
I wanted to ask the gentleman, to what extent do you see the 
current way in which military commanders at the base level are 
judged--and by that, I mean, it would seem to me that from the 
Pentagon perspective in evaluating commanders, the readiness 
issue--and some of us may recall it became an issue during the 
Presidential campaign about two divisions in the U.S. Army that 
slipped to a C-4 rating, readiness rating, became big news. 
Where that rating question of readiness is valued at a much 
higher level than whatever your rate of cannibalization is, and 
if it comes to the commander's decision, or certainly those 
under him who understand the commander's interest in your 
readiness, you are not going to let that training slot go by 
because it might ultimately be the final straw that affects 
your readiness rating down to 2 or 3, isn't it so? The 
question, isn't it also an issue of how the Pentagon rates 
commanders either consciously or unconsciously vis-a-vis 
readiness?
    Mr. Curtin. Yes, that's exactly the discussion I had. A 
couple of weeks ago, I was down at Oceana at the Naval Air 
Station there. The wing commander there was very clear. He knew 
what his priority was, and he had to meet mission-capable rates 
and he had to get his pilots in the air. Cannibalization, he 
knew it was happening. He saw it happening. He knew what effect 
it was having on his maintenance force, but he said, ``Hey, my 
future and my ratings depend on meeting those readiness 
rates.'' Very clear.
    Mr. McHugh. Thank you. Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman.
    Which basically gets me into the whole disincentive--it 
seems to me, though you have given me a number of reasons why 
you would see cannibalization, why it is difficult to get parts 
sometimes, the predictability, the number of aircraft, and so 
on, but it seems to me at least recording and documenting the 
cannibalization would be very important. There seems to be 
disincentives to doing that.
    So let me ask you, what would be the--you talked about why 
it is difficult for inventory, but what are the disincentives 
for keeping the data?
    Mr. Curtin. I'm not sure there's any penalty associated 
with reporting cannibalizations. I think it's just the time it 
takes. We're talking about a work force that's already stressed 
and probably underresourced, and now they've had to spend a lot 
of time on cannibalization. It's extra time to stop and record, 
take care of the paperwork, which is really computer work, but 
still it takes some time, and a lot of times is not seen as a 
priority for them.
    Mr. Shays. OK. Just one last question. Let me just ask this 
question: I can't picture how this system works. You make a 
plane for a number of years. You have a life expectancy which 
turns out the plane has twice as much life as we write into it. 
You stop making the plane. Do they still keep making parts?
    Mr. Curtin. Some. Others are so unique to that plane that 
the company may go out of business. If there aren't a lot of--
you know, you'll use up whatever you have in stock, hoping that 
will last you long enough, and when the time comes you're 
running out, you've got to find somebody else willing to 
manufacture that part, and usually at a very high cost.
    Mr. Shays. Automobile manufacturers, there was this 
wonderful article in Time magazine where they showed what the 
car would cost if you bought it in parts, and it was like 
$100,000 for a $25,000 car. Do we establish a contract--or 
maybe you don't know this; if you don't, tell me--but do we 
establish a contract up front that guarantees a certain amount 
of parts?
    Mr. Curtin. It's not in my specialty area. We do what we 
call initial spares. When you build a new system, you buy 
enough spare parts to get that up and running, and then you 
build your history of demands for different parts that break. 
That's what triggers your supply system.
    Mr. Shays. We will ask some of these questions of the next 
panel.
    Mr. Curtin. I think that would be good.
    Mr. Shays. Mr. Schrock, would you like to ask any 
questions?
    Mr. Schrock. No, Mr. Chairman.
    Mr. Shays. Mr. McHugh, we are happy to go back to you or 
Mr. Gilman or Mr.--excuse me, the gentleman, the ranking 
member, do you have any questions?
    Mr. Kucinich. No, Mr. Chairman.
    Mr. Shays. I think what we will do, then, is go to our next 
panel. Thank you very much.
    Our next panel is Lieutenant General Michael Zettler, 
Deputy Chief of Staff for Installation and Logistics, U.S. Air 
Force; Lieutenant General Charles Mahan, Jr., Deputy Chief of 
Staff for Logistics, U.S. Army, and Rear Admiral Kenneth 
Heimgartner, Director, Fleet Readiness, U.S. Navy.
    Gentlemen, if you have anyone else--please remain 
standing--if you have anyone else that may respond to a 
question, I would like to swear them in as well, so we don't 
have to do it twice.
    [Witnesses sworn.]
    Mr. Shays. Thank you. Gentlemen, we swear in all our 
witnesses, as you know, even Members of Congress. The only one 
I chickened out on was Senator Byrd. [Laughter.]
    But he is the only one.
    All right, why don't we take you in the order that we 
called you. Gentlemen, we are going to do 5 minutes, roll it 
over, but we would like you to finish before the 10. Thank you.

  STATEMENTS OF LIEUTENANT GENERAL MICHAEL E. ZETTLER, DEPUTY 
CHIEF OF STAFF FOR INSTALLATION AND LOGISTICS, U.S. AIR FORCE; 
LIEUTENANT GENERAL CHARLES S. MAHAN, JR., DEPUTY CHIEF OF STAFF 
     FOR LOGISTICS, U.S. ARMY; AND REAR ADMIRAL KENNETH F. 
       HEIMGARTNER, DIRECTOR, FLEET READINESS, U.S. NAVY

    General Zettler. Thank you, Mr. Chairman, members of the 
committee. Thank you for the opportunity to appear before you 
and discuss cannibalization in the U.S. Air Force. It is an 
important issue to us.
    On behalf of our Acting Secretary, Dr. Delaney, our Chief, 
General Ryan, and most importantly, the fine men and women of 
our Nation's great Air Force, we would thank this committee and 
all the Members of Congress for their recent support to support 
our readiness initiatives.
    Cannibalization is a cross-cutting issue. It impacts many 
aspects of our mission accomplishment, and therefore, whatever 
we do with spare parts impacts our people. General Ryan has 
stated our position very clearly. We cannibalize only as a last 
resort.
    Unfortunately, as the GAO has pointed out, all too often 
we've had to go to the last resort. This statement is rooted in 
the delicate tradeoff: the need to meet mission goals while 
managing the workload for our dedicated men and women.
    Our analysis shows improvements. The analysis indicates 
that cannibalizations have significantly declined since the 
high-water mark in 1997 of 82,000 cannibalizations. Last year 
cannibalizations decreased to 70,000. That's a 15 percent 
improvement. That's a great start. But there's more work to be 
done. Your support was a major factor in this 12,000 ``cann'' 
reduction over that 3-year period.
    The Air Force is absolutely committed to continue this 
favorable trend even further. To do so, we're prepared to 
discuss the many challenges that have been discussed by the GAO 
today and as we see them: full funding for spare parts; 
compensating for the diminishing industrial base; adapting 
modern, business-like policies for repair, procurement, 
stockage, storing, and issuing of spare parts, but not 
necessarily in a centralized fashion; ensuring viable organic 
and contractor sources of repair, and recapitalizing our aging 
aircraft and the subsystems that are so important to enhancing 
the reliability.
    To overcome these challenges, we in the Air Force have 
implemented the broad strategy to improve overall system 
supportability and reduce ``canns.'' These include fully 
funding the known spares requirements in fiscal year 2001. 
We've created an office that will manage diminishing 
manufacturing sources and material shortages. We're 
establishing and adequately funding our weapons systems depot 
maintenance programs for all repairs of aging aircraft and 
engines. We instituted policy changes to retain inventory when 
reasonably prudent to do so, which does, in fact, reverse 
policies which deleted now-needed inventory of the mid-
nineties. And we've created organizations such as the Regional 
Supply Squadrons whose purpose it is to optimize inventory 
distribution. Finally, we've improved deployed spare support 
with enhanced direct support objectives for our fighters and 
overall readiness spares packages for all of our aircraft.
    With your support, we've seen cannibalizations decline 15 
percent since 1997. Importantly, our total backorders that we 
as an Air Force experience have fallen 50 percent since 1998, 
and we've had a 10-year decline in the mission-capability 
reversed, an upturn for the first time since 1991. Our latest 
cannibalization rates indicate the positive trend is continuing 
with the most recent fiscal year 2001 ``cann'' rates at 11.1 
``canns'' per 100 sorties, the lowest rate since 1996.
    There's more to be done for our men and women and to 
improve our readiness. With your support, we will continue to 
aggressively pursue our strategy to drive cannibalizations to 
the lowest possible level while optimizing our overall 
readiness.
    At this time, I am ready to take your questions. Thank you, 
Mr. Chairman.
    [The prepared statement of General Zettler follows:]
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    Mr. Shays. Thank you, General.
    General Mahan.
    General Mahan. Thank you, Mr. Chairman and honorable 
members of the committee. It's my pleasure to be here today to 
report to you on the Army's view of cannibalization. I have 
submitted my full testimony, and in the interest of time, I 
will keep my comments short and to the point.
    The Army views cannibalization as a tool that unit 
commanders must use judiciously, we assume, and direct, in 
their efforts to meet mission and operational readiness 
requirements. Minimum use of this tool is prudent in that it 
provides commanders an ability to attain readiness and mission 
requirements when parts are not immediately available.
    Army maintenance policy supports the use of this tool under 
certain specified conditions, since there are additional costs, 
as already enumerated, in manpower and in spares to our units 
that use this tool. Although Army reporting systems do not 
completely capture all cannibalization activity, there is 
evidence that cannibalization rates have increased over the 
past 2 years, as Army aviation supply availability has 
decreased.
    Commanders' increased reliance on this tool to meet 
operational requirements and readiness goals is evidenced, we 
believe, by a review of recent active Army readiness rates. 
Over the past 12 months, two of our modernized fleets probably 
would not have made goal without the use of cannibalization 
since they met readiness goals by 3 percent or less. 
Regardless, overreliance on cannibalization has the undesirable 
side effects which you've already alluded to and which 
commanders at every level attempt to minimize. The negative 
side effects include those manpower requirements, longer 
mechanics hours, lower morale, increased cost certainly.
    As there is an inverse relationship between repair parts 
availability and cannibalization rates, the problem the Army is 
focusing on is supply parts availability. Cannibalization is 
only a symptom of the real problem, in our view. Due to a 
decade of underfunding and an OSD focus on reducing inventories 
to save money, as General Zettler talked about, in the early 
1990's, the Army's repair part stocks are neither sufficiently 
wide nor deep at both retail and wholesale levels to meet 
commander requirements.
    Consequently, the Army has failed to meet the Army's supply 
availability goal of 85 percent in 4 of the last 5 years, and 
that's for both ground and air fleets, and in 8 of the past 12 
months. Aviation supply availability performance is even worse, 
failing to meet goals in any of the last 16 years or in any of 
the last 12 months.
    Exacerbating that problem is an increasing demand for 
repair parts due to the aging fleets and decreased reparable 
spares reliability due to our past policy of inspect and repair 
only as necessary, as opposed to full refurbishment to depot-
level standards. While that policy will be changed under the 
National Maintenance Program to one that is a rebuild to depot 
standards, it does, in fact, contribute to today's 
cannibalization rates.
    In addition, a key tenet of our ongoing transformation is 
recapitalization of the fleets of our aircraft. This program 
addresses our aging fleet and our increasing operations and 
support cost problems for key weapons systems that require 
rebuild or selected upgrade.
    In closing, our view is that cannibalization is a symptom 
of the real problem of parts availability, and to minimize the 
use of that cannibalization we must improve spare parts 
availability and reliability, which will require a substantial 
investment of our funds.
    I thank you for the opportunity to appear before you today. 
I look forward to working with you all and responding to your 
questions at the appropriate time.
    [The prepared statement of General Mahan follows:]
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    Mr. Shays. Thank you, General Mahan.
    General Heimgartner.
    Admiral Heimgartner. I like being a ``general.''
    Mr. Shays. Admiral, I'm sorry. [Laughter.]
    Admiral Heimgartner. When I call you a general and you're 
an admiral, it is kind of like when people call me a Senator 
when I'm a Congressman. I kind of prefer Congressman. 
[Laughter.]
    Well, Mr. Chairman, Congressman Kucinich, members of the 
committee, I appreciate the opportunity to appear before you 
and discuss cannibalization and how it relates to naval 
aviation readiness and answer questions. I have submitted a 
written statement for the committee and ask that it be entered 
into the record, and I have a brief, 3-minute or so, oral 
summary of my written statement.
    First of all, I'm Rear Admiral Ken Heimgartner, the 
Director of the Fleet Readiness Division on the Chief for the 
Naval Operations' staff, a new position established in October 
2000 by the Chief of Naval Operations to help focus the Navy 
leadership's attention on current readiness. I work closely 
with the fleet to identify current readiness issues, validate 
those requirements to meet those readiness concerns, and 
advocate those requirements within the planning, programming, 
and budgeting system up here in D.C.
    As far as background, I'm a naval flight officer. I have 
over 22 years of operational flying experience, over 4,500 
hours of flight time in fighters and 3,000 of those in the F-14 
Tomcat. I served a 2-year exchange tour with the Air Force on 
flying status. I've been a squadron maintenance officer, a 
squadron commanding officer, and an airwing commander on an 
aircraft carrier and had to make the hard decisions on 
cannibalization.
    Cannibalization and its impact on fleet readiness is an 
area of huge interest to not only my division and me, but at 
the highest levels of the Navy and the Marine Corps. The 
Department of the Navy position is that, in support of our 
training and operational mission requirements, cannibalization, 
while not a preferred maintenance practice, can be a viable 
maintenance tool in certain circumstances. It is, therefore, 
authorized by Navy Department instructions. As long as the Navy 
and the Marine Corps operate complex, high-performance aircraft 
in difficult environments in support of our Nation's defense, 
pragmatic, constrained, and managed cannibalization will occur 
to ensure that we have enough mission-ready aircraft to meet 
operational and training missions.
    Having said that, we in the Navy and the Marine Corps 
recognize that cannibalization generally highlights shortfalls 
in our logistics systems and other areas. The sailors and 
marines that repair our planes don't want to tear down another 
plane to fix that plane that they are assigned to repair. Our 
maintenance technicians strongly agree that only extraordinary 
circumstances should drive cannibalization. Therefore, we track 
cannibalization and are taking actions to fix specific 
cannibalization problems as well as attacking negative trends 
in overall cannibalization rates.
    Our focus on this problem, along with Congress' help, has 
stopped the recent increasing trend in cannibalization across 
naval aviation. While the trend for the total force is 
declining, we still have ``cann'' problems, cannibalization 
problems, within certain types of aircraft, exacerbated by the 
increasing age of our naval aircraft inventory, which now 
averages over 18 years for our carrier fixed-wing aircraft and 
21 years for our helicopters. For comparison purposes, the 
average age of our surface combatants in the Navy, the ships, 
is only 15 years.
    The challenges associated with an increasing demand for 
parts as aircraft age, unanticipated parts failures on older 
aircraft, limited space for repair parts afloat, and long 
delays in delivery time for some parts, all contribute to the 
need for cannibalization. Because of these specific challenges 
and the dissatisfaction that lack of needed parts, equipment, 
and materials has on our sailors and marines, we are continuing 
our efforts to reduce the need for cannibalization of aircraft 
and have programs in place to do so.
    With your help, our deployed forces are ready today. There 
has been no degradation in our deployed force readiness over 
the last 20 years, but at a readiness price for our nondeployed 
forces. And the same as the Air Force, this last year was the 
first year that we have been able to reduce a downward trend in 
readiness for our nondeployed forces.
    The key to reducing the impact of our aging aircraft 
inventory and cannibalization is to establish a proper balance 
between acquisition of new equipment, which helps reduce 
maintenance requirements, and properly funding the spare parts 
for the aircraft that are currently in the inventory.
    Thank you for the opportunity to discuss this issue with 
you and answer questions.
    [The prepared statement of Admiral Heimgartner follows:]
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    Mr. Shays. Thank you, Rear Admiral.
    We will go to Mr. Gilman.
    Mr. Gilman. Thank you, Mr. Chairman. I want to welcome our 
experts here on logistics.
    Let me ask the entire panel, do you three Chiefs of Staff 
for Logistics and Director of the Fleet of all three major 
components of our military ever get together to discuss your 
mutual problems of cannibalization?
    General Mahan. Sir, I can tell you that we get together 
quite frequently. The Joint Logistics Commanders Conference, we 
meet often with the Joint Logistics Chief, Lieutenant General 
McDuffy. We talk about issues, all types. Cannibalization has 
not been one of the premiere subjects, but it certainly is 
embedded in our readiness discussions as we talk to that.
    Mr. Gilman. Well, General Mahan, you say you never get into 
the cannibalization or touch it lightly?
    General Mahan. Sir, it has not been a specific subject that 
we have dealt with as a unique subject. It is embedded in our 
discussion topics about readiness, about ways to enhance that 
readiness, etc. We talk more about the other issues, such as 
test equipment, diagnostics, the long lead times for 
administration and procurement lead times. We talk about 
funding levels. We talk about management systems.
    Mr. Gilman. But do you feel, all three of you, do you feel 
that cannibalization warrants more attention than it has been 
given by the services?
    General Zettler. I think when we meet----
    Mr. Gilman. Could you put the mic a little closer to you, 
General?
    Mr. Shays. Gentlemen, I'm sorry, we seem to be having a 
little bit of trouble with our mics. They used to project 
better.
    General Zettler. I think when we meet, we try to go to the 
root cause of cannibalizations. We recognize that there's a 
cannibalization issue out there, but we go to some of the 
things that you discussed: inventory management policies and 
practices, stockage levels, minimum readiness levels that we're 
willing to accept, and how you drive from those minimum 
readiness levels to a stockage objective.
    Mr. Gilman. Well, who meets with you from DOD?
    General Zettler. That's a very fair question, and in the 
past Dr. Kallock, who was the Deputy Under Secretary of Defense 
for Logistics, was the leader of this tribe as we worked our 
way through this process and these issues.
    Mr. Gilman. You're talking about past. Is he no longer 
there?
    General Zettler. No, sir, he's no longer there.
    Mr. Gilman. Has that post been replaced?
    General Zettler. Pardon me, sir?
    Mr. Gilman. Is there anyone who has been replaced for that 
responsibility?
    General Zettler. There are plans in the Department to 
replace him.
    Mr. Gilman. But at the moment there is no one there?
    General Zettler. That's correct, sir.
    Mr. Gilman. And how long has that been vacant?
    General Zettler. Since the change of administration.
    General Mahan. Sir, I might add, we have an Acting DUSDL, 
Deputy Under Secretary of Defense for Logistics, Mr. Allen 
Beckett. We have met with him. He continues to bring to us the 
issues that are important from a readiness perspective, but, 
sir, he is an acting.
    Mr. Gilman. Then it would be that post that would have the 
central control of logistics, is that correct? That staff level 
person?
    General Mahan. Sir, there is. I would submit to you that it 
is not merely the logistics chief that has that responsibility, 
nor that can impact on readiness and spares. I would suggest 
that the acquisition process, which is, in fact, separate, just 
as the science and technology is also separate, has much to do 
with the issues of spares, reliability of spares, and the 
levels of spares that are acquired as part of the initial 
systems process. So it is a partnership among all of those 
staff leads within the Secretary of Defense, just as it is in 
our----
    Mr. Gilman. I have to interrupt you because my time is 
running. Have you, the three of you, made any recommendation on 
how to avoid this growing problem of cannibalization to the 
Department of Defense?
    Admiral Heimgartner. From the Navy's perspective, not 
directly.
    Mr. Gilman. Pardon?
    Admiral Heimgartner. Not directly.
    Mr. Gilman. Not directly? What would you think about the 
services--how would you response to a proposal of partially or 
wholly privatizing the supply system for spare parts and other 
equipment management? What would your response be to that? 
Since we're not doing such a good job in the services, maybe 
the private sector could do a better job.
    General Zettler. I think there is room for a study of that 
approach. We have various systems, such as the KC-10 or the F1-
17, where we allow industry to do our supply chain management 
for the platform unique parts. We get good support. It is with 
a cost.
    We know that in cases where we have gone to industry to 
allow them to do that, we have also had supply chain 
difficulties. So I think when you move down that path, you have 
to be very careful. It's something that the Air Force would not 
immediately throw up a stop sign to, but it's one that we would 
say we need to go cautiously.
    Mr. Gilman. But worthwhile studying, is that what you're 
saying?
    General Zettler. Absolutely worthwhile studying.
    Mr. Gilman. Do the others feel the same?
    Admiral Heimgartner. If I may comment----
    Mr. Gilman. Admiral.
    Admiral Heimgartner. Yes, anything that may highlight why, 
the systemic reasons, if that's the case, that cannibalization 
is where it's at and where it needs to go. But I may add that 
cannibalization itself may just be a small symptom of larger 
problems. And from my own experiences, the sailors and the 
troops have no adverse reaction to cannibalizing if that action 
leads to a sortie that gets off the ground, training that's 
completed, an operational sortie flown while deployed overseas, 
and mission accomplishment. They take great pride in preparing 
those airplanes and getting those airplanes off the flight 
deck.
    Mr. Gilman. I can understand that, and they do a good job 
of that, but what about the cost factor to all of this of a 
piece of equipment close to several millions of dollars lying 
there idle because you cannibalized it?
    Admiral Heimgartner. Well, let me finish. The other 
elements that cannibalization may mask, and were alluded to by 
others as well as the GAO, and that may be an inadequate 
training issue. It may be the inadequate number of personnel. 
It may be improper engineering and logistics support for 
components on aging airplanes on which we have no data as to 
when they may break and the magnitude in which that fix may 
exacerbate the length of time in which components may be down.
    Let me just say that we don't normally stock entire landing 
gear assemblies because those landing gear assembles are 
supposed to last thousands of hours, but if they break 
prematurely, it can take as long as 2 years until the time that 
we've been able to get those parts back in the inventory. And 
that has been the recent case in the year 2000 with engines on 
AV8-B's, engines on H-46's, landing gear on the F-14, and 
landing gear on the F-18.
    Mr. Gilman. Admiral, how much does an F-14 cost the 
service? What's the cost of that 14?
    Admiral Heimgartner. Do you mean to buy a new one?
    Mr. Gilman. Yes.
    Admiral Heimgartner. Difficult to determine since the 
average airplane----
    Mr. Gilman. Well, approximately.
    Admiral Heimgartner [continuing]. Is over 20 years old. 
Replacement cost, probably $50-$60 million, but that's a guess.
    Mr. Gilman. Millions of dollars sitting there idle, it 
seems to me.
    My time is running. Mr. Chairman, one question more----
    Mr. Shays. Your time ran out a long time ago, but we're 
trying to accommodate you. [Laughter.]
    Mr. Gilman. The GAO noted the inability to determine the 
full extent of cannibalization because the services aren't 
really reporting the full extent of cannibalization. Can we do 
something about more accurate reporting, so that the Congress 
will have an opportunity to take a good look at the assessment 
of the cost and how it affects our----
    Mr. Shays. Let me do this: That is a question I am going to 
come back to. That is a whole new line of questions that we 
really do need to get into, and I really thank the gentleman 
for asking these very important questions.
    Mr. Gilman. Thank you, Mr. Chairman.
    Mr. Shays. I'm going to give Mr. Kucinich 10 minutes, and 
then we'll go to you, Mr. Schrock.
    Mr. Kucinich. I thank the chairman, and hopefully, it won't 
take that long to go through these questions.
    I want to begin by thanking each of the representatives of 
the service. I want to thank you for your service to our 
country. You should know that those of us who serve in Congress 
understand that you are performing an essential service to our 
Nation in taking responsibility in the respective services, and 
also, just as I don't like to be held accountable for the 
institution of Congress relative to certain things that happen 
around here, I would expect that any of the individuals who 
serve proudly also have some concerns about the institution 
that you are now serving. You do the best you can, and I 
believe that.
    But, nevertheless, I want that to serve as a backdrop for 
the questions that I have, and I ask that you not take them 
personally, but take them as the responsibility that I have to 
ask the questions. I hope that you will understand the spirit 
in which the questions are conveyed.
    General Zettler, I am sure you are aware of GAO's finding 
that the Department of Defense maintains almost $30 billion 
worth of current inventory that exceeds both war reserve levels 
and current operating requirements. Are you familiar with that?
    General Zettler. Yes, sir, I am.
    Mr. Kucinich. What do you think of that?
    General Zettler. Well, I feel that I have to look at the 
Air Force, where we work that issue for the Air Force. Our 
inventory in the Air Force over the last 10 years has been 
drawn down from, rough number, 35 billion to a number today of 
25 billion. I think that those stock levels that are out there 
are in the ballpark of appropriate.
    Do we have some things out there that may not be used for 8 
or 10 years? Probably. Do we have a lot of parts that we don't 
have right now? Absolutely.
    When I look at what the Materiel Command says keeps them 
from repairing parts to the needs in the field, the largest 
constraint that they repeatedly report to us is a shortage of 
carcasses, which says we don't have an inventory of spare parts 
to fix, to put back out in the field. So I think our inventory 
figures are probably in the ballpark.
    I will tell you that we've also made some policy changes, 
as I made in my oral statement, recently to retain inventory 
for a longer period of time. We've done that because we've had 
some solid studies done by the men and women that are out in 
the field that say, the current policy says, since we haven't 
had a demand for this, we should get rid of it. But we know 
that in 2 years we're going to go through the same life cycle 
on this airplane again, and that part is going to be in demand. 
So my bottom line on the inventory question is that we need to 
have a balance here. We can bring that inventory down 
dramatically, only to find out in a few years we'll need it 
again.
    We're also buying a great deal of spare parts, and those, I 
believe, are valid requirements that we have gone to great 
lengths to identify properly what's required and try to 
replenish the stocks that were drawn down in the nineties for 
demands that we said weren't going to happen.
    Mr. Kucinich. Thank you, General. General Mahan, would you 
like to respond to that same question?
    General Mahan. Sir, I would. I share the same perspective 
as my comrade from the Air Force.
    Mr. Kucinich. Do you have the same numbers?
    General Mahan. Sir, I have better numbers than that in 
terms of reduction from the OSD-mandated perspective. We had a 
memorandum directing reductions in inventory. At that point 
that we started, we were at a little over about 18 billion in 
the Army. We have gone down below 8 billion. We are now back to 
9.3 billion because we recognized that readiness rates could 
not be sustained with those levels of spare parts inventories.
    Our current procurement for aviation spares, the purchase, 
if you will, from field organizations, average about $1.6 
billion per year. So, in terms of inventory turns, we wouldn't 
meet the inventory turn average for industry at large, but we 
have, as already alluded to, some inventory that will not 
change as rapidly.
    If you went back and looked at our recapitalization 
efforts, much as General Zettler has already alluded to, we 
find that carcass rebuild, which we depend on 25 to 30 percent 
of the time for spares, is inadequate because of piece parts 
that are subordinated to that spare. So we have to go through 
and really look at the high readiness drivers and the high 
dollar cost drivers, so that we can get the best return on 
investment for what we will purchase in spares requirements.
    Mr. Kucinich. You're familiar with the same report that I 
cited?
    General Mahan. Sir, I am.
    Mr. Kucinich. What do you say about one of the aspects of 
that report that said that $1.6 billion worth of inventory was 
purchased without any valid requirements? This is GAO saying 
it. Is that a problem?
    General Mahan. Sir, I could tell you that, from the Army's 
perspective, we contributed to that. Until we have--and we are 
in the process even as we speak of going to a single visibility 
of all Army inventory. It's called total asset visibility. 
Before, our wholesale system believed and acted as if, when 
they issued a part, that part was considered consumed because 
our standard management information systems would not allow you 
to count as part of our requirements determination process all 
of the assets that were in the hands of field units when 
purchases were made from the original equipment manufacturers 
or when decisions were made to rebuild spares. Today we have 
made changes that will give us from the factory to the foxhole, 
if you will, the inventory in motion, both from a maintenance 
perspective, from an inventory perspective, and it will always 
be available for that acquisition objective determination.
    So, yes, sir, I would suggest that we did that. In my first 
tour in the Pentagon as a general officer, I was Director of 
Supply and Maintenance, and, in fact, we purchased into long 
supply, rebuilt into long supply, and failed to induct the 
appropriate readiness-driving carcasses into short supply into 
the production lines because we had poor visibility of those 
assets. We have changed that.
    Mr. Kucinich. So, General, when GAO said that the Army 
didn't know if it shipped inventory, inventory had been lost or 
stolen, because of weak inventory control procedures and 
financial management practices, you are saying these are things 
that you not only are aware of, but you are working to address?
    General Mahan. Sir, we have been vigorously attacking that 
through several issues. As I said, the total asset visibility 
program, the single stock fund program that will get us to 
visibility of all those assets, be that at, if you will, the 
flight line equivalent for the Army in the motor pool, in the 
authorized stockage list of units down to that retail level, 
through the installation level, if you will, retention 
accounts, and at the wholesale level. We are through milestone 
two. Basically, we have captured the installation stocks and 
the retention stocks at the core, mainly the repair parts 
companies, and we are now moving into milestone three, which is 
down at the retail stock level of the authorized stockage list 
inside the units themselves.
    Mr. Kucinich. A quick question--thank you, General.
    General Mahan. Yes, sir.
    Mr. Kucinich. I want to go to Admiral Heimgartner. GAO 
reported in its high-risk series that the Navy was unable to 
account for more than $3 billion worth of inventory. Do you 
have any response to that, Admiral? And what are you doing 
about it?
    Admiral Heimgartner. Well, similar approaches as the other 
two services. I mean, as we all know, the resources have been 
difficult to maintain in service aircraft as well as 
recapitalized, and we can't afford to have mispositioned, ill-
positioned stock. So we're attacking that aggressively.
    But, if I may, I would just like to mention for 
comparison's sake that we have about roughly 16,000 parts on a 
carrier. When an aircraft needs a part, we're able to fill that 
about 75 to 85 percent of the time immediately, and then it 
takes about 4 days on average for the other parts to come to 
the carrier. And if we're looking at shore-based operations, it 
takes 8 to 12 days.
    So what we have is a little bit of a mismatch, as much as 
25 percent, perhaps 15 percent. So can we do better? 
Absolutely, yes.
    Mr. Kucinich. Yes, one of the things I want to say before I 
go back to the Chair here is that there is a certain level of 
confidence that comes in the midst of all this when you have 
representatives of the service taking responsibility, first of 
all, because you have been very certain about that, but also 
stating that you are really making an effort, you have been 
making an ongoing effort to try to deal with this. I think that 
should give the public a certain degree of confidence that an 
effort is being made. I would say that, based on the 
presentations that I have seen here, I think the people should 
know that you are really working very hard to try to straighten 
this out. It is not something that you created, but you are 
trying to resolve it. So I want to thank you for your 
testimony. Thank you.
    Mr. Shays. I thank the gentleman. Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman. I think what my 
friend from Ohio said last is probably the most important 
thing. I am not sure--we've missed the point here, as far as I 
am concerned.
    General Zettler, first of all, said that they try to 
cannibalize as a last resort, and he also said full funding--
keyword ``full funding''--for these parts is necessary if he is 
going to keep his planes running.
    General Mahan said underfunding is the main problem. 
Underfunding is the main problem. More spare parts because of 
aging fleets, that is a key. The older these things get in the 
Navy, the Air Force, the Marine Corps, or the Army, they've got 
to be fixed.
    Admiral Heimgartner said aging inventory means more spare 
parts. And, folks, we just have done a lousy job of that, and I 
place the blame right here behind this desk. If these men are 
going to do what they are supposed to do, and if the fleets are 
supposed to do what they are supposed to do, we've got to fund 
them. We haven't killed the military over the last 8 years, but 
we have kept the water level up to here so they are strangling. 
Unless we do something about that, this isn't going to change.
    These three men are doing exactly what they are supposed to 
do. I heard my friend Mr. Gilman say, if the services aren't 
doing a good job of this, maybe we ought to let the civilians 
do it. I nearly came out of my seat at that one. They are doing 
a magnificent job. It is the civilians that aren't making sure 
they have the parts that they need.
    We can never predict when a ship is going to break, when a 
tank is going to break, and when an airplane is going to break, 
Mr. Chairman. A ship is only so big, and you're not kidding, 
there are lots of parts. I was in the Navy 24 years. I have 
talked to the people at Oceana a lot because that is in the 
district I represent. And they cannot predict when these things 
are going to happen. If you have to produce these things after 
the problem exists, then there is no way we are going to keep 
our fleet running, and they are not going to be able to carry 
out the missions they have been tasked to do.
    You have to understand, too, the military has been cut by 
40 percent in the last decade with requirements going up 400 
percent. That is not their fault; that is our fault. In the 
last 8 years, the last President had our forces in more areas 
of the world than all Presidents and Franklin Delano Roosevelt 
combined, and that was out of the budget. There was not a 
contingency fund to do that or a supplemental fund. These men 
had to try to operate with all those things going on and they 
simply can't do it.
    We shouldn't be having this discussion. We shouldn't have 
to look at airplanes like we see up there. Because if we were 
funding exactly as we should and we were providing the parts, 
that wouldn't have to happen.
    I sat next to a former 35-year-old major in the Air Force a 
year ago coming back from San Francisco. I said, ``You're 35 
and you're a former major. What's that all about?'' He said, 
``I was flying planes day-in/day-out, week-in/week-out, month-
in/month-out, and every night when I parked them, I wasn't sure 
any maintenance was going to take place on those, and I wasn't 
even sure if I came back in the morning that all the parts I 
left there the night before were going to be there. And my wife 
said to me 1 day, she said, 'You know, we've got three small 
kids. One day you're going to go up and you're not going to 
come back. What would I do?''' He was a smart guy. He got out. 
He's got a big, fancy, high-paying job in Silicon Valley, but 
the fact is we needed that guy, and we needed the hundreds and 
hundreds of others that have gotten out because of the same 
thing.
    I hear this from commanders and squadron commanders all the 
time in Virginia Beach and Norfolk, the area I am privileged to 
represent, and the enlisted people as well. The morale of the 
troops sucks. It stinks. Because they don't have the parts to 
do what they have been trained to do. Unless we at this level 
put the money in the budget to make that happen, and unless we 
do something about a supplemental real fast, the CNO has told 
me he's going to start parking planes June 1st. The Chief of 
Staff of the Air Force said he is going to start parking them 
August 1st. It is not these gentlemen's fault; it is our fault. 
We have got to make sure the funding is there.
    If we truly want to have the best military we have ever 
had--and everybody keeps saying we do, but I am starting to 
question that--we've got to make sure we provide them with the 
funding that is necessary. I didn't mean to get on my soapbox 
like this, but I was in the military 24 years. I know what it 
takes to run an operation, and we are not doing it. We are not 
letting them do it. Until we do, nothing is going to change.
    Thank you.
    Mr. Shays. I thank the gentleman.
    Let me just say to all three of our witnesses that, while I 
agree with a lot of what my colleague has said, having been 
here 14 years, I have been here when the military has come 
before the Appropriations Committee and said, ``We have all the 
money necessary to do everything we need to do.'' I served 14 
years in the Statehouse, and quite often people would come and 
say, ``We have everything we need.'' Then, later on, we find we 
didn't. So I will fault Members of the Congress when the 
statements are clear and the testimony is honest, but when 
people take the party line to be good soldiers for their 
command, they totally distort our knowledge and understanding.
    And let me just say to you that I am trying to get a handle 
on a few things, and it is very important that we proceed with 
this hearing and understand exactly where the problems are and 
where the remedies are. I can understand the age of the 
aircraft means that we are going to use parts more often. I can 
understand that, if we are no longer in production, we have a 
problem. I can understand that this number of units that we may 
have, the number of aircraft, may make it much more difficult 
to supply inventory. I can understand that we use this aircraft 
continually. They don't sit in the garage for a weekend 
usually. So that is a problem. And I can understand the whole 
funding issue.
    What other issues cause the shortage?
    General Zettler. Let me address that at least in part. Our 
stock management is pretty sophisticated business. We try to 
optimize aircraft availability. When we do that, we set some 
limits that we're willing to accept in not having the spare 
part where we would like it to be when the mechanic says, ``I 
need it.''
    We do that from the modeling approach that says some of 
these parts are terribly expensive, and so you try to optimize 
by having a few lesser ones than the very most expensive one. 
When we do that, the reason we do that is you try to drive to 
100 percent availability of every aircraft; you start to run 
vertical on the cost curve against the probability line that 
says I want 95 percent or 98 percent or 99, and you're 
literally going to infinity to assure you have the distribution 
of spare parts. So we put some cost constraints into our 
equations.
    When we do that, that means there's going to be times where 
a mechanic says, ``I need this part,'' and he doesn't have it. 
It's a simple variability of demand. He may have used one 
yesterday, too, and he may not use another one for 2 weeks or 3 
weeks while the system replenishes it.
    Having said that, we have obviously undershot that mark, 
and we're going back and look at those equations. I will also 
tell you that in our overall Department policy with the Defense 
Logistics Agency, what the Defense Logistics Agency is tasked 
to do is give us the parts that we need 85 percent of the time 
when we order them. That's their stockage policy. So that 
builds in some criteria here or some shortages in here. And, 
again, that's a matter of looking at where you're going to go 
on that probability-versus-cost curve.
    In order to overcome that one on the Defense Logistics 
Agency, for example, the Department of Defense 18 months ago 
authorized an additional $500 million of inventory 
augmentation, of which 60 percent comes to the Air Force as 
they buy it over 4 years to help us with our spare parts 
problems.
    So when a mechanic tells any of us out there, ``I don't 
have the parts,'' you really do have to bore down into the 
details of what is the part that you don't have or the one 
that's really giving you the problem and why. In many of our 
cases in our weapons systems right now, very currently, this 
year and last year, we closed two depots; we moved 40 percent 
of the repair capability between the depot at Kelly and the 
depot at McClellan in Sacramento, CA, and we put that into 
other depots or into the private sector. That's a huge workload 
change; 40 percent of our workload moved. And that has had 
perturbations.
    So you really need to start to peel the onion back before 
we talk about centralization, before we talk about making major 
policy changes: What is it we're really trying to fix here? I 
think that all of us are doing that, and I think you will 
recognize that we are doing that when we're done here today.
    In my service, for example, I have taken my Director of 
Supply and sat him aside with 120 to 150-day tasking to go 
through the complete supply chain management policies and 
procedures that we have and we operate under in the Department 
of Defense and in the Air Force, and to come back to the 
corporate body of the Air Force and tell us what are the high 
payoff ones that we need to go change, and we're prepared to do 
that. I've been to the Chief with the outline of how we're 
going to do that. I've made my case. The Chief supports it, and 
I think that General Mansfield will come back in the July/
August timeframe with, ``These are the things that we 
absolutely have to do,'' from stockage policy, from financial 
operations, from distribution policies, from how we do 
readiness spares kits, and bring that all together. I think he 
will bring in 30 to 50 initiatives, and I'm hopeful that we 
will get 75 to 85 percent of those accomplished in the next 
year.
    Mr. Shays. OK. General Mahan, we have an aging aircraft. We 
are no longer in production in some. We have small numbers of 
units, aircraft. We have a lack of predictability. We have a 
turnaround problem. We have full funding, and General Zettler 
has talked about cost constraints and that proper balance. What 
would you add to this list?
    General Mahan. Sir, I would tell you that policy, as it 
relates to stockage availability--as mentioned already, DLA 
used to have a 90 percent stockage availability requirement in 
the early nineties. They were mandated, I believe by Congress, 
to go to an 85 percent stockage availability criteria, as a 
result of the excesses that were, in fact, noted after the 
buildup of the Desert Shield/Desert Storm.
    I think at the end of that, because of the numbers of 
dollars that we had that were in----
    Mr. Shays. Let me just explain something, to add a little 
reality to my colleague's comments. We were ordering, because 
we had such poor inventory control--I mean, this is not the 
first hearing we've had. We are not babes in the woods here. We 
have had countless hearings talking about billions of dollars 
of parts being ordered because all the military didn't know 
they already had the parts. So we have to get at this.
    And the reason we started to see Congress respond 
differently was we wanted to know why the hell we were ordering 
parts we already had, and we were ordering them not just 1 
year; we were ordering them a year and a year and a year. So we 
hadn't used the parts for years and we kept ordering them 
because we have such poor control.
    We wondered why it is that our masks--and this isn't 
aircraft, but our masks--some of them were not made properly. 
Forty percent of them were not performing to the requirements, 
and we mixed them in with the inventory, and when we wanted to 
get them out of the inventory, they couldn't tell us which 
masks were what.
    So, I mean, there are a real lot of problems here. I 
suspect that they just didn't relate to the Marines on the 
ground and the Army on the ground, but it related to the same 
endemic kinds of problems.
    So you are talking about coming down to 85 percent, and 
that was a factor, you think. What else do you think?
    General Mahan. Sir, if I could expand on that----
    Mr. Shays. Sure.
    General Mahan. Mr. Chairman, I think we're violently in 
agreement in terms of our inability to articulate very clearly 
the real requirements. Our systems have grown up in stovepipe 
systems. Financial does not talk to supply. Wholesale did not 
talk to retail. We are attacking those systems. Maintenance did 
not talk to supply appropriately at the wholesale level. So I 
had swivel-chair technology taking place at the corporate 
leadership of the Army, where our Army Materiel Command had to, 
in fact, take one diskette, do a swivel-chair for every 
national stock number that it was trying to manage of the 6,400 
reparable items, much less the hundreds of thousands of 
consumable items that have been transferred to DLA. Sir, that 
is an unacceptable way of doing business, and we have to get at 
that.
    That is one of the efforts that we are making today, to try 
to get visibility over all those systems, so that we make the 
right corporate decision. Where we can, we need to run our Army 
and our Armed Forces as a business. As we have already alluded 
to, it still has to be passed through the prism every day of 
readiness and mission capability, but where we can--and that's 
where I go back to single stock fund and the National 
Maintenance Program, reliability of the spares, refurbishment 
of the platforms that will allow us to do that.
    So systems, spares reliability, and how we can look at our 
policies, not the least of which is inventory management, as 
we've spoken to, but also maintenance management. If I continue 
to repair only as necessary--and I'll give you probably one 
that to me is far more meaningful, but it clearly, I think, 
underscores the importance of having appropriate policies.
    Today we have an inspect-and-repair-only as-necessary 
policy that for the M-1 tank engine, when we originally bought, 
it was supposed to be 1,500 hours mean time between failures, 
delivered between 1,350 and 1,400. Because of inspect-and-
repair-only as-necessary, if I open an engine at the unit level 
and that engine has a problem with one or the other of its 
forward or rear mods--and there are four in that--they can 
replace a forward mod and put the engine back together, and 
they just bought into the life expectancy of the worst of the 
remaining three modules of that engine. By doing that, that 
means that the mechanics are going to be probably repairing it 
three times more frequently than they should, had they gone 
back to refurbishment; i.e., the depot-level DEMAR standards 
that will go back and recapitalize and refurbish to zero miles 
an hour.
    So our policies, be that inventory management, be that 
maintenance management, certainly be that the financial 
management as in single stock fund, all coalesce, hopefully, 
into a better capability to do exactly what you would expect of 
us, and that is to manage appropriately and efficiently all 
those different policies and procedures.
    So, sir, we are in agreement in terms of where we must go. 
It's now pushing the dollars into the systems to be allowed to 
do that. My management information systems are, in fact, from 
wholesale logistics modernization program, which is for the 
first time trying to get at a capability instead of buying 
hardware and software in stovepipe fashion that has first, 
among equals, the ability to coalesce all of the disparate data 
elements from supply, maintenance, finance, etc. So that we can 
begin to see all of those things that we could not see before.
    That's what led us to this inventory mismanagement. 
Clearly, guilty as charged, because we did not have visibility. 
Once we issued, it was considered consumed. And GAO, I believe, 
would go back and could confirm for you that those things that 
were bought into long supply or repaired into long supply were 
at least partially, if not wholly, due to our inability to use 
those systems automatedly. So that an automatic feed to a 
requirements determination process included the elements that 
were down at the retail level in the hands of the flight lines 
and the motor pools, as well as all the way up.
    Mr. Shays. K-Mart can tell you what they sold in any store 
almost instantly. The military at this time cannot tell you 
what they have, where they have it, when it goes out. They 
can't tell you, in a sense, what the consumer is buying. And I 
am just saying to you that we all recognize that and we are 
trying to deal with it, but it is why we are here.
    General Mahan. Yes, sir.
    Mr. Shays. Because if you can do it as well as the private 
sector, then we want you to continue to do it. If the private 
sector can cut your costs, so your military personnel who have 
been trained to do so many things can do their jobs and not 
have to handle inventory, although you have people trained to 
handle inventory, that may be a plus. So these are all things 
that I know you are considering and we are aware that you are 
as well.
    General Zettler. Mr. Chairman.
    Mr. Shays. Yes?
    General Zettler. In our Air Force today, implemented in 
fiscal year 2001, being refined in fiscal year--or implemented 
in 2000, being refined this year, when our reparable parts sell 
at a base, in short order, not instantaneously, the item 
manager for that part and his supply chain manager, his bosses, 
know what parts have sold, and that allows them to make more 
management-level decisions of what parts need to be repaired 
and driven into the repair.
    So we have a program out there. By acronym, we call it 
KEYSTONE. It's certainly not perfect, but a vast improvement 
over what we had in 1999 to tell us what parts are being 
consumed and how to, then, replenish those, rebuild the budgets 
for the future years.
    General Mahan. And, sir, likewise, I think through all the 
services, we are going to more and more of a real-time DRID-54, 
which is an OSD directive that forces us to go to real-time, if 
you will, even wireless kind of activities, so that we can 
relate supply activity to real mission requirements. That's one 
of the underpinning responsibilities of the services as we go 
to more of this business process-related----
    Mr. Shays. Let me just say, my colleague is welcome to join 
in anytime, but when you only have two Members, we have the 
opportunity to turn off the light. It also gives you a chance 
to give a more extended answer, if you want to.
    Mr. Schrock. I would like very much to----
    Mr. Shays. Sure.
    Mr. Schrock. I agree with two things you said completely. 
One was that for a long time we were overbuying and things were 
stacking up on one another, and that is not good. But I think 
you will be pleased to know that the Navy at the SPA Wars 
Command in Chesapeake has developed a system, a K-Mart-type 
system, a Wal-Mart-type system.
    Mr. Shays. Right.
    Mr. Schrock. And, oddly enough, it was developed by an ED-7 
Chief Petty Officer and a First Class Petty Officer. And I had 
a briefing on that a couple of months ago, and it's actually 
magnificent and is going to stop some of these problems.
    And another thing you said, you're absolutely right, the 
Joint Chiefs do come up here and say they want this much money 
when they knew they needed this much. I went back and talked to 
two of them, and their response was, ``Well, that's just the 
way business was done the last 8 years. We knew we were going 
to ask for this much, but we had to beg for the rest.'' We 
shouldn't have to do that. Those men ought to be able to come 
up here and say frankly what they need for the whole period and 
then be done with it. And I think that mindset is going to 
change.
    Mr. Shays. Right, and they are going to say what they need, 
and we are not going to agree with everything, but at least the 
record is honest. Then we can have accountability where it 
belongs. I think if you tell the American people the truth, 
they ask you to do the right thing. And I think if you ask 
their Representatives, their Congressmen and women, what you 
believe to be the truth, they attempt to do the best they can 
to accommodate.
    But, we are also dealing with--I mean, I am interested in 
National Service in general. I had a Member say he is not going 
to vote for it because three out of their seven accounts 
weren't auditable. And then in my work on the Budget Committee, 
working with DOD, none of DOD's accounts are auditable--none. 
None. Over 7.6 trillion transactions were not auditable. That 
lends itself to extraordinary abuses. So we just have to make 
sure that we are demanding the same accountability ultimately.
    Admiral, I didn't give you a chance to just respond. I do 
want to get to the second part, which I do fault the military 
for, and I am going to give you a chance--in other words, we 
can say it is other people that should have done this or that 
and we could do a better job. I am at a loss to know why we 
aren't keeping better documentation and why the documentation 
can't be uniformly understood. And if it can, then I want to 
know how it can be.
    But we have traveled the bases and we ask these questions 
of the rank-and-file, and they tell us how much down time 
exists for the inventory. Thank goodness, they are telling us 
because I want to do something about it. But it seems to be 
higher than what the statistics tell us.
    But, Admiral, just going back on the issue of the age of 
the aircraft, no longer in production, small number of units, 
lack of predictability, turnaround time is a problem, full 
funding issues, whether we are fully funding the cost, what's 
the proper balance between inventory on hand, and so on--I 
mean, those are issues that obviously you have to think about. 
Is there anything else I should add to that list?
    Admiral Heimgartner. Let me, if I could, just take a couple 
of minutes to address that in broad terms, and then maybe more 
specifically.
    I agree, since the early nineties, requirements was not 
something that the system focused on. I've been--this is my 
fourth tour in the Pentagon, and I've been in requirements and 
readiness in most of the tours with some budget experience. But 
the CNO, when he came in last year, his first priority for his 
first year was current readiness. The reason that he put 
together this division that I head, which is Fleet Readiness, 
was to get to the real requirement and challenge all 
assumptions, measure the product of the plan, a number of items 
that are good business-sense issues and which we, frankly, 
hadn't focused on in a number of years.
    We used to have a robust requirements generation process in 
the Pentagon, but we went out of that when we were top-line-
driven. So now we're back into that, and we're back into it big 
time. I say that to kind of add a strategic underpinning to 
understanding cannibalization and other things that we do. We 
can't look at them in a stovepipe environment. We have to look 
holistically.
    One thing that we're doing in the Navy is we're trying to 
understand why we can't execute the flying hour program and 
match the hours that we had programmed to the cost per flight 
hour. In other words, we fly up the money, but we don't fly the 
hours. So why is it that the costs are going up? And it's more 
than just cannibalization. And you've mentioned almost every 
item that has to be taken into account when you look at our 
ability or inability to meet the mission.
    So my particular division, just to give you some idea of 
what has been invested by the Navy and the Marine Corps in 
trying to get to the heart of the requirements, we're the ones 
responsible to assess, develop the metrics, the models, and the 
methodologies for the flying hour program, manning for 
aviation, training for aviation, support equipment for 
aviation, publications for aviation, the programmed logistics 
in order to do the analysis to decide if these parts are 
reaching an age in which we ought to overhaul them instead of 
just repair them. I also have depot maintenance for aircraft, 
airframes, and engines, the spares, and a look at the 
facilities as well as the shipping and handling of those 
particular parts. Then I have about the same thing on the ship 
and the submarine side, too.
    So we're expending a considerable amount of effort in order 
to try and find out the real requirement, that linkage to 
readiness, so that we can better articulate what it is that we 
need so that we can get our arms around what it really costs.
    Mr. Shays. And that is a work-in-process that will have 
some conclusion when, do you think?
    Admiral Heimgartner. We've already been able to assess the 
flying hour program for 2001 and determine what the real 
shortfalls were in the flying hour program and those accounts 
that support the flying hour program, and those have been 
articulated with Members of Congress as well as the ongoing 
supplemental negotiations within our own Department.
    Then, in a formal way, because of the nature of this beast 
here and the periodic nature of how we do budgets, we've 
already put all those pieces into play for the PR-03 or PALM-
03, but we have good knowledge of where the key areas are from 
having gone through this in 2001 as well as 2002.
    Yes, we have to be patient. We can't fix something that's 
been broken for a number of years, but we have to approach it. 
We're dedicated and obligated to doing that.
    Mr. Shays. Let me ask you this: It strikes me that you, as 
commanders, want information and you want it to be as accurate 
as possible. I think GAO's analysis, particularly on how the 
data is organized and how we describe it, and the fact that 
they think it is quite inaccurate, I think has got to be of 
concern to all of you. It would strike me that you help your 
cause by truly having that data be as accurate as possible.
    Admiral Heimgartner. Let me address that, if I may?
    Mr. Shays. Sure.
    Admiral Heimgartner. Because of the Navy IG team that 
visited our naval installations about 2 years ago, and other 
studies and inspections that we've had, in order to get the 
data that's so critical to not only making decisions at the 
headquarters level, but understanding at the execution level, 
down in the squadrons, how that money is being spent and then 
what it's being spent on--the acronym is called NOWCOMUS 
Optimized. We have a legacy NOWCOMUS which, as the GAO 
mentioned, gathers as much information as it can, to use 
cannibalizations as an example, and has some degree of 
relevance. It's debatable whether it's 50 percent, 75 percent, 
but it's less than the full requirement as to exactly how often 
we cannibalize and the reasons that we cannibalize.
    This new system that we're going to, which is in about a 
third of our squadrons, and will be in all of the commands 
associated with aviation and shipboard support by fiscal year 
2004, it's impossible now to make a transaction with a part 
unless it's entered into the system. There's a whole number of 
reasons as to why parts are removed or the repair actions, 
including a lot of degree of fidelity and granularity on 
cannibalization.
    So we are in the process of fixing it. We understand that, 
unless you have full visibility into how the funds are being 
executed, you can't make the right decisions up here in the 
headquarters, and this NOWCOMUS Optimized will do that for the 
Navy.
    Mr. Shays. Now will the terminology be the same for all 
three branches?
    Admiral Heimgartner. I can't answer that, sir.
    General Zettler. We're not going to implement the Navy 
system there. I recognize how much you travel and have the 
opportunity to talk to our great people. I think that the GAO 
may have overstated a bit the lack of data in the Air Force. We 
don't step up to that. We will obviously go work when the 
report is published.
    It's not a perfect system. We certainly miss some 
maintenance transactions, but, by and large, the 
cannibalization actions that we do require entries into the 
system to track the aircraft status. So there's a self-checking 
audit process that goes on in the automation system.
    The mechanics are pretty reliable in making their data 
entries. Once they've got the data in the system, we've got it 
captured.
    Mr. Shays. Let me ask you: Is there any disincentive, 
though, to not highlight this issue? In other words, it strikes 
me that you might be judged based on--well, I mean, the B-22, 
when it was not in operation, you know, whether you said it was 
in operation before the vacation period or after, different 
factors came into play that seemed to us like real games.
    General Zettler. Our field commanders are judged, obviously 
on their overall readiness status, but our field commanders 
also are given wide latitude in how they achieve their mission 
ratings. I have not learned, nor I think we would be surprised 
as an Air Force to learn, that a commander at the field level 
was suppressing cannibalization data. We recognize it's a 
problem. We want accurate accounting, and the mechanics are 
willing to make that entry into the data base.
    The shortcoming of the system probably is, after 11 hours 
or 12 hours of working, when he has to go back into the shop 
and enter that piece of data into the core automated 
maintenance system, taking the time to do it. But, as a general 
rule, I said there's checks and balances that show up that this 
airplane is not mission-capable because it's got these parts 
off of it. How did that part get out of it? Well, we ``canned'' 
it. And it gets entered.
    In our data system world, we've been using the core 
automated maintenance system for about 20 years. It's a dated 
system. It's still green screens, but we have a refurbishment 
ongoing, and shortly after the first of the year it will be a 
Windows-based system and then spiral development to make it 
much more user-friendly and totally capture the data that the 
mechanics are doing.
    But, as I said, once the mechanic puts that data into the 
system, it's captured at the base-level data base. That 
transfers to an Air Force data base, and then we have several 
management information systems that can tap into that data 
warehouse and allow us to pull it down.
    The order of magnitude may be off by a couple of percents 
in ``canns.'' I don't know. Maybe we're not at 12.7 in 1997. 
Maybe we're 13. But that's the order of magnitude I'm really 
confident with that we're dealing with.
    The trendline is absolutely accurate because it's been the 
same system out there over this period of time. So, from 12.7 
in 1997 to 11.1 for this fiscal year, that's a significant 
improvement that's going in the right direction, and we intend 
to keep it going in that direction.
    Mr. Shays. Mr. Kucinich, any questions?
    Mr. Kucinich. Gentlemen, when you have to requisition spare 
parts, are any of the spare parts from your respective branches 
of the service requisitioned from overseas? I mean, are they 
made overseas, the stuff that you requisition? Do you know?
    Admiral Heimgartner. I don't know.
    General Mahan. Sir, I could tell you that primarily, unless 
we have an original equipment manufacturer, meaning a U.S. 
company, that has subcontracted out overseas, we don't see 
that. Ours is primarily, because of many reasons, policy as 
well as statute, are pretty much defined in terms of U.S. 
production facilities. I believe that is where we're headed.
    Mr. Kucinich. Yes, I am familiar with the Defense 
Production Act. One of the reasons I asked the question, Mr. 
Chairman--and thank you, General--one of the reasons I asked 
the question is this: This whole hearing today is essentially 
about inventory management. As the United States continues to 
see the collapse of its basic industry which provides the 
parts, if not the actual equipment, that then complicates 
accessing the goods that you need to do the job that you do. Is 
that correct?
    General Mahan. Absolutely. Yes, sir.
    Mr. Kucinich. And that is why we have the Defense 
Production Act to begin with. And at some point, Mr. Chairman, 
that might be something that might be worthy of your 
consideration. So I appreciate that, and thank you, gentlemen.
    General Mahan. Mr. Chairman, if I could expand on that just 
a bit?
    Mr. Shays. Sure.
    General Mahan. The production base--and that's really what 
we're talking about, not only the organic inside our depots, 
but the defense industry at large--we have gone and have seen, 
and we have had, as an example, between 1999, we had 18 safety-
of-flights, which as a safety-of-flight message that says that, 
if I have a catastrophic failure of this part, and we have had 
one, obviously, that caused that safety-of-flight, that then we 
have life and limb of the aircrews at risk.
    When we went back into that on many of those, and in the 
A8-64, our Apache aircraft, one of our most sophisticated 
platforms, we find that they have subcontracted parts out to a 
subcontractor who, in fact, defaulted, and actually the 
subcontractor had in some cases contracted out to another 
contractor. So the original equipment manufacturer had gotten 
to the point where we were depending on a partnering effort 
with them when, in fact, they were doing it for business 
reasons, to the extent that we could not fly airframes.
    We had the most serious one that grounded the entire Apache 
aircraft fleet as a result of that, and we, then, had to go 
back in and, were it not for double shifts at Corpus Christi 
Army Depot, to be able to get those things remanufactured, we 
would have been only this past April 2001, basically a year, 
because of the extremely long lead times between administrative 
lead time and production lead time of these kinds of aircraft 
spares. It can be up to 2 years from the time that you sense 
you have a problem until you can do something about it.
    That's why, as the aircraft ages, we have some of these 
design flaws that crop up only after significant aging, and one 
was the Sprague clutch and flange problems inside some of our 
aircraft componentry that then caused us--we had not used any 
in the previous 6 to 8 years, again, that obsolete inventory 
that we talk about. But when it was needed, those parts did not 
meet the specifications originally manufactured to, and we had 
to go back in and refurbish, again, because of the 
subcontracting process.
    So it's a very delicate balance between organic and 
certainly OEM, but it has extended beyond OEM to then 
subcontractors to that OEM. That's a balancing act in terms of 
the readiness piece. So, sir, I think it very clearly underlies 
your premise that says industrial preparedness is certainly an 
issue.
    Mr. Kucinich. Thank you, sir. Thank you, Mr. Chairman.
    Mr. Shays. It strikes me we are always going to have a 
cannibalization problem. It is almost like we fly our parts in 
one plane and that is how we deliver the parts to the base. I 
mean, you are going to have that, and you are certainly going 
to have it with older aircraft. It is a marvel that our 
mechanics in some cases are able to have an airworthy aircraft.
    So it is going to be there, and the issue is, to what 
extent? And the other issue is, in my judgment, how on top of 
this you all are, how on top of it we are. It seems to me that 
we have to keep working to get the data more accurate. So we 
will be working with you in this process.
    If there is anything you had prepared to answer that you 
felt we should have asked, even if it was a tough question that 
we didn't have the sense to ask you, I would love you to answer 
the question you were prepared for. [Laughter.]
    And if you would like to make any closing statement--see, I 
like to make an assumption you stayed up all night preparing 
for this and there's something that we should have asked you. 
[Laughter.]
    General Zettler. I would like to finish with a remark.
    Mr. Shays. Sure.
    General Zettler. Congressman Kucinich brought in the F-22. 
Mr. Gilman brought in privatization of suppliers. I would say 
that new airplanes demonstrably give us improved reliability 
and improved availability.
    Mr. Shays. Right.
    General Zettler. The C-17 is doing marvelous for us. The 
``cann'' rate on the C-17 is down less than 4, and many of 
those are parts that the government supply system would 
provide. We have a contracting arrangement with the Boeing 
company providing overall spares management on the C-17. 
They're doing a great job. Our mission availability rate is up 
in the high 80 percent.
    The F-117, we have the same type contractor support 
arrangement on. We have an availability rate, again, in the 
high 80 percent.
    The KC-10, we again have a contractor arrangement providing 
parts for us. Again, a high mission capability rate and a very 
low ``cann'' rate.
    As we move into new weapons systems, such as the F-22 or 
the Joint Strike Fighter, we're optimizing those for 
reliability and maintainability and availability. When we do 
that, we are looking at partnering with the industry that's 
going to provide those to help us with supply chain management, 
to ensure us that we have improved availability.
    The converse is true on our aging platforms, such as the C-
5 and the B-1 that you see over here. The B-1, the GAO properly 
characterized the main problem with cannibalization on that as 
being the defensive avionic system. In the defensive avionic 
systems we have some parts in there that are only repaired by 
one vendor in the United States, and he has a limited capacity. 
And why should we incentivize him to increase that capacity 
when we know that we're going to try to replace that defensive 
avionic system? So we go along that line of, where do you spend 
that dollar? To modernize that system or to pay for more 
repairs to that system? So those are the tradeoffs that we have 
to bring.
    But, since those platforms were brought up, I wanted to 
bring out how our new systems are doing and what the effects of 
recapitalization of our Air Force can be.
    Thank you for allowing us to be here today.
    Mr. Shays. Thank you. It would strike me that maybe, when 
we take a second look at this, we try to divide up the 
different weapons systems based on age to see what the 
difference is in terms of cannibalization.
    General, did you want to make any comment?
    General Mahan. Sir, in summary, I would like to thank the 
committee for having us here today to help us articulate to 
you, and I think to our Nation, some of the issues at hand. 
Everyone is working as hard as they can. We are partnering with 
industry, and they have been a valuable partner in ensuring 
that we have tried to maintain readiness of our fleets.
    We, just as the Air Force has done, are trying to eliminate 
some of the old fleets that we could not incentivize the 
original equipment manufacturers to continue to produce, even 
if we wanted to. They are unwilling to because of the low 
numbers of the airframes, and the UH-1 and the AH-1 are great 
examples of that.
    But, regardless, we know that, as we try to remanufacture, 
we still have a long way to go. Three of our aircraft fleets in 
the Army are already past their half-life metric. Because of 
that, we have seen our operations and support costs increase 10 
percent per year across the Army for the past 3 years.
    Refurbishment and recapitalization is one of our key 
initiatives to try to get back some of that life, and as we do 
so, to either incorporate new technology and new reliability, 
but certainly to get back to a standard that we can expect to 
fly and be able to do what we need to do from a mission-
readiness and a mission-effectiveness standpoint.
    So, sir, we are happy that you asked us to come, and we 
look forward to working with you in the future.
    Mr. Shays. Well, we are happy you came.
    Rear Admiral.
    Admiral Heimgartner. Thank you, sir. Let me just make a 
couple of comments along the same lines as the generals have 
brought out.
    We just completed a very in-depth study on why the cost of 
doing business, primarily repairing depot-level repairs and the 
consumption rates--in other words, how often do you put parts 
in an airplane and how long do they last? We, too, are showing 
figures of roughly 6 to 8 percent per year, and most of our 
aircraft that are on the decks of our carriers, which are in 
the more extreme environments, are up at the 8 percent level. 
So we have a cost of doing business that's going up 8 percent.
    We're doing exhaustive studies of trying to determine how 
we can flatten that curve. I mean, 8 percent compound interest 
over the life of our airplanes, which now is 17 years, is a 
huge, huge operational support bill. We want to flatten that 
curve. You can flatten that curve by investing money into 
reliability fixes, which we do as best we can, or you can buy 
new airplanes.
    As Congressman Kucinich mentioned earlier, about this 
flattening the aging curve, the Navy needs to buy about 170 
aircraft per year in order to keep the average age of our 
airplanes at 15 years or less. For the last several years, the 
best we have been able to do is buy 120. So if you can't invest 
the money for reliability fixes and if you can't make the force 
younger, then we're potentially faced with a real challenge 
that may be extremely difficult to meet.
    I can assure you that the readiness of our deployed units 
is as high as it's ever been, but it comes on the back of those 
next to deploy. Those next to deploy are the ones that are 
greater than 90 days from being in the forefront of going 
overseas. That's the folks that are the most frustrated, where 
morale suffers. These are people that are priority 3 on parts. 
These are the ones that, if there's a major component for an 
airplane, that component for an airplane goes to a deployed or 
a soon-to-deploy squadron.
    As I said, our sailors and marines take great pride in 
being able to maintain these airplanes. They will do anything, 
and they have. You've seen the statistics on how long they work 
and how dedicated they are. But we owe them a better workday, a 
better quality of services, and we're doing the best we can to 
try and quantify that with all the challenges that we faced for 
a number of years.
    Thank you very much, sir.
    Mr. Shays. Thank you, and I think the committee agrees with 
all three of your closing statements. We appreciate your good 
work and look forward to working with you. Thank you.
    This hearing is adjourned.
    [Whereupon, at 12:25 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]

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