[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                         [H.A.S.C. No. 110-140]

                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2009

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                AIR AND LAND FORCES SUBCOMMITTEE HEARING

                                   ON

 BUDGET REQUEST FROM THE UNITED STATES TRANSPORTATION COMMAND AND AIR 
                    FORCE MOBILITY AIRCRAFT PROGRAMS

                               __________

                              HEARING HELD
                             APRIL 1, 2008

                                     
[GRAPHIC] [TIFF OMITTED] 

                                     




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                    AIR AND LAND FORCES SUBCOMMITTEE

                   NEIL ABERCROMBIE, Hawaii, Chairman
JOHN SPRATT, South Carolina          JIM SAXTON, New Jersey
SOLOMON P. ORTIZ, Texas              HOWARD P. ``BUCK'' McKEON, 
SILVESTRE REYES, Texas                   California
ADAM SMITH, Washington               JEFF MILLER, Florida
MIKE McINTYRE, North Carolina        JOE WILSON, South Carolina
ELLEN O. TAUSCHER, California        FRANK A. LoBIONDO, New Jersey
ROBERT A. BRADY, Pennsylvania        TOM COLE, Oklahoma
JIM MARSHALL, Georgia                ROB BISHOP, Utah
DAN BOREN, Oklahoma                  MICHAEL TURNER, Ohio
HANK JOHNSON, Georgia                PHIL GINGREY, Georgia
JOE SESTAK, Pennsylvania             CATHY McMORRIS RODGERS, Washington
GABRIELLE GIFFORDS, Arizona          GEOFF DAVIS, Kentucky
KENDRICK B. MEEK, Florida            W. TODD AKIN, Missouri
KATHY CASTOR, Florida                DOUG LAMBORN, Colorado
                 Heath Bope, Professional Staff Member
                Lynn Williams, Professional Staff Member
                      Ben Glerum, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Tuesday, April 1 2008, Fiscal Year 2009 National Defense 
  Authorization Act--Budget Request from the United States 
  Transportatioon Command and Air Force Mobility Aircraft 
  Programs.......................................................     1

Appendix:

Tuesday, April 1, 2008...........................................    45
                              ----------                              

                         TUESDAY, APRIL 1, 2008
  FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST 
 FROM THE UNITED STATES TRANSPORTATION COMMAND AND AIR FORCE MOBILITY 
                           AIRCRAFT PROGRAMS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Abercrombie, Hon. Neil, a Representative from Hawaii, Chairman, 
  Air and Land Forces Subcommittee...............................     1
Saxton, Hon. Jim., a Representative from New Jersey, Ranking 
  Member, Air and Land Forces Subcommittee.......................     4

                               WITNESSES

Lichte, Gen. Arthur J., Commander, Air Mobility Command, U.S. Air 
  Force..........................................................    10
Payton, Hon. Sue, Assistant Secretary of the Air Force for 
  Acquisition....................................................     6
Schwartz, Gen. Norton A., Commander, United States Transportation 
  Command, U.S. Air Force........................................     8

                                APPENDIX

Prepared Statements:

    Lichte Gen. Arthur J.........................................    49
    Payton, Hon. Sue.............................................    62
    Schwartz, Gen. Norton A......................................    69

Documents Submitted for the Record:

    [There were no Documents submitted.]

Questions and Answers Submitted for the Record:


    Mr. Abercrombie..............................................    97
    Mr. Bishop...................................................   107
    Ms. Bordallo.................................................   104
    Mr. Hayes....................................................   105
    Mr. Hunter...................................................   103
    Mr. Miller...................................................   106
    Mr. Saxton...................................................   104
  FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST 
  FROM THE UNITED STATES TRANSPORTATION COMMAND POSTURE AND AIR FORCE 
                       MOBILITY AIRCRAFT PROGRAMS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                          Air and Land Forces Subcommittee,
                            Washington, DC, Tuesday, April 1, 2008.
    The subcommittee met, pursuant to call, at 1 p.m., in room 
2118, Rayburn House Office Building, Hon. Neil Abercrombie 
(chairman of the subcommittee) presiding.

 OPENING STATEMENT OF HON. NEIL ABERCROMBIE, A REPRESENTATIVE 
    FROM HAWAII, CHAIRMAN, AIR AND LAND FORCES SUBCOMMITTEE

    Mr. Abercrombie. Hello, everybody. Thank you for coming 
today.
    This is a hearing on the posture of the United States 
Transportation Command (TRANSCOM) and the Air Force mobility 
aircraft program.
    Today, the Air and Land Forces Subcommittee meets to 
receive testimony from Air Force officials on the posture of 
the United States Transportation Command and the status of Air 
Force mobility aircraft programs.
    Our panel of witnesses today includes the honorable Sue 
Payton, Assistant Secretary of the Air Force for Acquisition.
    Welcome and aloha to you, Ms. Payton.
    Secretary Payton. Thank you.
    Mr. Abercrombie. General Norton Schwartz, commander of the 
United States Transportation Command.
    Nice to see you again, General. Aloha.
    And General Arthur Lichte, commander of the Air Force 
Mobility Command (AMC).
    Aloha to you, General.
    Three main issues the subcommittee will strive to 
understand, three main issues, although some people may think 
that the only issue facing the Air Force at this time in terms 
of acquisition is the continuing saga of the tanker, which we 
will not be concentrating on today.
    If there are questions in that regard, Ms. Payton, am I 
correct that you would be quite willing to sit with anybody and 
speak to those who may want to comment? But I would prefer 
today that we go on with the substance of the other elements 
that are at issue.
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. Does that make sense?
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. And I do want to thank you for the 
briefing that we had, which I feel exercised the--I almost said 
exorcised, but exercised all the relevant territory that needed 
to be traversed on this, without going into the proprietary--
past the proprietary boundaries, and I do thank you for that.
    Secretary Payton. Thank you.
    Mr. Abercrombie. And you would be quite willing to have 
that kind of discussion with any member that desires it, if 
they were not able to be there, correct?
    Secretary Payton. Yes, sir. Yes, sir.
    Mr. Abercrombie. Okay. The issues then I am hoping that we 
will deal with today, the Department's mobility requirements 
and aircraft inventory for both short and long-range airlift 
aircraft.
    I am going to go over this. We have your testimony, 
obviously, but I want you to know where I think we are going to 
zero in, and you can perhaps attune your summary remarks in 
this area.
    The mobility requirements, the short and long-haul airlift 
aircraft, the degree to which the projected budget meets the 
airlift requirement--this is very important to us--and the Air 
Force requirements and operational needs for the Joint Cargo 
Aircraft (JCA) program, those three items.
    Concerning the Department's mobility requirements in the 
airlift aircraft inventory, there appear, in my judgment, to be 
conflicting views within the Department as to what the C-5 and 
C-17 inventory should be.
    Ms. Payton, I am sure you know there are lots of discussion 
about this in terms of keeping lines open and all the rest of 
that. I don't want to get into that, per se. That is not the 
question.
    The question here is what you believe the C-5 and C-17 
inventory should be.
    TRANSCOM states 205 C-17s and 111 C-5s. Air Force planning 
officials state 248 C-17s and 52 C-5s.
    And, General Lichte, in your written statement, you 
indicate the actual program of record of 189 C-17s and 111 C-5s 
doesn't provide what is really needed. This is what I extract 
from your testimony.
    There also appears to be a mixed message on what size the 
C-130 fleet should be. On the one hand, the Air Force indicates 
that 395 C-130 aircraft are enough, but then eight C-130J 
aircraft are included in the Air Force unfunded requirement 
list.
    Regarding the C-17, currently, the last C-17 will be 
delivered in June 2009, 14 months from now. There is a 34-month 
lead time for key C-17 components.
    The budget request does not include funding for additional 
aircraft--excuse me.
    The budget request does not include funding for additional 
aircraft or funding for shutting down the C-17 production line. 
Yet, 15 C-17 aircraft or $3.9 billion are included in the Air 
Force unfunded requirements list.
    You see where I am going, Ms. Payton and General Lichte.
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. I have to reconcile this in order to make 
recommendations that make some sense. And let's set aside for 
the moment, I hope, for our conversation's sake, anything that 
is in the papers of general circulation about what members are 
saying needs to be done or not done or what is a good idea or 
what isn't.
    That is a political dimension that I hope we can avoid in 
the sense of the premises of our discussion.
    Six key Department of Defense (DOD) mobility studies were 
recently delivered to the committee--six. However, we 
understand the mobility studies do not account for several key 
factors--this is what we have derived from that--despite six 
different papers that were read.
    The end strength growth of 92,000 personnel for the Army 
and the Marine Corps. Now, if I am wrong on some of these 
things, and you do have studies that take this into account, we 
don't have them as yet and I am quite happy to get those or if 
you are in the course of doing it, that is another thing, but 
we need to know that.
    So let me cite the other factors. This is now with the 
mobility study and in anticipation of what we need to 
recommend.
    End strength growth of the 92,000 personnel--and I 
understand that that is on paper right now. That is not 
necessarily here and the time factor and all that may alter 
proposals in this area. But nonetheless, that is what is 
proposed to this point.
    Again, mobility requirements for the Army's Future Combat 
System (FCS) and Army modularity. Again, believe me, you are 
not going to have to make much of an argument to me that the 
Future Combat System is, at best, problematic.
    But for planning purposes and recommendation purposes, we 
have to take this into account.
    The determination by the Army that its FCS, the Future 
Combat System, manned ground vehicles are too large to fit into 
a C-130 aircraft. Use of dedicated C-17s as an intra theater 
airlift role for which they are extensively being used.
    These are some of the factors we don't think have been 
taken into account in the studies we received or taken into 
account fully in the studies we have received to this point.
    All these factors call into question the value of the 
recently completed airlift studies, the value in the sense of 
being a comprehensive baseline against which to try and make 
our recommendations.
    Concerning the final issue, we would like to better 
understand the Air Force's rationale for its procurement plans 
for the Joint Cargo Aircraft.
    According to our understanding of the conclusions of the 
Department's airlift studies, the Air Force airlift capability 
would be better met by investing in other mobility aircraft 
rather than a Joint Cargo Aircraft.
    That is something I think we need to speak candidly about 
today, if we can.
    There also appears to be a significant unit cost difference 
between the Air Force and the Army version of the aircraft that 
needs to be reconciled.
    The Army says its version will cost $36 million and the Air 
Force version reportedly is projected to cost $61 million per 
aircraft.
    We, therefore, need to better understand the JCA 
requirement, the Joint Cargo Aircraft requirement and the cost 
structure. It seems the Pentagon first made the decision to 
procure the Joint Cargo Aircraft and then did studies 
associated with the procurement decision, perhaps using 
outdated information or incomplete information and perhaps now 
is trying to determine what the program costs are.
    I am not trying to judge ahead of time. I am just giving 
you the impression that can be made by reading what we have 
read to this point.
    There has been enough nodding of heads out there in my 
direction. So I presume I have said quite enough to give you 
pause for thought.
    And so with that, I would like to turn to my good friend 
and colleague from New Jersey, my mentor on this committee. So 
anything I say which makes sense he can take credit for, but he 
also has to take the blame.
    That is Mr. Saxton.

STATEMENT OF HON. JIM SAXTON, A REPRESENTATIVE FROM NEW JERSEY, 
        RANKING MEMBER, AIR AND LAND FORCES SUBCOMMITTEE

    Mr. Saxton. Mr. Chairman, thank you.
    Mr. Chairman, you have done a great job here opening this 
hearing this morning.
    My opening statement reflects, to a large degree, some of 
the points that you made.
    Let me make one overarching point before I actually get 
into my statement. That is that we are here today facing a 
situation, which I have said before, and I strongly believe 
that we collectively, as a government, have failed to provide 
the proper level of funding for our military services across 
the board.
    Today's discussion will be reflective of that, in my 
opinion. We simply can't buy what we need, with the dollars 
that are made available, to do what we need to do to support 
our warfighters and to provide the level of national security 
that our country needs and deserves.
    The White House plays its part. Congress plays its part. 
The input that we all get from various sectors, the Department 
of Defense plays its part. But the fact of the matter is that 
when we get to the top line, it is too low.
    It is not often that circumstances permit us to engage the 
operational commanders and the acquisition officials in the 
same forum. So I would like to thank them all for being here 
today. We appreciate it very much.
    This is a unique opportunity. I would like to thank 
Chairman Abercrombie for assembling this panel of witnesses for 
the subcommittee.
    Global mobility is a key component of our national 
security. The ability to globally project strategic national 
security capabilities and to provide responsive support to the 
U.S. Government, multinational and nongovernmental logistical 
requirements is the heart of USTRANSCOM.
    Without this capability, the rest of our defense posture 
and our ability to provide global humanitarian relief and 
support for our friends and allies is largely irrelevant.
    This simple fact is the reason that I have been such a 
longstanding advocate of the Department's strategic airlift 
programs, especially, in this case, the C-17.
    Mr. Chairman, you have often heard me express concerns, as 
I did a minute ago, about the current trends in defense funding 
levels. All of the Department's sustainment, modernization and 
recapitalization programs are severely constrained by the top 
line that is inadequate to ensure our military is ready and 
equipped to support the national military strategy.
    Unanticipated cost growth in programs such as the C-5 
Reliability Enhancement and Reengining Program, RERP, and the 
C-130 Avionics Modernization Program, AMP, only increase these 
challenges.
    I am very glad to have Ms. Payton with us today to discuss 
the challenges the Air Force is having in fielding required 
capabilities to the warfighter on time and on cost.
    As I have said, we simply cannot afford to do all the 
things that we need to do and there is no longer room in the 
budget to compensate for poorly defined and poorly managed 
programs.
    As you all know, Secretary Young recently certified to 
Congress that the C-5 RERP program was essential to national 
security, that there were no alternatives which provide equal 
or greater military capability at less cost, and that the 
modified program cost is reasonable.
    The modified program includes performing the program of 52 
C-5Bs and C aircraft and only modernizing avionics on the 
remaining 59 C-5A aircraft.
    The total program cost for the restructured C-5 program, 
modernization program is projected to be $7.7 billion for the 
52 aircraft.
    Now, I would like to bring your attention to the fact that 
in 2005, the mobility capability study, which was used as an 
analytical basis for determining the C-5 inventory requirement, 
states that 112, not 52, 112 modernized and reliability 
improved C-5s are required to make the Department's strategic 
airlift requirements.
    It is unclear to me how we are going to be able to meet the 
stated requirement for strategic airlift if we are going to 
perform reliability improvements to less than half of the C-5 
fleet--52 aircraft.
    Reliability equates to availability and availability 
renders capacity. This was the original thought behind the C-5 
RUP program of procuring C-17s. Improving the reliability of 
the existing C-5 fleet was thought to be more affordable than 
to gaining the needed organic capability.
    Now we are faced with a dilemma. We are only going to 
perform reliability enhancements on 52 C-5s at a cost of $7.7 
billion and, at the end of the day, we are not going to achieve 
the minimum organic strategic airlift force structure 
capability to support the stated requirement of 33.95 ton-miles 
per day.
    I noted that Secretary Young, in his testimony before this 
subcommittee last month, stated that the new tanker, the KC-45, 
would be used to fill the remainder of the airlift gap.
    General Schwartz, I hope that you will be able to expand on 
that statement a bit and explain to us how a tanker, which, as 
you have said in the past, is going to be used as a tanker 
first and is going to also be used to offset the shortfall in 
strategic airlift requirements.
    I raise these points because the Department's fiscal year 
2009 budget request does not include funding for any C-17s. No 
funding in the budget request for 2009 means that the C-17 line 
will be shut down unless this body takes steps to keep it open.
    We now know that the C-5 modernization program will not 
meet the requirements identified in the 2005 MCS. We must also 
account for the end strength increases of the Army, as the 
chairman pointed out, and the Marine Corps, the mobility 
requirements of the Army's Future Combat System, as the 
chairman also pointed out, and the fact that we are over-
utilizing the current C-17 fleet.
    In fact, I noted in one of our accompanying notes here that 
some of the C-17 aircraft are already on restricted status.
    That said, I would like to hear from each of our witnesses 
as to their thoughts on the wisdom of shutting down the C-17 
production line at this time.
    Ladies and gentlemen, let me just conclude by saying I know 
this is a top line problem, and I know that you are struggling 
to do your jobs within the constraints that we and the White 
House seem to be determined to impose.
    And so I look forward to working with you to work through 
these problems that the chairman outlined and that I 
reiterated, and we look forward to hearing your testimony.
    Mr. Abercrombie. Thank you, Mr. Saxton.
    Without further ado, then, and without objection, I hope we 
will proceed to the panel's testimony and then go into 
questions.
    All the witnesses' prepared statements are included in the 
hearing record.
    So in light, Ms. Payton, of the opening comments, perhaps 
you could address your summary remarks in that vein and we can 
proceed apace.

 STATEMENT OF HON. SUE PAYTON, ASSISTANT SECRETARY OF THE AIR 
                     FORCE FOR ACQUISITION

    Secretary Payton. Yes, sir. Thank you very much.
    Good afternoon, Chairman Abercrombie and Congressman Saxton 
and all the distinguished members of this committee.
    It is my distinct honor to appear before you today to 
testify on the state of several Air Force mobility and tanker 
programs.
    I am further honored to be joined by General Norton 
Schwartz, the commander of U.S. Transportation Command, and 
General Arthur Lichte, the commander of Air Mobility Command.
    I look to these gentlemen as my customers.
    I look forward to discussing how the Air Force is committed 
to modernizing and recapitalizing our aging aircraft to protect 
our Nation and support our airmen, while providing the best 
value to the American taxpayers.
    In the interest of time, I will limit my opening remarks to 
the KC-45A, the C-5 modernization, C-130J production, and C-27, 
also known as the Joint Cargo Aircraft or JCA.
    The KC-45A is our number one procurement priority. The KC-
45A tankers will provide greater overall capability than the 
current inventory of 500-plus KC-135E and KC-135R tankers, 
which will take several decades to replace.
    With the average age of the fleet over 47 years, when the 
last KC-135R is retired, it will be more than 80 years old. It 
is also absolutely critical for the Nation to move forward on 
this program pending the findings of the GAO protest 
investigation.
    The Air Force spent an unprecedented amount of time and 
effort with the offerors, ensuring opening communications and a 
completely transparent process, and I am extremely proud of the 
KC-45A acquisition team and I am certain that the Air Force 
selected the best overall value to the warfighter--the 
taxpayer--based on the competition evaluation factors.
    With regards to our strategic airlift fleet, modernization 
of the C-5 fleet remains an Air Force priority to meet 
combatant commanders' requirements.
    The last time I testified before a subcommittee of the 
Senate with General Schwartz, Secretary Wynne had announced 
that the C-5 Reengining Reliability Program was in a critical 
Nunn-McCurdy breach.
    And I am very pleased to tell you that on February 14th of 
2008, the Under Secretary of Defense for Acquisition, 
Technology and Logistics (AT&L) certified the restructure of 
the C-5 RERP.
    The certified production program consists of modernizing 
the remaining 47 C-5Bs and two C-5Cs.
    A key component of the intra theater airlift modernization 
effort is our C-130J. As of February 2008, we have fielded 63 
of the 87 funded C-130J aircraft. The current C-130J multiyear 
procurement contract ends in fiscal year 2008 and we will be 
using sub-optimized additional procurements through annual 
contracts to procure future aircraft until a new multiyear 
program contract can be negotiated.
    As a joint Army-Air Force program, the JCA is uniquely 
qualified to perform time-sensitive mission-critical re-supply. 
On February 29, Office of the Secretary of Defense (OSD) sent 
the required six reports and certification required by Fiscal 
Year 2008 National Defense Authorization Act.
    We are now prepared to move forward with this joint 
program. I look forward to your questions on that.
    The men and women in Air Force acquisition take great pride 
in developing on our promise to deliver war fighting 
capabilities on time and on cost.
    I am very honored to represent them in front of this 
committee, and I thank you again for the opportunity to be 
here. I look forward to any of your comments and questions.
    [The prepared statement of Ms. Payton can be found in the 
Appendix on page 62.]
    Mr. Abercrombie. We will move now to General Schwartz.

STATEMENT OF GEN. NORTON A. SCHWARTZ, COMMANDER, UNITED STATES 
             TRANSPORTATION COMMAND, U.S. AIR FORCE

    General Schwartz. Chairman Abercrombie, Congressman Saxton, 
distinguished members of the committee, it is my privilege to 
be with you today representing the more than 140,000 men and 
women of the United States Transportation Command.
    We are a supporting command and our number one mission is 
provide outstanding support to the warfighter and our Nation by 
rapidly delivering combat power and sustainment to the joint 
force commander, providing the utmost care, moving our wounded 
troops from the battlefield to world class medical treatment 
facilities and redeploying our forces home to their families.
    As the Department's distribution process owner, USTRANSCOM 
also leads a collaborative effort within the logistics 
community to improve the broader DOD supply chain.
    We execute our mission through the many fine people in our 
component commands, the Army's Military Surface Deployment and 
Distribution Command, the Navy's Military Sealift Command, and 
the Air Force's Air Mobility Command, led by General Art 
Lichte, whom I am honored to have up here with me today.
    The components provide the mobility resources and the 
expertise necessary to execute military and commercial 
transportation, terminal management, aerial refueling, and 
global patient movement through the defense transportation 
system.
    Our effectiveness is the direct result of the hard work and 
dedication of these professionals, and I am grateful to you and 
all of Congress for the needed support you provide.
    I could not be prouder of the TRANSCOM team and our 
national partners.
    Today, we are supporting the global war on terror (GWOT) 
and keeping our promises to the warfighter.
    The delivery of much needed Mine-Resistant, Anti-Ambush 
Protected (MRAP) vehicles to protect our troops continues to be 
a top priority. To date, we have delivered more than 4,900 
MRAPs to the U.S. Central Command (USCENTCOM) theater and by 
the beginning of next week, we will top 5,000.
    Delivered almost exclusively by air in the early stages and 
as production levels declined, we have reached a balance 
between air and surface modes of transportation to optimize 
distribution.
    We continue to advance to normalized transportation 
operations throughout the Central Command. In 2007, we 
initiated the first U.S. flagged commercial cargo flights into 
Afghanistan and Iraq since combat operations began and 
increased the use of alternative air and seaport facilities in 
the regions, thus broadening our capability to provide the best 
possible support to our warfighters.
    We have also focused on improving the quality of life for 
our people. Through the Families First program, we are 
improving household goods shipments, as this recurring event 
directly effects the lives of our service people and their 
families.
    We now protect household goods with full replacement value. 
In addition, the defense personal property system, the web-
based software which will better facilitate household moves 
will be fully integrated into all shipping offices later this 
year.
    We are also transforming the military deployment and 
distribution enterprise by incorporating best commercial 
practices wherever it makes sense.
    Much like Fortune 500 companies, which realize savings 
through the use of transportation management services, our 
Defense Transportation Coordination Initiative (DTCI), in 
partnership with the Defense Logistics Agency (DLA) and the 
services, will use a commercial transportation coordinator to 
help manage a significant portion of DOD routine freight 
movement.
    We are currently implementing DTCI at three Continental 
United States (CONUS) sites and, in fact, the first shipment 
occurred yesterday at Puget Sound, and we are encouraged by the 
potential savings and improved support we can provide as DTCI 
expands to additional sites throughout the coming year.
    It is through a combination of military and commercial 
capabilities that USTRANSCOM fields a transportation and 
distribution system that is unmatched anywhere in the world.
    As we look to the future, rapid global mobility will 
continue to be a key enabler and ensuring the appropriate mix 
of lift assets is vitally important to the mission.
    My top acquisition and airlift recapitalization priority is 
our tanker fleet. I am encouraged that the KC-X is now under 
contract, albeit under protest, and the Air Force will proceed 
with this very important procurement program consistent with 
the pending determination by the Government Accountability 
Office (GAO).
    The KC-X will provide multipoint refueling, significant 
cargo and passenger carrying capability and appropriate 
defensive systems and it will be a game-changing platform for 
the future of global mobility.
    I am also encouraged by the Department's decision to 
certify the C-5 modernization program. The Nation needs the 
outsized and oversized lift capability provided by a reliable 
C-5 as a complement to the C-17.
    We are optimistic that the newly certified modernization 
program will deliver the needed reliability and performance to 
make the C-5 a more productive platform.
    With these modernized C-5s, I remain convinced that the 205 
C-17s, 111 C-5s and commercial capacity provides the right 
balance to meet our strategic mobility requirement.
    Despite our very substantial military force structure, 
USTRANSCOM will always depend on a mix of government-owned and 
commercial assets. We should guard against overbuilding the 
organic airlift and sealift fleets, which could place our 
longstanding commercial partnerships at risk.
    A critical national capability for projecting military 
power and sustaining forces is a viable Civil Reserve Air 
Fleet. The continued success of craft relies upon the strength 
of our U.S. flagged airlines.
    We are, however, looking toward the post-Operation Iraqi 
Freedom (OIF) timeframe, when lift requirements will decrease 
substantially. Given that eventual reality, we are looking at 
innovative ways, such as the craft assured business initiative, 
to encourage participation, thus ensuring the long-term health 
of this program.
    As we look to the future, two important studies will 
address increasing Army and Marine force structure, unit 
positioning, equipment modernization, including the Army's FCS 
program, and other changes that may alter or influence the lift 
demand signal.
    These study efforts, with extensive TRANSCOM participation, 
will deliver in January and May 2009, respectively.
    I am grateful to you, sir, and the committee for allowing 
me to appear before you today to discuss these and other 
important issues. I thank you for the essential support that 
you provide in enabling our capabilities, and I look forward to 
your questions.
    Thank you.
    [The prepared statement of General Schwartz can be found in 
the Appendix on page 69.]
    Mr. Abercrombie. Thank you.
    General Lichte.

  STATEMENT OF GEN. ARTHUR J. LICHTE, COMMANDER, AIR MOBILITY 
                    COMMAND, U.S. AIR FORCE

    General Lichte. Mr. Chairman, Mr. Saxton, distinguished 
committee members, thanks for the opportunity to appear before 
you today.
    As a total force team of over 133,000 active duty, Air 
National Guard and Air Reserve mobility airmen, Air Mobility 
Command is a proud member of the United States Transportation 
Command joint team, and we are proud to provide global reach to 
our nation's warfighters through airlift, air refueling, global 
patient movement, and air base opening.
    I am extremely pleased by what the committee has 
accomplished, what the command has accomplished, and we 
continue our focus on winning today's fight, taking care of our 
people and preparing for tomorrow's challenges.
    Perhaps the most notable was the recent Air Force 
announcement for the development and procurement of up to 179 
KC-45A tanker aircraft. Although the process of recapitalizing 
our entire tanker fleet will take three decades and require a 
long commitment, this is a great first step toward retiring our 
geriatric Eisenhower era KC-135s, a first step that will foster 
future generations of mobility airmen to be able to continue 
their great support of the joint warfighter and United States 
Transportation Command's global mission.
    As the Air Force's number one acquisition priority, the new 
tanker is vitally important to our national security. As the 
combat enabler for global vigilance, reach and power, it will 
be able to carry more fuel and more cargo and more passengers 
than the KC-135 that it is replacing, and it will be able to 
refuel joint and coalition aircraft on every mission.
    Likewise, we received good news on the certification of the 
C-5 reliability enhancement and reengining program and the 
selection of the C-27 as the new Joint Cargo Aircraft.
    Even though these announcements did not receive the same 
visibility as the KC-45, they are still critical to AMC's 
support to our nation.
    Fully modernizing a total of 52 C-5s will enhance the 
capabilities of our nation's largest airlifter, increase its 
reliability rates, and allow us to operate at reduced cost.
    And on the other end of the airlift scale, the C-27 Spartan 
will satisfy the requirement for a platform that can deliver to 
that last tactical mile.
    But the good news in Air Mobility Command is not just about 
modernization and recapitalization. We continue to take care of 
airmen and not just airmen, but soldiers, sailors and Marines, 
as well.
    Through airlift and precision airdrop, we have pulled the 
supply chain vertically up out of the threat and eliminated the 
need to place over 12,000 soldiers, sailors, airmen and Marines 
in harm's way on the road to Iraq and Afghanistan in each of 
the last 4 months.
    And for those who must be on the front lines to perform 
their duties, AMC has airlifted over 2,600 mine-resistant 
ambush-protected vehicles, MRAPs, to Iraq on C-17s and contract 
carriers as part of United States Transportation Command's 
joint effort to rapidly deliver these high priority systems by 
both sea and air.
    The command also continues to press forward with the 
improvements to the aeromedical evacuation system and, as many 
of you heard last fall, when Resolution 640 was presented on 
the floor of the House, our aeromedical evacuation system 
continues to work miracles for Americans wounded while 
answering our nation's call.
    Both of our new airframes, the KC-45A and C-27, will 
support this absolutely vital aeromedical evacuation.
    In a true example of joint service synergy, I am proud to 
say that if one of America's sons or daughters gets wounded in 
Iraq, is able to make it to the theater hospital in Balad Air 
Base, they have a 98 percent chance of survival, thanks to our 
amazing medical care system.
    And within that system, it is our aeromedical evacuation 
heroes who provide those wounded joint warriors their lifeline 
back home. It is a moral imperative and it is a promise we 
intend to keep for everyone who serves.
    As we look to the future and prepare for tomorrow, there 
are plenty of challenges on the horizon, challenges we must 
meet to ensure the next generation of airmen and joint 
warfighters can continue to deliver America's clenched fist to 
its enemies or its outstretched hand to those in need around 
the world.
    The continued wear and tear on our airframes remains a 
major concern. While our C-130 center wing box replacement 
program is making great progress, we are beginning to see wear 
and tear and other issues on other airframes, as well.
    Even though the C-17 is a fairly young aircraft, we are 
beginning to see cracks in the fuselage caused by repetitive 
fatigue from thrust reverses, and the C-5 fleet is not immune 
either, with cracks appearing on the top of the aircraft and in 
the structure near the forward cargo door hinges.
    We are pressing ahead with fixes for these issues, but 
others will undoubtedly appear in the future as the fleet 
remains heavily tasked to meet mission requirements.
    We are also facing looming deadlines to complete avionics 
upgrades so we can meet global air traffic requirements and 
continue to access congested airspace worldwide.
    Thus far, we have been able to modify a considerable 
portion of our fleets, but we have a lot to do before the 
restrictions begin to impact operations in the year 2015.
    In conclusion, I would like to say that I am proud to be 
both a mobility airman and a member of the United States 
Transportation Command's joint team.
    From direct support of the warfighter on the battlefield to 
humanitarian airlift and response to natural disasters, our air 
mobility fleet is and will continue to be a critical component 
of America's strategic capability.
    I am humbled to represent the 133,000 mobility airmen of 
the command, as we support United States Transportation Command 
in demonstrating our national resolve, delivering combat power, 
and saving lives.
    And, sir, I am ready for any questions you may have.
    [The prepared statement of General Lichte can be found in 
the Appendix on page 49.]
    Mr. Abercrombie. Thank you very much, General.
    For today's hearing, for our members, we are going, as you 
know, from hearing to hearing, reversing the order, starting 
for those who have least seniority on the way up and then the 
regular seniority on the way down.
    We are at regular seniority, moving sideways, I guess, is 
more accurate.
    So I have some questions, but I will start with Mr. Spratt.
    Mr. Spratt. Thank you very much for your testimony.
    I am interested in the fate of the C-5. Forty years ago, I 
was working in the Department of Defense dealing with the 
acquisition of the C-5A, which was a checkered history, to say 
the least, and we still have many of the same problems.
    It is kind of the symptom of the system.
    Madam Secretary, you were very complimentary of the 
acquisition workforce that you have under your command, but we 
have got, in the case of the C-5, an astounding increase in 
unit cost over and above the Average Procurement Unit Cost 
(APUC)--I don't know how you pronounce that acronym--68 percent 
from the original baseline.
    How do you account for that and is that an acquisition 
problem or does that have more to do with the climate in which 
all acquisition is transacted today?
    Secretary Payton. Thank you very much for the question, 
Congressman Spratt.
    I believe it is a combination of both. The day that I 
walked in to take over this position, I took a look at the 
funding profiles for the programs that were heavily in cost 
overrun, 50 percent or more, and I realized that to a program, 
they had been baselined at a cost way too low.
    They had been baselined way too early, before we really 
understood what the cost of the program would be.
    Relative to C-5 RERP, we have also had an increase in the 
cost of titanium, about 503 percent since 2004, and C-5 RERP is 
very titanium dependent because it is mostly an engine program.
    So the titanium that was needed to really make the engines 
and put them on the aircraft had gone up. Material costs had 
gone up. Labor rates had gone up.
    So I would say that we baselined the program too early, 
before we had done adequate prototyping, and we did not pick 
the right cost number. We picked a 30 or 40 percent confidence 
level to begin with instead of an 80 or 90 percent.
    I have since put out guidance and any program that comes 
before me will be funded at a level of 80 percent confidence 
that our acquisition people will be able to succeed.
    So it is a combination of a lot of things going wrong. On 
the C-5 AMP program, having issues with that, we kicked the can 
down the road. C-5 RERP was dependent on C-5 AMP.
    So the acquisition strategy, I believe, on that was flawed 
and I do believe we have had some cost escalation in materials 
and in labor hours.
    Mr. Spratt. Do I understand the background material 
correctly to say that you have taken the RERP and taken the 
reliability out of the RERP, so that basically we have got a 
reengineering, but not the reliability components?
    Secretary Payton. No, sir. We still have the reliability 
component in there. That was up for discussion, but that was 
thrown off the bus. We are definitely having a reengining and 
reliability improvement to that program.
    I think there are 70 items that are going to be improved in 
the reliability.
    Mr. Spratt. Now, by my account of your testimony, there are 
about 111 C-5s left.
    Secretary Payton. Yes, sir.
    Mr. Spratt. And we have 170 C-17s.
    Secretary Payton. I believe there are 190 currently in the 
program of record.
    General Schwartz. It is 171 delivered, sir.
    Mr. Spratt. It is 171.
    General Schwartz. Yes, sir.
    Mr. Spratt. And you indicate, however, that the Air Force 
continues to support the acquisition of this airplane. You just 
don't have the money to pay for it, but you are sending us a 
signal that if we can find the money, that you would be 
agreeable to a continuation.
    Am I reading between the lines correctly here?
    Secretary Payton. Based on the acquisition decision 
memorandum of the 14th of February, we will reengine and 
improve the reliability on 52 C-5s that will become C-5Ms and 
the other 59 C-5As will be AMP'd.
    The acquisition strategy right now is to go ahead and 
improve the avionics on those As and to, obviously, do the 
avionics and the reengining reliability on the Bs and Cs.
    Mr. Spratt. The testimony of one witness was to the effect 
that I think the U.K. and Australia and the Canadians have 
bought the C-17, and we kept the F-16 line going despite the 
fact that the DOD was recommending we stop the C-17 line.
    The market overseas developed to take up a lot of the 
production in San Antonio.
    Is there a possibility here that if we can keep the C-17 
line going, it might be something that our allies and others 
around the world might want to procure, as well?
    Secretary Payton. Sir, I believe that is what I am hearing, 
but maybe General Schwartz would have more information on that.
    General Schwartz. Sir, as you are aware, the Canadians are 
in for four, the Aussies for four, the Brits a total of seven.
    There are Gulf nations that have expressed interest 
probably in excess of four and the North Atlantic Treaty 
Organization (NATO) allies have indicated an interest in three.
    It is absolutely clear to me that there is an appetite for 
these machines outside the DOD procurement profile and it 
requires aggressive marketing on behalf of the manufacturer to 
see that those opportunities are realized.
    Mr. Spratt. Thank you for your testimony.
    Mr. Abercrombie. Thank you very much.
    Just to make clear, General Schwartz, are you saying that 
the question of shutting down the line has to be seen in the 
context of outside sales as opposed to shutting down the line 
simply because the Air Force is not necessarily requesting nor 
requiring more?
    General Schwartz. Sir, I am saying that it is a strategy 
for extending the production line and it is one that----
    Mr. Abercrombie. For the corporation that is involved.
    General Schwartz. And it is something that should be 
aggressively pursued.
    Mr. Abercrombie. Thank you.
    Mr. Saxton.
    Mr. Saxton. Thank you, Mr. Chairman.
    And, again, thank you for being here with us. We appreciate 
it very much.
    The C-5 program, first, let me say that I have been a 
longtime supporter of the C-5 modernization program. In fact, 
some years ago, the Air Force was kind enough to make a C-5 
available to us out at Andrews Air Force Base and a group of us 
went, when the program was just a proposal, to actually get a 
feel for what the program was like and what the requirements 
would be, et cetera.
    And at the time, we were going to modernize, I think, just 
the C-5Bs, if my memory serves me correctly, and then one thing 
led to another, some activity in Congress and in other places 
and the program--a study was put in place for the potential 
modernization of the entire fleet of 111 airplanes.
    And when that study looked promising, we concluded that we 
could meet our airlift requirements with a fleet of less than 
200--I have forgotten what the number was exactly--C-17s and 
111 modernized C-5s.
    And then another turn in the road occurred recently and the 
cost of modernizing 111 C-5s became too much for a measuring 
stick called Nunn-McCurdy.
    And so now we have a program where we are back where we 
started to modernize 52 Bs and AMPing, I guess, the 59 As.
    And in my opening statement, I posed the question, if 111 
modernized C-5s and less than 200 C-17s gave us the required 
amount of lift, how does 52 modernized Bs and 59 As, with new 
electronics, which doesn't, from what I understand, improve 
capability in terms of reliability, how does this give us the 
same amount of lift or how does this help us--how does this 
make it possible for us to meet our requirements, our lift 
requirements, when we concluded previously that we needed the 
entire fleet modernized?
    Mr. Abercrombie. Before you answer, this is essentially 
what General Lichte is saying in his testimony, as well.
    What Mr. Saxton has put forward as the proposition, as the 
premise, is also the testimony that has come to us. I think 
that is a fair summary on page four under C-5 reliability and 
reengineering program.
    General Schwartz. Congressman, the bottom line is that the 
original baseline was 180 and 111 modernized aircraft. That is, 
modernized C-5 aircraft.
    The numbers give you 33.95 ton-miles with 205 and 111 with 
the C-5Bs, the 52 aircraft that you addressed, being 
reliability improved.
    So in part, that is where the number which Senator Levin 
solicited from me last fall came from.
    General Lichte. Mr. Saxton, if I might add, and it goes to 
what the chairman was asking about, mobility capability 
studies, as well.
    The 33.95 that we talk about were slightly short, but we 
are within shooting distance.
    The problem, as you point out, with the studies, we have a 
lot of studies and we haven't captured everything, because this 
is a changing and dynamic world.
    So we have not captured what we would say keeps moving the 
goalpost for us, that we have to go back and keep readdressing 
the numbers.
    We haven't captured that increase in the Army. We haven't 
captured the fact that the C-130 is no longer a platform that 
Future Combat Systems will fit on.
    So, therefore, it leads to a C-17 or C-5 platform and you 
have to ask the question on a concept of operations. If you 
have to go into unimproved or semi-improved runways, it leads 
you back to C-17.
    And so while we are at the bottom of the range--and, by the 
way, the study has provided a range that we shoot for, but on 
every study, we end up being forced to the bottom of that 
range, which means you assume some of the risk that you would 
have if you increase the numbers all the way up.
    So as General Schwartz points out, the 205 C-17s and 111 
makes that 33.95 million ton-miles per day, as we know it 
today, but doesn't take into account some of the other studies.
    So while we accept the numbers that we have in the program 
and in the President's budget right now, my feeling is, as the 
commander of Air Mobility Command, I would like to see us keep 
the C-17 production line open and I would like us to get the 
results of some of those studies back in with the increased 
amount of information, which is undergoing right now through 
Transportation Command and the MCRS, mobility capabilities and 
requirements studies, so that we can refine that number and 
make sure we have it right.
    Mr. Saxton. General, when you say that the requirements 
change from time to time, I guess one of the changes that we 
didn't anticipate was the need to deploy MRAP by air over the 
past months.
    That was certainly something that was not anticipated.
    General Lichte. That is true. But, of course, the studies 
we look at are wartime and, obviously, the MRAPs are part of 
wartime, in all the war plans for the initial surge and 
especially in that early 30 days where we worked very closely 
with Transportation Command to determine whether we will go by 
air or whether we will go by land or by sea.
    Mr. Saxton. Now, it is our understanding that in planning 
for future airlift requirement, that the requirements involving 
the Future Combat System have not been considered in arriving 
at the conclusions that the Air Force has come to relative to 
the lift that we need.
    Mr. Abercrombie and I, on Friday, are going to go to see 
some demonstrations of FCS, because it is a reality and if it 
is a reality and if history is a good teacher, we will have the 
need to deploy FCS in the foreseeable future.
    My information is that FCS will begin to come online as 
early as 2010, but will be fully operational--will have initial 
operational capability in 2015, 7 years from now.
    And, yet, the Army has not put forth the requirement, from 
what I understand, for this deployment and, therefore, these 
matters involving FCS and its deployment have not been factored 
into the need for lift.
    Is that correct?
    General Schwartz. Congressman, the mobility capability 
study 2005 did not address FCS, because its window of analysis 
extended through 2012 and, at the time, FCS was not delivering, 
certainly in quantity, until 2017.
    And as you are aware, the Army now has an interest in 
accelerating that timeline, as you indicated. And so the 
studies that we have at the moment do not consider FCS, the 
mobility capability and requirements study, as well as the 
McCaskill-Tauscher study, which the Institute for Defense 
Analysis is doing, the latter January 2009 deliverable, the 
former in May of 2009 deliverable, will include FCS 
requirements.
    Mr. Saxton. Thank you.
    Thank you, Mr. Chairman.
    Mr. Abercrombie. Just so we are clear on that, before we go 
to Mr. Smith.
    When you say FCS requirements, there is a whole slew of 
proposals there. What we are going to see doesn't involve the 
kind of equipment that won't fit right now, right?
    General Schwartz. Sir, we are talking about vehicles which 
are C-17 compatible.
    Mr. Abercrombie. Right. And they say are ready now?
    General Schwartz. Sir, they are not ready now, but we have 
dimensional data which is from the manufacturer and so on and 
we will do our best analysis based on the best information.
    Mr. Abercrombie. So that is a separate issue to be settled, 
right, on when these actually are deliverable in a form that 
actually requires an airlift capability?
    General Schwartz. Of course.
    Mr. Saxton. If I could just take 30 seconds, Mr. Chairman.
    Mr. Abercrombie. Yes.
    Mr. Saxton. General Schwartz was very articulate about 
explaining why the FCS requirement has not been included in the 
current set of requirements for airlift, and I just want to 
make that clear for the record.
    Is that right, General?
    General Schwartz. They have not been factored in, that is 
correct.
    Mr. Abercrombie. Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    A quick question on the C-17. Forgive me, there are a lot 
of facts floating around on this. I want to make sure I am 
clear on this.
    So you are not planning on purchasing any more, but I think 
the viewpoint of most is that, at some point, we will likely 
need more C-17s. So the concern is in keeping the line open.
    Is that accurate? Are you envisioning a point in the future 
where you will need more C-17s, but just not right now and just 
not within the funding? Is that an accurate assessment of what 
is going back and forth here?
    General Schwartz. That is not necessarily my view, sir. The 
secretary and General Lichte can sort of address their view.
    Mr. Abercrombie. Would you pull the microphone a touch 
closer, please?
    General Schwartz. I think it is premature to suggest that 
we require additional 17s as far as the eye can see, sir.
    Mr. Smith. I wasn't saying as far as the eye can see. I was 
just saying more than we have now. But you are saying it is 
still possible that we might not even need more.
    General Schwartz. As I have articulated, sir, I think the 
right number of C-17s is 205, which is 15 short of where the 
program is right now.
    Mr. Smith. Anything different?
    General Lichte. I would add, as Secretary Wynne and General 
Moseley have mentioned, that once we determine where the 
requirements are and as we have talked about with the chairman, 
we are at the bottom of the requirements.
    So as we hear about Future Combat Systems, as we know about 
some increase in the size of the Army, it will depend on where 
those soldiers are positioned.
    If they are part of the force that we need to take their 
equipment forward or back, that may drive a higher requirement, 
and we are at the bottom of the scale.
    So if that drives us up, it may require that we look at it.
    Mr. Smith. That answers--sorry--other questions to our 
timeline.
    I want to ask you two questions about the tanker decision. 
There is a lot certainly that has come out of it, but I still 
have more to learn. I can't speak for anybody else on the 
panel.
    And I guess one of the biggest questions I have is in terms 
of assessing the risk and reliability of the delivery schedule 
in assessing for or against two competitors, which seem to, to 
some degree, ding the 767 requirement.
    I know there are a lot of different pieces to this, but one 
of the biggest pieces certainly is having the plant to build 
the tanker, which the 767 has and has been building, whereas 
the 330 has been contemplating building a new plant in Alabama, 
no guarantees of workforce there, at least not the same 
guarantees that you have with the people who have already been 
building it.
    So it seems hard for me to understand that that would be a 
negative against the 767 proposal in terms of their reliability 
versus a plant that hasn't even been built yet.
    I am wondering if you could explain that.
    Secretary Payton. Yes. Congressman Smith, thank you for the 
question.
    I would love to go to a closed session. We did look at the 
facilities implication and I would be more than happy to 
describe any of that with you, but not in an open forum.
    Mr. Smith. The other question is on the changes in the 
assumptions that have been made, and I have been seeing 
different answers to this in a variety of different forums, 
none of which have been terribly satisfactory, because 
certainly there are many different changes that are made on a 
procurement this size and you can get so buried in the details.
    But the bottom line is what the Air Force seemed to be 
asking for in the 2002 timeframe is different than what they 
ultimately wound up asking for. I think we would all agree upon 
that.
    I mean, to the point where last year sometime, there was 
considerable scuttlebutt that the 330 proposal, they were 
saying, ``We might not make one, given the requirements that 
are put here. We think they are skewed unfavorably toward 
767.''
    And then they went, gosh, in a year's timeframe, from 
having a set of requirements--and I know that is not the right 
word here, because you didn't actually formally change the 
requirements, but there were changes within the proposal 
requests.
    They went from saying, ``Gosh, we might not be able to 
compete at all'' to getting the contract. And the big 
difference here is medium-sized versus large, but there are 
others.
    What changed between 2002 and 2008 in terms of those 
requirements that took it in such a radically different 
direction?
    Secretary Payton. Well, to start with, I would have to take 
for the record the question about what changed between 2002 and 
the point at which we put the official RFP out in January of--
--
    Mr. Smith. Things changed after that, too.
    Secretary Payton. I would be more than happy to address 
what changed prior to the request for proposal (RFP) going out 
and then the one thing that changed, and it wasn't a 
requirement, but it was a piece of the data that goes into a 
model.
    So I could answer that part, and I think that General 
Lichte may want to add to it.
    The main thing we wanted to make sure we were doing in the 
integrated fleet aerial refueling assessment was to be able to 
compare one offeror to the KC-135 and compare the other offeror 
to the KC-135 in a very high stress wartime environment that 
would be realistic.
    So as we were reviewing the datasets that would feed into 
the model, it became apparent that in a time of war, you do 
have the aircraft parked closer together on the ramp. There is 
an Air Force instruction, I believe, that says no closer than 
25 feet.
    And you do start parking the aircraft on ramps that can 
handle heavier weight first. And so the things that were 
improved in the datasets were making the actual data more 
realistic for a wartime scenario.
    Now, at the time that we did this, we had no idea what 
either offeror was going to bid. We were being told that we 
might get two bids from Boeing.
    So those things were changed just to make more realistic 
the scenario.
    There was one thing that was changed after the RFP was 
released and that was that we discovered there was one more 
parking ramp at Bahrain than the model was allowing as a data 
input. And so that was added for more realism, as well.
    But at no time were any datasets changed to try to skew or 
unlevel the playing field.
    And I don't know, General Lichte, if you have anything you 
might want to add.
    Mr. Smith. I would yield to the chairman. I am out of time. 
I don't want to take too much time.
    Mr. Abercrombie. Why don't you make your remark, General, 
and then we will conclude this segment.
    General Lichte. Yes, Mr. Chairman.
    What I would say, because, as the operator, we helped 
establish the requirements and the KC-X requirements were set 
and established by the Joint Requirements Oversight Council, 
the JROC, in November of 2006 and it didn't change after that.
    And the evaluation criteria were established when the RFP 
went out on 30 January 2007 and we didn't change after that. 
The items that Ms. Payton referred to, there were five things 
that affected the Integrated Fleet Aerial Refueling Assessment 
(IFARA), but they were all operational realities.
    Mr. Abercrombie. Can you say what that is, for the record?
    General Lichte. The five things, four of them were made 
actually prior to the RFP going out, with the wingtip clearance 
that Ms. Payton alluded to.
    In peacetime, we use about 50 feet between aircraft. In 
wartime and what we are using today, it is 25-foot wingtip 
clearance.
    So we decided that is what we should be. That is the fair 
way of looking at it. So with wingtip clearance, the ramp 
utilization with regard to pavement stress, and that is the 
same thing we do as we assess airfields.
    Obviously, we are going to have a mix of aircraft, tankers, 
fighters, bombers, and so we assessed where the tankers will 
be. So we looked at that and put it out.
    One of the things that came up was tanker receptacle 
credit. On the tanker aircraft, the new KC-X can take gas, as 
well as give gas. Our KC-135s can't take gas. There is a 
flexibility that that gives a commander by being able to take 
gas.
    So we had to evaluate what is the credit we should give to 
someone who puts a receptacle on the tanker.
    And so that was one of the things that came up, and then a 
realistic tanker ground time. There was discussion whether you 
just give a ground time to the tanker, how much time it takes 
to just pump fuel on it.
    But for all our aircraft in the entire system, we have 
published ground times, because there is a lot more than just 
pumping gas. Crew chiefs have to be ready. The latrines need to 
be serviced.
    There are a lot of other things that go into make an 
aircraft ready. So we used our standard time for tankers, which 
is four hours and 15 minutes, and we used that and applied it 
across the board.
    And then the last one was, as Ms. Payton alluded to, the 
one base that we didn't have the ramp right at Bahrain and that 
was changed and was given to all the competitors in advance, 
and we offered to answer any questions about the requirements 
on that.
    Mr. Smith. Thank you.
    Thank you, Mr. Chairman. I appreciate it.
    Mr. Abercrombie. Ms. Payton, will you make arrangements to 
meet with Mr. Smith or his designee about the factory question?
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. We will move to Mr. Akin now.
    Mr. Akin. Thank you, Mr. Chairman.
    Mr. Abercrombie. Just one thing. Excuse me, Todd.
    Again, so I make it clear, I didn't want to use Mr. Smith's 
time, but there was an implication there, and I wanted to make 
certain that, for the record, we have it.
    General Schwartz, if I understood you correctly and if I 
understood the answers to Mr. Smith, is it the Air Force 
position--and perhaps I need to address it to you, Ms. Payton.
    Is the Air Force position that if 15 more C-17s come into 
the picture, if you get to 205, which is approximately 15 more, 
13 to 15 more C-17s, that is sufficient unto the day?
    The reason I ask that question is--I am not trying to trick 
you--the reason I ask the question is under your unfunded 
requirements list, you list 15 C-17s for almost $4 billion.
    So the question, if you are answering--if I understood what 
has been directed to Mr. Smith to this point, if 15 come in, 
for example, say the Appropriations Committee deals in a 
supplementary or even in this bill with 15 more, then will you 
remove that from your unfunded requirements list?
    Secretary Payton. I think that is a General Schwartz 
question.
    General Schwartz. I don't think it is. The bottom line is 
205 is the right top line, in my view.
    Mr. Abercrombie. Yes. I understood you and General Lichte 
have 205 as the number, is that correct?
    General Lichte. That is correct, as I know all the 
requirements today. So I still need, Mr. Chairman, that the 
numbers for the Future Combat System be increased in the Army, 
all those things we talked about earlier.
    I need the results of that before I would be able to commit 
to a final number, but 205----
    Mr. Abercrombie. Well, then, why are they on the unfunded 
requirements list?
    General Lichte [continuing]. And 111 brings us to the 
bottom of that requirement capability.
    Mr. Abercrombie. I am still not quite exactly clear whether 
Mr. Smith's question has been answered.
    Mr. Smith. It has to my satisfaction, Mr. Chairman. The 
last piece is the key piece. The requirements may well change 
based on other things that are asked for by us or by DOD and if 
that happens and, all of a sudden, the Future Combat Systems 
requires airlift of a certain kind, then they may have to 
reevaluate it. It is in flux, I gather that.
    Mr. Abercrombie. Do you understand why I am asking these 
questions? Because we have drifted into a pattern of having a 
budget and a defense bill and then something called an 
emergency supplemental bill, which, all of a sudden, doesn't 
have much to do with emergencies and doesn't have much to do 
with supplemental, but has a whole lot to do with politics and 
a whole lot to do with bouncing requirements back and forth, 
particularly where procurement is concerned.
    And what it does is it throws a political element into it, 
particularly from the congressional side, which is easily 
criticized or easily critiqued and probably criticized, as 
well, but, nonetheless, is almost inevitable when we get into 
this kind of situation where it is tough for us to figure out 
exactly what the hell are you asking for.
    Is silence assent in the Thomas Moore sense?
    General Schwartz. Mr. Chairman, the need is 205 C-17s. I do 
not presume that those things that are yet to be assessed and 
concluded will add to that number. Some people do. That is not 
where I am at.
    Mr. Abercrombie. I accept that. You understand regular 
order gets severely compromised when there is an assumption 
that, well, let's not really worry about--I am not saying you 
are doing this, but there is going to be a tendency to say, 
``Well, it really doesn't matter whether the studies are 
finished yet or when they do, we will just toss it into the 
supplemental,'' and all of a sudden, F-22s are appearing and 
Joint Strike Fighters (JSF) and what have you.
    It becomes a kind of procurement reserve.
    General Schwartz. One thing, sir, to make clear that if the 
decision is to build more than 205, then my best military 
advice to the committee is that we look for trade space 
elsewhere in the fleet mix.
    So if you build above 205 C-17s, it means taking capacity 
out elsewhere, which probably means C-5As. That is the trade 
space, in my opinion.
    Mr. Abercrombie. This all presumes, by the way, that we 
don't ever change the way we procure, that we don't ever get to 
capital budgeting or any other system, that we just keep on 
going the way we have been doing all along. Right?
    Which would be the sensible way to do it, because absent 
changing the way we finance things, this is what we are going 
to face, correct?
    Todd, I am sorry to take the time, but I thought it needed 
to be clarified.
    Mr. Akin. Thank you, Mr. Chairman, and I agree with you, I 
think it did.
    I was going to ask along the same lines, as well.
    Currently, we have 171 C-17s, is that right?
    General Schwartz. A 171 delivered birds, yes, sir.
    Mr. Akin. And how many are on order then?
    General Schwartz. A 190 is the program.
    Mr. Akin. One-ninety.
    General Schwartz. Yes, sir.
    Mr. Akin. So if we don't do anything else, if we follow the 
budget that you are recommending, we are going to end up with 
190.
    General Schwartz. That is the current program.
    Mr. Akin. And you are saying 205 takes you to the point 
where you are totally comfortable that you will never need 
anything more than 205 of them.
    General Schwartz. Sir, it takes me to the point where I 
think the risks are reasonable.
    Mr. Abercrombie. It takes him to the point of retirement, 
Todd.
    Mr. Akin. Now, you are factoring in, General, the--I mean, 
you have some sense of Future Combat Systems. You are in charge 
of shipping things all over the planet. I mean, that is your 
command.
    So you have a little bit of a sense, if we do this, this or 
this, you have a feel for just the general proportional change 
that that might be if something is bigger you are shipping or 
this or that, right?
    General Schwartz. Yes, sir, we do.
    Mr. Akin. And that is why you say that, with some level of 
confidence, you think that is just a good number and you would 
be okay.
    General Schwartz. It is with a level of confidence and the 
key thing here is, sir, we have more than one way to do things.
    Mr. Akin. Right.
    General Schwartz. Not everything goes by air.
    Mr. Akin. The next question I had was it said that on the 
C-5As, you are putting avionics on those. You said that.
    Now, was I mistaken? I thought the C-5As had a very, very 
low reliability, that they are very old and that there is a 
whole lot of maintenance on those. Is that true?
    General Schwartz. That is the case, sir.
    General Lichte. And, sir, the majority of the maintenance 
is done on the engines. It is time to remove engines. So the 
reliability enhanced and reengining program will help on the 
number that we are RERPing.
    Mr. Akin. So when you talk about putting avionics on the C-
5As, does avionics mean engines?
    General Lichte. No, sir. It is the equipment in the cockpit 
that allows it to fly in some of the airspace that some of that 
equipment is required in.
    Mr. Akin. That is what I thought. So it doesn't help the 
reliability.
    General Schwartz. Some.
    General Lichte. Only a little bit.
    General Schwartz. It does some. The issue here is 
obsolescence and if we are going to continue to operate the C-5 
even at its current 55 percent or so reliability.
    Mr. Akin. How many C-5As do we have now?
    General Schwartz. Sir, given the program, there will be 59 
C-5As.
    Mr. Akin. Fifty-nine. So, now, if you were trying to get 
the best bang for the taxpayer's buck, would it be better--this 
is just your opinion, and I know I am putting you on the firing 
a little bit, but that is what your job is, so it is okay.
    Would you rather have the 59 C-5As or would you rather have 
more C-17s? You need some C-5s because there are some things 
that are just big that you need to haul, but you have got the 
Bs and the Cs.
    General Schwartz. If money were no object, I would rather 
have the C-17s, but it is not.
    Mr. Akin. So the reason for keeping any C-5As around is 
more just the cost of the additional C-17s.
    General Schwartz. It is having a balanced force that can 
accomplish the tasks that we see that need to be done, and 
operating it effectively and, yes, there is cost as a 
consideration.
    Capacity is a consideration. Reliability is a 
consideration. Taking that all into balance, 205, 111, was 
where we came out.
    Mr. Akin. The 111 includes then the 59As.
    General Schwartz. It does, sir.
    Mr. Akin. But you are saying if somebody wanted to do it a 
different way, if you got rid of some of the C-5As, you could 
put more C-17s. You could mix that way, but it is a little bit 
more expensive, you are saying, to go that route.
    General Schwartz. Substantially.
    Mr. Akin. And you are figuring new engines for the C-5As or 
not?
    General Schwartz. No. Sir, there are a number of options, 
clearly, but the current position is, based on the 
certification for the Nunn-McCurdy and on the C-5 program is 
specific to aircraft that will become reliability--improved C-
5Ms.
    There are any number of options out there, to be sure, 
fewer C-5As, more C-17s, RERP, all 111. There are a number of 
options, but the place where we are at the moment is 205, 52 
and 59.
    Mr. Akin. I guess another thing that has always been 
curious to me, you say they are something like 50 percent 
reliable. At least as I look at a number like that, I wouldn't 
want to get in an airplane that is 50 percent reliable.
    General Schwartz. It doesn't mean it is unsafe, 
Congressman. What it means is that the airplane might not 
depart on time. It might need maintenance for whatever reason.
    We would not operate an aircraft that was unsafe.
    Mr. Akin. Well, I assumed that you wouldn't do that. But I 
guess when you have an unreliability factor in a plane, then 
you have to sort of figure that if you really only have 50 of 
them, you have got some number less than that, because you 
don't know for sure they are ready to go. Is that right?
    General Schwartz. You manage the fleet in a way that you 
acknowledge the fact that they are less reliable and you 
compensate. For example, perhaps you schedule two to make one 
sortie.
    Mr. Akin. Am I out of time, Mr. Chairman?
    Mr. Abercrombie. Thirty seconds.
    Mr. Akin. Thirty seconds, okay.
    Changing subjects here a little bit, on the question of the 
tanker situation, I had a chance to sit in on----
    Mr. Abercrombie. I knew I shouldn't have said that.
    Mr. Akin. I had a chance to sit in on the meeting. I guess 
it was what you call the Secret level or it was a closed 
briefing on that.
    I got the impression, just sort of as a takeaway, that the 
sense was that one of the competitors felt that the Air Force 
was really looking at a medium-sized plane and at least had 
that sense enough that that is what they bid, and yet the 
parameters the way the numbers and the algorithms worked out, 
there was an advantage to have a bigger plane.
    The question that is not quite clear, in my mind, was there 
were a series of sort of like you have to meet this parameter, 
you have to meet that parameter, you have to meet the other.
    Once you meet it, my understanding was there was no 
additional benefit for exceeding the parameter.
    Is that true or did you give extra sort of benefit to 
people who exceeded what was required?
    Secretary Payton. Yes, sir.
    Mr. Akin. Because on that point, it seems like that turns 
on the question of whether or not the other contractor should 
have bid a bigger plane, also, to have a big plane fighting a 
big plane instead of a medium one and a big one.
    Secretary Payton. Yes. Yes, sir. I appreciate the question.
    The RFP was very clear that each offeror had to meet the 
minimum threshold in order to stay in the competition, in order 
to be compliant at all.
    If they didn't meet the very minimum threshold of the 
requirement, if it was a key performance parameter, then they 
would be unawardable.
    Mr. Akin. Right.
    Secretary Payton. Now, it was also very clear that extra 
credit would be given to the offeror who exceeded that 
threshold, but we would not give any extra credit to someone 
who exceeded an objective, which was something way up high.
    So relative to the RFP, it was very clear that we had no 
requirement for size, large or medium. We did have requirements 
to meet capabilities and there would be extra credit given for 
exceeding that minimum threshold.
    And on three occasions, we did debrief each of the offerors 
as to, of the 808 requirements, exactly what they were getting 
credit for.
    Mr. Akin. That answers the question.
    Thank you, Mr. Chairman.
    Mr. Abercrombie. You are welcome.
    Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman.
    Thank you all for your service, General Schwartz, General 
Lichte.
    It seems to me that the posture we now have with the C-17 
and C-5 question is that the can has been kicked down the road, 
assuming Congress goes ahead and authorizes another 13 to 15.
    The only issue would be the long lead time suppliers and at 
this point, that has actually kicked off a little bit.
    So I am pleased that we are adding C-17s. I am pleased that 
we are continuing with the RERP-AMP program where the C-5s are 
concerned, and we will figure out a year or so from now just 
where we are going from here.
    Ms. Payton, if I could, in the tanker question, one thing 
Air Force was not permitted to take into account is the fact 
that Airbus, McDonnell-Douglas' partner in this venture, is 
supported by European governments, subsidized. Is that correct?
    Secretary Payton. That is correct, sir. Yes, sir.
    Mr. Marshall. Has that factor been taken into account at 
all in this process, that you are aware of?
    Secretary Payton. To my knowledge, subsidies and things 
like that were not taken into account anywhere in the 
evaluation.
    Mr. Marshall. Have you thought about whether or not there 
is, at this point, some mechanism for taking not only that into 
account, in trying to evaluate the choice that Air Force 
prefers, but also taking into account the number of American 
jobs that will be located here in the continental United 
States?
    Have you thought about that? I am sure you have. Could you 
share with us what your thoughts have been about that?
    Secretary Payton. That is a question across the entire 
Department of Defense that probably needs to be addressed.
    At this point, subsidies and the number of Americans 
working and the number of jobs and even the supply chain, the 
Buy America Act, as it is written and enforced within the 
Department of Defense, was what we went with relative to the 
supply chain.
    So I would think that it is a question for Secretary Young 
or Secretary Gates about, across the board, what you look at 
relative to subsidies or work share of American jobs.
    Mr. Marshall. But that is not a question--those questions 
were not taken into account with regard to this particular 
decision.
    Do you see any mechanism for those kinds of questions to 
now be addressed as it applies to this particular decision?
    Secretary Payton. Yes, sir. I mean, we address all kinds of 
things, especially as things come across in legislation to us 
to address.
    We had many, many updates just in the fiscal year 2008 
National Defense Authorization Act about acquisition. But at 
this time, I see nothing going on within the Department 
relative to this.
    Mr. Marshall. Thank you. There are some other questions 
that I have, but I appreciated the closed session that we had, 
the secret level session that we had, and I thought that there 
is some follow-up that we are going to have to engage in in 
some other setting that I will call you about.
    Secretary Payton. I would be happy to do that, sir.
    Mr. Marshall. JCA.
    Secretary Payton. Yes, sir.
    Mr. Marshall. And I don't know that this is--I don't know 
to whom this is addressed, but maybe for the panel generally. 
What has concerned me for some time now, assuming that this is 
a platform that should be shared jointly, is that there hasn't 
been the degree of jointness in the acquisition process that we 
would like to see.
    A lot of effort has been made in that regard, but Army is 
still set on contractor logistics being supplied and Army has 
really been set up to do anything other than that with regard 
to a platform like this.
    Conversely, Air Force is set up to do this kind of work, 
has depots that do this kind of work, and, in fact, given corps 
requirements, would be interested in making sure that in the 
acquisition process, there is an appropriate consideration 
given to the long-term maintenance, repairs and modernization.
    In other words, let's not replicate the C-17, where we are 
just struggling almost annually to try and figure out the 
appropriate balance.
    What work has been done on that lately, any? Where are we 
as far as that question is concerned?
    Secretary Payton. Yes, sir. As a matter of fact, the 
original question earlier about the difference in the APUC 
numbers between the Air Force's JCA and how much it will cost 
per unit and how much the Army's will cost per unit, we did 
include in our calculation the price to stand up the depot, the 
price that it took to negotiate the data rights so that we in 
the Air Force could do the logistics and meet our corps 50-50 
requirements.
    We are working very closely with the Army. I met with Dean 
Popps yesterday to discuss this. We are going to work on a 
study so that in fiscal year 2010, these numbers will converge, 
and we will understand better how we can do joint training 
better.
    In our number, we quoted how much the simulators would be 
for training. That is something that the Army does under their 
O&M numbers and would not be part of the APUC.
    So we have nine positions in Huntsville. The Air Force has 
manned up eight of those. So the joint acquisition program is 
very healthy and we are teeing up these issues so that we can 
get the best for the taxpayer.
    And I believe that we could see that number, that APUC 
number for the Army come down as they start relying on more of 
the logistics that we have that are organic.
    So we are dedicated to working this out.
    Mr. Marshall. I appreciate that and I would just highlight 
your words. We could see the cost come down if Army worked more 
closely with Air Force, considering the long-term maintenance 
and sustainment of this system.
    Secretary Payton. Yes, sir. And I think that----
    Mr. Marshall. The taxpayers win, in other words.
    Secretary Payton [continuing]. This particular aircraft is 
very exciting to our coalition partners and to other people, 
the Air National Guard and other folks in the U.S., as well.
    And so we may just on the beginning of how many we will 
sell and the more you sell, the lower your price per unit comes 
down, as well.
    So we are very, very excited about this program and what it 
can mean for our coalition and international interoperability.
    Mr. Marshall. Thank you all for your service, what you do 
for our Air Force and our country.
    Mr. Abercrombie. Thank you.
    Before we go to Dr. Gingrey, what you are saying is a 
little disconcerting to me.
    You say you are doing studies now. Why wouldn't they be 
done before you have the aircraft?
    I am not quite sure what you are saying. Why wouldn't you 
have the need or requirements determined before you are 
completing an award contract?
    I mean, you already have an existing----
    Secretary Payton. Yes.
    Mr. Abercrombie. Well, I am going to ask you. The reason I 
am doing this is you referred to the question I asked at the 
beginning in my remarks and part of the argument here is that 
you already have an existing plane.
    Secretary Payton. I am sorry. I missed the last part of 
that.
    Mr. Abercrombie. I am saying part of the argument here is 
between the Army and the Air Force, and you are saying here you 
are still doing studies.
    Secretary Payton. Yes. What we were told during the 
acquisition reviews of this by the OSD cost estimators to use 
our historical numbers as to how we do business, and then we 
are now kicking off discussions and reviews of how we actually 
will stand up the joint training together and how we will 
actually stand up the joint sustainment together.
    And so a lot of the money that we have in our Research, 
Development, Test & Evaluation (RDT&E) line is to solve some of 
those disconnects.
    Dr. Gingrey. Mr. Chairman, if I could. I have been pretty 
actively involved in trying to pull the two services together 
with regard to this particular platform and that is, in part, 
because of the problems we have had with C-17, trying to figure 
out what we are going to do where C-17 maintenance and 
modernization and sustainment over a period of time is 
concerned.
    And it is two separate acquisition entities with different 
history, different budget organization, different everything. 
And so it doesn't surprise me that they are still working on 
details, and we will still be working on details of this as 
time progresses.
    I think what we need here in Congress is to see a 
commitment from both services that they are going to move 
forward jointly with regard to this, and they are going to do 
what is most practical from the perspective of the taxpayer and 
our general objectives militarily.
    So far, I am seeing that. It has been difficult as we have 
moved along. There have been some bumps in the road. But I have 
actually been pretty impressed with the extent to which they 
have come together.
    Mr. Abercrombie. I am willing to grant that, but--excuse 
me, Phil, if we could just pursue this a moment.
    But underlying all of our discussion, including the 
tankers, for that matter, is this whole question of funding and 
how much money is available and how to meet the requirements 
given the funding that is available.
    General Schwartz, virtually all of his testimony has as a 
theme going through it that there is only so much money and 
there is so much in the way of requirement and that a prudent 
person has to simply deal with those realities.
    Supplemental budgets and so on are theoretical, for all 
intents and purposes. You don't know when they are going to 
come. You don't know when they are going to be put forward. You 
don't know when they are going to be completed, et cetera. You 
don't know what else is going to get added in there.
    Now, the intra theater airlift fleet mix analysis, I have 
to think to myself so that I can make sure I get all of that in 
there, concludes--at least my judgment is that do you have to 
procure this JCA to meet your airlift intra theater 
requirements.
    Why not procure additional C-130Js?
    Secretary Payton. I would like to answer----
    Mr. Abercrombie. Given the fiscal constraints that you 
yourself have put forward to our attention today saying that we 
need to recognize.
    General Lichte. Mr. Chairman, I can jump in here and help 
out a little bit.
    Mr. Abercrombie. Yes.
    General Lichte. That study went over to you recently and it 
acknowledged the requirement that we had with the Army and the 
Air Force numbers, 24 for the Air Force.
    What we found out as we did that study, if you are talking 
the war fight, no matter how you begin the war fight, what you 
really need are bigger platforms. You need the C-5s, you need 
the C-17s, and you need C-130Js to get a lot of stuff over to 
the fight quickly.
    What we found as we did that study, and they acknowledged 
the numbers that were in there for the Air Force and the Army 
and said, ``Yes, that is a valid need,'' when you get to a 
certain phase in the war, which we happen to be in now in Iraq 
and Afghanistan, there may be a requirement where it is more 
effective to use a smaller airplane so that you are not using a 
C-130J size aircraft, but you are not filling it up.
    And so we have asked the folks to go back and take a look 
at that part of the phase of the war that you are in, what do 
you really need, what would be most effective, and, in 
conjunction with that, we were looking at what are the needs 
for homeland defense, what are the needs for the National Guard 
if a calamity or crisis develops in a certain part of our 
country.
    Would it be easier to forward medical supplies and people 
in a smaller aircraft or will you need the size of the aircraft 
that we are talking about with C-17s and C-130Js?
    And so the one study that authorized the numbers is there, 
but we are looking at what else or how else would those 
aircraft be used.
    Certainly, as Ms. Payton pointed out, in the international 
arena, it helps us with partnering and working with other air 
forces.
    Mr. Abercrombie. That is not essentially--I appreciate all 
that, but essentially what I am asking here is the Army is 
maintaining, for example, that it can do it for almost half the 
price of--its version of the aircraft at half the price of the 
Air Force.
    I am asking a money sensitive question.
    Secretary Payton. Yes, sir, and if I could reply to that.
    The Army's cost number did not include standing up a depot, 
which the Air Force is going to be doing. It did not include 
negotiating the data rights from the provider of the aircraft 
so that we can do our own maintenance in the future.
    It did not include the cost of simulators and trainers for 
crew maintenance. Those are all put in another line.
    Mr. Abercrombie. The cost I am referring to is from the Air 
Force of 60.7. You are saying you are putting that in your unit 
cost.
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. And the Army doesn't have the same 
definition of a unit cost.
    Secretary Payton. That number----
    Mr. Abercrombie. Well, if you are doing things jointly, 
when the hell are we going to get this done? That is not an 
answer that satisfies me very well.
    You mean you are in such elementary opposition to one 
another that you don't even agree as to what a unit cost is 
when you present it to the Congress.
    Secretary Payton. Well, they don't----
    Mr. Abercrombie. Am I to take from your remarks that the 
Army is trying to deceive us?
    Secretary Payton. No, sir. The Army doesn't have a depot 
standup cost because they are going to have their maintenance 
done by the contractor.
    That is in a different line for operation & maintenance 
(O&M).
    Mr. Abercrombie. So you are saying the Army is finessing 
this.
    Secretary Payton. No, sir. I think that the RDT&E and 
procurement costs, as the Army has stated them, are accurate. I 
believe that the O&M costs for the Army--I think those need to 
be examined.
    Mr. Abercrombie. Ms. Payton, you are right on the edge of 
getting into the Blues Brothers.
    Secretary Payton. Sorry, sir, I don't mean to be there.
    Mr. Abercrombie. That is when Jake says, ``Well, but you 
lied to us about the band, lied to me when I was in prison 
about the band. You haven't kept the band together.'' ``I never 
lied to you. I bullshitted you a little bit, but I never lied 
to you.''
    Secretary Payton. Sir, I would never give any 
misinformation that----
    Mr. Abercrombie. No, but you are saying that the Army is 
doing that.
    Secretary Payton. No, sir. I believe that----
    Mr. Abercrombie. They are trying to finesse this. You are 
telling me they have got a cost that they know about, but they 
are not telling us about it, and they are trying to pretend 
their unit cost, given information to us, is the same as your 
unit cost, and they know better.
    Secretary Payton. Well, sir, we would have to get with the 
Army and we are doing a business case analysis study, not a 
requirements study, on how to do training better together, how 
to do sustainment better together.
    I didn't want to leave the impression the requirements have 
changed in any way.
    Mr. Abercrombie. Well, there is a hell of a big difference, 
a $30 million difference.
    Secretary Payton. One of the additional things that we are 
doing is we are paying for all the joint live fire testing. We 
are paying for, as I said earlier, the tech manuals, training 
systems.
    Mr. Abercrombie. So I have to go back now, and I have got 
to have my staff then start making comparisons to make sure the 
Army isn't telling us one thing and the Air Force telling us 
something else, and we have to try and figure out what it is 
that puts apples to apples.
    Secretary Payton. No, sir. We would be glad to come 
together and----
    Mr. Abercrombie. But that is what the joint thing is all 
about. I don't understand. Why, if this is a joint operation, 
do you have two different sets of--you apparently know that 
there are.
    You are telling them to me in detail right now. In the Air 
Force, why aren't they operating off the same page when it 
comes to determining unit cost?
    Secretary Payton. Sir, I will take that action for the 
record, and I will return.
    Mr. Abercrombie. Is that a reasonable question?
    Secretary Payton. Absolutely.
    Mr. Abercrombie. Do you dispute that the unit costs are 
stated differently?
    Secretary Payton. No, sir. I believe the unit costs are 
correct. I will tell you that on the 25th, JCA, from the Air 
Force, our unit costs will start going down, because that 
investment that we have made upfront, now each unit that we 
build after the 24th will be factored in, so the price per tail 
will decrease.
    Mr. Abercrombie. But if you know that your criteria for the 
unit cost is different from the Army, why hasn't this been 
reconciled?
    Secretary Payton. Sir, I will have to take that question 
for the record.
    Mr. Abercrombie. I don't understand. Why should you have to 
take it for the record?
    Secretary Payton. Because I need to get with my 
counterparts and understand in detail how they calculated the 
APUC for this program.
    We do have----
    Mr. Abercrombie. Why hasn't it been done already?
    Secretary Payton. Because we--I will have to take that for 
the record. I apologize.
    Mr. Abercrombie. You don't have to apologize. This seems to 
me elemental. The whole basis of the questioning that is going 
on here and the whole basis of the idea of jointness is that 
there is at least a common understanding of what it is that is 
being determined and given to the committee.
    You obviously already know this difference. This is not 
news to you. You have it in detail.
    Knowing the difference, how come it hasn't been reconciled 
in terms of what is presented to the committee?
    Secretary Payton. Well, sir, I----
    Mr. Abercrombie. I have got the Army telling me one set of 
things. You know, I feel like I am being jerked around here.
    I am on the edge of having to make recommendations to the 
membership here and I am dealing with different numbers, 
different unit costs, where you are saying there are different 
criteria, which you know. You know that there are different 
unit costs.
    Secretary Payton. Again, we are taking a different approach 
on acquisition and sustainment.
    Mr. Abercrombie. Why? How can we make a decision if you are 
taking a different acquisition process from the Army, and, yet, 
it is being presented to us as if it is reconciled, I mean, as 
if you are all operating from the same page?
    That is why I asked the question. I am thinking how the 
hell can the Army come in with a unit cost significantly less 
here? Why is it tens of millions of dollars less?
    Secretary Payton. I will get more detail for you on that, 
but I know they are building more. So the more that you build 
relative to APUC numbers, the lower the price per aircraft is.
    I will tell you that we do have to invest in the data 
rights. Because we are doing our own maintenance, we have a 50-
50 law that we must abide by because we have logistics centers.
    Mr. Abercrombie. And the Army doesn't.
    Secretary Payton. No, sir. They do not do their own----
    Mr. Abercrombie. I know that.
    Secretary Payton [continuing]. Logistics on airplanes.
    Mr. Abercrombie. Let me ask this then. Why are we even 
bothering with the Army? Why don't I just dismiss it entirely, 
that it doesn't have anything to do with this version of the 
Joint Cargo Aircraft, operating in separate universes?
    Why are we even talking about it being joint then? Why 
don't they just do what you tell them to do?
    Secretary Payton. I think that is probably above my grade 
level, sir. I am trying to do the best I can in bringing 
jointness into something that was sort of formed separately and 
pulled together.
    Mr. Abercrombie. I am sorry, but it is very difficult. It 
is very difficult to understand then, if all of these things 
are, in fact, the case, and you are just telling me right now, 
why wouldn't that information have been given to the Army so 
that they could make a decision as to whether or not they 
should just simply join in your program? It is joint, what the 
hell. What difference does it make?
    Secretary Payton. Yes, sir. The decision was made this 
would be an Army-led program and we are working through this 
the best that we can.
    Mr. Abercrombie. So the Army thought that they could lead 
in this program and not have anything to do with depots, and 
they didn't understand that, and it never occurred to them, 
even though they have depots for MRAPs and everything else that 
the Army has to deal with, that they wouldn't need to have a 
depot factor involved in a cargo aircraft.
    It didn't occur to them?
    Secretary Payton. Sir, those are questions for the Army. 
And as I say, we have people supporting that program in 
Huntsville.
    Mr. Abercrombie. You know, you are saying these are 
questions for the Army. You are saying that I need to ask the 
Army.
    Secretary Payton. No, sir. I am suggesting that we come 
back together and any and all questions that you have relative 
to this.
    Mr. Abercrombie. Isn't it a little late in the game to be 
getting together with the Army?
    Secretary Payton. No, sir. We have been together with them. 
We were on the source selection with them. We have had our 
people involved.
    Mr. Abercrombie. The source selection, didn't elemental 
stuff like this come up during the source selection?
    Secretary Payton. Yes, sir. The acquisition strategy that 
was approved by OSD at our request was that there would be some 
differences in the approach here, but we would manage the 
program together, and we would do the business case analysis to 
determine how we would move forward.
    Mr. Abercrombie. Do you think it is being managed very well 
together at this stage?
    Secretary Payton. Sir, from what I can tell from talking to 
our----
    Mr. Abercrombie. From you can tell from the last 10 
minutes, do you think it is well managed together?
    Secretary Payton. I think there are some differences that 
we need to be able to articulate better to you.
    Mr. Abercrombie. Thank you.
    Dr. Gingrey.
    Dr. Gingrey. Mr. Chairman, thank you.
    Madam Secretary, the chairman obviously has got some tough 
decisions to make, and it requires some tough questions, and I 
certainly appreciate it, from his perspective.
    I am going to direct my questions and give you an 
opportunity to take a breath and direct my questioning to 
General Schwartz and General Lichte.
    It seems that you have an agreement in regard to the total 
need, getting back to airlift specifically, of 205 C-17s, 52 C-
5Bs and Cs that have been fully AMP'd and RERP'd, and then 59 
C-5As that have just had the AMP program.
    How do you 52 modernized C-5s added to 189 or even, General 
Schwartz, as you said, 205 C-17s, how does that give us enough 
airlift to meet our airlift requirements?
    Either way, it seems we are going to come up woefully short 
of the mobility capability study's recommendation. So 
considering we are going to--nobody has mentioned this, I don't 
think, during the long hearing, but we are going to be standing 
up a new command. We all know that, Africa Command, AFRICOM.
    We are also going to increase the end strength of the Army 
and the Marine Corps something like 92,000 additional troops.
    So it seems like our need for airlift is not going to 
decrease, it is going to grow.
    I ask the two Generals. Would you agree with that? As we 
look long, and not so long, that the needs certainly could be 
projected greater than what you have outlined here today in 
regard to our overall airlift capability?
    General Schwartz. Congressman, it is a great question. 
Fundamentally, the shock absorber in all of this, again, as I 
indicated earlier, is the fact that we have an organic fleet, a 
very substantial fleet, which is what we have talked about thus 
far.
    And, of course, we use our commercial partnerships 
extensively to augment the organic fleet when that is required, 
and, in fact, that has been the case.
    As you are aware, the Civil Reserve Air Fleet and our 
commercial partners deliver about 90 to 95 percent of our 
passengers, typically, and at least in the most recent conflict 
now ongoing, 35 to 40 percent of the cargo.
    So it is important to recognize that this is a system which 
includes both U.S. government-owned assets and sealift in 
exactly the same way, as well as commercial capacity.
    Dr. Gingrey. Yes. But, General, let me just add that with 
the price of jet fuel, I just wonder how many of the Deltas of 
the world will be able to take on that business as we look long 
on this.
    General Schwartz. It is a concern, there is no question. 
There is fragility in the American airline industry and that is 
something that is a national defense issue, in my view. I agree 
with you completely.
    And with regard to the other matters, AFRICOM, size of the 
Army and the Marine Corps and so on, without a doubt, we have 
to look at that. But I would just offer this context, that a 
presumption that all changes in requirements lead to more 
airlift, I think, is not necessarily the right way to approach 
the problem.
    I think it is important to look at this in a multi-mode 
fashion. This is what the upcoming studies will do. And I think 
it is important, again, to recognize that in the case of the 
Army and the Marine Corps----
    Dr. Gingrey. Well, General, let me just say that I 
personally, I do, I do believe that the number to meet our 
airlift requirement should be revised and it is going to take 
more C-17s.
    I think it is going to take more modernized C-5s to meet 
it. I think you can't ignore the fact that the C-5As, the 59 
that you are just going to modernize the cockpit--in the late 
1980's, they had a wing modernization program, and those 
airframes, in many cases, may have more flight capability than 
the Bs and the Cs because of that modernization of the wings.
    So funds for C-17s I don't think can be realized by 
forgoing C-5 modernization, because those funds reside in 2014 
and beyond. Obviously, funding for C-17s is a 2009 issue. It is 
next year.
    So if we are going to look at a more general five-year 
picture, then you need to consider that if you save $38 billion 
in total ownership costs by increasing the life of the C-5s 
through modernization, then you could use that to buy C-17s.
    So, General Lichte, you may want to comment on that.
    General Lichte. Sir, I would just add to General Schwartz. 
We do rely on the commercial world a lot and we use the C-17 
and C-5 fleet to handle really our oversized and outsized 
cargo.
    And so we manage the fleet to the best of our ability and 
that is why we need to take a look at the two studies that are 
critical right now, the MCRS, capabilities and requirements 
study, as well as the study that is led by Senator McCaskill 
and Congressman Tauscher that we are looking at the airlift 
issues that you raise with AFRICOM, the 92,000 extra, and on 
and on.
    And so that is why, while I agree with everything that 
General Schwartz has said, I would like to see the C-17 line 
stay open, because it is our only insurance policy right now if 
anything else goes wrong or if there is another development 
that we need to look at.
    And until we have things settled down as to where we are 
going to be basing all our Army soldiers, whether they are be 
home-based, whether they will be overseas-based, and how we are 
going to handle the future crises, that is what these studies 
will look at.
    That is what we will hope to come back and have some 
answers for the committee.
    Dr. Gingrey. Well, General, I don't disagree with that, I 
don't. I think you make a good case for it and I think we are 
going to need additional C-17s.
    I am in favor of fully RERPing all of the C-5As, as well as 
the Bs and the Cs. But I honestly think, as I sit here, in 
regard to what our commercial partners, what our civilian 
partners have done in the past, going back to the first Gulf 
War, I know many of those pilots, Delta pilots in particular, 
as I am a native Atlantan, that they not only welcomed those 
contracts, but they did out of their compassion and love of 
their country and flew those flights.
    But, again, with the price of jet fuel and the 
consolidation of the industry and possibly some failures, you 
can't count on that piece being there, and I think we 
absolutely need to think in terms of all of the airlift being 
done on the military side and not count on our civilian 
partners, even though they would like to do that.
    Mr. Chairman, that is all I have, and I will yield back the 
remaining balance of my time.
    I thank the Generals, and I thank the Secretary.
    Mr. Abercrombie. Mr. Bishop, would you yield to Mr. Saxton 
for a moment, because he has to leave?
    Mr. Bishop. I would be happy to yield.
    Mr. Saxton. Thank you very much.
    General Schwartz, the KC-45, I am told, has a wingspan of 
real close to 200 feet, it is 197 or 198, and the maximum gross 
takeoff weight of over 500,000 pounds.
    Will the size and weight of the KC-45 present challenges to 
the operational employment of the KC-45, and are there 
airfields that you will not be able to operate the KC-45 from 
where we are currently operating the KC-135?
    General Schwartz. Those challenges are manageable, 
Congressman, and no doubt there are some airfields that will 
be--we will have to use the 135s, which will be around for 
another 30 years, accordingly.
    But I am personally persuaded that this is manageable, and 
I think General Lichte will confirm that, as well.
    Mr. Saxton. But the answer to my specific question is that 
there are some airports that currently are based--where we base 
KC-135s that will not be able to be used for the KC-45.
    General Schwartz. Presumably, that is the case and, in 
addition, that is not unlike the airlift scenario, sir, where 
some airplanes--some fields are C-5 capable and some are not.
    Mr. Saxton. I know, but I just wanted to get an answer to 
my question.
    The answer is that there are some airfields----
    General Schwartz. There are some.
    Mr. Saxton [continuing]. That will not be able to 
accommodate the KC-45.
    General Schwartz. There are some, but that, again, in my 
view, will be manageable.
    General Lichte. Mr. Saxton, could we come back to you on 
the record with that? Because I am not aware of any of the 
airfields. I know there is some discussion on the weight and 
everything, but really, for the runway lengths, I am not aware 
of any difference that we would be restricted from the 135.
    So General Schwartz and I can go back and take a look at 
that just to make sure we give you the accurate answer.
    Mr. Saxton. Thank you very much. Appreciate that.
    Mr. Bishop.
    Mr. Bishop. Well, Mr. Ranking Member, I am going to talk 
very slowly here until the chairman can return.
    I just want to thank you all for being here.
    To be very honest, I had a couple of questions which I 
think are going to be redundant, because I am sure they have 
been covered already, and I apologize for not being here to 
listen to the earlier testimony.
    So I am sure that Mr. Abercrombie will not be opposed for 
me submitting those questions for the record, and I will ask 
unanimus consent (UC) to allow us to quit if that is the end of 
it.
    Mr. Saxton. That is kind of unusual. Why don't we just 
suspend for a few minutes until the chairman gets back?
    [Recess.]
    Mr. Bishop. Ms. Payton and Generals, until Mr. Abercrombie 
returns, in all sincerity, you probably--if this is redundant, 
just say so. okay? But let me at least go through the three 
that I have written down here, and then we can go from there.
    And let me start with Ms. Payton, if I could.
    At the time, Congress is adding funds to the budget to keep 
the C-17 line and airlift production capability going. We are 
allowing another power project capability, in this case, aerial 
refueling, to now be produced primarily by another country, 
which is the Airbus, obviously.
    Does it make sense to the United States to not preserve the 
capability to produce C-17 aerial refueling aircraft, as well 
as other strategic bombers along the current line?
    Do you understand what I am trying to say with that?
    Secretary Payton. Yes, sir, I understand the question.
    I think that I look to the people in charge of readiness 
and the people in charge of operations to answer that question. 
I really don't have an answer for that question.
    Mr. Bishop. Ms. Payton and Mr. Chairman, if you have 
already answered that already in this committee hearing, and I 
am making the assumption you probably have, I have these 
questions.
    Once again, I have two others. I am more than happy to put 
them for the record, because I am assuming they will probably 
re-plowing ground that has already been done here.
    Mr. Abercrombie. That is all right, if you want to do it. 
If you need answers and you want them today, go ahead.
    Mr. Bishop. Actually, I would be more than happy to submit 
these for the record and allow them a chance to look at them 
again.
    I was actually just filling time, to be honest with you.
    Mr. Abercrombie. Thank you very much. I appreciate that.
    Mr. Bishop. And I am done filling the time right now.
    Mr. Abercrombie. Ms. Payton, I want to go back over this, 
what we just were discussing, and make sure we are on the same 
page.
    What I don't understand is, at this stage--that is why I 
asked about studies being done and before contracts go out and 
so on.
    What I don't understand is why haven't we gotten to a 
stage, let's say, where you are going to have Air Force 
personnel at the Army bases for the maintenance.
    I understand very clearly that the Army is using a 
different bookkeeping system. Again, I don't understand. It is 
supposed to be joint operation. Why we do this is beyond me.
    For their support equipment, for the spares and so on, they 
contract, right?
    Secretary Payton. Sir, I would have to defer to the Army. I 
am not the lead of this program and I----
    Mr. Abercrombie. You have Air Force personnel maintaining 
the planes.
    Secretary Payton. We have Air Force personnel in the 
program office. Yes, sir.
    Mr. Abercrombie. The plane is essentially the same, is it 
not?
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. General Lichte and General Schwartz, 
right?
    General Schwartz. The airframe is the same.
    General Lichte. Yes.
    Mr. Abercrombie. I mean, they have versions, I understand, 
but essentially it.
    Doesn't it make sense then for Air Force personnel to have 
the maintenance even if it is at the Army base?
    I am very concerned that you are going to have maintenance 
taking place on these planes--and the planes could be switched 
back and forth, right? They might be servicing the Air Force at 
one point, but depending on deployments and all the rest of it, 
be at an Army base at another and so on. Right?
    I don't like this idea of contracting. Why the hell should 
the Army be contracting for these?
    This accounts for some of the difference. Right?
    Secretary Payton. Sir, I think that is something for the 
Army. I know that we do maintenance at logistics centers, 
because we have thousands and thousands of airplanes.
    And so it is part of the way we do business.
    Mr. Abercrombie. That is what I meant. You are already 
doing this.
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. And you have personnel in whom you have 
confidence.
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. And you have protocols set up for their 
training and their in-service training and their maintenance of 
capacity, right?
    Secretary Payton. Yes, sir. That is part of our cost.
    Mr. Abercrombie. Contractors come and go. I am willing to 
venture, I can't say for sure, but I am willing to venture that 
a good portion of the difference between the Army costs, as 
presented to us, and your costs probably have to do with 
contracting and maintenance and in those areas.
    In fact, you cited them to me yourself right now, right?
    Secretary Payton. That is a portion of it, but I would 
remind you that we are only doing 24 and when you divide that 
number into the 1.4, 1.5, 1.6 billion or whatever it is, it 
comes out to be about 60.68 million per unit.
    The Army is doing 74, I believe. So when you divide that 
number in, the price per unit goes down, because you have more 
that you are doing.
    That may be part of the reason, as well.
    Mr. Abercrombie. The proper analysis of what the Army 
needed then by--how do you come up with 24? How do we come up 
with 24?
    Secretary Payton. That was a requirement that came in from 
our A-3 in the Air Force. It was not an acquisition 
determination. It was a requirement that came in from the 
uniformed side of the world.
    General Lichte. It was validated by the JROC, the Joint 
Requirements Oversight Council.
    Mr. Abercrombie. Every time I hear the word JROC, 
trepidation sets in.
    General Schwartz. Mr. Chairman, the requirement, remember, 
is to address the current fleet obsolescence issue in the Army, 
which includes C-23s and C-12s, in addition to this mission 
set, as General Lichte alluded to, of mission critical, time 
sensitive, the last tactical mile.
    The numbers--that limited set of the 78 airplanes has been 
validated, as General Lichte indicated, and it is my personal 
view, having watched this, that there is a compelling need for 
this size airplane in the environment we are currently 
operating in, supporting provincial reconstruction teams, 
disperse soft elements, small elements that are distributed 
about the battlefield.
    And so 78----
    Mr. Abercrombie. The fleet mix analysis, at least our 
reading of it, that wasn't covered. You may be doing it now.
    General Schwartz. No, sir. That is on the books, and it was 
certainly attested to by the RAND study, which was recently 
presented to you. But as Art suggested----
    Mr. Abercrombie. Well, I am not sure that is the case. 
Maybe you can point out to me where that is the case.
    General Schwartz. We will take that on, sir.
    Mr. Abercrombie. I am still not persuaded necessarily that 
the C-130J, even if you don't use it full-up all the time, 
wouldn't be just--because you are, by definition, switching 
your deployments all the time, why not use it?
    Sometimes you would fill it all the way up, sometimes you 
wouldn't.
    Secretary Payton. It is interesting to note that at the 
point where we were looking at APUC of the C-130J, which is 
where we would be with the JCA, it was about $100 million per 
tail.
    But now that we have built so many more of them, the price 
has come down to something like 74. So we are just on the very 
beginning of this JCA relative to the price per unit cost.
    So the more that we would build for our coalition partners, 
the price will come down drastically once we get----
    Mr. Abercrombie. The C-130.
    Secretary Payton [continuing]. The return for the JCA from 
that investment.
    General Schwartz. Sir, I guess the best way I could 
describe this is in the motor carrier industry, you have some 
folks that run 80,000-pound trucks and you have some folks that 
run much smaller vehicles or that do less than truckload kind 
of service and others that do--where they specialize in filling 
the trucks up and doing long haul kind of activity.
    The same thing applies to a lesser extent, but still 
applies in the airlift end of the business, and, that is, what 
you want to try to do, ideally, is to fit the platform to the 
mission requirement.
    Mr. Abercrombie. Okay. Let's, for conversation, accept 
that. But I will tell you, the mechanic that works on it has to 
work on all of them. You don't go into the truck stop then and 
say, ``You know what I am going to do? I am going to contract 
for an outside mechanic to come in here, because this is a 
different model.''
    If you guys are already doing the maintenance and the 
servicing and the utilizing and maintaining the support 
equipment, you have got the professionalism, we have already 
alluded--not alluded to--stated specifically today that in 
terms of readiness, 50 percent or 55--in fact, General 
Schwartz, you yourself said we never send a plane up that isn't 
safe, that isn't ready.
    It is just that there are different factors that come into 
play in terms of their readiness, if you will, to leave. 
Different cargoes have come in and they require--so on and so 
forth.
    It seems to me then that you need to put the people--in 
order to make this most efficient, there is nothing to prevent 
Air Force personnel from being stationed at an Army base, is 
there?
    Secretary Payton. No, sir, not that I know of. But we will 
come in and bring you that.
    Mr. Abercrombie. I mean, we are taking the people from 
different services and putting them to work for the Army and 
the Marine Corps right now, are we not, in Iraq and 
Afghanistan?
    Aren't Navy personnel and Air Force personnel serving under 
commands of the Army and the Marine Corps?
    General Schwartz. Sir, I think I have to tell you candidly 
that I believe in unit cohesion and I don't know whether it--if 
an airplane needs to get serviced en route, it doesn't matter 
who does it.
    But if you are talking about making that a deployable 
capability, which it needs to be----
    Mr. Abercrombie. Yes.
    General Schwartz [continuing]. I think then what you need 
to have is a unit that can act with cohesion and singleness of 
purpose.
    Mr. Abercrombie. I have always been against this 
contracting anyway. When people say to me, ``Well, you don't 
want personnel cutting--why should personnel cut the grass,'' I 
said, ``Because they report to the commanding general on the 
base, that is why,'' because they are a part of a unit and they 
are not somebody that just came in from the outside.
    Setting aside the homeland security implications and the 
terrorism implications, it is because they have an entirely 
different mindset.
    General Schwartz. My experience is that it depends on where 
you are at. I have been with contract personnel downrange that 
were as committed, as devoted to the mission as anybody in 
uniform.
    Mr. Abercrombie. Luckily.
    General Schwartz. Well, it has to be the right folks in the 
right circumstances with the right protocols for employment. 
And, again, Secretary----
    Mr. Abercrombie. In all honesty, General, that requires a 
hell of a lot of oversight from someone like yourself or your 
designee, and I am not sure you get that from a corporation. 
But we can discuss this from another point.
    My point here is that I have got to get this thing 
reconciled about where the true costs are and where they are 
not, because it affects--even if it is out of the billions and 
it is only 24 and it doesn't amount to that much, believe me, 
in the recommendations we are trying to put together now, a 
couple of hundred million dollars one way or the other can make 
a big difference in what we say or don't say in terms of making 
a sensible recommendation.
    I don't mean to hurt your feelings, anybody out there, by 
getting as charged up at this, but when we say joint and all 
that, I get a vision in my mind that there is a cooperative 
endeavor going on, and we can count on what is happening, and 
that everybody has decided ahead of time where they are going 
and how they are going to work it, and then the recommendation 
comes forward.
    But that isn't the case here.
    General Schwartz. Sir, I think, if I may, Madam Secretary, 
my recommendation is to have both the Army and the Air Force 
folks come and join a panel together so that that----
    Mr. Abercrombie. You want to sit in on the 10th of April? 
They are coming in next week, and I am sure they are hearing 
about it right now. Some gremlin is probably already out there.
    Secretary Payton. They will be getting a phone call from 
me.
    Mr. Abercrombie. You maybe can't get interoperable 
communication in the Future Combat System, but it sure as hell 
seems to be able to leave the Hill and go across the river.
    General Schwartz. That is what BlackBerries are for, Mr. 
Chairman.
    Mr. Abercrombie. Well, I have got a couple of more things. 
Thank you very much.
    General Lichte, are you comfortable that the retirement of 
24 C-130Es this fiscal year will not impact the Air Mobility 
Command mission?
    General Lichte. Yes, sir, I am. I think we have to get rid 
of the old aircraft, and the E models are one that we target to 
retire, and we will be able to do the best we can to make up 
the difference in any of the lift requirements.
    Mr. Abercrombie. General Schwartz.
    General Schwartz. I concur, sir. Just by way of context, 
the E model C-130 right now delivers about 25 percent of what 
an H model C-130 can, the support it provides. If you compare 
it to a J model, it is 15 percent.
    The bottom line is the E model contributes, but modestly 
compared to the others.
    General Lichte. And I would also add that--you probably 
know this, but we have some of them already restricted and two 
of them grounded. So really we just need to get them off the 
ramps and retire them completely.
    General Schwartz. And by the way, Chairman, and I am sure 
General Lichte will confirm this, those crews and those 
maintainers get applied to make those other machines more 
ready.
    Mr. Abercrombie. Parenthetically, that kind of effort, that 
kind of work, that kind of experience isn't going to be 
necessarily duplicated by contractors. Right? Am I right in 
that?
    What you are just citing is people who are extraordinarily 
experienced, right? They deal with situations that require all 
their skill and call upon probably years of teamwork and 
understanding about what they are dealing with.
    General Schwartz. There is no question but that that that 
is the ideal. But I must tell you, Mr. Chairman, that my 
experience with contract support has not been a great 
disappointment--has not been a disappointment, to be absolutely 
candid.
    I mean, there are good and----
    Mr. Abercrombie. Do you suggest then we get rid of the Air 
Force personnel you have in contract?
    General Schwartz. There are some places where it works and 
there are some places where we shouldn't, and you rely on us to 
give you the best advice on where are those--what are those 
circumstances.
    Mr. Abercrombie. All right. Fair enough. Now, there is an 
item from last year's authorization bill, and I am not up to 
par on or up to speed on how it is being implemented.
    The Air Force was asked to develop a fee-for-service aerial 
refueling pilot program.
    Are you familiar with that, Ms. Payton?
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. Can you just give me an--can you do that 
today, or should I ask you to put it in writing?
    Secretary Payton. Yes, sir. I can tell you that we have 
released a request for information. We have at least six 
responders to that request for information.
    We will be holding an industry day on the 14th of April, 
and we are moving out with putting an RFP out as soon as we get 
enough input from industry to understand the capabilities 
there.
    So we are moving out on that.
    Mr. Abercrombie. Do you feel that authorization--excuse 
me--are the Defense Act requirements being met satisfactorily?
    Secretary Payton. Yes, sir, I do. At this point, I would 
like to ask if General Lichte might have some more information 
on that, as the customer of this.
    General Lichte. Right. Everything is moving out. There is 
really a three-phase program. Ms. Payton alluded to the first 
phase.
    The second phase will be up to the contractor to develop 
his procedures and everything, and then the third phase, where 
Air Mobility Command will be involved in seeing how they can 
execute, if they can execute.
    Mr. Abercrombie. Do you have confidence in it or not?
    General Lichte. Well, sir, I have some questions that we 
need to answer with regard to the operational procedures, FAA 
requirements and certifications, legal issues that come up.
    Mr. Abercrombie. Is there anything we need to address in 
this upcoming bill or should we wait on events?
    General Lichte. I think, at this point, we have all that we 
need to proceed with the rest and the proof of concept and then 
we would like to come back to you and let you know how it is 
progressing.
    Mr. Abercrombie. In the next bill?
    General Lichte. Well, really, the law says it is a five-
year plan.
    Mr. Abercrombie. No. I meant would you have some idea in 
the next bill whether we need to modify anything.
    General Lichte. We might, at that point, after we find out 
what the folks are doing in phase one and phase two.
    Mr. Abercrombie. Okay. General Schwartz, on the Civil 
Reserve Air Fleet question, in the 2008 act, there was a study 
to be delivered to us, but I think it was to be April 1, and I 
don't believe we have it, and I just wondered if you can update 
me.
    General Schwartz. Yes, sir, absolutely. Sir, we have 
formally requested the consent of the committees to extend the 
delivery of that to 30 September. And one of the reasons that 
was necessary, Mr. Chairman, is because, as you are aware, the 
Authorization Act slipped in terms of approval, and we were 
unable to get it on contract until last month.
    And so it was simply a matter of allowing the Institute for 
Defense Analysis to do their good work.
    Mr. Abercrombie. The reason I ask is--are you saying then 
we don't need to make decisions on the reserve air fleet, civil 
air reserve air fleet issues in this Defense Act?
    General Schwartz. The Department has requested that the 
committee consider the assured business initiative. I believe 
that that is still relevant for consideration. You will have an 
interim report from the study contractor in time, I think, to 
inform your development of language.
    My point is that the assured business proposal is not a 100 
percent fix for what ails the American flagged airlines, but it 
will provide financial predictability, which, in this setting, 
I am told by the airlines, is very important to their business 
plans.
    Mr. Abercrombie. When is the interim report due, then?
    General Schwartz. This summer, sir, they will give us----
    Mr. Abercrombie. But this summer, we will already be past--
we may very well be past this bill.
    We are already getting hit--the reason I bring it up, 
General, I am not trying to give you a bad time about it, but I 
am telling you what my time problems are.
    General Schwartz. I understand.
    Mr. Abercrombie. We are already getting the--Ms. Payton can 
attest to the fact that you are having an argument about 
subsidies, whether it is the World Trade Organization (WTO) or 
whether it is Airbus or whether we get all the rest of it.
    Now, this could easily be seen as a subsidy to airlines.
    General Schwartz. Mr. Chairman, we----
    Mr. Abercrombie. That doesn't bother me, as such, but that 
is a separate philosophical or political issue.
    General Schwartz. Yes, sir. We will come back to you with 
the exact schedule of when the interim progress reviews will 
occur and when those insights will be available, at least in 
draft form.
    We will do that for the record, and we will turn that this 
week.
    Mr. Abercrombie. I don't mind hearing about it informally. 
It is not like you are going to be forced into a gauntlet or 
something.
    General Schwartz. But if you would allow me, Mr. Chairman, 
the presumption that assured business is a subsidy I think is 
unfair. Assured business is not paying anybody to do--
subsidizing zero activity or even a modest amount of activity.
    The way this is designed is that we will make a financial 
commitment up front, but the Civil Reserve Air Fleet would fly 
the hours and we would pay them on that basis.
    You would hold me accountable not to leave a nickel on the 
table at the end of the year. If I do, we have made that 
commitment, they get the money. But that is not the way we will 
manage the program.
    I will make sure I get fired if we don't use those flying 
hours productively that we have committed to provide.
    Mr. Abercrombie. I have no doubt with respect to your 
professional commitment. I am just saying how if someone has a 
political agenda, they can interpret it much differently.
    General Schwartz. Understood.
    Mr. Abercrombie. If they want to. It is like the political 
pundits and some politicians who call member initiatives 
earmarks. I only have member initiatives that I deal with, and, 
believe me, I get plenty of them coming in from everywhere, 
including the armed services of the United States. Right?
    And all is for good reason. Everybody has got a case to 
make. I am just citing that I need to have some basis for it, 
that is all, other than my reference to your goodwill, good 
intentions and professionalism.
    General Schwartz. Understood, Mr. Chairman.
    Mr. Abercrombie. I think that is it--oh, one other thing 
before we close, and I thank you. I thank you for the 
candidness of the exchange and your answers, well considered 
answers.
    Because you have had so much to do today, maybe you didn't 
have a chance to look at the paper. I make reference to it 
because you are probably already dealing with the material 
coming to you, the GAO examination of close to 100 major 
systems.
    The principal element--this is in the ``Washington Post'' 
today I just referred to.
    The principal point that they made with regard to whether 
it is things like the joint strike fighter or the Future Combat 
System or whatever they happened to look at--I have not read it 
yet, read this particular summary yet.
    But the newspaper summary hits on three things, and some of 
the reason I bring it to your attention today, I think it will 
be useful for you to take a look at it and perhaps comment on 
it before we go to our markups.
    At least from the point of view of Mr. Sullivan and the 
GAO, he cited three things with respect to cost overruns and 
delays, and I will quote from the paper for you.
    ``There are too many programs chasing too few dollars.'' 
Sound familiar? ``And technologies are often not mature enough 
to go into production, and it takes too long to design, develop 
and produce a system.''
    Now, the latter part, of course, means, to me, you can't 
bend the laws of physics. You may be asking something to be 
produced that is, by definition, challenging or maybe 
impossible to do.
    And I don't certainly mind spending money to find out 
whether something can't be done. Sometimes that is even more 
important knowledge to gain than actually accomplishing 
something that you set out to do and it turns out you could 
actually do it.
    Rushing something into production when it is not really 
ready, because, politically, that seems like something that 
people want to do, again, that is bending the laws of physics 
sometimes.
    And then too many programs chasing too few dollars, and it 
may not even be, in my judgment, too many programs, it may be 
just that the programs themselves have too few dollars, because 
the costs associated with it become exponential rather than 
arithmetic.
    But I still think it is probably worth all of our time to 
take a look at that, not so much with the idea of refuting or 
getting into an arm-wrestling match with Mr. Sullivan and his 
colleagues at the GAO, but maybe to give us some perspective on 
what our difficulties are here in making sensible 
recommendations by virtue of cost analysis and mission 
requirements and the human dimension that has to come into play 
in making all these decisions.
    You are bound to get references to this study, I think, in 
days and weeks to come. So we might as well all take a good 
look at it.
    I don't know whether we are going to have a hearing or a 
briefing on it where we invite commentary where it seems 
pertinent, but I am thinking of doing that. Okay?
    Secretary Payton. Yes, sir.
    Mr. Abercrombie. Thank you very much.
    [Whereupon, at 3:26 p.m., the subcommittee was adjourned.]



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                            A P P E N D I X

                             April 1, 2008

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                             April 1, 2008

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             QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD

                             April 1, 2008

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                 QUESTIONS SUBMITTED BY MR. ABERCROMBIE

    Mr. Abercrombie. Using Contract Logistics Support for the C-17 is 
very expensive. Does the Air Force have any future plans to transition 
more of C-17 sustainment operations to organic ``blue-suit'' 
sustainment? Do you feel the Department has a good grasp on how to 
determine whether or not Contractor Logistics Support is more cost 
effective than organic sustainment? '
    Ms. Payton. [The witness did not respond in a timely manner.]
    Mr. Abercrombie. Has Lockheed Martin signed a contract with General 
Electric for the new C-5 engines with unit costs that support the 
overall C-5 RERP cost estimate developed by the Cost Analysis 
Improvement Group during the Nunn-McCurdy breach certification process?
    Ms. Payton. [The witness did not respond in a timely manner.]
    Mr. Abercrombie. The Air Force included $650.8 million on its 
Unfunded Requirements List for procurement of an additional 8 C-130Js 
and 2 JCA Special Operations Aircraft. Is the Air Force requirement for 
C-130 greater than 395 aircraft and can you explain to us the Special 
Operations version of the JCA and if a JROC validated requirement 
exists for the platform?
    General Lichte. [The witness did not respond in a timely manner.]
    Mr. Abercrombie. When is the interim report due, then?
    General Schwartz. An initial review of the Civil Reserve Air Fleet 
viability study is due June 20, 2008. United States Transportation 
Command will accomplish the final review by July 18, 2008. Pertinent 
insights will be available within a week after the accomplishment of 
our review. The command is negotiating with the federally-funded 
research and development center conducting the study to make available 
to the House Armed Services Committee staff one or more individuals 
conducting the study for preliminary observations and to answer 
questions prior to the Committee mark-up of the Defense Authorization 
Bill.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS states that 111 ``modernized and reliability improved'' C-
5 are needed to meet the strategic airlift requirements of the 
Department, but the newly certified C-5 program will only provide the 
Department with 52 modernized and reliability improved C-5 aircraft. 
Why does the new program of record counter the 2005 MCS that was used 
as the analytical basis for determining airlift requirements?
    Ms Payton. The C-5 Reliability Enhancement and Re-engining Program 
(RERP) Nunn-McCurdy certification process considered fourteen 
alternatives to meet organic strategic airlift requirements. Each 
alternative was evaluated on its ability to meet strategic airlift 
requirements as well as on program acquisition cost, life cycle cost 
and affordability within the Future Years Defense Program. USD (AT&L) 
determined that of all the alternatives, fully modernizing 52 C-5s 
provides the greatest military capability at the lowest cost. It is my 
role, as the senior Air Force Acquisition official, to ensure the Air 
Force executes the Nunn-McCurdy certified program.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS states that 111 ``modernized and reliability improved'' C-
5 are needed to meet the strategic airlift requirements of the 
Department, but the newly certified C-5 program will only provide the 
Department with 52 modernized and reliability improved C-5 aircraft. 
Why does the new program of record counter the 2005 MCS that was used 
as the analytical basis for determining airlift requirements?
    General Lichte. It was determined through the Nunn-McCurdy process 
and vetted by the Joint, Requirements Oversight Council (JROC) that the 
required capability of the MCS strategic airlift fleet (180 C-17s/112 
``modernized and reliability improved'' C-5s) equates to 33.95 MTM/D. 
This capability requirement can be achieved by varying the strategic 
airlift fleet mix. Since the contribution of the C-5 fleet is being 
reduced by only RERPing the B's, additional C-17s will be needed to 
make up for the MTM shortfall. A fleet of 205 C-17s and 111 C-5s (52 C-
5Ms & 59 C-5As) exceeds the 33.95 MTM/D requirement.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS states that 111 ``modernized and reliability improved'' C-
5 are needed to meet the strategic airlift requirements of the 
Department, but the newly certified C-5 program will only provide the 
Department with 52 modernized and reliability improved C-5 aircraft. 
Why does the new program of record counter the 2005 MCS that was used 
as the analytical basis for determining airlift requirements?
    General Schwartz. It was determined through the Nunn-McCurdy 
process and vetted by the Joint Requirements Oversight Council (JROC) 
that the required capability of the Military Capabilities Study 
strategic airlift fleet (180 C-17s/112 ``modernized and reliability 
improved'' C-5s) equates to 33.95 million-ton-miles per day (MTM/D). 
This capability requirement can be achieved by varying the strategic 
airlift fleet mix. Since the contribution of the C-5 fleet is being 
reduced by only completing the Reliability Enhancement & Re-engining 
Program on the B's, additional C17s will be needed to make up for the 
MTM/D shortfall. A fleet of 205 C-17s and 111 C-5s (52 C-5Ms & 59 C-
5As) accomplishes the 33.95 MTM/D requirement. I believe this is the 
correct fleet mix for the future. I reached this opinion by combining 
the analysis of available MTM/D capability, fleet mission capable 
rates, the annual flying hour program, average cost per flying hour, 
total number of organic aircraft tails, available pallet capacity, and 
average age of the fleet.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the Air Force program of record is 189 C-17 aircraft for which all 
funding has been appropriated. However, no funding has been requested 
in the FY09 budget request for either continued C-17 procurement or 
production line shutdown. What does the Air Force intend to do with the 
C-17 production line in fiscal year 2009 given that the last Air Force 
aircraft will be delivered in June 2009? How much will it cost to 
shutdown the C-17 production line?
    Ms Payton. The Air Force intends to comply with any direction that 
may be provided by the FY2009 National Defense Authorization and 
Defense Appropriations Acts. Current estimates for shutdown are $485M 
assuming no FY08 procurement.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the Air Force program of record is 189 C-17 aircraft for which all 
funding has been appropriated. However, no funding has been requested 
in the FY09 budget request for either continued C-17 procurement or 
production line shutdown. What does the Air Force intend to do with the 
C-17 production line in fiscal year 2009 given that the last Air Force 
aircraft will be delivered in June 2009? How much will it cost to 
shutdown the C-17 production line?
    General Lichte. With no additional USAF procurement above 190 
aircraft, the Boeing C-17 production line may begin to shutdown in 
2008. The last contracted foreign customer delivers Jun 08 (UK-6) and 
the final production line C-17 (USAF 190) delivers in Aug 09. Boeing is 
currently at risk protecting long lead items for 30 aircraft. C-17s 
have a 34 month build time. Without commitment for more procurement, 
Boeing may halt production on protected aircraft.
    Current estimates for shutdown are $485M. If additional aircraft 
are procured, the shutdown is deferred and shutdown costs increase due 
to inflation.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the Air Force program of record is 189 C-17 aircraft for which all 
funding has been appropriated. However, no funding has been requested 
in the FY09 budget request for either continued C-17 procurement or 
production line shutdown. What does the Air Force intend to do with the 
C-17 production line in fiscal year 2009 given that the last Air Force 
aircraft will be delivered in June 2009? How much will it cost to 
shutdown the C-17 production line?
    General Schwartz. With no additional U.S. Air Force procurement 
above 190 programmed aircraft, the Boeing C-17 production line may 
begin to shutdown in 2008. The last contracted foreign customer 
delivers June 2008 and the final production line C-17 delivers in 
August 2009. Boeing is currently at risk protecting long lead items for 
30 aircraft. C-17s have a 34 month build time. Without commitment for 
more procurement, Boeing may halt production on protected aircraft.
    Current estimates for shutdown are $485 million. If additional 
aircraft are procured, the shutdown is deferred and shutdown costs 
increase due to inflation.
    Mr. Abercrombie. General Schwartz, you stated in November 2007 that 
you require 205 C-17s to meet your airlift requirements. What 
analytical basis did you use to determine that 205 C-17s is what you 
require and will you submit it to the Subcommittee?
    General Schwartz. As I stated in a November, 2007, letter to 
Senator Levin, I believe 205 C-17s and 111 C-5s is the correct fleet 
mix for the future. I reach this opinion by combining the analysis of 
available million-ton-miles per day (MTM/D) capability, fleet mission 
capable rates, the annual flying hour program, average cost per flying 
hour, total number of organic aircraft tails, available pallet 
capacity, and average age of the fleet. Taking these factors together, 
I personally conclude 205/111 is correct.
    The analysis behind this conclusion compared various fleet 
combinations of C-17s and C-5s, all with MTM/D capacity equal to the 
previously programmed fleet of 180 C-17s and 112 fully, modernized C-5s 
- the strategic airlift fleet capability requirement described in the 
2005 Mobility Capability Study. Specifically, if only the C-5B fleet 
undergoes the Reliability Enhancement and Re-Engining Program (RERP) 
and C-5As are retained without RERP, a total of 205 C-17s are required 
to retain the equivalent capacity.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS did not take into account new and critical planning 
factors such as: The end strength increases of 92,000 personnel for the 
Army and Marine Corps; mobility requirements of the Army's Future 
Combat System and Modularity concepts of employment; the recent 
announcement by Army officials that the Army Manned-Ground Vehicle is 
too large to be transported by a C-130 aircraft; the 159% over-
utilization rate of the current fleet of C-17 aircraft; and the use of 
C-17s in multi-use roles for which the C-17 is being used extensively 
in current operations. Is it in the best interest of the Nation to 
close the only strategic airlift production line given these important 
factors that were not considered in the MCS?
    Ms Payton. Our current C-17 program of record is based on the 2005 
Mobility Capabilities Study (MCS) and Quadrennial Defense Review (QDR), 
the last validated strategic airlift requirements. As you noted, the 
2005 MCS did not take into account recent emerging factors. In Jan 08, 
we initiated another comprehensive study to address current airlift 
requirements. This study will also take into account the recent 
decision to restructure the C-5 modernization program. The study will 
not produce findings until mid-2009. Unfortunately, the study's 
completion date is at odds with the pending C-17 production line 
closure. Without procurement of additional C-17s, the production line 
will begin to shutdown in mid-2008 as the last contracted C-17 is 
built, and delivered in Aug 09. Without speculating on the results of 
the study, closing the C-17 line prior to the study's completion would 
be detrimental if the study determines additional C-17s are required.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS did not take into account new and critical planning 
factors such as: The end strength increases of 92,000 personnel for the 
Army and Marine Corps; mobility requirements of the Army's Future 
Combat System and Modularity concepts of employment; the recent 
announcement by Army officials that the Army Manned-Ground Vehicle is 
too large to be transported by a C-130 aircraft; the 159% over-
utilization rate of the current fleet of C-17 aircraft; and the use of 
C-17s in multi-use roles for which the C-17 is being used extensively 
in current operations. Is it in the best interest of the Nation to 
close the only strategic airlift production line given these important 
factors that were not considered in the MCS?
    General Lichte. The ongoing Mobility Capabilities and Requirements 
Study (MCRS) will consider factors not initially identified by the 2005 
Mobility Capabilities Study (MCS). The results of this study may 
require additional capacity, beyond the current program of record of 
190 C-17s and 111 (52Ms &59As). During the Nunn-McCurdy process for the 
C-5 RERP Program, the Joint Requirements Oversight Council (JROC) 
determined that 33.95 MTM/D of organic strategic airlift capacity is 
essential to national security. The current program of record of 190 C-
17s and 111 C-5s (52 C-5Ms & 59 C-5As) does not provide 33.95 MTM/D of 
organic capacity. A fleet of 205 C-17s and 111 C-5s (52 C-5Ms & 59 C-
5As) exceeds the 33.95 MTM/D, requirement, however congressional 
assistance is required to continue production beyond the current 
program for 190 C-17s.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
the 2005 MCS did not take into account new and critical planning 
factors such as:The end strength increases of 92,000 personnel for the 
Army and Marine Corps; mobility requirements of the Army's Future 
Combat System and Modularity concepts of employment; the recent 
announcement by Army officials that the Army Manned-Ground Vehicle is 
too large to be transported by a C-130 aircraft; the 159% 
overutilization rate of the current fleet of C-17 aircraft; and the use 
of C-17s in multi-use roles for which the C-17 is being used 
extensively in current operations.Is it in the best interest of the 
Nation to close the only strategic airlift production line given these 
important factors that were not considered in the MCS?
    General Schwartz. The ongoing Mobility Capabilities and 
Requirements Study (MCRS) will consider factors not initially 
identified by the 2005 Mobility Capabilities Study (MCS). The results 
of this study may require additional capacity, beyond the current 
program of record of 190 C-17s and 111 C-5s (52 C-5Ms & 59 C-5As). 
During the Nunn-McCurdy process for the C-5 Reliability Enhancement & 
Re-Engining Program, the Joint Requirements Oversight Council (JROC) 
determined that 33.95 million-ton-miles per day (MTM/D) of organic 
strategic airlift capacity is essential to national security. The 
current program of record of 190 C-17s and 111 C-5s (52 C5Ms & 59 C-
5As) does not provide 33.95 MTM/D of organic capacity. A fleet of 205 
C-17s and 111 C-5s (52 C-5Ms & 59 C-5As) will make possible the 33.95 
MTM/D requirement and therefore I cannot recommend terminating the C-17 
production line at this time.
    Mr. Abercrombie. General Lichte and General Schwartz, do you know 
of any commercial markets for Fee-for-Service providers? If there are 
none, would commercial air carriers still be competitive to the organic 
tankers?
    General Lichte. The Air Force is not aware of a commercial market 
for Fee-for-Service Air Refueling providers. Historically, air to air 
refueling has been the domain of military operations. One company, 
Omega Air Inc., has the capability to refuel US Naval probe-equipped 
aircraft through an active government contract. It is our 
understanding, however, that Omega does not refuel commercial (non-
military) aircraft.
    Commercial air carriers utilized in an air to air refueling role 
are not competitive with organic tankers since Omega Air is currently 
the only commercial source and their operational commercial refueling 
fleet size is small. Boom/receptacle refueling comprises the majority 
of Air Force refueling operations. Based on recent industry responses 
to a government request for information, there is no existing 
commercial capability, including Omega Air, that can refuel receptacle-
equipped Air Force aircraft. The most recent industry information 
indicates it will take over 18 to 24 months from contract award to 
develop, integrate, test, and certify/qualify a commercial boom 
capability ready to refuel Air Force aircraft.
    Mr. Abercrombie. General Lichte and General Schwartz, do you know 
of any commercial markets for Fee-for-Service providers? If there are 
none, would commercial air carriers still be competitive to the organic 
tankers?
    General Schwartz. The Air Force is not aware of a commercial market 
for Fee-for-Service Air Refueling providers. Historically, air to air 
refueling has been the domain of military operations. One company, 
Omega Air Inc., has the capability to refuel U.S. Naval probe-equipped 
aircraft through an active government contract; however it is our 
understanding that Omega does not refuel commercial (non-military) 
aircraft.
    Commercial air carriers utilized in an air to air refueling role 
are not competitive with organic tankers since there is only one 
current commercial source (Omega Air) and their operational commercial 
refueling fleet size is small. Boom/receptacle refueling comprises the 
majority of Air Force refueling operations and based on recent industry 
responses to a government request for information, there is no existing 
commercial capability, including Omega Air, that can refuel Air Force 
(receptacle equipped) aircraft. Responses from industry indicate it 
will take over 18 to 24 months to develop, integrate, test, and 
certify/qualify a commercial capability.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
insurance coverage and limitations have been raised as a potential 
barrier to participation by commercial carriers. How could this barrier 
be overcome?
    General Schwartz. The Air Force has formed a team to address all 
issues associated with Fee-for-Service Pilot Program. We are currently 
engaged in a dialogue with industry, through a request for information, 
to discuss issues that present challenges to the execution of this 
pilot program. Our findings thus far indicate insurance for several 
potential commercial providers of air refueling services may be 
prohibitively expensive or not available. This may require the 
government to assume risk through indemnification of some commercial 
providers offering refueling services for Air Force aircraft. We hope 
to address insurance and all other concern in greater detail once we 
have completed the market research phase of this effort.
    Mr. Abercrombie. Ms. Payton, General Schwartz, and General Lichte, 
insurance coverage and limitations have been raised as a potential 
barrier to participation by commercial carriers. How could this barrier 
be overcome?
    General Lichte. The Air Force has formed a team to address all 
issues associated with the Fee-for-Service Pilot Program. Through a 
request for information, we are discussing with industry issues that 
present challenges to the planning and execution of this pilot program. 
Our findings thus far indicate insurance for several potential 
commercial providers of air refueling services may be prohibitively 
expensive or not available to some. Based on our dialogue with industry 
all potential commercial providers offering refueling services for Air 
Force aircraft require indemnification while conducting refueling 
operations. We have not discovered alternative solutions to this issue 
but we hope to address insurance, indemnification, and all other 
concerns in greater detail once we have completed the market research 
phase of this effort.
    General Schwartz. The Air Force has formed a team to address all 
issues associated with Fee-for-Service Pilot Program. We are currently 
engaged in a dialogue with industry, through a request for information, 
to discuss issues that present challenges to the execution of this 
pilot program. Our findings thus far indicate insurance for several 
potential commercial providers of air refueling services may be 
prohibitively expensive or not available. This may require the 
government to assume risk through indemnification of some commercial 
providers offering refueling services for Air Force aircraft. We hope 
to address insurance and all other concerns in greater detail once we 
have completed the market research phase of this effort.
    Mr. Abercrombie. General Schwartz, will you attempt to incorporate 
Fee-for-Service provides into the Civil Reserve Air Fleet program?
    General Schwartz. Until the Fee-for-Service Pilot Program test 
phase is complete, we won't be able to determine whether commercial air 
refueling Fee-for-Service providers are compatible with Civil Reserve 
Air Fleet requirements and regulations. If proven and compatible, 
incorporating into the CRAF-like arrangement would be a logical next 
step.
    Mr. Abercrombie. General Schwartz, why do you believe we must move 
forward with this Assured Business Model approach now--even though it 
has not been shown to be necessary and it is unknown if it would 
actually provide the intended effect?
    General Schwartz. Our intent in seeking authority for the Assured 
Business model is to allow sufficient time to develop an implementation 
process prior to the inevitable decline in post-Operation Iraqi Freedom 
business levels. Doing so now, while there is still ample business, 
will enable us to implement the concept under relatively benign 
conditions. It will give us time to improve related contract practices 
and techniques before the situation reaches a critical juncture. Civil 
Reserve Air Fleet (CRAF) carriers are unanimous in their support for 
Assured Business as a means of stabilizing future business levels.
    Further, the Assured Business concept should not be considered a 
stand-alone process. By itself, it is not large enough to solve all 
CRAF problems. It is intended to be a ``no extra cost to the 
government'' process to provide stability to the CRAF program and thus 
more attractive to United States air carriers. It has the potential to 
provide the Department additional time as we explore other options. We 
are already researching other possible changes to enable CRAF to meet 
future challenges. We have added questions related to these issues to 
the CRAF study mandated by the fiscal year 2008 National Defense 
Authorization Act.
    Assured Business should be viewed within the context of these other 
potential changes. Depending on the future health of the United States 
air carrier industry, additional changes may not be needed. The Assured 
Business concept is intended to set the stage for a reinvigorated CRAF 
by providing a useful tool for contract management, even as we explore 
further needed program refinements.
    Mr. Abercrombie. Ms. Payton and General Lichte, why were the 
necessary infra-theater airlift studies to determine whether an actual 
need or requirement existed for JCA initiated and completed after JCA 
contract award? Is this approach prudent and do you think it fully 
informs decision makers on how taxpayer funding should be invested by 
the Department?
    General Lichte. In May 2007, USD/AT&L found that the Army's 
Analysis of Alternatives, with addendum, sufficient to meet the 
requirements established for the analysis to support an initial JCA 
acquisition program baseline of up to 75 aircraft. Air Mobility Command 
and the Air Force accept the outcome of the Army's AoA. Subsequently, 
USD/AT&L authorized 78 JCAs, split between the Army and Air Force, 54-
24 respectively, in his June 2007 Acquisition Decision Memorandum. The 
contract was not awarded until these actions occurred.
    During the last half of 2007, Air Mobility Command sponsored a RAND 
study commonly referred to as the Fleet Mix Analysis (FMA). The purpose 
of the FMA was to identify the most cost effective solution for 
maintaining sufficient intratheater airlift capability and included 
analysis to determine Air Mobility Command requirements for JCAs beyond 
the 78 (54 Army/24 Air Force) previously approved by USD/AT&L. The 
study concluded that the stretch variant of the C-130J is the most cost 
effective solution in performing the intratheater airlift mission.
    There are other emerging and specialized mission areas such as 
supporting AFRICOM, special operations, and Air National Guard support 
of FEMA for which the specialized capabilities of the C-27 may be a 
good fit. The Air Force is interested in further analysis of those 
areas. I will defer comment on additional Air Force JCAs to Ms. Payton, 
as the Air Force lead for acquisition.
    Mr. Abercrombie. Ms. Payton and General Lichte, why were the 
necessary infra-theater airlift studies to determine whether an actual 
need or requirement existed for JCA initiated and completed after JCA 
contract award? Is this approach prudent and do you think it fully 
informs decision makers on how taxpayer funding should be invested by 
the Department?
    Ms. Payton. The requirement for the 78 Joint Cargo Aircraft is 
based on the Army's Time Sensitive Mission Critical mission analysis of 
alternatives. OSD determined that the mission would be split with the 
Army receiving 54 aircraft and the Air Force receiving 24 aircraft. The 
analysis was completed and thoroughly vetted before the decision to 
award a contract for the aircraft.
    Mr. Abercrombie. Ms. Payton, the unit cost of the Air Force JCA is 
$60.7 million per aircraft. The Army's unit cost of the JCA is $36.6 
million per aircraft. Can you explain to the Subcommittee the 
significant cost difference between the Army and Air Force version of 
the two aircraft?
    Ms. Payton. Let me clarify that there is only one version of the 
Joint Cargo Aircraft. The Army and Air Force are procuring the same 
version of the C-27 for the same price, which is about $31 million per 
aircraft. The JCA program acquisition procurement cost is about $44 
million per aircraft for both Services. The costs you referred to are 
derived from the support strategies assumed for each service in order 
to establish the program cost baseline. A common support strategy has 
not been determined, so the Department of Defense directed the program 
cost estimate be based on the way each Service traditionally supports 
aircraft. Army costs are based on Contractor Logistics Support using 
Operations & Maintenance funding, which is not part of the procurement 
unit cost quoted. Air Force costs are based on organic support, 
including establishment of depot maintenance and service provided 
training. These items are purchased with investment funding and are 
therefore included in the Air Force procurement unit cost. The long-
term sustainment and training strategies will be determined at the Full 
Rate Production decision and will be the same for each Service.
    Mr. Abercrombie. Ms. Payton, the Army is choosing to use Contractor 
Logistics Support (CLS) to procure its initial spares, sustain its JCA 
aircraft and to train its JCA aircrews and maintainers. What analysis 
was behind the Air Force decision to not pursue Contractor Logistics 
Support as its acquisition strategy for these items? What benefits did 
the Air Force see in organic support?
    Ms. Payton. No decision has been made to use organic support. Both 
Services will utilize the same long-term sustainment and training 
strategy. We have initiated depot support and training studies to 
support determination of a common sustainment and training strategy at 
the Full Rate Production decision. For planning purposes only, the Air 
Force budgeted funding in the FYDP for organic support since we 
traditionally use this support strategy, whereas the Army traditionally 
uses contract support and budgeted accordingly. We will update FYDP 
funding requirements when a long-term strategy is determined at the 
Full Rate Production decision. Prior to the Full Rate Production 
decision, both Services will utilize Interim Contractor Support and 
Training.
    Mr. Abercrombie. Ms. Payton, since air refueling tankers currently 
are not available in the commercial market, how would the development 
and conversion of aircraft to a refueling tanker be paid for? Wouldn't 
all such costs be passed on to the Air Force in the fees it pays?
    Ms. Payton. Up front costs for development and conversion of 
commercial aircraft into commercial tankers would be paid for by 
industry. Those costs would be amortized over the length of the fee for 
service pilot program and therefore passed on to the Air Force in the 
fees it pays.
    Mr. Abercrombie. General Lichte, the Air Force requested $3.9 
billion for procurement of an additional 15 C-17s on its Unfunded 
Requirements List. Given this, is the actual Air Force requirement for 
C-17s greater than 198 aircraft that have been authorized?
    General Lichte. The ongoing Mobility Capabilities and Requirements 
Study (MCRS) will consider factors not initially identified by the 2005 
Mobility Capabilities Study (MCS). The results of this study may 
require additional capacity, beyond the current program of record of 
190 C-17s and 111 (52Ms & 59As). During the Nunn-McCurdy process for 
the C-5 RERP Program, the Joint Requirements Oversight Council (JROC) 
determined that 33.95 MTM/D of organic strategic airlift capacity is 
essential to national security. The current program of record of 190 C-
17s and 111 C-5s (52 C-5Ms & 59 C-5As) does not provide 33.95 MTM/D of 
organic capacity. As stated in the USD(AT&L) letter to Congress dated 
14 Feb 08, Congressional assistance is required to continue production 
beyond the current program for 190 C-17s with a goal of 205 C-17s and 
111 C-5s (52 C-5Ms & 59 C-5As) that will provide the 33.95 MTM/D 
organic strategic airlift capacity validated by the JROC as essential 
to national security.
    Mr. Abercrombie. General Lichte, in testimony last year before the 
Committee in November, 2007, both Secretary Wynne and General Mosley 
articulated concerns about the impact on organic resources and the Air 
Force flying hour program. How does the Air Force intend to address 
those concerns as it moves forward with a pilot program?
    General Lichte. If AMC is required to fund the Fee-for-Service 
(FFS) aircraft from our tanker flying hour programs, we will be unable 
to keep our current authorized tanker aircrew force structure fully 
qualified. Flying hours for AMC tanker aircrews are earned to meet 
aircrew currency events only. Missions performed by FFS aircraft will 
not reduce active duty training requirements. There are no additional 
hours added to the programs to meet customer refueling needs. It takes 
1,000 flying hours to keep 5.3 crews, or 2% of total active duty tanker 
crews, current for a year. Therefore, we will work with the Air Staff 
to ensure that the FFS pilot program does not negatively impact our 
organic flying hour program requirements.
    Mr. Abercrombie. If the current Congressional restriction for 
prohibiting C-5A retirement was lifted, does the Air Force desire to 
retire any C-5A aircraft?
    General Lichte. The Mobility Capabilities Study calls for a range 
of 292-383 inter-theater airlift aircraft with a minimum million ton-
mile per day (MTM/D) capability of 33.95 MTM/D. Further, the FY08 
National Defense Authorization Act (NDAA) calls for a minimum of 299 
strategic tails. The current program of record is 190 C-17s and 111 C-
5s with 52 of the C-5s validated to receive the Reliability Enhancement 
and Re-Engining Program (RERP). A fleet of 52 RERPed C-5s, 59 non-RERP 
C-5s and 205 C-17s, assures AMC of meeting known requirements. Given 
the maintenance challenges of the C-5A, if the fiscal environment 
allowed for additional C-17s beyond 205, the Command would retire the 
aging A-models one-for-one based on current requirements.
    Mr. Abercrombie. General Lichte, what impact will this have on 
organic training and flying missions?
    General Lichte. Since CRAF missions are funded through the 
Transportation Working Capital Fund (TWCF), there is no impact to the 
organic flying hour programs.
    Mr. Abercrombie. What impacts do Type-1000 storage Congressional 
restrictions on retired aircraft have on maintaining current aircraft 
fleets? Can you assign a monetary value of the Type-1000 storage 
impacts as it concerns maintaining the C-130 and KC-135R fleets of 
aircraft, and the costs involved to maintain retired aircraft in Type-
1000 storage status? What is the cost avoidance if Type-1000 storage 
restrictions were lifted on C-130 and KC-135E aircraft?
    General Lichte. The Type 1000 storage restricts the Air Force from 
using the KC-135E and C-130E aircraft for spare parts. One example of 
how this restriction affects maintaining the fleet is the KC-135 
autopilot. In December 2005, 94 new autopilot processors were purchased 
at a cost of $95K each ($8.93M total). Access to these critical 
components could offset many similar costs in the future.
    The initial cost to the USAF nearly doubles for Type 1000 vs. full 
retirement and does not allow salvage of critical spare parts. The 
first year bill for the KC-135 goes from $1.1M for 48 aircraft for full 
retirement to $1.9M for placement into Type 1000 storage. Additionally, 
there will be a 4 year recurring cost of $1.6M for those aircraft to 
remain in Type 1000 storage. The initial cost for interring 24 C-130s 
into Type 1000 storage is $799K and the 4-year recurring cost is $900K; 
full retirement costs $468K.
    Removal of the Type 1000 restrictions would provide the taxpayer a 
total cost avoidance of approximately $3.6M in the first 4 years alone. 
This does not include the cost savings that would be provided with 
access to the aircraft for spare parts.
    I defer the question ``Can you assign a monetary value of the Type-
1000 storage impacts as it concerns maintaining the C-130 and KC-135R 
fleets of aircraft. . .'' to the AFMC/CC, Gen. Carlson, because this 
relates directly to spare parts and aircraft sustainment that are under 
AFMC's responsibility.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. HUNTER
    Mr. Hunter. While we understand that Families First is going to 
begin coming on-line in April 2008, what is the current timeline for 
full deployment of the program and the new DPS support system and when 
do you expect it to be fully operational?
    General Schwartz. While portions of Families First are already on-
line, a protest to the Government Accounting Office from the Household 
Goods Forwarders Association of America (HHGFAA) on some portions of 
Families First has caused a delay in awarding shipments in Defense 
Personal Property System (DPS). We expect to continue roll-out in mid 
July 2008 to the initial 18 sites. At that point, after further 
consultation with each of the military Services, we will schedule the 
roll-out with the remaining sites.
    Mr. Hunter. What problems with Families First and the DPS system, 
including information technology (IT) problems, still need to be 
corrected in order for the program and system to be fully operational?
    General Schwartz. The Defense Personal Property System (DPS) system 
currently has no known significant information technology problems. The 
Families First and DPS system may be impacted as a result of the 
current Government Accountability Office (GAO) action. A GAO protest by 
industry concerning some elements of the Families First program could 
potentially require additional DPS work that could incur additional 
cost and schedule impacts.
    Mr. Hunter. What are the specific costs associated with addressing 
each of the remaining IT problems and do you have funding to address 
these problems before transportation offices begin making awards for 
the movement of households goods under the new program?
    General Schwartz. The Defense Personal Property System (DPS) 
currently has no known significant information technology problems. DPS 
is adequately funded to meet capabilities for FY08 and FY09. The 
Families First and DPS systems may be impacted as a result of the 
current Government Accountability Office (GAO) action. A GAO protest by 
industry concerning some elements of the Families First program could 
potentially require additional DPS work that could incur additional 
cost and schedule impacts.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. SAXTON
    Mr. Saxton. General Schwartz, the KC-45, I am told, has a wingspan 
of real close to 200 feet, it is 197 or 198, and the maximum gross 
takeoff weight of over 500,000 pounds.
    Will the size and weight of the KC-45 present challenges to the 
operational employment of the KC-45, and are there airfields that you 
will not be able to operate the KC-45 from where we are currently 
operating the KC-135?
    General Schwatz. There is no requirement in the Capability 
Development Document to operate the KC-45 from all KC-135 airfields. 
Because the maximum weight is a key factor in determining airfield 
suitability, we used the KC-10 to answer your question as it has a 
heavier maximum weight than the KC-45. The Airport Suitability and 
Restrictions Report contains 1,755 worldwide airfields that are 
suitable for the KC-135. Of these airfields, only 32 are unsuitable for 
the KC-10. Therefore, we can reasonably establish that approximately 
98% of the airfields currently available to the KC-135 would also be 
available to the KC-45. This would be, in my opinion, a manageable 
operational situation.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. General Schwartz, Commander, MSC, in his Report to 
Congress in May 2004, assured us that MSC would only send ships to 
foreign shipyards when ``directed by operational necessity''. Did MSC, 
under your jurisdiction, make the decisions that ``operational 
necessity'' required Tippecanoe and Rappahannock to be sent to 
Singapore for repair? What was the basis for these decisions? How are 
``operational necessity'' decisions made? What are the specific 
criteria for determining ``operational necessity''?
    General Schwartz. The USNS Rappahannock and USNS Tippecanoe are 
Fleet Replenishment Oilers in the Naval Fleet Auxiliary Force (NFAF). 
These vessels perform a Navy unique mission and are not among forces 
assigned to the United States Transportation Command. The Navy 
coordinates scheduling and execution of maintenance for NFAF ships to 
meet operational requirements. As such, I respectfully defer this 
question to the Department of the Navy.
    Ms. Bordallo. General Schwartz, U.S. Transportation Command and the 
Military Sealift Command (MSC) as ship operating contracts and long 
term charter contracts with commercial shipping companies for moving 
military cargo and for prepositioning requirements. How do you enforce 
the requirements of Section 7310 of Title 10 with regard to these 
private ship operating companies to ensure these vessels are repaired 
at U.S. domestic shipyards?
    General Schwartz. Repair and overhaul of all MSC ships are 
conducted in accordance with the provisions of 10 U.S.C. 7310. In cases 
where a private company operates a government-owned ship, the company 
is required to award and manage subcontracts for necessary overhaul and 
repair in compliance with Title 10. MSC enforces compliance by 
designating the bid area for the work and granting subcontracting 
approval to the operating company before an award is made.
    Privately-owned ships under time charter to MSC, other than time-
chartered ships in the Maritime Prepositioning Ship (MPS) program, 
conduct only necessary voyage repairs while under contract. Overhauls 
and maintenance are performed outside of the charter period, and are 
therefore not subject to the provisions of 10 U.S.C. 7310. For MPS 
vessels, overhaul and maintenance are performed in shipyards in the 
U.S. or Guam in association with scheduled equipment offloads.
    Ms. Bordallo. General Schwartz, in 2005, USNS Petersburg, a ship 
prepositioned in Guam as part of the Maritime Administration (MARAD) 
Ready Reserve Force (RRF), and an element of the MSC Pre-positioning 
Program, was sent from its homeport of Guam to Singapore for overhaul. 
At the time, the Memorandum of Understanding (MOU) between U.S. 
Transportation Command (TRANSCOM) and MARAD required that repairs to 
RRF vessels be done in US shipyards. Yet, that requirement in the MOU 
has been repeatedly ignored. What is TRANSCOM doing to ensure that 
MARAD is complying with the MOU, and that RRF vessels are being 
repaired in U.S. domestic shipyards?
    General Schwartz. The United States Transportation Command 
(USTRANSCOM) maintains a close and continuous relationship with the 
Maritime Administration--a staunch advocate of the United States 
shipyards. In the case of the SS Petersburg, Guam Shipyard challenged 
the Maritime Administration's actions in Federal District Court. The 
Court did not find that the Maritime Administration violated either 
statutes or the terms of the 1997 Memorandum of Agreement (MOA). 
Subsequently, 10 USC 7310(a) and 50 USC App 1744 were amended. 
USTRANSCOM and the Maritime Administration currently are updating the 
1997 MOA and this revision will reflect the recent legislative changes. 
The Maritime Administration continues its compliance with the law, and 
performs ship repairs in accordance with the revised statute.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MR. HAYES
    Mr. Hayes. The Civil Reserve Air Fleet (CRAF) provides a cost-
effective compliment to our organic mobility airlift fleet. You have 
been a proponent for the recently announced KC-45 Tanker aircraft. I 
understand the US Air Force recently released a Request For Information 
(RFI) to industry to support a Fee-For-Service Pilot Program as 
directed by the 2008 Defense Authorization Bill. As the Combatant 
Commander responsible for providing airlift and air refueling support 
to the supported COCOMs, do you see a future where commercial air 
carriers provide a similar CRAF-like air refueling capability for our 
nation?
    General Schwartz. Until we get the results from our upcoming Fee-
for-Service pilot program, we won't be able to chart a future for the 
application of commercial, Civil Reserve Air Fleet (CRAF)-like, air 
refueling capability. The pilot program will determine whether the 
concept is feasible from a business and operational perspective, while 
also validating the missions that can be supported with this 
capability. Once feasibility and applicability have been determined, we 
can build upon that to develop a larger construct for a CRAF-like 
capability.
    Mr. Hayes. Ms. Payton, the 2008 NDAA (Sec 1081) directed the Air 
Force to conduct a Fee-For-Service (FFS) Pilot Program to determine the 
feasibility of FFS air refueling to ``support, augment or enhance the 
air refueling mission of the Air Force'' by utilizing commercial air 
refueling providers & I understand the Air Force released a FFS Pilot 
Program Request For Information (RFI) on 26 Feb 2008. Has Industry 
responded to the RFI and what timelines have you established for 
industry to deliver this capability? Do you see these timelines as 
aggressive?
    Ms. Payton. Industry has responded to the Request for Information 
by the requested 28 Mar 2008 response date. We are reviewing the RFI 
responses and held Government/Industry one-on-one discussions during 
the week of 14-18 April 2008. While it is too early in the process to 
provide a definitive answer to this question, we hope to gain further 
insight into industry's capability to meet the proposed timeline for 
providing fee for service refueling to the Air Force in Fiscal,Year 
2010. Initial responses from industry indicate that no potential 
provider can develop, integrate, test and qualify/certify a boom 
equipped aircraft prior to the 2010 timeframe and no provider has 
indicated that they will develop the proposed capability without a 
signed government contract. We may find that through this process the 
planning timeline for the Congressionally directed Fee for Service 
Pilot Program may be aggressive, however we want to be responsive to 
Congressional direction and the AF's commitment to a proof-of-concept 
for this pilot program. If we find that the current planning schedule 
is too aggressive we will adjust our expectations accordingly, prior to 
submitting a request for proposal.
    Mr. Hayes. Ms. Payton has Industry responded to the RFI and what 
timelines have you established for industry to deliver this capability? 
Aren't these timelines pretty aggressive?
    General Lichte. Industry has responded to the Request for 
Information by the requested 28 Mar 2008 response date. We are 
reviewing the RFI responses and held Government/Industry one-on-one 
discussions during the week of 14-18 April 2008. While it is too early 
in the process to provide a definitive answer to this question, we hope 
to gain further insight into industry's capability to meet the proposed 
timeline for providing fee for service refueling to the Air Force in 
Fiscal Year 2010. Initial responses from industry indicate that no 
potential provider can develop, integrate, test and qualify/certify a 
boom equipped aircraft prior to the 2010 timeframe and no provider has 
indicated that they will develop the proposed capability without a 
signed government contract. We may find that through this process the 
planning timeline for the Congressionally directed Fee for Service 
Pilot Program may be aggressive, however we want to be responsive to 
Congressional direction and the AF's commitment to a proof-of-concept 
for this pilot program.. If we find that the current planning schedule 
is too aggressive we will adjust our expectations accordingly, prior to 
submitting a request for proposal.
    Mr. Hayes. General Lichte, what role/responsibilities will the Air 
Mobility Command have in administering/overseeing the Fee-For-Service 
Pilot Program?
    General Lichte. We anticipate AMC will have a role in contracting 
oversight and payment distributions. We will also provide execution 
support to identify air refueling support requirements and command and 
control direction. We will be lead on working with air refueling users 
to determine whether contract providers are satisfactorily meeting 
requirements and work with all parties to identify and mitigate 
negative operational or safety trends if they should develop.
    Mr. Hayes. General Lichte, how many air refueling requests were not 
fulfilled in 2007? How many since we began the global war on terror?
    General Lichte. Two hundred sixty six non-supports of 7,589 valid 
requests--3.5% non-support rate (Priority 1 and 2 only) were not 
fulfilled in 2007. One thousand three hundred and fifty eight non-
supports of 57,144 valid requests--2.4% non-support rate (Priority 1 
and 2 only) were not fulfilled since we began the global war on terror. 
``Unfilled'' is defined as validated missions that went non-supported. 
This only reflects Priority 1 & 2 missions; there is no accurate way of 
capturing unfilled numbers for Priority 3-5. Air refueling priorities 
are defined in AFI 11-221. A short synopsis of priorities is included 
below:

    Priority 1: Presidential-directed missions and operational National 
Emergency Airborne Command Post (NEACP) support. Wartime or contingency 
combat support designated by (JCS). Special operations support and 
other programs approved by the President for top national priority. 
Deployments to conduct contingency operations and special missions 
directed by the Secretary of Defense or the JCS. Missions in support of 
counterdrug operations and operational reconnaissance.

    Priority 2: Nonscheduled JCS-directed operational deployments. JCS-
directed exercise missions which require air refueling to meet JCS 
objectives. Extended over water deployments (aircraft range will not 
allow a fuel stop en route) or deployments of aircraft tasked for 
Priority 1 missions for which an en route fuel stop is not practical. 
Foreign Military Sales (FMS) case support. (Unless mission qualifies 
for a higher priority). Aircraft test operations extended over water. 
JCS exercise missions which require air refueling to meet MAJCOM, NAF, 
or wing objectives. Employment missions in support of MAJCOM-directed 
exercises or operations or MAJCOM-, NAF-, or wing-directed over water 
deployments for the Marines is FMFPAC or FMFLANT. Predeployment 
qualification training.

    Priority 3: MAJCOM-, NAF-, or wing-directed redeployments or NAF-
directed exercises and ORIs. Intratheater deployments and 
redeployments. Combat Crew Training School (CCTS), Replacement Training 
Unit (RTU), and requalification training and upgrade training, when air 
refueling training is accomplished during the mission. Wing-directed 
exercises and evaluations. Expeditionary Brigade (MEB).

    Priority 4: Missions launched to satisfy US Air Force, Navy, and 
other DoD agency training requirements.

    Priority 5: Unit to unit scheduled non-allocated air refueling 
(soft air refueling).
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. MILLER
    Mr. Miller. AF Special Operations will continue to be integral in 
the GWOT and it's certain these aircraft will continue to be in high 
demand for the foreseeable future. Specifically, the Special Mission C-
130 fleet at AFSOC is being utilized at an accelerated rate due to the 
GWOT and one of the highest priorities for AFSOC is the 
recapitalization of their C-130 fleet. What is Air Mobility Command's 
role in ensuring AFSOC C-130 assets are recapitalized and what is the 
plan for getting this accomplished?
    General Lichte. AFSOC's C-130 fleet, much the same as AMC's C-130 
fleet, has seen increased utilization due to GWOT. As lead command for 
common modifications across all C-130 variants, AMC oversees the center 
wing box (CWB) replacement program. AMC has worked closely with AFSOC 
to accelerate their LD/HD assets into the existing production line in 
order to mitigate capability gaps. However, responsibility for AFSOC's 
fleet recapitalization does not fall under AMC.
    Mr. Miller. In the FY09 Unfunded Requirements Listing, the Air 
Force has requested two C-27s to place in AFSOC to develop the AC-27 
gunship, and SOCOM has also stated its priority for this program. Can 
you elaborate on how the AF will make this happen and specifically, 
what role will Air Mobility Command play in making sure the AC-27 
begins development sooner rather than later?
    General Lichte. AMC does not play a role in the AC-27s development 
or acquisition.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. BISHOP
    Mr. Bishop. How will the new multi-mission KC-45 be used to 
compliment the rest of your airlift and refueling fleets? Will it 
provide better efficiencies?
    General Schwartz. This clearly is the case. Even with a significant 
airlift capability, the KC-45A is a tanker first, the KC-45s primary 
war-time mission. It serves as a crucial part of the air bridge that 
allows us to get forces where they are needed as soon as possible. As 
an air refueler with its modern design, efficient engines, greater fuel 
capacity (as well as its ability to take on fuel while airborne), 
greater range, the ability to deliver fuel via either boom or drogue, 
coupled with its night-vision compatibility and defensive systems, make 
it a very effective platform for replacing our aging KC-135 fleet. 
Additionally, its cargo/passenger-carrying capabilities will make unit 
self-deployments and other lift missions less demanding on our existing 
airlift assets. Finally, the KC-45 also has the capability to perform 
aero-medical evacuation missions, a capability that could be used to 
augment this vital mission as well.
    Mr. Bishop. Ms. Payton, at the same time Congress is adding funds 
to the budget to keep open the C-17 line, America's ``only'' large 
military airlift production capability (and a top unfunded priority for 
the Air Force), you are allowing another power projection capability--
aerial refueling--to now be produced primarily by another country 
(Airbus). What sense does it make for the US--a power projection 
nation--to not preserve the capability to produce C-17s, aerial 
refueling aircraft, as well as aircraft carriers, strategic bombers, 
etc.
    Ms. Payton. Whether maintaining existing production lines, or 
acquiring new weapon systems, cost effective industrial and 
technological capabilities are important to national security and 
military readiness. Participation of allied countries in the 
procurement of weapon systems not only fosters competition and 
innovation in the industrial base, but the Department of Defense 
believes it can also promote security cooperation and improve our 
national security. Regarding the Air Force's new aerial refueling 
aircraft, Northrop Grumman's major subcontractors outside the United 
States are located in Spain, Germany, and France. These three countries 
are NATO allies, and the experiences we have had with our NATO allies 
on other programs have not negatively impacted our national security.
    Mr. Bishop. General Schwartz, how will the new multi-mission KC-45 
be used to compliment the rest of your airlift and refueling fleets? 
Will it provide better efficiencies?
    General Schwartz. That is clearly the case. Even with a significant 
airlift capability, the KC-45A is a tanker first, the KC-45s primary 
war-time mission. It serves as a crucial part of the air bridge that 
allows us to get forces where they are needed as soon as possible. As 
an air refueler with its modern design, efficient engines, greater fuel 
capacity (as well as its ability to take on fuel while airborne), 
greater range, the ability to deliver fuel via either boom or drogue, 
coupled with its night-vision compatibility and defensive systems, make 
it a very effective platform for replacing our aging KC-135 fleet. 
Additionally, its cargo/passenger-carrying capabilities will make unit 
self-deployments and other lift missions less demanding on our existing 
airlift assets. Finally, the KC-45 also has the capability to perform 
aero-medical evacuation missions, a capability that could be used to 
augment this vital mission as well.
    Mr. Bishop. Ms. Payton, some are claiming that because the Northrop 
Grumman award relies significantly on EADS--Airbus components and 
airframe, that there is a risk of having France cut off supplies and 
future support of this critical system. How valid are those concerns?
    Ms. Payton. The experiences we have had with our NATO allies on 
other programs have not negatively impacted our national security. As 
an example, the engines that power our KC-135R tankers are manufactured 
by CFM International, a joint venture between General Electric and the 
French company Snecma. Despite past disagreements between the United 
States and France over foreign policy, we have not experienced problems 
in maintaining these engines. We have no reason to anticipate negative 
impacts to our national security due to Northrop Grumman's production 
and sustainment of KC-45 tankers.

                                  
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