    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                             [H.A.S.C. No. 112-77]

         UPDATE ON KC-46A AND LEGACY AERIAL REFUELING AIRCRAFT PROGRAMS

                                   __________

                                    HEARING

                                   BEFORE THE

                 SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES

                                     OF THE

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD

                                OCTOBER 13, 2011

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                 SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES

                        W. TODD AKIN, Missouri, Chairman
    DUNCAN HUNTER, California            MIKE McINTYRE, North Carolina
    MIKE COFFMAN, Colorado               SUSAN A. DAVIS, California
    SCOTT RIGELL, Virginia               JAMES R. LANGEVIN, Rhode Island
    TIM GRIFFIN, Arkansas                RICK LARSEN, Washington
    STEVEN PALAZZO, Mississippi          JOE COURTNEY, Connecticut
    TODD YOUNG, Indiana                  CHELLIE PINGREE, Maine
    ROSCOE G. BARTLETT, Maryland         MARK S. CRITZ, Pennsylvania
    J. RANDY FORBES, Virginia            HANK JOHNSON, Georgia
    ROB WITTMAN, Virginia                BETTY SUTTON, Ohio
    TODD RUSSELL PLATTS, Pennsylvania
                     Heath Bope, Professional Staff Member
                  Phil MacNaughton, Professional Staff Member
                     Mary Kate Cunningham, Staff Assistant

                                C O N T E N T S

                                  ----------

                         CHRONOLOGICAL LIST OF HEARINGS
                                      2011

                                                                       Page

    Hearing:

    Thursday, October 13, 2011, Update on KC-46A and Legacy Aerial
      Refueling Aircraft Programs....................................     1

    Appendix:

    Thursday, October 13, 2011.......................................    17
                                  ----------

                           THURSDAY, OCTOBER 13, 2011
         UPDATE ON KC-46A AND LEGACY AERIAL REFUELING AIRCRAFT PROGRAMS
                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Akin, Hon. W. Todd, a Representative from Missouri, Chairman,
      Subcommittee on Seapower and Projection Forces.................     1
    McIntyre, Hon. Mike, a Representative from North Carolina,
      Ranking Member, Subcommittee on Seapower and Projection Forces.     2

                                   WITNESSES

    Van Buren, David M., Air Force Service Acquisition Executive; Maj
      Gen Bruce Litchfield, USAF, Special Assistant to Commander, Air
      Force Materiel Command; Maj Gen (Select) Christopher C. Bogdan,
      USAF, Program Executive Officer, KC-46 Tanker Modernization
      Directorate; and Shay Assad, Director, Defense Procurement,
      Acquisition, Policy and Strategic Sourcing, Under Secretary of
      Defense for Acquisition, Technology, and Logistics (USD AT&L)..     3

                                    APPENDIX

    Prepared Statements:

        Akin, Hon. W. Todd...........................................    21
        McIntyre, Hon. Mike..........................................    23
        Van Buren, David M., joint with Maj Gen Bruce Litchfield, Maj
          Gen (Select) Christopher C. Bogdan, and Shay Assad.........    24

    Documents Submitted for the Record:

        [There were no Documents submitted.]

    Witness Responses to Questions Asked During the Hearing:

        Mr. Bartlett.................................................    43
        Mr. Courtney.................................................    43
        Mr. Critz....................................................    44

    Questions Submitted by Members Post Hearing:

        Mr. Palazzo..................................................    49
         UPDATE ON KC-46A AND LEGACY AERIAL REFUELING AIRCRAFT PROGRAMS

                                  ----------

                      House of Representatives,
                           Committee on Armed Services,
                Subcommittee on Seapower and Projection Forces,
                            Washington, DC, Thursday, October 13, 2011.
        The subcommittee met, pursuant to call, at 1:03 p.m. in
    room 2212, Rayburn House Office Building, Hon. W. Todd Akin
    (chairman of the subcommittee) presiding.

     OPENING STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM
      MISSOURI, CHAIRMAN, SUBCOMMITTEE ON SEAPOWER AND PROJECTION
                                 FORCES

        Mr. Akin. The hearing will come to order and if it is all
    right with people, I am going to start it with a prayer.
        Heavenly Father, we thank you for this day, for a free
    country. We ask your blessings on our deliberation, our
    leadership. Watch over our people who serve us overseas, the
    people in uniform. And I pray in Jesus' name, amen.
        Okay. We have got the Air Force tanker hearing. I have got
    some fairly brief opening remarks. I believe the ranking member
    has some remarks. I hope they are brief. And we are talking
    about potentially a vote at like 1:30, or something like that.
    So we are going to try and roll the best we can and then pop
    back in.
        So we are going to be hearing testimony from the Department
    of Defense acquisition officials regarding the Air Force's new
    tanker program, the KC-46, and to receive an update on current
    tanker aircraft, KC-135 and the KC-10. We intend to provide
    sufficient, but not overly burdensome oversight, of this
    program, and hope that this will go into the record books as an
    acquisition model of success.
        Today we have with us Mr. Shay Assad. He is the Director of
    Defense Acquisition Policy and Strategic Sourcing. We have Dave
    Van Buren, the Air Force's Service Acquisition Executive. Major
    General Bruce Litchfield, Special Assistant to the Commander of
    the Air Force Materiel Command. And Major General (Select)
    Chris Bogdan, a Program Executive Officer for the KC-46
    program.
        Thank you all, gentlemen.
        During the hearing, we hope to gain a better understanding
    of the KC-46 program, the program risks that have been
    identified, and the oversight mechanisms in place to keep the
    program on track. And we will appreciate the need for this new
    tanker as we hear testimony regarding our aging, but still
    capable, fleet of legacy tankers, and the dedicated airmen that
    keep them flying.
        Finally, we would like to gain an understanding of the KC-
    46 program impacts as budget deliberations for the future
    continue to take center stage and remain uncertain.
        With that, I turn to the ranking member of the
    subcommittee, Mr. McIntyre, for any comments that you would
    like to make, sir.
        [The prepared statement of Mr. Akin can be found in the
    Appendix on page 21.]

     STATEMENT OF HON. MIKE MCINTYRE, A REPRESENTATIVE FROM NORTH
        CAROLINA, RANKING MEMBER, SUBCOMMITTEE ON SEAPOWER AND
                           PROJECTION FORCES

        Mr. McIntyre. Thank you, Mr. Chairman.
        I would like to also thank the witnesses for appearing
    today.
        The Air Force has waited too long, unfortunately, for a
    replacement for the KC-135, when we think about it being an
    aircraft with an average age of nearly 50 years.
        In our current environment of constrained budgets, it is
    absolutely critical we get the KC-46 acquisition process on a
    stable track and on a schedule that is realistic and will not
    lead to costly delays. The Air Force recently completed an
    integrated baseline review, and I am interested in hearing from
    the witnesses about any risks that were identified in that
    process.
        Recent press reports have estimated the KC-46 program will
    experience cost overruns of more than $300 million. We need to
    clear that up.
        I would like us to better understand today how much of
    these overruns the Government would be liable for, and what
    measures are being taken to prevent any further cost overruns.
    If you will please address that.
        As we wait for the KC-46 to come online, I am concerned
    with the viability of our current legacy aerial refueling
    fleet. Their in-theater demand, as you well know, remains high.
    It appears that trend will continue in the near term.
        I look forward to hearing from the witnesses on the
    condition of our current legacy fleet, and if you would please
    discuss their ability and capacity to meet the increased
    theater demand.
        We all know and are very aware of the fiscal constraints
    that DOD [Department of Defense] is currently facing, and our
    full committee was hearing from the Secretary of Defense about
    that this morning in testimony. To the extent possible, it is
    important that we hear from you, our panel before us right now,
    what potential impacts you believe the Budget Control Act and
    possible concerns about it will have on the overall aerial
    refueling mission.
        Thank you for your service to our country. Thank you, Mr.
    Chairman, for your prayer. Thank you for holding this important
    hearing today.
        I yield back.
        [The prepared statement of Mr. McIntyre can be found in the
    Appendix on page 23.]
        Mr. Akin. Thank you.
        And I believe we are going to have just two opening
    statements; is that correct? I think David Van Buren, the
    Acquisition Executive, first; is that correct? And then also,
    then General Litchfield is going to talk a little bit about
    where we are legacy-wise, and that sets up, of course, where we
    want to be going.
        So David, it is good for me to put kind of a face on a
    name. I understand, I think of you as the parallel to Mr.
    Stackley, who does a good job, and I am sure you do very well,
    as well. So we would like to hear your testimony, sir.

    STATEMENT OF DAVID M. VAN BUREN, AIR FORCE SERVICE ACQUISITION
    EXECUTIVE; MAJ GEN BRUCE LITCHFIELD, USAF, SPECIAL ASSISTANT TO
        COMMANDER, AIR FORCE MATERIEL COMMAND; MAJ GEN (SELECT)
     CHRISTOPHER C. BOGDAN, USAF, PROGRAM EXECUTIVE OFFICER, KC-46
      TANKER MODERNIZATION DIRECTORATE; AND SHAY ASSAD, DIRECTOR,
        DEFENSE PROCUREMENT, ACQUISITION, POLICY AND STRATEGIC
         SOURCING, UNDER SECRETARY OF DEFENSE FOR ACQUISITION,
                  TECHNOLOGY, AND LOGISTICS (USD AT&L)

    STATEMENT OF DAVID M. VAN BUREN, AIR FORCE SERVICE ACQUISITION
                               EXECUTIVE

        Mr. Van Buren. Thank you, Mr. Chairman.
        Chairman Akin, Ranking Member McIntyre, and distinguished
    members of the subcommittee, thank you for the opportunity to
    address this committee with an update on the status of our KC-
    135 and KC-10 fleets, and how the KC-46 program is progressing
    now almost 8 months after contract award.
        The capitalizing of the tanker fleet remains the Air
    Force's acquisition priority. The Air Force awarded the Boeing
    Company an engineering, manufacturing and development contract
    for the KC-46 on February 24, 2011. Since contract award, the
    KC-46 team has worked with Boeing, the Federal Aviation
    Administration and many Department of Defense stakeholders to
    complete a comprehensive review of the KC-46 program.
        We have baselined the cost schedule and technical
    performance and risks of the program. As we work toward the low
    rate initial production decision scheduled for late fiscal year
    2015, we are confident that we can maintain the cost and
    schedule of this program, while mitigating the identified
    risks.
        The Air Force remains mindful of our Nation's budgetary
    challenges and fiscal constraints. This environment requires
    that we balance our capabilities between current combat
    operations and the need to address emerging threats and future
    challenges.
        We seek cost-effective systems that leverage existing
    capabilities and maximize interoperability and integration of
    legacy and future systems.
        At this point in the development program, I am pleased both
    on the performance of the Air Force program office led by
    General Bogden, the PEO [Program Executive Officer], and by the
    program execution of the Boeing Company. I understand this
    subcommittee is looking for how potential sequestration will
    affect the tanker program.
        As Congress implements the Budget Control Act of 2011,
    impacts to Air Force capabilities must be considered. Any
    reductions imposed by sequestration rules would deeply affect
    the Air Force's ability to perform its missions.
        At this point, however, it is too early to determine the
    specific impacts to aerial refueling programs, because such
    cuts would require the Air Force to rebalance its entire
    portfolio programs. However, we do know that any mandated
    significant cuts to KC-46 program would have grave consequences
    for the program. Likewise fully funding the KC-46 program under
    sequestration would be at the expense of other programs.
        We are committed to fielding the KC-X--KC-46 on time and on
    budget so the warfighter is properly supported in the future.
    In the meantime, the Air Force will continue to address new
    capabilities and upgrades needed for the legacy KC-135 and KC-
    10 tanker fleets to meet future air space mandates and emerging
    technologies, resolve critical obsolescence and diminishing
    resource issues, and maintain operational relevancy.
        I appreciate the subcommittee's continued support for our
    Air Force tanker programs and we look forward to answering any
    questions you may have.
        Thank you, Mr. Chairman.
        [The joint prepared statement of Mr. Van Buren, General
    Litchfield, General Bogdan, and Mr. Assad can be found in the
    Appendix on page 24.]
        Mr. Akin. Thank you for your testimony, David.
        And then, General Litchfield.

    STATEMENT OF MAJ GEN BRUCE LITCHFIELD, USAF, SPECIAL ASSISTANT
                TO COMMANDER, AIR FORCE MATERIEL COMMAND

        General Litchfield. Thank you, Chairman Akin, Ranking
    Member McIntyre, and distinguished members of the subcommittee.
    I am pleased to be here to cover the status of our KC-135 and
    KC-10 fleets.
        The Air Force tanker fleet remains the backbone of the
    Department of Defense's global power projection and global
    reach capabilities. This venerable fleet consists of 414 KC-
    135s and 59 KC-10 aircraft.
        Executing the Tanker Modernization Plan will require
    sustaining the KC-135s to an average age of over 80 years and
    KC-10s past an average age of 54.
        As such, both airframes will be in uncharted territory in
    terms of structural and systems issues attributed to age,
    obsolescence and diminishing manufacturing sources. We should
    expect keeping a fleet this long will result in greater demands
    on our airmen, higher sustainment costs and challenges to
    aircraft availability.
        The tanker fleet is in high demand as we execute operations
    across the globe and across the full spectrum of military
    operations. Because of this demand, the Air Force is executing
    a set of multistage initiatives to keep these aircraft viable
    and relevant through a combination of sustainment and
    modification efforts.
        KC-135 aircraft availability and mission capability rates
    have remained relatively steady over the last several years
    with aircraft availability near 65 percent and mission-capable
    rates near 80. For the KC-10, the aircraft availability and
    mission-capable rates are 65 percent and 79 percent,
    respectively.
        Our dedicated airmen around the world work hard every day
    to generate mission-ready aircraft. To sustain long-term fleet
    health, the tanker fleet receives routine depot maintenance and
    undergoes system modifications to address structural, systems
    and obsolescence concerns.
        We are currently executing several initiatives to keep our
    tankers in compliance with today's Federal aviation standards.
    These include modernizing air traffic management and friend-or-
    foe identification systems, as well as remanufacturing obsolete
    parts.
        Even with all the maintenance activities, sustainment
    actions and planned modifications, the preponderance of our
    legacy tanker fleet remains--retains the inherent design
    concepts birthed in the 1950s. With the planned service life of
    the KC-135s and the KC-10, the challenges of sustaining these
    aging weapon systems will rise until the KC-46 comes online. In
    the meantime, we will continue to execute our long-term
    sustainment plan for our legacy fleet to ensure we meet our
    Nation's aerial refueling needs.
        I appreciate the subcommittee's continued support for our
    Air Force tanker programs. Again, thank you for the opportunity
    to appear before you to discuss this critical Air Force
    mission, and I look forward to answering your questions.
        Mr. Akin. Thank you very much, General.
        I have a couple. First of all just on the--the intro, Mr.
    Van Buren. What are we looking at until we build the first
    aircraft? There is a series of steps. You are going to assemble
    an aircraft. We are going to be flying it, doing some testing
    on it. And then we expect maybe the first aircraft will be
    coming off of the line. What are the sort of dates timewise
    that you are looking at there?
        Mr. Van Buren. Well, the contract that we currently have
    runs through 2016 for EMD [Engineering and Manufacturing
    Development]. We will have a preliminary design review in 2012,
    critical design review in 2013, build the aircraft, first
    flight of the 767-2C in 2014. And----
        Mr. Akin. So the first flight is 2014. Okay. And then?
        Mr. Van Buren. Roughly 3 years from contract award. And
    then we will have the full-up KC-46 first flight at the end of
    2014.
        And General Bogdan, any other details with regard to our
    contract that you may want to add?
        General Bogdan. Yes, sir. Thank you.
        Congressman, the only thing I would add to that is one of
    the unique aspects of the way Boeing is actually designing and
    developing the airplane is to blend both their commercial best
    practices and our defense best practices to design the
    airplane.
        And one of the manifestations of that is the Boeing team is
    50 percent from their commercial side of their business, and 50
    percent from their defense side. And as they walk through the
    design of the airplane, they are using both the review process
    from their commercial side, as well as the review process from
    the defense side. And what I am happy to say about that is that
    the Air Force is involved in both sets of those steps, watching
    them design and develop the airplane.
        So, what you may see on the master schedule is actually two
    preliminary design reviews and two critical design reviews to
    go with those two first flights. The first flight of the
    commercial derivative airplane and the first flight of the
    actual KC-46. The Air Force is involved in both sets of those
    reviews, which gives us early insight into the commercial
    portion of the airplane to ensure that the military's portion
    ends up correct.
        Mr. Akin. Well, that is encouraging to hear you say that.
    It is sort of a double check and balance then with your team.
    Now, just want to make sure I understand one thing.
        You are in charge of this program; is that right?
        General Bogdan. Yes, sir.
        Mr. Akin. That is kind of encouraging, because sometimes we
    have groups that come in and address us, and it is not really
    clear who is really in charge of building this. In other words,
    you have the authority, but also you also have the
    responsibility to make sure this comes in on time and under
    budget.
        General Bogdan. Absolutely, sir. The buck stops with me and
    I report directly to Mr. Van Buren for the execution of this
    program.
        Mr. Akin. Directly to--okay. That makes sense. And so that
    is directly connected to----
        Mr. Van Buren. The Under Secretary for Acquisition,
    Technology, and Logistics. Currently, Mr. Kendall is the acting
    Under Secretary.
        Mr. Akin. Okay. That is good. One of the--I used to work
    for IBM. And one of the things we always said was if you have
    got an important program then you have to make sure there is
    somebody in charge. So I am glad to hear that there was no
    equivocation on that particular point. And of course the other
    thing is, is that if things slip at all, you will have the
    distinct honor of being able to fly in antique airplanes, you
    know? Maybe that is not what you really want to do.
        Just one other quick question from my memory. You have the
    KC--is it 35--is the large number 500d or some of them?
        General Litchfield. KC-135s.
        Mr. Akin. One thirty-five. And that is a smaller plane than
    the 10 [KC-10], right?
        General Litchfield. It is.
        Mr. Akin. What is the difference in the number of gallons
    or capacity, or however you measure it?
        General Litchfield. The KC-135 is roughly a 200,000-pound
    fuel capacity. I think the KC-10 is about 350 [350,000 pounds].
    So about one-and-a-half times.
        Mr. Akin. And how does the 46 [KC-46] fall in that mix?
        General Bogdan. Sir, the KC-46 when fully loaded is going
    to be able to offload or carry 212,000 pounds of gas. It
    doesn't appear like that is a whole lot more than a 135 [KC-
    135]. However, a far more efficient airplane than the 135, so
    it is offload capability and its range capability far exceed
    the 135.
        And we also have to remember that the KC-46 has also been
    built for a number of other missions, to include cargo-carrying
    capability. So it has a fully loaded cargo floor and it has
    built-in ability to carry air medical patients for air medical
    evacuation.
        Mr. Akin. So it is a little bit more a multipurpose
    aircraft. And there is a certain point of no return in carrying
    fuel, right? Because there are only a certain number of planes
    you are going to refill in a certain period of time, right? So
    you don't want to carry a lot of extra fuel you don't need?
        General Bogdan. That is true, sir. We prefer to offload all
    of our fuel and land at minimum fuel than have to land with
    extra fuel. More wear and tear on the airplane.
        Mr. Akin. Yes. Thank you very much.
        And let us see. The next question to the ranking member,
    Mr. McIntyre.
        Mr. McIntyre. Thank you, Mr. Chairman. I would like on the
    panel whoever feels most qualified to answer the question that
    I alluded to in my opening remark. What impacts will the Budget
    Control Act of 2011 enacted in July of this year have on the
    KC-46 program?
        Mr. Van Buren. The exact impacts, sir, are not known yet.
    The issues of sequestration, as I mentioned in my opening
    comments, are not specifically identified by the Air Force, as
    of now.
        However, I should say that one of the features of this
    particular acquisition, which in my mind is a model, is the
    manner in which we contracted for not only the engineering,
    manufacturing and development, but also on a firm fixed-price
    basis for the two--first two production lots and a not-to-
    exceed cap for the remaining production lots out for a large
    number of years, to the good work of Mr. Assad here, and
    others.
        And so, that any perturbation to that business deal or the
    business transaction that has been set up would be, in my
    opinion, very negative for the taxpayer.
        Mr. McIntyre. I also mentioned about the cost overruns,
    currently estimated at $300 million, roughly, above contract
    ceiling. Can you explain to us in simple terms whether or not
    the Government is exposed? And if it is not, then who is
    responsible for paying for those cost overruns above the
    ceiling?
        Mr. Assad. Yes, sir. I think I can answer that. The Boeing
    company is completely responsible for all costs above the
    contract ceiling price. So the taxpayers will incur no further
    cost increase on this contract should the development program
    exceed the ceiling price of the contract.
        Mr. McIntyre. Thank you. Thank you for clarifying that.
        Thank you, Mr. Chairman.
        Mr. Akin. Mr. Coffman.
        Mr. Coffman. Thank you, Mr. Chairman.
        I am wondering, can you go back again and talk about the
    $300 million cost overrun? And where, since we are under a
    fixed-price contract, what are the ramifications of that?
        Mr. Assad. Yes. The $300 million cost overrun that you are
    referring to, Congressman, was Boeing's present projection of
    where they think their costs are going to end up on the
    contract. They are trying to manage to a much lower number, but
    that is their projection. Our ceiling price, the price that the
    maximum liability to the taxpayer, is $4.9 billion.
        So to the degree that Boeing executes this contract in any
    manner that causes them to exceed that cost number, it is on
    the complete shoulders of the Boeing Corporation and not the
    taxpayer. So it is very straightforward. Anything over that
    $4.9 billion is Boeing's nickel, not ours.
        Mr. Coffman. As it should be. I believe that Boeing is also
    in development using essentially the same design or a similar
    design for what they are--to develop this same aircraft
    commercially as a cargo plane, if I am correct in that?
        Mr. Assad. They are, yes. They are using their first--as
    General Bogdan mentioned--they are developing the 767-C. They
    are using a lot of existing technology. So there is not a lot
    of risk in terms of understanding how to put that plane
    together.
        Mr. Coffman. Oh, absolutely. But I think what I am saying
    is, essentially, they will be able to recover their cost, this
    cost overrun that they will eat, and not the U.S. taxpayers.
    But the fact that they are going to be able to utilize a lot of
    technology that they are developing for the U.S. Government,
    that they will be able to utilize certainly some of that same
    technology for, or commercially--a commercial aircraft. Am I
    correct in that?
        Mr. Assad. Well, actually, most of the technology, if not
    all of it, is being brought to the table by Boeing. There are
    very few--there is some military modification to this aircraft
    that we are going to use that some--I guess they could take
    advantage of. But the fundamental plane is being brought to the
    table--that the elements of that plane--is being brought to the
    table by Boeing.
        Mr. Coffman. But did----
        Mr. Assad. There will be some benefit from the extra
    development that we are doing, but they are bringing a lot of
    that technology; for example, the 787 Dreamliner cockpit. That
    is already developed, designed and paid for by the Boeing
    Corporation.
        Mr. Coffman. I see. And so that is not part--that is not a
    part of the cost for this. But the----
        Mr. Assad. That is correct.
        Mr. Coffman. Okay, okay.
        Mr. Chairman, I yield back.
        Mr. Akin. Mr. Critz, where did--oh, okay. There you are.
        Mr. Critz. Thank you, Mr. Chairman.
        Looking at some information on the IBR [Integrated Baseline
    Review], obviously the risk assessments, cost is low because of
    the cap. That is pretty straightforward. They listed the risk
    assessment for the schedule to be moderate.
        Could somebody explain why there is risk there?
        General Bogdan. Yes, sir.
        Relative to the schedule on the contract, the requirement
    for Boeing is to deliver to the Air Force 18 fully ready to go
    to war on day one airplanes with all the support equipment, all
    the tech quarters, all of the training by August of 2017. That
    is the requirement in the contract. Boeing has set a baseline
    and attempting to deliver those 18 airplanes approximately 5
    months earlier than that in March of 2017. That is their own
    internal timeline.
        When my team baselined the program, we took a look at that
    overall schedule and the likelihood of Boeing meeting the March
    date and the likelihood of Boeing meeting the August 2017 date.
    We came to the conclusion that it is likely that Boeing will
    meet the August 2017 date, but there are about four things that
    we needed to keep our eye on to make sure that they didn't go
    off the rails, which would definitely impact them meeting that
    scheduled date.
        And let me enumerate those for you. The first thing that
    Boeing is doing a little differently on this airplane in terms
    of building it is, instead of building a basic commercial
    airplane on their production line at Everett, and then flying
    it down to Wichita and then taking it apart to put the military
    modifications on it, what they are doing is called inline
    provisioning. And that means that, as they build the airplane
    in Everett, they are going to build it with the wiring and the
    bundling and the fuel lines as if the military pieces were
    going to be fit on the line right there.
        Let me give you an example. When Boeing builds the tail of
    a 767 for a commercial customer, the tail of that airplane does
    not have a hole in it to fit a boom. But for our airplane, when
    the tail section of that KC-46 or 767-2C gets to Everett, it
    will already have the hole in it for Boeing to put the boom on
    it.
        So they are passing down through their sub-tier suppliers
    an additional requirement to build the airplane as if it were a
    military airplane, even though it is going to be put together
    on a commercial line. While Boeing does that quite often in
    their commercial airplanes, different variants, to do it on a
    military airplane with military requirements and specs,
    increases the level of risk for us in the Air Force of getting
    that done on time.
        So I have let Boeing know, and I have put them on notice,
    that I think that that inline provisioning is something that
    they are going to have to pay particular attention to, and we,
    the Air Force, are going to have to pay particular attention
    to, to ensure that their sub-tier suppliers can do the job
    right. It is less a problem with Boeing integrating, and more
    of an issue of making sure that we watch Boeing watch their
    sub-tier suppliers for this inline provisioning.
        So that is the first thing that worries me about the
    schedule, because if you don't get that right, you are not
    going to build your four test airplanes on time, and then
    everything propagates from there.
        The second thing that worries me a little bit on the
    program relative to schedule is the fact that Boeing is going
    to deliver to us an airplane that is FAA [Federal Aviation
    Administration]-certified. There are two elements to that FAA
    certification. The first is what we call an amended type
    certification, and that certification goes with the 767-2C. The
    second part of the FAA certification is called a supplemental
    type certification, and that certification goes with the
    military modifications that they are going to put on the
    airplane.
        It is very typical in the commercial world to do an ATC
    [Amended Type Certificate] certification and an STC
    [Supplemental Type Certificate] certification in serial. You do
    the ATC first. You put the military modifications on the
    airplane, and then you do the supplemental type cert. In this
    instance here, as a result of some of that inline provisioning,
    Boeing is actually going to do part of the ATC and the STC
    simultaneously. There is some concurrency there.
        The issue I have with that is, if a problem arises during
    the FAA certification on the ATC side, there is not a whole lot
    of time for them to recover before they get to the supplemental
    type cert, the STC side. And I have to have that STC
    certification before I can deem the airplane airworthy to fly.
    So that concurrency of the ATC and the STC worries me a little
    bit.
        We have been working with the FAA. The FAA has basically,
    in general, approved Boeing's process for doing this. The FAA
    doesn't have a problem with it. But we just have to make sure
    that the first time around, when they go to get that ATC
    certification there aren't too many hiccups, because that is
    going to propagate with that concurrency into the second part
    of that certification. So that is the second thing that I am a
    little bit worried about that causes some increased risk into
    the program.
        Mr. Critz. Now, you said there were four. And I see we have
    already used up my 5 minutes. So if I could, if it is possible
    to get written response to that question, I would really
    appreciate it.
        [The information referred to can be found in the Appendix
    on page 44.]
        General Bogdan. Yes, sir. And I apologize for being a
    little bit long.
        Mr. Critz. Oh, that is quite all right. It is an important
    issue.
        Thank you.
        And I yield back.
        Mr. Akin. And Mr. Bartlett is next.
        Oh, and by the way, it may be if we move along in the
    questions, it may be we could catch some of the things offline,
    just depending on who has questions.
        Mr. Bartlett. All right. Thank you very much.
        I noticed, both from your comparison chart and your spec
    sheet, that you are no longer waiving chemical and
    electromagnetic hardening, as we did during the Clinton years.
    Can you tell me to what level you are doing EMP
    [electromagnetic pulse] hardening?
        General Bogdan. Sir, currently, the military standard for
    EMP hardening for the KC-135 airplane is at a certain level,
    and for the KC-10 is at a certain level. The Department of
    Defense has undergone a rewriting of the standard, and the
    standard for us now has been slightly increased, although it is
    not at the same level as, for example, a presidential airplane.
    And that is in general terms.
        So what I would like to do is, I will take that question
    for the record and get you the actual numbers, the decimals and
    all of that, engineering numbers, that go with that. But what I
    can tell you is, the airplane--we are not going to waive the
    EMP hardening. It has to meet the current mil [military]
    standard, and that will--that is going to provide us a more
    capable and more survivable airplane than we have in the
    current tanker fleet.
        [The information referred to can be found in the Appendix
    on page 43.]
        Mr. Bartlett. The EMP Commission interviewed two Russian
    generals that told them that the Soviets had developed, and
    they had, an EMP-enhanced weapon that would produce 200
    kilovolts per meter at the ground zero. And that would be, if
    it was detonated 300 miles high over Iowa or Nebraska, that
    would be about 100 kilovolts per meter at the margins of our
    country.
        To my knowledge, that number is at least twice, and maybe
    more than twice, as large as anything that we have ever
    designed or built or tested to. How do we verify the level that
    we ought to be protecting to? The Department--the Pentagon--has
    a number. They have--and I don't know whether that number is
    classified or not--but it is substantially lower than the
    number that the Russian generals told the EMP Commission that
    they had enhanced the EMP weapons to produce.
        General Bogdan. I will just make a few quick comments about
    that, sir. The standards by which the Department of Defense
    sets the EMP levels for the airplanes are based on, as I know--
    understand it--a very detailed assessment of the threats.
        Without getting into any classified information, we can
    provide you that process. And they look at the current and the
    future threats to determine that EMP level. Relative to our
    airplane, as again I said, one of the inherent capabilities of
    our airplane being a commercial derivative airplane is, every
    commercial airplane has to have a certain amount of hardening
    for lightening strikes.
        And the FAA requires that and tests that during their ATC
    and STC certifications, as I talked about. So an added
    enhancement to our airplane is not only for the normal threat
    of EMP, but on top of that the FAA certification for things
    like lightening strike will be incorporated in our airplane.
    And I will get you the information about how we determine those
    levels.
        [The information referred to can be found in the Appendix
    on page 43.]
        Mr. Bartlett. Yes. Lightening strikes are what is referred
    to as an E2. It is an E2 component of a nuclear detonation. The
    E1 has a rise time in nanoseconds. No lightning protection, as
    far as I know, provides any meaningful protection against E1.
    And airplanes probably are not so susceptible to E3, which is a
    really, really long wavelength that couples with railroad
    tracks and wires buried deeply under the ground, coupled with
    the E3.
        I am concerned, because when we really need these planes in
    a war with a peer, it is in all of their open literature, it is
    in all of their war games. One of the first things they do is a
    robust EMP lay-down to deny us the use of all of our equipment
    which is not EMP hardened, which is far too much of our
    equipment. And I am concerned that if we are going to harden,
    hadn't we not ought to the level that we are told we should
    expect.
        I will look forward to your written response to this. And
    if the level to which you are hardening is not at the level
    that was designated by the Russian generals to the EMP
    Commission, then I would like your suggestions as to why it
    should not be.
        Thank you.
        Mr. Chairman, I yield back.
        Mr. Akin. Thank you, Roscoe.
        Our next is Mr. Courtney.
        Mr. Courtney. Thank you, Mr. Chairman.
        Mr. Van Buren, you were asked earlier about the Budget
    Control Act in terms of impact on the program. How about the
    C.R. [Continuing Resolution] last year in terms of the, you
    know, fits and starts and where we are today with the C.R.?
    And, you know, has that--it is--I mean, we are right now at R&D
    [Research and Development] sort of level in terms of where the
    program is. And I am just sort of wondering if that had any
    sort of delay, interruption, cost?
        Mr. Van Buren. The continuing resolution last year did not
    impact the program.
        General Bogden, what is your assessment of this year?
        General Bogdan. Sir, we took a look at that. And if we were
    to go into a C.R. for the entire fiscal year 2012 year and
    maintain at the fiscal year 2011 levels, we would be $203
    million short of what we would need to pay Boeing in their
    progress payments for work done on the EMD contract in fiscal
    year 2012.
        Mr. Courtney. Okay. The numbers that we have here seems to
    suggest it was fairly level from 2011 to 2012. So there
    actually is a difference in terms of what you--the plan was
    for----
        General Bogdan. Yes, sir. When we originally put the budget
    in for 2012, it was long before we figured who was going to win
    this competition, because we hadn't chosen the winner. So we
    had to budget for either possibility that the other competitor
    of Boeing would win.
        And if the other competitor would have won, we would have
    needed more money in 2012 than we would have for Boeing. And in
    this instance, because Boeing won, although 2012 and 2013 are
    leveled together, they are not equal, per se.
        Mr. Courtney. Okay. Because the numbers that we have here--
    --
        General Bogdan. And then, like I said, we went back, and
    based on Boeing's projected progress payments, which I have to
    validate, I have to take a look and make sure that they are
    really earning the money they claim they are earning with the
    work being completed. We will be about $200 million short on
    the progress payments for them.
        Mr. Courtney. All right.
        General Bogdan. If we are at the 2011 level.
        Mr. Courtney. That is helpful for us to know that.
        General Bogdan. Yes, sir.
        Mr. Courtney. One last question.
        General Litchfield, you talked about the operations that
    the tanker fleet has been involved in, in recent years. You
    know, looking at Libya where after the initial sort of salvo of
    ships and strike aircraft, I mean, our involvement tended to
    just sort of revert to refueling and recognizance.
        Is that because the NATO [North Atlantic Treaty
    Organization] allies don't really have that capability? I mean,
    are we the only ones that really have refueling fleets of any
    size or significance?
        General Litchfield. I think size and significance is a fair
    statement. There are other countries that have air refueling
    capability, but we are really the joint and coalition and
    allied supplier of air refueling across our partners.
        Mr. Courtney. So what percentage? I guess in terms of the
    operations of Libya, just an estimation?
        General Litchfield. I would have to get some specifics on--
    --
        Mr. Courtney. Okay.
        General Litchfield. I would have to take that one for the
    record.
        [The information referred to can be found in the Appendix
    on page 43.]
        Mr. Courtney. But it is significant, as you said?
        General Litchfield. Well, I think what is the real
    important thing is that our tankers are involved globally. You
    could say Libya, but I could say the same thing about the
    humanitarian operations in Japan when they were, after the
    tsunami and the nuclear incident, we were there.
        I could talk to you about what we do on a daily basis for
    keeping the ISR [Intelligence, Surveillance, and
    Reconnaissance] for drug interdictions and all that. I could
    talk to you about getting our wounded warriors home when they
    need to get MEDEVAC [medical evacuation] from the AOR [Area of
    Responsibility] all the way to the (?), because minutes matter
    in terms of saving a life.
        I think you could talk any operation you want any day, and
    our tankers are fully engaged in keeping--in support of their
    mission.
        We can get the answer on Libya. But what I would really
    like to leave you with is there isn't a day go by that a 135
    averages passing about 5 million pounds of fuel and supplying
    about 400-plus aircraft with refueling. And that is on a normal
    day.
        Mr. Courtney. You don't have to, you know, spend your time,
    you know, chasing those numbers. But I guess the point is just
    that there really is no other ally that can sort of fill that
    hole if we don't get this program, you know, hitting all
    cylinders on time. So----
        General Litchfield. Yes, sir.
        Mr. Courtney [continuing]. Thank you, Mr. Chairman.
        Mr. Akin. Thank you.
        And next is Mr. Palazzo.
        Mr. Palazzo. Thank you, Mr. Chairman.
        Thank the witnesses for being here today, and the service
    to--that you are providing to our country. Thank you.
        Like many people, especially those along the Gulf Coast, we
    were kind of surprised about the KC-X award, but after
    reviewing the selection documents it pretty much came up to
    our--ultimately our satisfaction that the decisionmaking
    process was okay.
        I do have a few questions that I would like to ask. I did
    have a question on the $300 million overrun, but that has
    already been asked and answered.
        So just General Bogden--but anybody who wants to jump in,
    feel free--is according to some press reports, the FAA is
    proposing heightened scrutiny of the wing skin after cracks as
    large as half an inch were found on commercial 767s.
        What impact will this have on the KC-46A program, and what
    measures has the Air Force taken to ensure that the tanker can
    meet the desired capabilities in the service line?
        General Bogdan. Sir, I am not sure if you are referring to
    the most recent airworthiness directive from the FAA about
    cracks that were recently found on some 767s. If you are
    talking about that one, what I can tell you is 183 of the
    oldest 767s in the commercial fleet today have older wing
    pylons on their airplanes. And it is those wing pylons that the
    FAA has sent out an airworthiness directive on just a few weeks
    ago for increased rate of inspection.
        The reason why that won't affect us is because in 2005 the
    FAA actually found those wing cracks and sent out the original
    airworthiness directive. And that is why most of the 767 fleet
    today has the new pylons and was not affected by this most
    recent finding of cracks.
        The design of our airplane has the new wing pylons from the
    2005 airworthiness directive. So we are confident, relative to
    that particular incident, that our airplane will not meet the
    same fate.
        One of the requirements, in a broader sense, one of the
    requirements we have on this contract is that Boeing has to
    prove to us during the design, development and testing phase of
    the program that this airplane is going to last for 40 years.
        That includes a number of different engineering tests and
    analysis on the structures, the wings, the skin of the
    airplane. And the requirements to meet that 40-year lifecycle
    are not the commercial requirements. They are the military
    standard requirements, which go above and beyond in a number of
    instances from the commercial inventory.
        So I am fairly confident that Boeing understands this. I am
    also fairly confident that our overseeing of Boeing developing
    and designing the airplane to the military standard for a 40-
    year lifecycle on the airplane is going to mitigate any
    problems we may see.
        Mr. Palazzo. And I have one more question, Mr. Chairman.
        What impacts would sequestration, as a result of the
    potential outcome of the Joint Select Committee on Deficit
    Reduction, have on this program, the KC-46A?
        General Bogdan. As Mr. Van Buren and Mr. Assad had already
    spoken, I will say it in very simple terms. The EMD contract on
    this program is a fixed price contract. All 175 production
    airplanes have already been priced.
        We know exactly how much we are going to pay for both EMD,
    and for every one of those airplanes. And we got a good deal.
        If we were to remove money from this program of a
    significant amount that we would have to alter the development
    program or alter our production target quantities, there is a
    chance that we would have to renegotiate both of those
    contracts. And that would put in jeopardy a significant savings
    to the taxpayers.
        Mr. Palazzo. Mr. Chairman, I yield back.
        Mr. Akin. Thank you.
        And last is Mrs. Davis. We have--there is a 15-minute vote
    and we are probably, what do you think, about 13 minutes into
    it or so, possibly?
        Mrs. Davis. Thank you, Mr. Chairman. I will try and be
    quick.
        And thank you all for being here.
        I just have a quick question to your last response.
    Wouldn't Boeing have assumed that they were building to
    military standards and not commercial; is that not a correct
    assumption?
        General Bogdan. During the proposal phase and during the
    source selection when we laid out our requirements, Boeing was
    well aware that the airplane had to meet the military standards
    for the 40-year lifecycle.
        Mrs. Davis. Okay. Thank you.
        Is there anything else besides what you suggested to the
    committee--and I may have missed this--that you learned from
    this process that informs future decisions? Because I think
    sometimes we, you know, we demonstrate that we have cut
    something and that is fine. And I think we are obviously
    looking at, you know, a tremendous number of cuts. But there
    doesn't seem to be a real systemic change to the culture of
    doing that.
        What did you learn that informs future decisions?
        Mr. Assad. In this particular program, Congresswoman, what
    we learned was that we need to use the type of procurement
    practice that we used on KC-X on as many programs, frankly, as
    we can, but that requires firm requirements.
        In this particular case, we spent a significant amount of
    time understanding from the warfighter exactly what their
    requirement was, so that the plane that rolled off the
    production line, in fact, can go to war from day one.
        And so, in those instances where we can define our
    requirements in a firm way, we need to use this type of
    contract, you know? It is appropriate to use a fixed price
    contract when you have definitive requirement and that is where
    we want to be whenever we can be there.
        Mrs. Davis. Is that--go ahead, sir. I am sorry.
        General Bogdan. Go ahead, ma'am.
        Mrs. Davis. Would anyone be challenging you on that in the
    future?
        Mr. Assad. Well, you know, there are those who never think
    a fixed price contract is the right type of a contract to use.
    And our view is, if the shoe fits on Cinderella's foot, she
    should wear it. And so, if a fixed price contract is
    appropriate, if the firm requirements are there and known and
    the risks are understood, it is an appropriate contract to use.
        Mrs. Davis. Okay, thank you.
        And I know that the--my understanding that the KC-46A will
    replace about 179 of the current 472 legacy tankers. So what
    about the others? What is the Air Force's plan to replace the
    others?
        Mr. Van Buren. The baseline, Congresswoman, has always been
    for the so-called KC-Y and a KC-Z that would go on after the
    acquisition of the KC-X program. And the whole set of
    requirements and acquisition approach will be more than a
    decade out during the period of our procurement of the KC-X
    tankers.
        Mrs. Davis. Okay.
        Thank you, Mr. Chair.
        Mr. Akin. Thank you for everybody helping on keeping the
    questions pretty short. Two more people have come in.
        Mr. Johnson, you are next. If you keep your questions to a
    couple minutes, that allows Mr. Larsen to ask one and we will
    still get to votes on time.
        Mr. Johnson. Thank you. Thank you, Mr. Chairman.
        Secretary Assad, I just heard you say that the as far as
    the KC-X and KC-Y programs, they would--you didn't say that
    they would replace the KC-135. You said they would go on after
    the KC-135. Which is the most accurate description?
        Mr. Assad. I am sorry, I might not have been as clear as I
    wanted to be. The whole replacement of the KC-135 fleet and the
    KC-10 fleet will be conducted by a series of procurements, KC-X
    being the first one, then KC-Y and then KC-Z. So there are
    three programs that will go incrementally through the years to
    replace the current tanker fleets.
        Mr. Johnson. So we will have three models that are
    replacing the current tanker fleet?
        Mr. Assad. I would want to defer that until after the
    commander--mobility command--goes through and develops those
    requirements in the out-years.
        Mr. Johnson. But we are, as it stands now, planning for
    three replacements?
        Mr. Assad. Three procurements.
        Mr. Johnson. Three procurements, all of which would replace
    the program that is in place now with just the one aircraft?
        Mr. Assad. They would replace the current legacy fleet of
    KC-135 and KC-10.
        Mr. Johnson. Looking ahead at the mix of aircraft our Air
    Force would be using in 20 or 30 years, is it possible that we
    won't need to spend billions of taxpayers' money on a new heavy
    tanker if we could accomplish our objective with the KC-46?
        Mr. Assad. That is entirely possible.
        Mr. Johnson. I have no further questions.
        I will yield back. Thank you.
        Mr. Akin. Thank you.
        And our last question goes to Mr. Larsen.
        Mr. Larsen. Thank you.
        Most of the gentlemen I have heard from you at one time or
    the other about this program, so my only concern is, and the
    only comment--it is really more of a comment. Just given the
    news of the summer and the conversations that took place in the
    media about the development phase of this, that we would be
    sure that here you stick to your contract and you make sure
    that the contractor sticks to the contract. And that the
    taxpayers aren't on the hook for anything but what is in the
    contract. That is the main point I want to make.
        Mr. Van Buren. That is our intent, sir. And that is the
    reason why we have very stringent controls with regard to
    constructive change to the contract, both at General Bogdan's
    level and at my level.
        Mr. Assad. And in addition, Representative, that is why,
    frankly, we are, we have and we will continue OSD [Office of
    the Secretary of Defense] oversight to ensure that that
    happens.
        Mr. Larsen. Yes, from OSD, not just from Air Force.
        Mr. Assad. That is correct, Congressman.
        Mr. Larsen. And we will continue congressional oversight on
    you all.
        Thanks a lot.
        Mr. Akin. Congressman Larsen, thank you.
        I just want to thank you all for being here. We just wanted
    a quick update on how the program was going. I think you did a
    great job and I wish you the very best on it. Make it the very
    best program ever.
        And so, we will stay tuned and thanks for taking the time
    with us. I am glad we got the questions done, so we do not have
    to wait and come back for anything.
        So, God bless you, have a great day.
        [Whereupon, at 1:53 p.m., the subcommittee was adjourned.]

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                                A P P E N D I X

                                October 13, 2011

    =======================================================================

    =======================================================================

                  PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                                October 13, 2011

    =======================================================================

                         Statement of Hon. W. Todd Akin

         Chairman, House Subcommittee on Seapower and Projection Forces

                                   Hearing on

         Update on KC-46A and Legacy Aerial Refueling Aircraft Programs

                                October 13, 2011

        This afternoon the subcommittee meets to receive testimony
    from Department of Defense acquisition officials regarding the
    Air Force's new tanker program, the KC-46, and to receive an
    update on current tanker aircraft, the KC-135 and the KC-10.
    Normally, we would hold this type of hearing at the beginning
    of the budget cycle, but as everyone knows, the Air Force was
    still in source selection and we felt that it was prudent to
    delay until sufficient information was available to the public.
    We also intend to provide sufficient, but not overly
    burdensome, oversight of this program and expect that this will
    go into the record books as a model of
    success.
        Today we have with us Mr. Shay Assad, Director of Defense
    Acquisition Policy and Strategic Sourcing; Mr. Dave Van Buren,
    the Air Force's Service Acquisition Executive; Major General
    Bruce Litchfield, Special Assistant to the Commander of Air
    Force Materiel Command; and Major General (Select) Chris
    Bogdan, Program Executive Officer for the KC-46 program.
        I think it's safe to say that many folks have looked
    forward to this day, and more importantly, the fact that the
    Air Force has finally begun to replace its 50-year-old,
    Eisenhower-era tankers. And, that the old adage known as
    ``Third Time's a Charm'' has once again been reaffirmed by the
    Air Force's acquisition professionals.
        As chairman of this subcommittee, I commend the acquisition
    corps of professionals who so diligently oversaw the process
    for this source selection and conducted what I felt to be a
    fair, open, transparent and fierce competition between two
    global competitors within the aircraft industry. I feel that
    the most affordable aircraft that met warfighter requirements
    for our Air Force was selected, and that the taxpayers'
    investment will provide many worthwhile and valuable returns.
        Air-to-air refueling is a crucial capability within our
    military and is what enables our global reach, influence and
    projection of our joint and allied air forces. Whether it is
    providing fuel for fighter aircraft to remain orbiting overhead
    our soldiers and marines on the ground in Afghanistan, or fuel
    for allied aircraft operations over Libya, or fuel for the last
    leg of that C-17 mission bringing our wounded warriors home
    from battle, air-to-air refueling will
    always, and should always, remain a mainstay of our core
    capabilities.
        During this hearing, we hope to gain a better understanding
    of various elements of the KC-46 program and how it will be
    carried out, as well as understand all program risks that have
    been identified and the oversight mechanisms in place to keep
    the program on track. And, we will all appreciate the need for
    this new tanker as we hear testimony regarding our aging, but
    still capable, fleet of legacy tankers and the dedicated airmen
    that keep them flying. Finally, we'd like to gain an
    understanding on KC-46 program impacts as budget deliberations
    for the future continue to take center stage and remain
    uncertain.

                        Statement of Hon. Mike McIntyre

      Ranking Member, House Subcommittee on Seapower and Projection Forces

                                   Hearing on

         Update on KC-46A and Legacy Aerial Refueling Aircraft Programs

                                October 13, 2011

        I would like to thank all of the witnesses for appearing
    here today to talk about this very important topic. The Air
    Force has waited way too long for a replacement for the KC-135,
    an aircraft with an average age of nearly 50 years.
        In our current environment of constrained budgets, it is
    absolutely critical that we get the KC-46 acquisition process
    on a stable track and on a schedule that is realistic and will
    not lead to costly delays. I understand that the Air Force
    recently completed an Integrated Baseline Review, and I am
    interested in hearing from the witnesses about any risks that
    were identified in that process.
        Recent press reports have estimated that the KC-46 program
    will experience cost overruns of more than $300 million. I
    would like to better understand how much of these overruns the
    Government would be liable for and what measures are being
    taken to prevent any further cost overruns.
        As we wait for the KC-46 to come online, I am concerned
    with the viability of our current legacy aerial refueling
    fleet. Their in-theater demand remains high and it appears that
    trend will continue in the near term. I look forward to hearing
    from the witnesses on the condition of our current legacy fleet
    and discussing their ability and capacity to meet increased
    theater demand.
        We are well aware of the fiscal constraints that DOD is
    currently facing. To the extent possible, I would like to hear
    what potential impacts the Budget Control Act and possible
    sequestration will have on the overall aerial refueling
    mission.
        I would like to thank the witnesses for their service to
    our country, and I thank the chairman for holding this
    important hearing today.
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    ?

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                  WITNESS RESPONSES TO QUESTIONS ASKED DURING

                                  THE HEARING

                                October 13, 2011

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                RESPONSES TO QUESTIONS SUBMITTED BY MR. BARTLETT

        General Bogdan. MIL-STD-2169 addresses all aspects of the current
    EMP threat and provides detailed descriptions of the components of
    high-altitude EMP (HEMP) threat waveforms, which include E1 (prompt
    gamma HEMP), E2 (scattered and neutron inelastic gamma HEMP), and E3
    (magnetohydrodynamic (MHD) HEMP). An unclassified composite waveform of
    E1, E2, and E3 HEMP environment is shown below.

    [GRAPHIC] [TIFF OMITTED] 71448.018

        Only the E1 waveform is applicable to KC-46 aircraft as it couples
    well to antennas, equipment (through apertures), conductive lines, and
    contains strong in-band signals to interfere with communication
    receivers. Due to low frequency content, the E2 and E3 components do
    not affect aircraft. The E2 component couples to overhead and buried
    long conductive lines, vertical antenna towers, and aircraft with
    trailing wire antennas. The E3 component couples to power and long
    communication lines including undersea cables.
        MIL-STD-2169 is based on all currently known EMP threats and is
    maintained and updated by the Defense Threat Reduction Agency (DTRA)
    (8725 John J. Kingman Road, Stop 6201, Ft. Belvoir, VA 22060). [See
    page 10.]
        General Bogdan. The KC-46 System Specification includes a
    contractual requirement to withstand an electromagnetic pulse (EMP) at
    least two times (6 dB) the EMP threat environment defined in the
    classified MIL-STD-2169. KC-46 aircraft will be designed and tested to
    meet this requirement. [See page 11.]
                                     ______

                 RESPONSE TO QUESTION SUBMITTED BY MR. COURTNEY
        General Litchfield. Total # of Air Refueling (AR) Sorties: 6043
        Total # of USAF Air Refueling Sorties: 4256
        U.S. Percentage of Total Air Refueling Sorties: 70.42%
        [See page 12.]
                                     ______

                  RESPONSE TO QUESTION SUBMITTED BY MR. CRITZ
        General Bogdan. The contractual requirement is for Boeing to
    deliver 18 aircraft ready to go to war on day one with all the support
    equipment, all the tech orders and all of the training, to the Air
    Force by August of 2017. As part of the Integrated Baseline Review
    (IBR) process, Boeing established an internal baseline schedule to
    deliver those 18 aircraft in March of 2017, approximately five months
    earlier than contractually required.
        During the IBR process, the KC-46 Directorate assessed Boeing's
    overall schedule, the likelihood of Boeing meeting their internal March
    2017 baseline date, and the likelihood of Boeing meeting the
    contractually required August 2017 date. The KC-46 Directorate came to
    the conclusion that it is likely that Boeing will meet the
    contractually required August 2017 date, but that there are four risks
    to the supporting schedule to closely manage during contract execution.
        Risk #1: In-line provisioning. Instead of building a basic
    commercial aircraft on their production line at Everett and then flying
    it down to Wichita to take it apart and install the military
    modifications on it, what they're doing is called in-line provisioning.
    In-line provisioning means that Boeing is going to build the wiring and
    the bundling and the fuel lines in the aircraft at Everett as if the
    military modifications were going to be fit on the line.
        For example, when Boeing builds the tail of a 767 for a commercial
    customer, the tail of that aircraft does not have a hole in it to fit a
    boom. But for the KC-46 aircraft, when the tail section of that 767-2C
    gets to Everett, it will already have the hole in it for Boeing to put
    the boom in place. Boeing is passing down to their sub-tier suppliers
    an additional requirement to build the aircraft as if it were in the
    military aircraft configuration even though it's going to be put
    together on a commercial line. While Boeing does this quite often in
    different variants of their commercial aircraft, doing so on an
    aircraft with military requirements and specifications increases the
    level of risk for accomplishing that work on time.
        Risk #2: FAA Certification. Boeing is going to deliver an airplane
    to the Government that is FAA certified. There are two elements to FAA
    certification. The first is an Amended Type Certification (ATC)
    associated with the commercial 767-2C. The is a Supplemental Type
    Certification (STC) associated with the military modifications that
    Boeing is going to put on the aircraft. It is typical to accomplish the
    ATC and STC in a serial manner--ATC first, install the military
    modifications, and then the STC. In this case, as a result of that in-
    line provisioning, Boeing is actually going to accomplish a portion of
    the ATC and STC concurrently. If a problem arises during the FAA ATC
    process, there is not a lot of time for Boeing to recover before they
    get to the STC process, which must be done before the Government can
    deem the aircraft airworthy to fly.
        The KC-46 Directorate has been working with the FAA, and the FAA
    has basically approved Boeing's process for accomplishing the ATC and
    STC effort. However, the Government and Boeing team must collectively
    work to ensure there are no major issues with obtaining the initial ATC
    because that will--given the concurrency-- propagate into the STC
    process.
        Risk #3: Flight Test. The test program, particularly for the Aerial
    Refueling certifications, will require efficient use and
    synchronization of FAA, developmental, and operational test resources
    to avoid driving additional test events, and to finish the test program
    objectives on schedule. While the KC-46 Directorate determined that
    Boeing has adequately justified their capability to achieve the
    proposed flight hours/month and effectiveness rate for FAA
    certification of the 767-2C with 65 hours/month and 85% effectiveness
    (i.e., a 15% re-fly rate), the KC-46 Directorate has some concern with
    Boeing's ability to achieve their proposed KC-46 sortie rate of 50
    hours/month and 85% effectiveness given the amount of coordination and
    synchronization with outside resources. The KC-46 Directorate is
    working with Boeing to identify resource requirements and constraints
    to mitigate this risk.
        Risk #4: Software. Boeing plans to reuse 70%-80% of existing
    software on the KC-46 program. Although a higher reuse rate might be
    expected on a commercial derivative aircraft program, historical
    experience on military programs would typically suggest a software
    reuse rate of 20%-30%. Because of this, the KC-46 Directorate is
    focusing on software early in the program to ensure Boeing puts the
    proper emphasis on this area, especially given the modifications to the
    commercial software required to accommodate classified/unclassified
    separation, information assurance and other military capabilities. The
    program will use simulation and hardware and software integration
    laboratories to provide early indication of software effectiveness. In
    addition, the Government is driving the requirement to capture leading
    software metrics to pinpoint areas of concern such that appropriate
    expertise and resources can engage early enough to prevent significant
    impacts to the program schedule. [See page 10.]
    ?

    =======================================================================

                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                October 13, 2011

    =======================================================================

                       QUESTIONS SUBMITTED BY MR. PALAZZO

        Mr. Palazzo. Given the experience with late deliveries of Boeing's
    Italian tanker program largely due to problems with the aerial
    refueling systems and the fact that the Government has listed the KC-46
    wing pods and the fly-by-wire boom systems as major risk items, what
    process did the Government use to evaluate the readiness level of those
    key aerial refueling systems to ensure they can be developed and
    qualified in time to meet the proposed delivery schedule?
        Mr. Van Buren, General Litchfield, and General Bogdan. The RFP
    required a technology readiness level (TRL) assessment as well as an
    assessment of the risk associated with the approach. The TRL was
    assessed in accordance with the governing TRL standard. The risk was
    assessed based on technical judgment and past experience of many highly
    experienced evaluators. Boeing's design and approach was found to be
    TRL 6 or higher with an acceptable level of risk. With respect to the
    Italian tanker, Boeing's past experience produced significant lessons
    learned for the KC-46 program. For example, the issue with the wing
    pods was discovered on the Italian program which allowed Boeing to
    start mitigating the risk before contract award. The Italian program
    also provided relevant experience with boom control laws. Additionally,
    the KC-46 boom is the same shape as the KC-10 boom which allows the use
    of extensive historical data (analysis, wind tunnel, and flight test)
    to mitigate the development risk.
        Mr. Palazzo. The documents we have reviewed indicate Boeing had
    acceptable plans to meet 577 requirements. The KC-X RFP mandates 372
    mandatory requirements and the post-contract award documents indicate
    Boeing bid less than 18 non-mandatory requirements (the number EADS
    [European Aeronautic Defence and Space Company N.V.] bid) for a maximum
    of 390 requirements. What are the other requirements?
        Mr. Van Buren, General Litchfield, and General Bogdan. There are no
    additional requirements. The difference in number of requirements is
    solely due to Boeing separating single Government requirements into
    different system specification paragraphs. Breaking down requirements
    is a standard systems engineering practice. For example, if the
    Government required a capability on the ground and in-flight, Boeing
    may have two separate paragraphs--one for the capability in-flight and
    one for the capability on the ground.
        Mr. Palazzo. The schedule appears highly concurrent and compressed.
    From the materials presented we understand first flight is scheduled
    for 3Q14, followed by the initiation of the development test program in
    2Q15, and a Milestone C decision planned for 4Q15. Thus, simultaneously
    with the occurrence of the IOT&E phase (3Q16-1Q17), 14 aircraft
    production representative aircraft must be delivered in 33 months
    (August 2017). What independent tool, process, or agency did the
    Government use to determine this was only a moderate risk schedule?
        Mr. Van Buren, General Litchfield, and General Bogdan. During both
    the KC-X source selection and the post-contract award Integrated
    Baseline Review (IBR) process, the Department used independent cross-
    functional teams of subject matter experts to assess Boeing's schedule
    and test approach.
        The KC-X source selection evaluation team conducted a thorough
    evaluation of each offeror's proposal (to include each offeror's
    program schedules and test approaches), per Section M of the Request
    for Proposal, to ensure there was ``an expectation of a low to moderate
    risk of unsuccessful contract performance.'' The KC-X source selection
    evaluation team--specifically evaluated by subject matter experts from
    the KC-X program office, Air Force Flight Test Center (AFFTC), Air
    Force Operational Test and Evaluation Center (AFOTEC), AMC/TE, US Navy
    NAVAIR, Joint Interoperability Test Command (JITC), AF SEEK EAGLE
    Office (AFSEO) and reviewed by Air Force and OSD experts--concluded
    that Boeing's test schedule and test approach was acceptable, and
    therefore, represented a ``low to moderate risk of unsuccessful
    contract performance.'' These organizations and subject matter experts
    provided a cross-service, independent assessment of Boeing's schedule
    and test approach informed by experience from previous, relevant EMD
    programs.
        During the post-contract award IBR process, Boeing reiterated their
    internal baseline schedule to deliver the 18 aircraft in March of 2017,
    approximately five months earlier than contractually required. The KC-
    46 Directorate (supported by the FAA and Defense Contract Management
    Agency) again assessed Boeing's overall schedule and test approach, the
    likelihood of Boeing meeting their internal March 2017 baseline date,
    and the likelihood of Boeing meeting the contractually required August
    2017 date. The KC-46 Directorate concluded that it is likely (moderate
    risk) that Boeing will meet the contractually required August 2017
    date, but that there are four risks to the supporting schedule to
    closely manage during contract execution.
        Risk #1: In-line provisioning. Instead of building a basic
    commercial aircraft on their production line at Everett and then flying
    it down to Wichita to take it apart and install the military
    modifications on it, what they're doing is called in-line provisioning.
    In-line provisioning means that as Boeing builds the aircraft in
    Everett, they are going to do so with the wiring and the bundling and
    the fuel lines as if the military modifications were going to be fit on
    the line right there.
        For example, when Boeing builds the tail of a 767 for a commercial
    customer, the tail of that aircraft does not have a hole in it to fit a
    boom. But for the KC-46 aircraft, when the tail section of that 767-2C
    gets to Everett, it will already have the hole in it for Boeing to put
    the boom in place. So Boeing is passing down to their sub-tier
    suppliers an additional requirement to build the aircraft as if it were
    a military aircraft even though it's going to be put together on a
    commercial line. While Boeing does this quite often in different
    variants of their commercial aircraft, to do so on a military aircraft
    with military requirements and specifications increases the level of
    risk for accomplishing that work on time.
        Risk #2: FAA Certification. Boeing is going to deliver an airplane
    to the Government that is FAA certified. There are two elements to FAA
    certification. The first is an Amended Type Certification (ATC)
    associated with the commercial 767-2C. The second part of the FAA
    certification is called a Supplemental Type Certification (STC)
    associated with the military modifications that Boeing is going to put
    on the aircraft. It is typical in the commercial world to accomplish
    the ATC and STC in a serial manner. You accomplish the ATC first,
    install the military modifications, and then accomplish the STC. In
    this case, as a result of that in-line provisioning, Boeing is actually
    going to accomplish a portion of the ATC and STC concurrently. If a
    problem arises during the FAA certification on the ATC side, there is
    not a lot of time for Boeing to recover before they get to the STC
    side, which must be done before the Government can deem the aircraft
    airworthy to fly.
        The KC-46 Directorate has been working with the FAA, and the FAA
    has basically approved Boeing's process for accomplishing the ATC and
    STC effort. However, the Government and Boeing team must collectively
    work to ensure there are no major missteps in the initial ATC part,
    because that will--given the concurrency--propagate into the STC part
    of the certification.
        Risk #3: Flight Test. The test program, particularly for the aerial
    refueling certifications, will require efficient use and
    synchronization of FAA, developmental, and operational test resources
    to avoid driving additional test events, and to finish the test program
    objectives on schedule. While the KC-46 Directorate determined that
    Boeing has adequately justified their capability to achieve the
    proposed flight hours/month and effectiveness rate for FAA
    certification of the 767-2C with 65 hours/month and 85% effectiveness
    (i.e., a 15% re-fly rate), the KC-46 Directorate has some concern with
    Boeing's ability to achieve their proposed KC-46 sortie rate of 50
    hours/month and 85% effectiveness given the amount of coordination and
    synchronization with outside resources. The KC-46 Directorate is
    working with Boeing to identify resource requirements and constraints
    to mitigate this risk.
        Risk #4: Software. Boeing plans to reuse 70%-80% of existing
    software on the KC-46 program. Although a higher reuse rate might be
    expected on a commercial derivative aircraft program, historical
    experience on military programs would typically suggest a software
    reuse rate of 20%-30%. Because of this, the KC-46 Directorate is
    focusing on software early in the program to ensure Boeing puts the
    proper emphasis on this area, especially given the modifications to the
    commercial software required to accommodate classified/unclassified
    separation, information assurance and other military capabilities. The
    program will use simulation and hardware and software integration
    laboratories, solely dedicated to the KC-46 program, to provide early
    indication of software effectiveness. In addition, the Government is
    driving the requirement to capture leading software metrics to pinpoint
    areas of concern such that appropriate expertise and resources can
    engage early enough to prevent significant impacts to the program
    schedule.
        Mr. Palazzo. We understand that all 4 EMD aircraft are planned to
    be instrumented for the test phase and the IOT&E period is not
    scheduled to end until 1Q17. Presumably those 4 EMD aircraft will be
    added to the 14 LRIP aircraft to fulfill the requirement to deliver 17
    [18] aircraft within 78 months after contract award.
        A. What mechanism did the Government use to ensure these aircraft
    can be de-instrumented and modified to production representative status
    and delivered by August 2017?
        B. How does this schedule risk assessment take advantage of lessons
    learned from previous concurrent EMD schedule programs?
        C. How does the Government intend to protect the warfighter's
    interest if the contractual schedule mandate (17 [18] aircraft within
    78 months after contract award) is not met (i.e., will the Government
    seek reimbursement from the contractor to offset sustainment costs
    required to maintain the legacy tanker fleet)?
        Mr. Van Buren, General Litchfield, and General Bogdan. A. Boeing's
    schedule shows a 90-day period per EMD aircraft that occurs prior to
    IOT&E for de-instrumentation and to update to a production
    representative baseline configuration as required for IOT&E per Title
    10. After completion of IOT&E, the contract calls for these aircraft to
    reset all inspection clock times to zero and have deficiencies
    identified through IOT&E corrected to meet the final product baseline
    prior to final delivery to the Air Force.
        B. During both the KC-X source selection and the post-contract
    award Integrated Baseline Review (IBR) process, the Department used
    independent cross-functional teams of subject matter experts (SME) to
    assess Boeing's schedule and test approach. These SMEs were able to
    provide lessons learned from various concurrent EMD schedule programs
    and identify risk areas with Boeing's approach.
        The KC-X source selection evaluation team conducted a thorough
    evaluation of each offeror's proposal (to include each offeror's
    program schedules and test approaches), per Section M of the Request
    for Proposal, to ensure there was ``an expectation of a low to moderate
    risk of unsuccessful contract performance.'' The KC-X source selection
    evaluation team--specifically evaluated by subject matter experts from
    the KC-X program office, Air Force Flight Test Center (AFFTC), Air
    Force Operational Test and Evaluation Center (AFOTEC), AMC/TE, US Navy
    NAVAIR, Joint Interoperability Test Command (JITC), AF SEEK EAGLE
    Office (AFSEO) and reviewed by Air Force and OSD experts--concluded
    that Boeing's test schedule and test approach was acceptable, and
    therefore, represented a ``low to moderate risk of unsuccessful
    contract performance.'' During source selection, these organizations
    and subject matter experts provided a cross-service, independent
    assessment of Boeing's schedule and test approach informed by
    experience from previous, relevant EMD programs.
        During the post-contract award IBR process, Boeing reiterated their
    internal baseline schedule to deliver the 18 aircraft in March of 2017,
    approximately five months earlier than contractually required. The KC-
    46 Directorate (supported by the FAA and Defense Contract Management
    Agency) again assessed Boeing's overall schedule and test approach, the
    likelihood of Boeing meeting their internal March 2017 baseline date,
    and the likelihood of Boeing meeting the contractually required August
    2017 date. The KC-46 Directorate concluded that it is likely (moderate
    risk) that Boeing will meet the contractually required August 2017
    date, but that there are four risks to the supporting schedule to
    closely manage during contract execution.
        Risk #1: In-line provisioning. Instead of building a basic
    commercial aircraft on their production line at Everett and then flying
    it down to Wichita to take it apart and install the military
    modifications on it, what they're doing is called in-line provisioning.
    In-line provisioning means that as Boeing builds the aircraft in
    Everett, they are going to do so with the wiring and the bundling and
    the fuel lines as if the military modifications were going to be fit on
    the line right there.
        For example, when Boeing builds the tail of a 767 for a commercial
    customer, the tail of that aircraft does not have a hole in it to fit a
    boom. But for the KC-46 aircraft, when the tail section of that 767-2C
    gets to Everett, it will already have the hole in it for Boeing to put
    the boom in place. So Boeing is passing down to their sub-tier
    suppliers an additional requirement to build the aircraft as if it were
    a military aircraft even though it's going to be put together on a
    commercial line. While Boeing does this quite often in different
    variants of their commercial aircraft, to do so on a military aircraft
    with military requirements and specifications increases the level of
    risk for accomplishing that work on time.
        Risk #2: FAA Certification. Boeing is going to deliver an airplane
    to the Government that is FAA certified. There are two elements to FAA
    certification. The first is an Amended Type Certification (ATC)
    associated with the commercial 767-2C. The second part of the FAA
    certification is called a Supplemental Type Certification (STC)
    associated with the military modifications that Boeing is going to put
    on the aircraft. It is typical in the commercial world to accomplish
    the ATC and STC in a serial manner. You accomplish the ATC first,
    install the military modifications, and then accomplish the STC. In
    this case, as a result of that in-line provisioning, Boeing is actually
    going to accomplish a portion of the ATC and STC concurrently. If a
    problem arises during the FAA certification on the ATC side, there is
    not a lot of time for Boeing to recover before they get to the STC
    side, which must be done before the Government can deem the aircraft
    airworthy to fly.
        The KC-46 Directorate has been working with the FAA, and the FAA
    has basically approved Boeing's process for accomplishing the ATC and
    STC effort. However, the Government and Boeing team must collectively
    work to ensure there are no major missteps in the initial ATC part,
    because that will--given the concurrency--propagate into the STC part
    of the certification.
        Risk #3: Flight Test. The test program, particularly for the aerial
    refueling certifications, will require efficient use and
    synchronization of FAA, developmental, and operational test resources
    to avoid driving additional test events, and to finish the test program
    objectives on schedule. While the KC-46 Directorate determined that
    Boeing has adequately justified their capability to achieve the
    proposed flight hours/month and effectiveness rate for FAA
    certification of the 767-2C with 65 hours/month and 85% effectiveness
    (i.e., a 15% re-fly rate), the KC-46 Directorate has some concern with
    Boeing's ability to achieve their proposed KC-46 sortie rate of 50
    hours/month and 85% effectiveness given the amount of coordination and
    synchronization with outside resources. The KC-46 Directorate is
    working with Boeing to identify resource requirements and constraints
    to mitigate this risk.
        Risk #4: Software. Boeing plans to reuse 70%-80% of existing
    software on the KC-46 program. Although a higher reuse rate might be
    expected on a commercial derivative aircraft program, historical
    experience on military programs would typically suggest a software
    reuse rate of 20%-30%. Because of this, the KC-46 Directorate is
    focusing on software early in the program to ensure Boeing puts the
    proper emphasis on this area, especially given the modifications to the
    commercial software required to accommodate classified/unclassified
    separation, information assurance and other military capabilities. The
    program will use simulation and hardware and software integration
    laboratories, solely dedicated to the KC-46 program, to provide early
    indication of software effectiveness. In addition, the Government is
    driving the requirement to capture leading software metrics to pinpoint
    areas of concern such that appropriate expertise and resources can
    engage early enough to prevent significant impacts to the program
    schedule.
        C. The Air Force will hold Boeing responsible for all contractual
    obligations. If Boeing does not meet its contractual obligations--for
    example, meeting the August 2017 RAA date with 18 aircraft--due to a
    contract-caused delay, then the Government would negotiate an adjusted
    schedule with Boeing and seek appropriate consideration from Boeing for
    that change. FAR 49.402-4 provides the contracting officer with the
    ability to ``permit the contractor, the surety, or the guarantor, to
    continue performance of the contract under a revised delivery
    schedule.'' In conjunction with reaching an agreement on a revised
    delivery schedule, FAR 49.402-7 requires the contracting officer to
    promptly ``assess and demand any liquidated damages to which the
    Government is entitled under the contract.''