Defense Acquisitions: Air Force Decision to Include a Passenger
and Cargo Capability in Its Replacement Refueling Aircraft Was
Made without Required Analyses (06-MAR-07, GAO-07-367R).
The United States Air Force has described aerial refueling as a
key capability supporting the National Security Strategy and
military warfighters on a daily basis. Currently, the Air Force
uses two aircraft for aerial refueling: the KC-135 and the KC-10.
While the KC-10 fleet has an average age greater than 20 years,
the KC-135 fleet averages more than 46 years and is the oldest
combat weapon system in the Air Force inventory. Consequently,
the Air Force intends to replace or recapitalize the KC-135
first. The Air Force began its KC-135 recapitalization efforts in
fiscal year 2004, and officials presented a KC-135
recapitalization program to joint military decision makers in
November 2006. This program proposed the inclusion of a passenger
and cargo capability, which exists to some extent in the current
aircraft, in the replacement air refueling aircraft. According to
Air Force officials, the recapitalization process may cost
between $72 billion and $120 billion and will span decades. This
recapitalization takes place at a time when the Air Force faces
fiscal constraints over the next few years, forcing officials to
reconfigure the service's short- and long-term priorities in its
fiscal year 2008 budget plan. The Air Force has begun this
process by announcing the intention to reduce personnel levels by
40,000 members. GAO is currently reviewing, under the Comptroller
General's authority to conduct evaluations on his own initiative,
the Analysis of Alternatives for the recapitalization of the
KC-135 aircraft. To fully understand the Analysis of Alternatives
for the KC-135 Recapitalization, we reviewed the requirements
determination process, of which an analysis of alternatives is a
part. Specifically, GAO reviewed (1) to what extent policy and
implementing guidance were followed in identifying the passenger
and cargo capability and in assessing the associated risk of not
including that capability in the replacement refueling aircraft
proposal and (2) to what extent decision makers, who validated
and approved the capability as a requirement, relied on analyses
as specified in policy and implementing guidance and the extent
to which this reliance may affect initiation of the acquisition
program.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-367R
ACCNO: A66491
TITLE: Defense Acquisitions: Air Force Decision to Include a
Passenger and Cargo Capability in Its Replacement Refueling
Aircraft Was Made without Required Analyses
DATE: 03/06/2007
SUBJECT: Air Force procurement
Defense capabilities
In-flight refueling
Military aircraft
Military policies
Policy evaluation
Reporting requirements
Requirements definition
Risk management
Cost estimates
Program goals or objectives
KC-135 Aircraft
KC-10 Aircraft
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GAO-07-367R
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March 6, 2007
Congressional Committees
Subject: Defense Acquisitions: Air Force Decision to Include a Passenger
and Cargo Capability in Its Replacement Refueling Aircraft Was Made
without Required Analyses
The United States Air Force has described aerial refueling as a key
capability supporting the National Security Strategy and military
warfighters on a daily basis. Currently, the Air Force uses two aircraft
for aerial refueling: the KC-135 and the KC-10. While the KC-10 fleet has
an average age greater than 20 years, the KC-135 fleet averages more than
46 years and is the oldest combat weapon system in the Air Force
inventory. Consequently, the Air Force intends to replace or recapitalize
the KC-135 first. The Air Force began its KC-135 recapitalization efforts
in fiscal year 2004, and officials presented a KC-135 recapitalization
program to joint military decision makers in November 2006. This program
proposed the inclusion of a passenger and cargo capability, which exists
to some extent in the current aircraft, in the replacement air refueling
aircraft. The Air Force proposal is part of the Joint Capabilities
Integration and Development System^1 process, which uses analyses to
identify and assess such a proposal so as to inform decision makers who
must allocate scarce resources. According to Air Force officials, the
recapitalization process may cost between $72 billion and $120 billion and
will span decades.^2 This recapitalization takes place at a time when the
Air Force faces fiscal constraints over the next few years, forcing
officials to reconfigure the service's short- and long-term priorities in
its fiscal year 2008 budget plan. The Air Force has begun this process by
announcing the intention to reduce personnel levels by 40,000 members.
^1The procedures established in the Joint Capabilities Integration and
Development System (JCIDS) support the Chairman of the Joint Chiefs of
Staff and the Joint Requirements Oversight Council in identifying,
assessing, and prioritizing joint military capability needs as specified
in Title 10 of the United States Code, sections 153, 163, 167, and 181.
Chairman of the Joint Chiefs of Staff Instruction 3170.01E, Joint
Capabilities Integration and Development System, P 1 (May 11, 2005),
hereinafter referred to as CJCSI 3170.01E (May 11, 2005).
^2This cost estimate is based on information provided by Air Force
officials in congressional testimony. The cost represents the estimated
total cost of procuring 520 replacement refueling aircraft over a 38-year
period. This is based on an estimated range of current prices per plane
based on costs cited in Air Force testimony, February, 2006.
Because of broad congressional interest, we are currently reviewing, under
the Comptroller General's authority to conduct evaluations on his own
initiative, the Analysis of Alternatives for the recapitalization of the
KC-135 aircraft.^3 To fully understand the Analysis of Alternatives for
the KC-135 Recapitalization, we reviewed the requirements determination
process, of which an analysis of alternatives is a part. The purpose of
this report is to bring to your attention issues concerning the adequacy
of Department of Defense (DOD) analyses used to determine the requirements
for a refueling aircraft with passenger and cargo capabilities, for which
a contract is to be awarded late in fiscal year 2007. Specifically, we
reviewed (1) to what extent policy and implementing guidance were followed
in identifying the passenger and cargo capability and in assessing the
associated risk of not including that capability in the replacement
refueling aircraft proposal and (2) to what extent decision makers, who
validated and approved the capability as a requirement, relied on analyses
as specified in policy and implementing guidance and the extent to which
this reliance may affect initiation of the acquisition program.^4
On December 15, 2006, we briefed congressional staff on our preliminary
observations. This letter expands on the information discussed in that
briefing and includes recommendations to the Secretary of Defense. We plan
to complete our review of the Analysis of Alternatives and report the
results in early summer 2007.
To conduct our evaluation, we reviewed documents containing analyses
supporting decision making in the DOD requirements process. This involved
a review of joint and service policies and implementing guidance that form
a framework for DOD's capability-based planning processes. We also
reviewed DOD's Mobility Capabilities Study and service concepts of
operations concerning air mobility and aerial refueling as well as the
RAND Analysis of Alternatives for KC-135 Recapitalization and the
corresponding DOD reviews of the Analysis of Alternatives. To assess the
DOD recapitalization proposal, we reviewed DOD and Air Force key documents
and analyses. Furthermore, we interviewed officials from the Office of the
Under Secretary of Defense for Acquisition, Technology and Logistics, the
Joint Staff, Headquarters Air Force, U.S. Transportation Command, Air
Mobility Command, Air Force Office of Aerospace Studies, and RAND
Corporation. We also interviewed officials directly involved with
presentations made to the Air Force Requirements for Operational
Capabilities Council and to the Joint Requirements Oversight Council. We
performed our work between May and December 2006 in accordance with
generally accepted government auditing standards.
^3According to Air Force implementing guidance, this is an analysis that
helps decision makers select the most cost-effective alternative to
satisfy an operational capabilities-based requirement. An Analysis of
Alternatives is also an analysis of operational effectiveness and
estimated life-cycle costs for alternative materiel systems. Air Force
Instruction 10-601, Capabilities-Based Requirements Development, P 4.4.1
(July 31, 2006), hereinafter cited as AFI 10-601 (May 31, 2006).
^4In policy and implementing guidance concerning capabilities-based
assessments, the words needs and requirements are used interchangeably.
For purposes of this report, we use the term capability to mean the
military ability to achieve a desired effect by performing a set of tasks
under specified standards and conditions. Also for purposes of this
report, the term requirement means a system capability or characteristic
required to accomplish approved mission needs.
The passenger and cargo capability proposed for the replacement refueling
aircraft is one of a number of proposed capabilities and this review was
limited to this single capability.
Results in Brief
Mandatory Air Force policy requires Air Force organizations to use a
formal capabilities-based approach to identify, evaluate, develop, field,
and sustain capabilities that compete for limited resources. Contrary to
mandatory Air Force implementing guidance, however, the Air Force proposal
for a replacement refueling aircraft included a passenger and cargo
capability without analyses identifying an associated gap, shortfall, or
redundant capability. According to mandatory Air Force implementing
guidance, analyses supporting the decision-making process should assess a
capability based on the effects it seeks to generate and the associated
operational risk of not having it. In this case, the supporting analyses
determined neither need nor risk with regard to a passenger and cargo
capability. Air Force officials could not provide supporting information
sufficient to explain this discrepancy between the analyses and their
proposal. Without sound analyses, the Air Force may be at risk of spending
several billion dollars unnecessarily for a capability that may not be
needed to meet a gap or shortfall.
Military decision makers approved the passenger and cargo capability as a
requirement although supporting analyses identified no need or associated
risk. Mandatory Air Force implementing guidance states that senior leaders
must use the documented results of analyses to confirm the identified
capability requirement. The Air Force Requirements for Operational
Capabilities Council validated, and the Chairman of the Joint Chiefs of
Staff's Joint Requirements Oversight Council validated and approved, the
replacement refueling aircraft proposal with a passenger and cargo
capability. Following this approval of the oversight councils, DOD plans
to solicit proposals and award a contract for the replacement of the
refueling aircraft late in fiscal year 2007. However, including a
passenger and cargo capability without analyses identifying an associated
gap or shortfall could preclude the certification of the program by the
Under Secretary of Defense, Acquisition, Technology and Logistics to
Congress. Without this certification, the acquisition program for the
replacement refueling aircraft cannot begin.
Accordingly, we are recommending that the Secretary of Defense direct the
Secretary of the Air Force to accomplish the required analyses that
evaluate the proposed passenger and cargo capability so as to determine if
there is a gap, shortfall, or redundancy, assess the associated risk, and
then submit such documentation to the Joint Requirements Oversight Council
for validation. Once these analyses are completed, we also recommend that
the Secretary of Defense direct the Chairman, Joint Chiefs of Staff, to
formally notify the Under Secretary of Defense for Acquisition, Technology
and Logistics that such analyses have been completed as required prior to
certification of the program to Congress.
In written comments on a draft of this report, DOD disagreed with our
recommendation to accomplish the required analyses to establish if there
is a gap, shortfall, or redundancy and assess associated risks concerning
the proposed passenger and cargo capability in the replacement refueling
aircraft. DOD stated that through the Joint Capabilities Integration and
Development System process, the Air Force presented analysis and rationale
for the passenger and cargo capability. DOD further stated that its Joint
Requirements Oversight Council and the Air Force concluded that the
analysis was sufficient justification for the capability and the Joint
Requirements Oversight Council validated the requirement. However, as our
report points out, DOD did not perform the required analyses and failed to
identify a gap, shortfall, or redundancy for the passenger and cargo
capability. DOD agreed with our recommendation to formally notify the
Under Secretary of Defense for Acquisition, Technology and Logistics once
the required analyses have been completed. DOD stated that the Under
Secretary of Defense for Acquisition, Technology and Logistics will
consider whether the Joint Requirements Oversight Council has accomplished
its duties with respect to the program, including an analysis of the
operational requirements of the program. DOD also stated that the
Department would again review the justification for a passenger and cargo
capability prior to making a decision to initiate the acquisition program.
However, DOD did not offer assurance that, as we recommended, the Air
Force would accomplish the required analyses to determine if there is a
gap, shortfall, or redundancy, assess the associated risk, and then submit
such documentation to the Joint Requirements Oversight Council for
validation. We continue to believe that our recommendations have merit and
that the analyses required by mandatory guidance are necessary to inform
the decision that begins the acquisition program.
In light of the DOD comments, we have added a matter for congressional
consideration to this report that suggests the Congress require that
o in addition to the certification described by section 2366a of
title 10, United States Code, the Under Secretary of Defense for
Acquisitions, Technology and Logistics make a specific
certification that the Air Force employed a sound, traceable, and
repeatable process producing analyses that determined if there is
a gap, shortfall, or redundancy and assessed the associated risk
with regard to passenger and cargo capability for the KC-135
Recapitalization, and
o consistent with service policy, these analyses are made
available to the Joint Requirements Oversight Council prior to the
Under Secretary's certification of the program pursuant to section
2366a of title 10, United States Code.
DOD's comments are reprinted in enclosure I and our evaluation of the
comments begins on page 12 of this letter.
Background
With the use of its capabilities-based assessment system, DOD compares
what the military has with what the military needs as it considers what it
will buy. The military identifies and prioritizes these needs and proposes
solutions or capabilities that address a capability gap or shortfall. A
capability gap or shortfall is the military inability to achieve a desired
effect by performing a set of tasks under specified standards and
conditions. The gap may be the result of having no existing capability or
lack of proficiency or sufficiency in an existing capability. When
capabilities are validated and approved, they become requirements in the
defense acquisition system. The KC-135 recapitalization, seeking a
replacement refueling aircraft for the Air Force, has proceeded under this
capabilities-based approach.^5
In a capabilities-based approach, establishing the requirements for the
replacement refueling aircraft involves consideration of capabilities
beyond those of the current aircraft fleet. As described by DOD, the
capabilities-based approach replaces the process of building plans,
operations, and doctrine around an individual military weapon system as
often occurred in the past.^6 Instead, the capabilities-based approach
requires that officials explicitly link the acquisition to appropriate and
needed capabilities. For example, although the current KC-135 and the
KC-10 refueling aircraft have a cargo and passenger capability, a
replacement refueling aircraft proposal may or may not have such a
capability, depending on needs of the warfighter and the supporting
analyses. Air Force officials told us that based on this existing
capability, they foresaw a need for the inclusion of a similar capability
and included the passenger and cargo capability. However, in a
capabilities-based approach, needs must be supported by analyses.
Therefore, the inclusion of a passenger and cargo capability in the
current proposal should not depend on what occurred in the past but what
will be needed in the future.
In our previous reporting concerning acquisition outcomes and best
practices, we have noted the importance of matching warfighter
requirements with available resources, a responsibility shared by the
acquisition and requirements communities in DOD. As described in Air Force
implementing guidance, there is within DOD a distinct separation between
the requirements authority and acquisition authority.^7 Under this
guidance, this separation requires early and continued collaboration
between both communities in order for the Joint Capabilities Integration
and Development System process and acquisition process to work
effectively. Mandatory Air Force implementing guidance describes the
process of analyzing and prioritizing capabilities as establishing a
common understanding of how a capability will be used, who will use it,
when it is needed, and why it is needed. The guidance further describes
that each capability, such as the passenger and cargo capability of the
replacement refueling aircraft, is to be assessed based on the effects it
seeks to generate and the associated operational risk of not having it. To
avoid the risk of unnecessary spending on an unneeded capability, service
guidance envisions fielding affordable and sustainable operational
capability needed by the warfighter.
Mandatory Air Force policy and guidance implement the Joint Capabilities
and Integration and Development System, which includes analyses performed
by the military service and oversight by both service and joint oversight
councils. The Air Force, as sponsor of the KC-135 recapitalization,
participates in the Joint Capabilities Integration and Development System
process, which is intended to identify, assess, and prioritize needed
joint military capabilities and associated risks. Mandatory Air Force
guidance states that Air Force capabilities-based planning employs an
analytically sound, repeatable, and traceable process to identify
capability needs.^8 The Air Force Requirements for Operational
Capabilities Council, an instrument of the Air Force Chief of Staff and
Secretary of the Air Force, reviews, validates, and recommends approval of
all Air Force capabilities based requirements.^9 After Air Force
validation, the Chairman's Joint Requirements Oversight Council,
responsible for reviewing military acquisitions, approves and validates
warfighting capabilities.^10 From a requirements standpoint, final
approval of a proposal rests at the level of the Chairman of the Joint
Chiefs of Staff.
^5In an interview regarding the Air Force briefing to the Joint
Requirements Oversight Council, a senior DOD official told us the
refueling recapitalization program is proceeding under a
capabilities-based approach.
^6Prior to this new capabilities-based approach, DOD used a threat- and
risk-based process to determine requirements. While threat is no longer
the driving factor in determining requirements, risk management is still
part of DOD acquisition strategy.
^7AFI 10-601, Capabilities-Based Requirements Development, P 1.2 (July 31,
2006).
Following Air Force validation and joint approval, the Under Secretary of
Defense for Acquisition, Technology and Logistics, who supervises DOD
acquisition,^11 must certify, as Milestone Decision Authority for the
proposed refueling recapitalization, that the requirements community has
accomplished its statutory duties and that the proposed program is in
compliance with DOD policies and regulations.^12 Absent this
certification, the acquisition program for the replacement refueling
aircraft cannot begin.^13
In our prior reviews, we produced a number of products concerning aerial
refueling requirements and related capabilities such as passenger and
cargo capacity. In our August 1996 report, U.S. Combat Air Power: Aging
Refueling Aircraft Are Costly to Maintain and Operate, we recommended
consideration of a dual-use aircraft that could conduct both aerial
refueling and airlift operations as a replacement for the KC-135.^14 We
recommended that the Secretary of Defense require that future studies and
analyses of replacement airlift and tanker aircraft consider accomplishing
the missions with a dual-use aircraft. DOD only partially concurred with
this recommendation, expressing concern at that time about how a dual-use
aircraft would be used and whether one mission area might be degraded to
accomplish the second mission. In our June 2004 report, Military Aircraft:
DOD Needs to Determine Its Aerial Refueling Aircraft Requirements, we
recommended conducting a study to establish air refueling requirements and
we also recommended that a comprehensive analysis of alternatives be
conducted in support of the recapitalization of the KC-135.^15 DOD
concurred with this recommendation. The current proposal for
recapitalization of the KC-135 considers a multirole aircraft, establishes
air refueling requirements, and includes an analysis of alternatives.
^8Air Force Instruction 10-604, Capabilities-Based Planning, P 1.1.1 (May
10, 2006), hereinafter cited as AFI 10-604 (May 10, 2006).
^9AFI 10-601, P 2.3.5.1 (July 31, 2006).
^10AFI 10-601, P 2.3.5.2 (July 31, 2006).
^1110 U.S.C. S133 (b)(1) (2006).
^1210 U.S.C. S 2366a (a) (7) and (a)(10) (2006).
^1310 U.S.C. S 2366a (a) (2006) and Department of Defense Instruction
5000.2, Operation of the Defense Acquisition System, P 3.7.1.2 (May 12,
2003), hereinafter cited as DODI 5000.2 (May 12, 2003).
^14GAO, U.S. Combat Air Power: Aging Refueling Aircraft Are Costly to
Maintain and Operate, GAO/NSIAD-96-160 (Washington, D.C.: Aug. 8, 1996).
^15GAO, Military Aircraft: DOD Needs to Determine Its Aerial Refueling
Aircraft Requirements, GAO-04-349 (Washington, D.C.: June 4, 2004).
Air Force Analyses Did Not Identify a Need for Passenger and Cargo
Capability as Required by Policy
Mandatory Air Force policy requires Air Force organizations to use a
formal capabilities-based approach to identify, evaluate, develop, field,
and sustain capabilities that compete for limited resources.^16 According
to DOD officials, the KC-135 recapitalization has proceeded under a
capabilities-based approach. Contrary to Air Force implementing guidance,
however, the Air Force's proposal for a replacement refueling aircraft
included a passenger and cargo capability without analyses identifying an
associated gap, shortfall, or a redundant capability. According to
mandatory Air Force implementing guidance, analyses supporting the
decision-making process should assess a capability based on the effect it
seeks to generate and the associated operational risk of not having it.^17
However, in this case, the supporting analyses determined neither need nor
risk. Air Force officials could not provide information explaining this
discrepancy between the analyses and their proposal. The four analyses
that might have established the passenger and cargo requirement are the
Capabilities Review and Risk Assessment, the Functional Area Analysis, the
Functional Needs Analysis, and the DOD Mobility Capabilities Study.
Mandatory Air Force policy directs the use of a Capabilities Review and
Risk Assessment as a capabilities-based planning process that is
traceable, repeatable, and defensible to identify Air Force-wide
capability shortfalls, gaps, and areas for further study.^18 According to
mandatory Air Force implementing guidance, senior leaders use these
findings to make comprehensive decisions that will yield the best results
for the Air Force and joint warfighter.^19 The Air Force conducted a
Capabilities Review and Risk Assessment examining the Air Force concepts
of operations to determine if a capability gap or shortfall existed and
the assessment did not report a passenger and cargo capability gap to be
addressed by an air refueling aircraft.^20
The Functional Area Analysis and the Functional Needs Analysis are related
assessments and both are a part of the Joint Capabilities Integration and
Development System. According to mandatory Air Force implementing
guidance, the Functional Area Analysis documents the military tasks needed
to achieve military objectives.^21 The Functional Area Analysis for the
replacement refueling aircraft does not identify movement of passengers
and cargo as a required task of the proposed refueling replacement
aircraft. Mandatory Air Force implementing guidance also describes
follow-on analysis, the Functional Needs Analysis, which compares the
capability needs to the capabilities provided by existing or planned
systems and identifies the gaps/shortfalls or redundancies.^22 Additional
mandatory Air Force implementing guidance states that if the Functional
Needs Analysis identifies a shortfall, Air Force planners must determine
the consequence to the Air Force of having a specific amount of capability
and the likelihood that the shortfall will have an adverse effect on the
Air Force's ability to achieve desired effects for a given time period.^23
The Functional Needs Analysis for the replacement tanker aircraft does not
document a passenger and cargo capability gap or shortfall and made no
mention of the consequence to the Air Force of having or not having this
capability or the likelihood that a shortfall will have an adverse effect
on the Air Force.
^16Air Force Policy Directive 10-6, Capabilities-Based Planning and
Requirements Development, P 1 (May 31, 2006), hereinafter cited as AFPD
10-6 (May 31, 2006).
^17AFI 10-601, P 1.2 (July 31, 2006).
^18AFPD 10-6, P 1.1 (May 31, 2006).
^19AFI 10-604, P 3.1.4 (May 10, 2006).
^20The Global Mobility Concept of Operations describes the primary mission
of air refueling as providing worldwide, day/night, adverse weather,
probe/drogue, and boom air refueling on the same sortie to
receiver-capable U.S., allied, and coalition military aircraft (including
unmanned aircraft). Refueling aircraft are employed to support global
attack, air bridge, deployment, redeployment, homeland defense, and
theater support to joint, allied, and coalition air forces, and
specialized national defense missions. They also are used to support
special operations and U.S. nuclear forces.
^21AFI 10-604, P 3.1.4.2 (May 10, 2006).
In 2004, the Department of Defense identified the Mobility Capabilities
Study as an effort to determine, among other things, refueling
requirements and recapitalization needs.^24 The Mobility Capabilities
Study executive summary stated the analysis conducted by the study
addressed five objectives including identifying mobility capability gaps,
overlaps, or excesses and providing associated risk assessments.^25
However, when the report of the Mobility Capabilities Study was released
in 2005, it did not identify a passenger and cargo gap or shortfall,
concluding instead that combined U.S. and host nation transportation
assets were adequate to meet U.S. objectives with acceptable risk. The
study did note that a passenger- and cargo-capable refueling aircraft
could be used in a secondary mission role when not being used in its
primary mission. However, the Mobility Capabilities Study also identified
a refueling aircraft shortfall in all refueling-required scenarios but one
and concluded that the number of aircraft needed to satisfy refueling
needs ranges from 520 to 640 total aircraft, a range that exceeds the
current Air Force inventory of 590 refueling aircraft.^26 A possible
shortage of refueling aircraft under some circumstances raises questions
about the ability to employ a refueling aircraft in a passenger and cargo
role and underscores the importance of analyses to guide decision-makers
concerning a refueling replacement aircraft. Additionally, DOD previously
expressed concern that a tanker with a passenger and cargo capability
could inappropriately degrade the air refueling mission of the aircraft
and concluded that such an option could only be accepted if supported by
analyses.^27
Mandatory Air Force implementing guidance governing the capabilities-based
planning analyses discussed above states that capabilities-based planning
employs an analysis process that identifies, assesses, and prioritizes
needed military capabilities.^28 These four analyses did not identify a
passenger and cargo capability
gap, did not establish that such a capability would represent a
redundancy, and did not assess the risk of not acquiring such a
capability. Without sound analyses, the Air Force may be at risk of
spending several billion dollars unnecessarily for a capability that may
not be needed to meet a gap or shortfall.
^22 AFI 10-601, P 2.2.1 (July 31, 2006).
^23AFI 10-604, P 3.1.4.3 (May 10, 2006).
^24GAO-04-349, app. II, p. 34.
^25Department of Defense Mobility Capabilities Study, Executive Summary,
Sec. II, p. 2 (December 2005).
^26The inventory of 590 air refueling aircraft comprises 114 KC-135Es, 417
KC-135Rs, and 59 KC-10 aircraft.
^27GAO/NSIAD-96-160, app. I, p. 41.
^28Capabilities-based analyses that identify, assess, and prioritize
include the Functional Needs Analysis, Functional Area Analysis, and the
Capabilities Review and Risk Analysis. AFI 10-604, PP 1.1.1 and 3.1.4 (May
10, 2006). The Mobility Capabilities Analyses 2005 shared this objective
of identifying mobility capability gaps, overlaps, or excesses and
providing associated risk assessment. Department of Defense Mobility
Capability Study, Executive Summary, section II, p. 2.
Military Decision Makers Approved the Capability with Neither an
Identified Need nor Risk Assessment
Military decision makers approved the passenger and cargo capability as a
requirement although supporting analyses identified neither need nor risk.
According to mandatory Air Force implementing guidance, the validation
phase of the requirements determination process is the formal review
process of a capabilities-based requirements document by the Air Force
Requirements for Operational Capabilities Council or Chairman's Joint
Requirements Oversight Council to confirm the capability need and
operational requirement.^29 The Air Force Requirements for Operational
Capabilities Council validated and the Chairman's Joint Requirements
Oversight Council validated and approved the replacement refueling
aircraft proposal with a passenger and cargo capability.
The Air Force Requirements for Operational Capabilities Council is the
oversight body established to validate and recommend approval or
disapproval of Air Force-sponsored proposals and requirements documents.
This instrument of the Air Force Chief of Staff and Secretary of the Air
Force first reviewed and then validated the proposal for a passenger and
cargo capability in the replacement refueling aircraft. According to
mandatory Air Force implementing guidance, the Air Force Requirements for
Operational Capabilities Council ensures Air Force capabilities-based
requirements documentation is prepared in accordance with Air Force and
joint guidance, complies with established standards, and accurately
articulates valid Air Force capabilities-based requirements.^30 Although
there was neither an identified need nor a risk assessment that supported
inclusion of the passenger and cargo capability in the replacement
refueling aircraft, the Air Force Requirements for Operational
Capabilities Council validated the proposal in July 2006 and forwarded it
for Joint Requirements Oversight Council consideration.
The Chairman of the Joint Chiefs uses the Joint Requirements Oversight
Council to help fulfill his statutory responsibility to provide advice to
the Secretary of Defense on requirements prioritization.^31 The Vice
Chairman of the Joint Chiefs of Staff, on behalf of the Chairman, presides
over the Joint Requirements Oversight Council and, in this role, assists
the Chairman in identifying and assessing the priority of joint military
requirements (including existing systems and equipment) to meet the
national military and defense strategies.^32 According to joint policy,
Joint Capabilities Integration and Development System procedures support
the Chairman and Joint Requirements Oversight Council in identifying,
assessing, and prioritizing needed joint military capabilities and
conducting risk assessments.^33 In November of 2006, the Joint
Requirements Oversight Council met, validated, and approved the passenger
and cargo capability without the supporting analyses that identified a
passenger and cargo need or an associated risk. Officials acknowledged
that analyses that might have established the need and might have assessed
the risk were not used in the Chairman's oversight council. Officials
stated that decision makers used military judgment as the basis to include
the passenger and cargo capability in the proposal for the replacement
refueling aircraft. In our review of relevant DOD policy and guidance, we
found mandatory Air Force guidance describing a capabilities-based process
that incorporates subjective operational expertise in combination with
objective analysis.^34 However, we found decision makers did not use
objective analysis in combination with their judgment as required.^35 By
including a passenger and cargo capability in the replacement refueling
aircraft without supporting analyses that identify need and assess
associated risk, the Air Force may be at risk of spending several billion
dollars unnecessarily and DOD may not be able to certify the program as
required by statute.
^29AFI 10-601, P 2.3.5 (July 31, 2006).
^30AFI 10-601, P 3.4 (July 31, 2006).
^3110 U.S.C. S 153 (a)(4)(A) and 10 U.S.C. S 181 (b)(1) (2006) and
Chairman of the Joint Chiefs of Staff Instruction 5123.01B, Charter of the
Joint Requirements Oversight Council, Encl. A-1.
^3210 U.S.C. S 181 (b)(1) (2006).
^33Chairman of the Joint Chiefs of Staff Instruction 3170.01E, P 1 (May
11, 2005) and 5123.01B, Charter of the Joint Requirements Oversight
Council, Encl. A P 2e(15), p. A-6 (April 15, 2004).
The lack of analyses identifying and supporting the passenger and cargo
capability affects the acquisition program directly. The Air Force intends
to replace the fleet of more than 500 KC-135s, and the Mobility
Capabilities Study of 2005 set the requirement for KC-135s at a range of
between 520 to 640 aircraft. Replacement of this fleet is estimated to
cost a minimum of $72 billion. Compared to a refueling aircraft without a
passenger and cargo capability, the inclusion of the capability is
estimated to increase costs by 6 percent. The Joint Requirements Oversight
Council approval of the proposal of a replacement refueling aircraft with
the passenger and cargo capability, without an established need supported
by analyses and without an analysis of risk, could result in an
unnecessary expenditure of at least $4.3 billion by our estimates.
Lack of analyses may also affect initiation of the acquisition program.
Pursuant to statute, the Under Secretary of Defense for Acquisition,
Technology and Logistics must certify the program before initiation of an
acquisition program.^36 Among other items, this certification must include
that (1) the Joint Requirements Oversight Council has accomplished its
duties including an analysis of operational requirements and (2) the
KC-135 refueling replacement aircraft program complies with DOD policies,
regulations, and directives. Although responsible for reviewing and
approving military needs, the Joint Requirements Oversight Council
approved a capability that was not associated with a capability gap or
shortfall, contrary to policy and implementing guidance. This could
preclude certification of the program by the Under Secretary of Defense
for Acquisition, Technology and Logistics. Without this certification, the
acquisition program for the replacement refueling aircraft cannot
begin.^37
34AFI 10-601, P 1.4.1 (July 31, 2006).
^35Air Force Instruction 10-601 (July 31, 2006) also describes, at P
1.4.3, the concept of Top-Down Direction, whereby higher authority, such
as the Chief of Staff of the Air Force, may direct a sponsor to initiate
the development and fielding of a new capability. Even if Top-Down
Direction were used in this case, the sponsor would still be responsible
for conducting appropriate analysis and producing the capabilities-based
documents, pursuant to the mandatory guidance at AFI 10-601, P 1.4.3.
^3610 U.S.C. S 2366a (a) (2006).
^3710 U.S.C. S 2366a (2006) and DODI 5000.2 P 3.7.1.2 (May 12, 2003).
Conclusions
DOD and the military services are facing significant budgetary pressures
as they determine the necessary equipment and personnel to meet varied and
demanding missions. As we noted earlier in our report, the Air Force is
faced with fiscal constraints and is considering reducing its personnel by
tens of thousands. While funding these budgetary and personnel issues, the
Air Force has indicated that its top acquisition priority is replacement
of the KC-135 aerial refueling aircraft.^38 Additionally, the Air Force
has decided that the replacement aircraft is to include a passenger and
cargo capability. However, it has reached the decision to add this
capability without the benefit of supporting analyses that identified need
and assessed associated risk.
Accomplishing required analyses informs decision making and it is
consistent with current Air Force policy. Mandatory Air Force implementing
guidance states each capability is to be assessed on the effects it seeks
to generate and the associated operational risk of not having it.
Additionally, the Air Force recognizes the importance of policies that
accurately determine requirements in an environment of limited resources
to achieve the greatest Air Force capability.^39 Accomplishing the
required analyses related to the passenger and cargo capability in the
replacement refueling aircraft informs decision making, complies with
mandatory Air Force policy and implementing guidance, and may avoid
unnecessary expenditures for capability that may be unneeded.
Recommendations for Executive Action
We recommend that the Secretary of Defense direct the Secretary of the Air
Force to accomplish the required analyses that evaluate the proposed
passenger and cargo capability so as to determine if there is a gap,
shortfall, or redundancy, assess the associated risk, and then submit such
documentation to the Joint Requirements Oversight Council for validation.
Once these analyses are completed, we also recommend that the Secretary of
Defense direct the Chairman, Joint Chiefs of Staff, to formally notify the
Under Secretary of Defense for Acquisition, Technology and Logistics that
such analyses have been completed as required prior to certification of
the program to Congress.
^38In October 2006, the Chief of Staff of the Air Force identified the
service's top five procurement priorities as follows: (1) replacement
refueling aircraft, (2) combat rescue helicopter, (3) space-based early
warning and communications satellites, (4) the F-35 (Lightning II), and
(5) the next-generation long-range strike bomber.
^39Air Force Policy Directive 16-5, Planning, Programming, and Budgeting
System, P 1 (29 July 1994).
Matter for Congressional Consideration
The Congress should consider requiring that:
o in addition to the certification described by section 2366a of
title 10, United States Code, the Under Secretary of Defense for
Acquisitions, Technology and Logistics make a specific
certification that the Air Force employed a sound, traceable, and
repeatable process producing analyses that determined if there is
a gap, shortfall, or redundancy and assessed the associated risk
with regard to passenger and cargo capability for the KC-135
Recapitalization, and
o consistent with service policy, these analyses are made
available to the Joint Requirements Oversight Council prior to the
Under Secretary's certification of the program pursuant to section
2366a of title 10, United States Code.
Agency Comments and Our Evaluation
In written comments on a draft of this report, DOD did not agree with one
recommendation but agreed with a second recommendation. DOD's comments are
included as enclosure I at the end of this report.
DOD disagreed with our recommendation to accomplish the required analyses
to establish if there is a gap, shortfall, or redundancy and assess
associated risks concerning the proposed passenger and cargo capability in
the replacement refueling aircraft. In its comments, DOD stated that
through the Joint Capabilities Integration and Development System process,
the Air Force presented analysis and rationale for the passenger and cargo
capability. DOD further stated that its Joint Requirements Oversight
Council and the Air Force concluded that the analysis was sufficient
justification for the capability and the Joint Requirements Oversight
Council validated the requirement. However, as our report points out, DOD
did not perform the required analyses and failed to identify a gap,
shortfall, or redundancy for the passenger and cargo capability. When
interviewed, Joint Requirements Oversight Council officials told us that
no analysis identifying a need for a passenger and cargo capability was
presented to the Council. Required analyses should establish an
understanding of when and why a capability is needed and the risk of not
having it. No such analysis was available to the Joint Requirements
Oversight Council. Considering the requirement for analyses that separate
needs from wants and the risk of unnecessary expenditures in this
multi-year multi-billion dollar acquisition program, we continue to
believe that our recommendation has merit and that the analyses required
by mandatory guidance are necessary to inform the decision that begins the
acquisition program.
DOD agreed with our recommendation to formally notify the Under Secretary
of Defense for Acquisition, Technology and Logistics once the required
analyses have been completed. Acknowledging the responsibility established
in section 2366a of title 10, United States Code, DOD stated that the
Under Secretary of Defense for Acquisition, Technology and Logistics will
consider whether the Joint Requirements Oversight Council has accomplished
its duties with respect to the program, including an analysis of the
operational requirements of the program. DOD also stated that the
Department would again review the justification for a passenger and cargo
capability prior to making a decision to initiate the acquisition program.
However, DOD did not offer assurance that, as we recommended, the Air
Force would accomplish the required analyses to determine if there is a
gap, shortfall, or redundancy, assess the associated risk, and then submit
such documentation to the Joint Requirements Oversight Council for
validation. We believe that the time it could take to accomplish the
required analyses and submit the analyses for revalidation by the Joint
Requirements Oversight Council, could delay the Under Secretary's
certification until just prior to the Milestone B decision, and may
frustrate the congressional oversight that would otherwise be permitted
under section 2366a.^40 We believe that in a program committing $120
billion over several decades, the review confirming that needs are
justified should occur as far in advance of program initiation as
possible.
We continue to believe that by including a passenger and cargo capability
in the replacement refueling aircraft without required analyses that
identify need and assess associated risk, the Air Force is at risk of
spending several billion dollars unnecessarily. We also believe, as
reported, that the absence of analyses identifying a capability gap,
shortfall, or redundancy, and the Joint Requirements Oversight Council
approval of the program without these analyses is contrary to policy and
implementing guidance and could preclude certification of the program by
the Under Secretary of Defense for Acquisition, Technology and Logistics.
In light of the DOD comments on our report, we are proposing a matter for
congressional consideration.
- - - -
We are sending copies of this report to other interested congressional
committees; the Secretary of Defense; the Under Secretary of Defense,
Acquisition, Technology and Logistics; the Secretary of the Air Force, and
the Director, Office of Management and Budget. Copies of this report will
also be made available to others upon request. In addition, this report
will be available at no charge on the GAO Web site at http://www.gao.gov.
^40 In respect to acquisition programs, milestones are established in DODI
5000.2 and are the points where a recommendation is made and approval is
sought regarding starting or continuing a program into the next phase. In
this instance, the decision at Milestone B is to enter into the system
development and demonstration phase pursuant to guidance prescribed by the
Secretary of Defense and to begin the acquisition program.
If you have any questions regarding this report, please contact me at
(202) 512-8365 or [email protected] . Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made major contributions to this report
include Ann Borseth, Assistant Director; Grace Coleman; Oscar Mardis;
Karen Thornton; and Steve Woods.
William M. Solis, Director
Defense Capabilities and Management
Enclosure
List of Congressional Committees
The Honorable Carl Levin
Chairman
The Honorable John McCain
Ranking Minority Member
Committee on Armed Services
United States Senate
The Honorable Daniel K. Inouye
Chairman
The Honorable Ted Stevens
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate
The Honorable Ike Skelton
Chairman
The Honorable Duncan L. Hunter
Ranking Minority Member
Committee on Armed Services
House of Representatives
The Honorable John P. Murtha
Chairman
The Honorable C.W. Bill Young
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives
(350973)
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