Technology Outpaces Procurement Process

For years, one of the biggest challenges to the Air Force's goal of modernizing its aircraft has been instability in funding-the unplanned reprogramming of budgets at the behest of Congress, the Defense Department or even the Air Force itself that results in unexpected expenses for contractors and suppliers, driving up the costs of weapons.

But now technology is turning out to be just as formidable a cost driver. Technology is changing so rapidly that the Air Force says it simply cannot field equipment fast enough.

The F-22 stealth fighter is a case in point, says Lt. Gen. George Muellner, principal deputy assistant secretary of the Air Force for acquisition. The tactical aircraft is being developed by Lockheed Martin to replace the Air Force's existing fleet of F-15 fighters. "We're fielding an airplane [F-22] that has parts on it that we're spending a significant amount of money to engineer out of the design because they're already out of production," Muellner says.

"A number of years ago we decided we were going to use an Intel processor, the commercial market standard. We had Intel work with us and define what that commercial processor was going to be, and we're three generations beyond that already and we have yet to field the airplane," Muellner says.

The problem is not confined to new weapons systems. The Air Force's high operating tempo is wearing out current weapons and further driving up modernization costs on existing equipment. "Things like the F-15s and F-16s are costing more to fly because of the fact that avionics in the past existed for 20 to 30 years relatively constantly and now the technology, and therefore the industrial base that underpins it, turns over with much-reduced cycles," Muellner says. "On the [electronic] side, you have a generational turnover every 18 months to two years."

Fighter Outlook

The Clinton administration has requested $785 million for the first two production F-22s, plus $26 million for initial spares and $1.5 billion for continued research and development. The program is expected to cost $11.7 billion through 2003; the Air Force intends to achieve a production rate of 36 aircraft per year by 2004.

The F-22 suffered a setback earlier this year when the General Accounting Office raised concerns about program costs and manufacturing process problems encountered by Lockheed Martin. GAO recommended the Pentagon delay purchasing the first two production aircraft for a year because testing of the fighter is months behind schedule due to delays in engineering and manufacturing the plane's wings and fuselage. GAO contended testing delays have limited the amount of information available to support the Air Force's plans to begin production of the F-22 in 1999.

Jacques Gansler, undersecretary of Defense for acquisition and technology, says delaying the program would disrupt Lockheed Martin's agreements with subcontractors and significantly raise program costs. Instead, he decided to continue with the current schedule but delay making a final low-rate production decision until December 1999.

"There's no reason not to continue on with [the program], given the fact that we haven't had any flight problems or anything of the sort," Gansler says. "This is not a troubled program. What we're trying to do is gain higher confidence in the product before releasing it to production."

The administration's 1999 budget request also includes $919.5 million for the next-generation Joint Strike Fighter, with $463 million coming from the Air Force procurement budget and $456 million coming from the Navy. The JSF will continue its concept demonstration phase into 2001, when contractors Lockheed Martin and Boeing Co. will compete for production of the fighter, which is scheduled to begin in 2005.

Prior to the Quadrennial Defense Review, the Pentagon's blueprint for reform published last year, the Air Force, Navy and Marine Corps together planned to purchase 2,978 Joint Strike Fighters. The QDR recommended the services purchase 2,852 aircraft, unless the program encountered difficulties such as cost overruns, technical problems or schedule delays.

But the services may scale back their orders even if the program doesn't run into trouble. Members of the National Defense Panel, an independent group of experts charged with reviewing the QDR, recommended late last year that Congress consider scaling back the Pentagon's three fighter programs (the F-22, the JSF and the Navy's F/A-18E/F Super Hornet).

Given the absence of a rival for air superiority, the Pentagon has a unique window of opportunity to explore truly revolutionary technologies and concepts, the panel concluded in its report to Congress. And some of the funds earmarked for fighters might be better invested in other experimental technologies that could prove more effective in countering the types of threats the military is likely to face in the future.

Other Air Priorities

As it works to resolve future fighter issues, the Air Force is continuing with plans for modernizing its airlift fleet. The administration requested $3.2 billion in 1999 for another 13 C-17 cargo aircraft. The Air Force is in the second year of a seven-year procurement contract, estimated to save the service about $1 billion over the course of the contract. The Air Force's commitment to the multiyear contract enabled contractor Boeing and its subcontractors to guarantee volume discounts on C-17 parts and production. The Air Force took delivery of the 40th of 57 C-17s in June and plans to buy another 50 between 2000 and 2003.

Although the Air Force does not plan to buy more B-2 strategic bombers, it has requested $376 million in 1999 for continued development and to cover production support costs and initial spares. The Air Force also requested $655 million for continued research and development and procurement of two final E-8C Joint Surveillance Target Attack Radar System (JSTARS) aircraft. The Air Force had planned to buy 19 of the aircraft, but the QDR recommended buying only 13. NATO plans to purchase JSTARS also seem to have fallen through, due to cost concerns among U.S. allies.

Several Air Force space programs under development would also receive continued funding under the administration's budget request, including the MILSTAR satellite system, the Space-Based Infrared System, the Evolved Expendable Launch Vehicle and the Global Positioning System (GPS).

In total, the administration has requested $17.5 billion for procurement and $13.6 billion for research and development for the Air Force in 1999. Much of that request would cover classified programs, however. Such "black" programs account for 37 percent of the Air Force's procurement request and 34 percent of its research and development request, according to an analysis by the independent Center for Strategic and Budgetary Assessments. That's because the Air Force is responsible for most command, control, communications, intelligence and space assets, and the Air Force budget is used to fund a number of intelligence agencies.

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