Military Aircraft
Observations on DOD's Aerial Refueling Aircraft Acquisition Options Gao ID: GAO-04-169R October 14, 2003During the Senate Armed Services Committee's September 4, 2003 hearing on the Department of Defense's (DOD) proposed lease of 100 Boeing KC-767A aerial refueling aircraft, Congress expressed concern about a significant "bow-wave" funding requirement in future years to pay for leasing and then buying these 100 aircraft at the end of their leases, while continuing efforts to modernize the remainder of the tanker fleet. Subsequently, Congress requested that DOD analyze the option of leasing 25 aircraft, followed by a procurement of the remaining 75 aircraft. The Deputy Secretary of Defense responded to the request on September 22, 2003, identifying several alternative acquisition strategies, with associated cost and savings estimates. On September 25, 2003, Congress asked that GAO review the DOD response and assess the validity of the department's assumptions and the accuracy of the cost and savings estimates, and identify any other alternative acquisition strategies that the Committee should consider. This letter responds to that request.
In our opinion, the assumptions used by DOD to develop its analysis of acquisition options generally appear to be reasonable, and the computations of the cost and savings estimates associated with these options appear to be accurate based on the current terms and conditions of the negotiated lease. We do believe, however, that the costs and savings numbers could be further refined under the options involving purchase. For example, Air Force officials indicated that The Boeing Company would pay the cost to underwrite the issuance of the bonds needed for financing in the original lease option. However, they could not definitively say whether the underwriting costs were included in the $131 million price for each aircraft. Because fewer bonds, if any, would be issued under the options involving purchase, the costs should be lower and the savings higher. With the exception of the fifth option, DOD did not significantly deviate from the costs, schedules, and support provisions contained in its July 10, 2003 report to the Committee and the Congress. Air Force officials stated that their analysis of options complied with the Chairman's request and that analyses outside the proposed lease's terms and provisions would be academic exercises that might not be representative of the final negotiated prices. These officials also stated that changes from the proposed contract would require new negotiations and new review and approval actions, and consequently would lead to additional delays. In addition to the options presented by DOD, we believe two other possible approaches--lease fewer tankers or purchase tankers on a slower schedule--may be of interest to the Congress. Both options would involve fewer than 100 aircraft--one through leasing and one through direct purchase. Both options have advantages and disadvantages that we have not fully explored in the time available.
GAO-04-169R, Military Aircraft: Observations on DOD's Aerial Refueling Aircraft Acquisition Options
This is the accessible text file for GAO report number GAO-04-169R
entitled 'Military Aircraft: Observations on DOD's Aerial Refueling
Aircraft Acquisition Options' which was released on October 14, 2003.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO:
GAO-04-169R:
United States General Accounting Office:
Washington, DC 20548:
October 14, 2003:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Member
Committee on Armed Services
United States Senate:
Subject: Military Aircraft: Observations on DOD's Aerial Refueling
Aircraft Acquisition Options:
During the Senate Armed Services Committee's September 4, 2003 hearing
on the Department of Defense's (DOD) proposed lease of 100 Boeing
KC-767A aerial refueling aircraft, you expressed concern about a
significant "bow-wave" funding requirement in future years to pay for
leasing and then buying these 100 aircraft at the end of their leases,
while continuing efforts to modernize the remainder of the tanker
fleet. Subsequently, you requested that DOD analyze the option of
leasing 25 aircraft, followed by a procurement of the remaining 75
aircraft. The Deputy Secretary of Defense responded to your request on
September 22, 2003, identifying several alternative acquisition
strategies, with associated cost and savings estimates. On September
25, 2003, you asked that GAO review the DOD response and assess the
validity of the department's assumptions and the accuracy of the cost
and savings estimates, and identify any other alternative acquisition
strategies that the Committee should consider. This letter responds to
your request.
DOD's response compared the six acquisition options offered by the
Deputy Secretary to acquire 100 KC-767A aircraft: (1) leasing all
100 aircraft as outlined in the Air Force plan reported to the Congress
in July 2003; (2) purchasing all 100 aircraft at the time of order
under the same multiyear conditions as the lease; (3) leasing the first
25 aircraft and purchasing the remaining 75 when the order is placed;
(4) leasing the first 25 aircraft and purchasing the remaining 75 when
the aircraft are delivered; (5) leasing 25 aircraft, followed by a
traditional multiyear procurement of 75 aircraft under a separate
contract, and (6) leasing all 100 aircraft initially, then planning to
seek $2.4 billion between fiscal years 2008-2010 to purchase 26 of the
100 aircraft.[Footnote 1]
To perform our work, we met with DOD and Air Force officials to obtain
details on these options, including the assumptions and information
used to generate the cost and savings estimates contained in DOD's
response. We also conducted our own independent analysis. See enclosure
I for more details on our scope and methodology.
Summary:
In our opinion, the assumptions used by DOD to develop its analysis of
acquisition options generally appear to be reasonable, and the
computations of the cost and savings estimates associated with these
options appear to be accurate based on the current terms and conditions
of the negotiated lease. We do believe, however, that the costs and
savings numbers could be further refined under the options involving
purchase. For example, Air Force officials indicated that The Boeing
Company would pay the cost to underwrite the issuance of the bonds
needed for financing in the original lease option. However, they could
not definitively say whether the underwriting costs were included in
the $131 million price for each aircraft. Because fewer bonds, if any,
would be issued under the options involving purchase, the costs should
be lower and the savings higher.
With the exception of the fifth option--Chairman Warner's suggestion of
leasing 25 aircraft, followed by a purchase of the remaining 75
aircraft at delivery--DOD did not significantly deviate from the costs,
schedules, and support provisions contained in its July 10, 2003 report
to the Committee and the Congress. Air Force officials stated that
their analysis of options complied with the Chairman's request and that
analyses outside the proposed lease's terms and provisions would be
academic exercises that might not be representative of the final
negotiated prices. These officials also stated that changes from the
proposed contract would require new negotiations and new review and
approval actions, and consequently would lead to additional delays.
In addition to the options presented by DOD, we believe two other
possible approaches--lease fewer tankers or purchase tankers on a
slower schedule--may be of interest to the Congress. Both options would
involve fewer than 100 aircraft--one through leasing and one through
direct purchase. Both options have advantages and disadvantages that we
have not fully explored in the time available.
Our Assessment of DOD's Analysis:
In our opinion, the assumptions used by the DOD to develop its analysis
of acquisition options generally appear to be reasonable, and the
computations of the cost and savings estimates associated with these
options appear to be accurate based on the current terms and conditions
of the negotiated lease. Table 1 summarizes DOD's estimated costs and
savings for the six options it considered, followed by our observations
on the approach, data, and assumptions used. As indicated in table 1,
the current proposal being considered by the Congress for the Air
Force--the lease of 100 KC-767A aircraft for 6 years each, followed by
their purchase at the end of the lease--is the most costly of the
options over the next decade, requiring about $29.8 billion (then-year
dollars). As we have testified,[Footnote 2] leasing requires the least
up-front funding to the 2004-2009 Future Years Defense Program (FYDP),
about $5.5 billion (then-year dollars). While purchase of the 100
aircraft would cost the least amount over the long term--$24.3 billion,
or $5.5 billion less than the lease, it would require the largest up-
front increase to the FYDP--nearly $13 billion more than the lease
option. DOD approved the lease proposal, at least in part, because it
requires the least amount of up-front funding for refueling aircraft
while keeping the funding for other programs intact.
Table 1: Options and Cost Comparisons (then-year dollars in billions):
Options: 1. Lease 100; Cost during FYDP[A]: 5.5; Total costs[B]: 29.8;
Savings over current lease proposal: NA.
Options: 2. Purchase 100; Cost during FYDP[A]: 18.4[C]; Total costs[B]:
24.3[C]; Savings over current lease proposal: 5.5.
Options: 3. Lease 25/buy 75, pay when order; Cost during FYDP[A]: 16.6;
Total costs[B]: 25.6; Savings over current lease proposal: 4.2.
Options: 4. Lease 25/buy 75, pay at delivery; Cost during FYDP[A]:
10.1; Total costs[B]: 26.3; Savings over current lease proposal: 3.5.
Options: 5. Separate contracts (lease 25, buy 75); Cost during FYDP[A]:
16.0; Total costs[B]: 27.1[C]; Savings over current lease proposal:
2.7.
Options: 6. Lease with $2.4 billion increase; Cost during FYDP[A]: 7.5;
Total costs[B]: 28.6; Savings over current lease proposal: 1.2.
Source: GAO analysis of Air Force data.
[A] Aircraft cost only. Includes cost of purchasing leased aircraft at
end of lease.
[B] Includes operating and support costs, other government costs, and
military construction.
[C] Assumes that multi-year procurement authority was granted.
[End of table]
We have the following comments and observations on DOD's options:
* The estimated costs and savings for all options except for number 5
are based on the cost figures from the currently negotiated lease with
Boeing. Based on our analysis, we believe these represent a reasonable
estimate of the likely total costs and savings in then-year dollars. We
do think, however, that the costs and savings numbers could be further
refined in the options involving purchase or lease. For example, Air
Force officials indicated that The Boeing Company would pay the cost to
underwrite the issuance of the bonds in the original lease option.
However, they could not definitively say whether the underwriting costs
were included in the $131 million price for each aircraft. Because
fewer bonds, if any, would be issued under the options involving
purchase, the costs should be lower and the savings higher.
* The fifth option entails a contract for leasing 25 aircraft followed
by a separate contract for a traditional multi-year procurement. With
this option, Air Force officials stated that the capital markets may
not support the lease because of risk concerns, particularly in
exercising the option to buy the planes at the end of the lease, and,
therefore, the option is potentially unexecutable. In examining this
concern, we would point out that 90 percent of the present value of the
fair market value of the aircraft will have been paid at the end of
their 6-year leases, and it would make little sense not to purchase the
planes. Also, given the long-term need to replace the tanker fleet, it
is unlikely that the planes would not be purchased at the end of the
lease.
* All of the options except for number 5 assume delivery of 60 aircraft
during the FYDP period on the same delivery schedule. DOD believes
option 5 would require new negotiations, internal and external review,
and congressional approval--a process that could take as long as a year
and could result in higher prices than currently negotiated for the
lease of 100 aircraft. Because of this potential delay, DOD also
estimates that this option would result in delivery of only 40 aircraft
during the FYDP period. Based on our analysis, we believe the costs and
savings estimates by the Air Force are more speculative for this
option. It is unclear to us why the process to negotiate and process
the changes would take so long to gain final approval. Also, any
purchase of the aircraft, including those specified in each of the
other options, required congressional approval.
* As presented by DOD, all the options considered represent a trade-off
between more up-front budget authority during the FYDP period and more
potential savings over the life of the program.
* All of the options except for number 5 assume the same early delivery
schedule as the currently proposed lease; that is, the first 4 aircraft
would be delivered at the end of fiscal year 2006, 16 in 2007, and 20
per year in subsequent years until 100 have been delivered. This
assumes that it is more urgent to begin replacement of the tanker fleet
now rather than proceed with the previously planned procurement
schedule, which the Air Force has said would begin delivering aircraft
in fiscal year 2009.
* DOD was not asked to and did not assess other options outside the
terms and provisions of the existing lease, which could potentially
provide additional cost savings. For example, what costs and savings
might accrue if the number of KC-767A aircraft leased and/or procured
varied from 100 aircraft? How would competitive bidding by commercial
airlines and independent maintenance, repair, and overhaul facilities
for KC-767A maintenance and training support affect costs and savings?
How would program costs change if the purchase price per plane was
closer to the $120.7 million estimate postulated by the Institute for
Defense Analyses, rather than the $131.0 million price contained in the
contract?[Footnote 3]
* The Deputy Secretary's letter presenting the Air Force savings
estimates states that the department proposes to find an extra $2.4
billion to buy out the leases for 26 aircraft in the 2008-10 timeframe.
Air Force officials told us that DOD will try to identify these funds
in the current FYDP and may even seek support from the Army, Navy, and
Marine Corps. This is option number 6 in the table. DOD and Air Force
acquisition officials we spoke with said that the Deputy Secretary of
Defense's letter to the committee represents a firm commitment to
identify these funds in the fiscal year 2008-2010 time frame. If the
Congress agreed to that approach, it might want more assurance that the
increase in funding would really occur, otherwise the savings will not
materialize and the Congress may simply be asked to provide additional
budget authority.
The initial 100 KC-767A aircraft being discussed represent only about
20 percent of the KC-135 inventory. DOD and the Air Force have stated
that tanker replacement efforts need to continue beyond these aircraft,
and that this will be an expensive and lengthy undertaking. As a
result, the funding requirements for tanker replacement will extend for
many years beyond those addressed in the lease proposal, and will have
to compete with other high priority programs among the Air Force and
the other services in a fiscally-constrained environment. Thus, the
Committee's concern about a tanker "bow wave" is appropriate and
relevant as we pointed out in our September 4, 2003 testimony,
regardless of the option chosen for the first 100 aircraft. The options
involving a 25/75 split of leased and purchased aircraft all have a
positive effect on the "bow wave" concern beyond fiscal year 2012, as
was discussed at the September 4, 2003 hearing. By committing more
funding in the early years of the program, costs are reduced
considerably in the out years. This should ease the burden on budgets
for follow-on procurements of tanker aircraft. The proposal to plus up
the budget by $2.4 billion to buy out 26 of the leases also has a
positive effect on reducing the bow wave, but not to as great an extent
as the other options. This approach still incurs costs in the $3
billion range in fiscal year 2011-13. To illustrate the effect of DOD's
various options on this long-term spending picture, we have developed
charts showing the budget authority that would be required to execute
the acquisition of the first 100 aircraft followed by a subsequent
purchase of another 100 KC-767A aircraft. (See enclosure II).
Other Alternative Approaches:
The DOD response represents a reasonable analysis of the 25/75 split
option and it offers an additional option--option number 6, which
proposes to add $2.4 billion for tankers to be used to buy out leases
for 26 aircraft. In effect, this would be a "lease 74/buy 26" approach.
We believe at least two additional options may be of interest to the
committee as it considers its decision. These include the following:
* Lease fewer tankers. Section 8159 of the 2002 Act[Footnote 4]
authorized a pilot program for leasing no more than 100 Boeing 767s as
tankers. The act did not specify leasing 100; it set 100 as the
maximum. A smaller leasing program would still meet the intent of the
act, would be less expensive, would start replacement of the KC-135s,
and most importantly, would allow some time for the Air Force to study
tanker force requirements and conduct a thorough analysis of
alternatives before committing to a large acquisition program.[Footnote
5] Such an approach would probably need to include leasing as many as
40 to 50 aircraft to provide sufficient time for the needed studies.
This approach is still more expensive than purchase, and it might still
involve the use of the special purpose entity[Footnote 6] to facilitate
lease financing, but it allows the program to proceed with early
delivery of aircraft without disruption to Air Force budgets in the
short-term. We do not know what effect this approach would have on
delivery schedules or whether Boeing would agree to the same lease
terms for fewer aircraft.
* Purchase tankers on a slower schedule. The Air Force plans to spend
about $5.5 billion during the FYDP period for the proposed lease, and
the Deputy Secretary stated in his letter to you that the department
proposes to identify an additional $2.4 billion during this period to
buy out some of the leases. If that total of $7.9 billion were applied
toward purchase of tankers, it would represent a reasonable start
toward replacing the tanker fleet through a normal acquisition process.
Because the Boeing 767 commercial aircraft has been in production since
1982 and thus represents little development risk, the Air Force should
be able to negotiate a multi-year procurement for a substantial number
of aircraft. This would not provide the same firm order for 100
aircraft in the current lease proposal, but it would still represent a
large transaction for Boeing on its 767 production line. However, this
approach might involve delays in deliveries of the first aircraft,
depending on how much budget authority is available in fiscal year 04
and fiscal year 05. Deliveries might also have to be spread over a
longer period if the Air Force and DOD do not provide additional
funding priority for tankers. This approach, too, would provide the Air
Force some time to study tanker requirements and analyze options before
committing to a large program.
We could not develop costs for these two options in the time available.
Air Force officials believe that adoption of either of these options
would delay delivery of the first aircraft and further believe that
while less costly in the short term, the proposals could increase total
program costs.
Agency Comments and Our Evaluation:
In oral comments on a draft of this correspondence, DOD and Air Force
officials generally concurred with our analysis. These officials also
pointed out that their analysis, as contained in the letter from the
Deputy Secretary of Defense, was limited specifically to the questions
asked of them by you although they have considered other options that
were not included.
We conducted this work from September to October 2003 in accordance
with generally accepted government auditing standards.
Unless you announce its contents earlier, we plan no further
distribution of this letter until 10 days from its issue date. At that
time, we will send copies of this letter to the Chairman and Ranking
Member of the Committee on Armed Services, House of Representatives,
and the defense subcommittees of the Senate and House Committees on
Appropriations. We will send a copy to the Chairman, Subcommittee on
Readiness, House Committee on Armed Services, for whom we are
conducting a broader body of work in this area. We will also send
copies to the Secretary of Defense and the Director of the Office of
Management and Budget. We will also make copies available to other
interested parties upon request. In addition, the letter will be
available at no charge on the GAO Web site at http://www.gao.gov.
We appreciate this opportunity to be of assistance. If you or your
staffs have any questions regarding this letter, please contact me at
(202) 512-4914 or Brian J. Lepore, Assistant Director, at (202) 512-
4523. Other key contributors to this review were Ann M. Dubois, Joseph
J. Faley, Jennifer K. Echard, Kenneth W. Newell, Madhav S. Panwar,
Charles W. Perdue, Kenneth E. Patton, and Tim F. Stone.
Neal P. Curtin,
Director
Defense Capabilities and Management:
Signed by Neal P. Curtin:
Enclosures:
[End of section]
Enclosure I: Scope and Methodology:
To assess the validity of the Department of Defense's (DOD)
assumptions, accuracy of cost and savings estimates associated with the
various options addressed by the Deputy Secretary of Defense in his
response to the Committee, and to identify alternative acquisition
strategies, we met with DOD and Air Force officials to discuss detailed
information related to the options. These discussions included the
nature and scope of the options selected, as well as the assumptions
and methodologies used in the analyses. We also obtained and reviewed
Air Force data used to generate the cost and savings estimates
contained in DOD's response, validated that the data was appropriately
included or excluded to support the details of the individual options
chosen, tested the accuracy of the computations, and conducted our own
independent analyses.
To assess the funding impacts of the various options when combined with
a subsequent purchase of 100 aircraft, we compared Air Force data for
each of the options to a postulated buy of an additional 100 aircraft
beginning in fiscal year 2012 at the rate of 20 aircraft per year. We
used the Air Force's purchase price for the aircraft, spread the
payments for each aircraft over a 4-year period per Air Force data, and
adjusted the data to reflect then-year dollars.
[End of section]
Enclosure II: Impact of Air Force Options on Budget Authority
Requirements:
Follow-on procurements to the initial lease of 100 aircraft will be a
necessary part of any tanker replacement program. Because the funding
requirements of the proposed lease are deferred until later years,
those requirements will impact the requirements for subsequent tanker
acquisitions. The following figures provide an approximate illustration
of how the various options effect the funding requirements for future
refueling aircraft purchases beyond the first 100.
Figure 1: Annual Budget Authority Required to Initially Lease 100
Aircraft and to Purchase 100 Follow-On Aircraft:
[See PDF for image]
[End of figure]
Combining a follow-on purchase of 100 aircraft with the Air Force's
original proposal to lease 100 aircraft, would require maximums of
about $6.3 billion and $6.4 billion in budget authority in fiscal years
2012 and 2013 respectively, as shown in figure 1. About $3.6 billion
would be required during the current FYDP and a total of about $38.5
billion would be required over the entire program.[Footnote 7]
Figure 2: Annual Budget Authority Required to Purchase Both an Initial
100 And Second Block of 100 Aircraft:
[See PDF for image]
[End of figure]
Purchasing the initial 100 aircraft, when combined with a follow-on
purchase, would have the least impact on overall budget authority
requirements. As figure 2 shows, an initial purchase of 100 aircraft
followed by a subsequent purchase of an additional block of 100
aircraft would require maximums of about $3.4 billion in budget
authority in fiscal years 2008 and 2013 to procure the aircraft. About
$15.8 billion would be required during the current FYDP and a total of
about $33 billion would be required over the entire program to procure
the 200 aircraft.
Figure 3: Annual Budget Authority Required to Lease 25 Aircraft and to
Purchase 75 Aircraft at Time of Order and to Purchase 100 Follow-On
Aircraft:
[See PDF for image]
[End of figure]
Combining a follow on purchase of 100 aircraft with the alternative of
initially leasing 25 aircraft and purchasing 75 others, would require
maximums of about $4.1 billion and $4.3 billion in budget authority in
fiscal years 2012 and 2013, respectively, as shown in figure 3, if the
75 aircraft were paid for when ordered. About $14.5 billion would be
required during the current FYDP and a total of about $34.3 billion
would be required over the entire program.
Figure 4: Annual Budget Authority Required to Lease 25 Aircraft and to
Purchase 75 Aircraft at Time of Delivery and to Purchase 100 Follow-On
Aircraft:
[See PDF for image]
[End of figure]
Paying for the initial 75 aircraft in the previous option on delivery
would require maximums of about $5.6 billion and $6.7 billion in budget
authority in fiscal years 2010 and 2011, respectively, as shown in
figure 4. About $8.1 billion would be required during the current FYDP
and a total of about $35 billion would be required over the entire
program.
Figure 5: Annual Budget Authority Required To Initially Lease 25
Aircraft and to Purchase the Remaining 75 Aircraft of the Initial Block
under a Separate Contract and to Purchase 100 Follow-On Aircraft:
[See PDF for image]
[End of figure]
Combining a follow-on purchase of 100 aircraft with the option of
initially leasing 25 of the initial 100 aircraft and negotiating a
separate contract for the purchase of the remaining 75 aircraft of the
initial block, would require maximums of about $4.6 billion and $4.5
billion in budget authority in fiscal years 2009 and 2013,
respectively, as shown in figure 5. About $14.4 billion would be
required during the current FYDP and a total of about $35.3 billion
would be required over the entire program.
Figure 6: Annual Budget Authority Required to Initially Lease 74
Aircraft and to Purchase 26 Aircraft and to Purchase 100 Follow-On
Aircraft:
[See PDF for image]
[End of figure]
Combining a follow-on purchase of 100 aircraft with the option of
purchasing 26 of the initial 100 aircraft, would require maximums of
about $5.5 billion and $5.7 billion in budget authority in fiscal years
2012 and 2013, respectively, as shown in figure 6. About $5.6 billion
would be required during the current FYDP and a total of about $37.3
billion would be required over the entire program.
FOOTNOTES
[1] Figures 4 and 5 of the Deputy Secretary's letter also mentioned
another version of this--to identify $2 billion in fiscal year 2008-
2009, but this option was not discussed in the narrative of the letter.
[2] Military Aircraft: Observations on the Proposed Lease of Aerial
Refueling Aircraft by the Air Force. GAO-03-923T. Washington, D.C.:
September 4, 2003.
[3] At your request, we reviewed the Institute of Defense Analyses
study and concluded that its methodology was reasonable. See Military
Aircraft: Institute for Defense Analyses Purchase Price Estimate for
the Air Force's Aerial Refueling Aircraft Leasing Proposal.
GAO-04-164R. Washington, D.C.: October 14, 2003.
[4] Department of Defense and Emergency Supplemental Appropriations for
Recovery from and Response to Terrorist Attacks on the United States
Act, Pub. L. 107-117, § 8159, 115 Stat. 2230, 2284-85.
[5] Section 309 of the Emergency Supplemental Appropriations for Iraq
and Afghanistan Security and Reconstruction for Fiscal Year, 2004, S.
1689, 108th Cong. § 309 (2003), requires that the Secretary of Defense
submit a report to the congressional defense committees describing an
analysis of alternatives for replacing the capabilities of the fleet of
KC-135 fleet aircraft. The Air Force has indicated, however, that it
will probably initiate a tanker requirements study sometime between
fiscal years 2004-2006, followed by a formal analysis of alternatives
(AOA). Air Force officials have stated that a formal AOA could take up
to two years to complete.
[6] The Special Purpose Entity would be a trust created under the laws
of Delaware that would issue bonds to raise sufficient capital to
purchase the new aircraft from The Boeing Company and lease them to the
Air Force.
[7] These totals include only procurement costs and do not represent
total program costs.
