Defense Acquisitions
Air Force Decision to Include a Passenger and Cargo Capability in Its Replacement Refueling Aircraft Was Made without Required Analyses Gao ID: GAO-07-367R March 6, 2007The 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.
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.
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Director: Team: Phone:GAO-07-367R, Defense Acquisitions: Air Force Decision to Include a Passenger and Cargo Capability in Its Replacement Refueling Aircraft Was Made without Required Analyses
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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[Footnote 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.[Footnote 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.
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.[Footnote 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.[Footnote 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.
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:
* 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:
* 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.[Footnote
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.[Footnote 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.[Footnote
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.[Footnote 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.[Footnote 9] After Air Force
validation, the Chairman's Joint Requirements Oversight Council,
responsible for reviewing military acquisitions, approves and validates
warfighting capabilities.[Footnote 10] From a requirements standpoint,
final approval of a proposal rests at the level of the Chairman of the
Joint Chiefs of Staff.
Following Air Force validation and joint approval, the Under Secretary
of Defense for Acquisition, Technology and Logistics, who supervises
DOD acquisition,[Footnote 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.[Footnote 12] Absent this certification, the acquisition
program for the replacement refueling aircraft cannot begin.[Footnote
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.[Footnote 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.[Footnote 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.
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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.
In 2004, the Department of Defense identified the Mobility Capabilities
Study as an effort to determine, among other things, refueling
requirements and recapitalization needs.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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.
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.[Footnote 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.[Footnote 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.[Footnote
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.[Footnote 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.[Footnote 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.[Footnote 34] However,
we found decision makers did not use objective analysis in combination
with their judgment as required.[Footnote 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.
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.[Footnote 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.[Footnote
37]
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.[Footnote 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.[Footnote 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.
Matter for Congressional Consideration:
The Congress should consider requiring that:
* 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:
* 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.[Footnote 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.
If you have any questions regarding this report, please contact me at
(202) 512-8365 or solisw@gao.gov. 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.
Signed by:
William M. Solis, Director:
Defense Capabilities and Management:
List of Addressees:
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:
Enclosure !: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
3000 Defense Pentagon:
Washington, DC 20301-3000:
Acquisition, Technology, And Logistics:
Feb 20 2007:
Mr. William M. Solis:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the GAO Draft
Report, 07-367R, "Air Force Decision to include a Passenger and Cargo
Capability in Its Replacement Refueling Aircraft Was Made Without
Required Analyses," dated January 23, 2007 (GAO Code 350973/GAO-07-
367R). The Department of Defense non-concurs with Recommendation 1 and
concurs with Recommendation 2 in the draft report. Details of our
responses are contained in the enclosure.
The Department appreciates the opportunity to comment on the draft
report.
Sincerely,
Signed by:
Diane M. Wright:
Acting Director:
Portfolio Systems Acquisition:
Enclosure:
As stated:
GAO Draft Report - Dated January 23, 2007 GAO Code 350973/GAO-07-367R:
"Air Force Decision to Include a Passenger and Cargo Capability in Its
Replacement Refueling Aircraft Was Made Without Required Analyses":
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommended 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.
DOD Response: Non-concur. Through the Joint Capabilities Integration
and Development System (JCIDS) process, the Air Force presented
analysis and rationale for the passenger and cargo capability. The
Joint Requirements Oversight Council (JROC) and the Air Force concluded
that the analysis was sufficient justification for the capability, and
the JROC validated the passenger and cargo requirement. The Department
will review the JROC justification and associated analysis prior to the
Milestone B decision, as required by section 2366a of title 10, United
States Code.
Recommendation 2: The GAO recommended that the Secretary of Defense
direct the Chairman, Joint Chiefs of Staff, once these analyses are
completed, 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.
DOD Response: Concur. In accordance with section 2366a of title 10,
United States Code, 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 for the
program.
[End of section]
(350973):
FOOTNOTES
[1] The 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, ¶ 1
(May 11, 2005), hereinafter referred to as CJCSI 3170.01E (May 11,
2005).
[2] This 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.
[3] According 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, ¶
4.4.1 (July 31, 2006), hereinafter cited as AFI 10-601 (May 31, 2006).
[4] In 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.
[5] In 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.
[6] Prior 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.
[7] AFI 10-601, Capabilities-Based Requirements Development, ¶ 1.2
(July 31, 2006).
[8] Air Force Instruction 10-604, Capabilities-Based Planning, ¶ 1.1.1
(May 10, 2006), hereinafter cited as AFI 10-604 (May 10, 2006).
[9] AFI 10-601, ¶ 2.3.5.1 (July 31, 2006).
[10] AFI 10-601, ¶ 2.3.5.2 (July 31, 2006).
[11] 10 U.S.C. §133 (b)(1) (2006).
[12] 10 U.S.C. 2366a §§ (a)(7) and (a)(10) (2006).
[13] 10 U.S.C. § 2366a (a) (2006) and Department of Defense Instruction
5000.2, Operation of the Defense Acquisition System, ¶ 3.7.1.2 (May 12,
2003), hereinafter cited as DODI 5000.2 (May 12, 2003).
[14] GAO, U.S. Combat Air Power: Aging Refueling Aircraft Are Costly to
Maintain and Operate, GAO/NSIAD-96-160 (Washington, D.C.: Aug. 8,
1996).
[15] GAO, Military Aircraft: DOD Needs to Determine Its Aerial
Refueling Aircraft Requirements, GAO-04-349 (Washington, D.C.: June 4,
2004).
[16] Air Force Policy Directive 10-6, Capabilities-Based Planning and
Requirements Development, ¶ 1 (May 31, 2006), hereinafter cited as AFPD
10-6 (May 31, 2006).
[17] AFI 10-601, ¶ 1.2 (July 31, 2006).
[18] AFPD 10-6, ¶ 1.1 (May 31, 2006).
[19] AFI 10-604, ¶ 3.1.4 (May 10, 2006).
[20] The 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.
[21] AFI 10-604, ¶ 3.1.4.2 (May 10, 2006).
[22] AFI 10-601, ¶ 2.2.1 (July 31, 2006).
[23] AFI 10-604, ¶ 3.1.4.3 (May 10, 2006).
[24] GAO-04-349, app. II, p. 34.
[25] Department of Defense Mobility Capabilities Study, Executive
Summary, Sec. II, p. 2 (December 2005).
[26] The inventory of 590 air refueling aircraft comprises 114 KC-
135Es, 417 KC-135Rs, and 59 KC-10 aircraft.
[27] GAO/NSIAD-96-160, app. I, p. 41.
[28] Capabilities-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, ¶¶ 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.
[29] AFI 10-601, ¶ 2.3.5 (July 31, 2006).
[30] AFI 10-601, ¶ 3.4 (July 31, 2006).
[31] 10 U.S.C. § 153 (a)(4)(A) and 10 U.S.C. § 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.
[32] 10 U.S.C. § 181 (b)(1) (2006).
[33] CJCSI 3170.01E, ¶ 1 (May 11, 2005) and Chairman of the Joint
Chiefs of Staff Instruction 5123.01B, Charter of the Joint Requirements
Oversight Council, Encl. A ¶ 2e(15), p. A-6 (April 15, 2004).
[34] AFI 10-601, ¶ 1.4.1 (July 31, 2006).
[35] Air Force Instruction 10-601 (July 31, 2006) also describes, at ¶
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, ¶ 1.4.3.
[36] 10 U.S.C. § 2366a (a) (2006).
[37] 10 U.S.C. § 2366a (2006) and DODI 5000.2 ¶ 3.7.1.2 (May 12, 2003).
[38] In 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.
[39] Air Force Policy Directive 16-5, Planning, Programming, and
Budgeting System, ¶ 1 (29 July 1994).
[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.
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