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[H.A.S.C. No. 109–47]








FEBRUARY 28, 2006

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ROSCOE G. BARTLETT, Maryland, Chairman
ROB SIMMONS, Connecticut
JO ANN DAVIS, Virginia
CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
KEN CALVERT, California

GENE TAYLOR, Mississippi
DAN BOREN, Oklahoma

Harry Cartland, Professional Staff Member
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Doug Lane, Professional Staff Member
Heath Bope, Professional Staff Member
William Natter, Professional Staff Member
Andrew Hunter, Professional Staff Member
Claire E. Dunne, Staff Assistant




    Tuesday, February 28, 2006, U.S. Air Force Aerial Refueling Recapitalization Requirements


    Tuesday, February 28, 2006



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    Bartlett, Hon. Roscoe, a Representative from Maryland, Chairman, Projection Forces Subcommittee

    Taylor, Hon. Gene, a Representative from Mississippi, Ranking Member, Projection Forces Subcommittee


    Hoffman, Lt. Gen. Donald, U.S. Air Force, Military Deputy, Office of the Assistant Secretary of the Air Force for Acquisition

    Kelly, Lt. Gen. Christopher, U.S. Air Force, Vice Commander, Air Mobility Command

    Kennedy, Michael, Director, Staff Development and Research Coordination, Rand Corporation

    Wetekam, Lt. Gen. Donald J., U.S. Air Force, Deputy Chief of Staff, Logistics, Installations and Mission Support


Hoffman, Lt. Gen. Donald
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Kelly, Lt. Gen. Christopher

[The Documents submitted can be viewed in the hard copy.]

[The Questions and Answers can be viewed in the hard copy.]
Mr. Bartlett
Mr. Taylor


House of Representatives,
Committee on Armed Services,
Projection Forces Subcommittee,
Washington, DC, Tuesday, February 28, 2006.

    The subcommittee met, pursuant to call, at 6:12 p.m., in room 2212, Rayburn House Office Building, Hon. Roscoe Bartlett (chairman of the subcommittee) presiding.


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    Mr. BARTLETT. The subcommittee will come to order.

    I know congressmen are enthralled by listening to their own voice, but if it is okay, if there are no objections, I am going to submit my opening statement for the record, because I want all the time possible available for your testimony. And I am really pleased that you are here with us.

    We have votes coming at 6:30 tonight, and we can wait for about 10 minutes into the vote, because it only takes us about 5 minutes to get there. And we will be gone about 20 minutes and be able to come back. But I would like to get through your testimony, because I do not know how many members will be able to return.

    I would like to get through your testimony if possible before we go to the vote, and we will have maybe a half-hour for that. So that is about five to seven minutes for each of you. And, be sure, that there will be opportunity during the question and answer to amplify on anything that you would like to amplify.

    And before we turn to your testimony, let me turn to my ranking member, my good friend from Mississippi, Mr. Taylor.


    Mr. TAYLOR. Mr. Chairman, I am going to follow your excellent lead. Let's go straight to the panel.
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    Mr. BARTLETT. Okay. Thank you very much.

    General Chris Kelly, vice commander for Air Mobility Command; Lieutenant General Donald Hoffman, Deputy Chief of Staff for Air Force Acquisition; Lieutenant General Don Wetekam, Deputy Chief of Staff for Air Force Logistics and Mission Support; and, finally, Dr. Michael Kennedy, Director for Development and Research Coordination for the RAND Corporation.

    Let's begin, General Kelly, with your testimony.


    General KELLY. Thank you, Mr. Chairman.

    Chairman Bartlett, Congressman Taylor, distinguished committee members, thank you for the opportunity to appear before you this evening. General Hoffman, General Wetakam and I are proud to come before you and to discuss the Air Force's Tanker Acquisition and Recapitalization Program.

    As the vice commander of Air Mobility Command, I will cover daily tanker operations, joint tanker requirements and the impact of our aging tanker fleet on mission accomplishments.

    At an average age of over 45 years, our Eisenhower era KC–135 fleet is the oldest combat weapons system in the United States Air Force. Thanks to the tireless efforts of our total force airmen, our civilians and contractors and supported by a state-of-the-art tanker airlift control center, Air Mobility Command manages this task 24 hours a day, 7 days a week, every day of the year. And we accomplish this task with little fanfare or notice.
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    We are very proud of the Air Force's air refueling fleet. We believe it clearly provides our nation and its leaders a day one option.

    On behalf of the men and women of Air Mobility Command, we appreciate the support provided by the Congress, and we look forward to working with this committee to meet our air refueling obligations and satisfy our future joint war fighter needs.

    The Air Force will acquire any replacement tanker through a fair and open competition of all alternatives.

    Thank you for the opportunity to provide this statement for the record, and I look forward to answering your questions a little later this evening.

    [The prepared statement of General Kelly can be viewed in the hard copy.]

    Mr. BARTLETT. Okay.

    General Hoffman.


    General HOFFMAN. Mr. Chairman, members, thank you very much for the opportunity to come here.
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    I represent the acquisition professionals that will make the replacement aircraft a success. Since the testimony cycle last year, I think four important events have happened that help inform this process: The Mobility Capability Study (MCS) has been delivered, the Analysis of Alternatives (AOA) on the replacement tanker has been completed, the Quadrennial Defense Review has studied this issue as well, and the Fleet Viability Board has done their assessment of the aging tankers that we have right now.

    None of those give us the answer, but they all inform, I think, a way ahead. And as we go forward in this process, I think an answer will emerge, and we are standing ready to do the right acquisition and requirements activities to make that a success.

    [The prepared statement of General Hoffman can be viewed in the hard copy.]

    Mr. BARTLETT. General Wetekam.


    General WETEKAM. Chairman Bartlett, Congressman Taylor and distinguished members of the committee, I also thank you for the opportunity to appear here this evening to discuss this issue of extreme importance to our current and future war fighting capability. I know that Generals Hoffman and Kelly, along with Dr. Kennedy, are extremely well-qualified to describe our future refueling requirements, the current condition of our KC–135 and the evolving role of aerial refueling.
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    I hope that in my role I may be able to provide some additional clarification on the condition of our current tanker fleet and its assessed viability for the future.

    I also thank the committee for its continued support to our airmen, and I look forward to answering your questions.

    Mr. BARTLETT. Dr. Kennedy.


    Dr. KENNEDY. Thank you very much for this opportunity.

    I was the project leader on the KC–135 Recapitalization Analysis of Alternatives, the draft copy of which has been delivered to your committee, and so I am here to answer any questions you may have about the analysis in there.

    Mr. BARTLETT. Thank you very much. That has to set a record for concise testimony.

    Thank you all very much.

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    As my custom is, I will reserve my questions till last, and let me turn now to my good friend and ranking member, Mr. Taylor, for his comments and questions.

    Mr. TAYLOR. Gentlemen, I guess like some others who had bought off on the Air Force's suggestion to go to a lease, I, like a lot of other people, was very disappointed to see what came out over on the Senate side.

    I am curious, now that a decision has been made to go away from that, what are the options that you have looked at? Have you looked at modification of existing commercial aircraft? Have you looked at possibly building KC–135s from scratch if need be? Or are we down to the two options that we were looking at three or four years ago, which was the European aircraft or the Boeing aircraft?

    General HOFFMAN. That was all covered in the AOA, and I will let Dr. Kennedy talk about the range of options that they considered.

    Dr. KENNEDY. Yes. The AOA considered procurement of aircraft of the sort you are describing based on either Boeing or Airbus airframes, everything from relatively small what might be tactical tankers in the Boeing 737 or Airbus 321 range, up to the very large 747 range of tankers.

    And we found that the range of what we called medium to large commercial derivatives was most cost effective between 300,000 and 1 million pounds gross takeoff weight, roughly between a 767 and a 747.

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    We found all of the options in there close enough in our analysis that we could not exclude them, and in particular we found that moderate changes in the underlying commercial aircraft price could move them as to which turned out to be most cost effective, well within our range of uncertainty about what the prices might be.

    We looked at converting used commercial aircraft, we looked at converting military aircraft, such as C–17s. We looked at developing new aircraft, actually developing them and then building them as new airframes. And we did not find any of them to be as cost effective as the new commercial derivatives.

    We also considered commercial sources of aerial refueling for the wartime requirements, and there was no evidence that it would be more cost effective than organic provisions by the Air Force of the refueling services.

    General KELLY. Could I just add one other thing, sir? From an operational point of view, now that we know—although the AOA has not been publicly released, but we do know from the results that will be publicly released very quickly, from an operational point of view, we know that range of alternatives that they looked at and those ranges of different types of airplanes, and from an operational point of view, we are looking very much forward to a fair and open competition to look at that entire range of options and see what industry might propose back to us. And then as we step through the acquisition process, see where that leads us.

    But from an operational point of view, we think that all of those alternatives are operationally feasibility and that we can operate a fleet into the future no matter how that skinnies down once we get into the acquisition process.
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    Mr. TAYLOR. Walk me through something. KC–135, was that originally a DC–10 that had been modified or was built as a tanker from the wheels up?

    General KELLY. Yes, sir. There is a little bit of myth, perhaps, is maybe the way I would answer that, sir. Back in the early 50's when Boeing was working on the 707, it had some experimental airplanes, obviously, that led to the commercial 707. The KC–135 has always been called a derivative of the 707 but, actually, the KC–135 and the 707 are derivatives of those original experimental airplanes, if you will, those concepts that Boeing produced way back in the early 50's.

    They are very, very similar in many, many, many ways, but, actually, they are both a derivative of the test concept at Boeing and not one from the other.

    Mr. TAYLOR. General, I guess what I am getting is I came from manufacturing a long time ago. I am a huge believer in the economies of scale, particularly on things like airplanes or ships, if you can get a series going, the amount of money that you can save as a force with building something one at a time.

    So to what extent is your studying focusing on using those economies of scale as some sort of existing airframes, if any, and modifying them to suit the Air Force's needs rather than doing this the other way around?

    General HOFFMAN. New aircraft, obviously, you would be fiscally constrained on what scale you would get if you bought a new aircraft. We are thinking probably 15 a year, plus or minus 5, is probably the fiscally constrained environment that we would find ourselves in recapitalization.
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    If you looked at used aircraft, and I know the AOA looked at this, they looked at what fleets are out there that might be available, and if you do want to get that economy of scale, you need, kind of, similar aircraft. You do not need 10 of this and 8 with slight different models with different engines and then 6 more but they are all called 737, or something. So they actually did work there to find out what fleets are available or might potentially be available in the future that could be purchased and then modified for U.S. use.

    Dr. Kennedy.

    Dr. KENNEDY. Yes. Well, I would say in terms of the new commercial derivatives, they are taking advantage of the fact that approximately 60 or 70 percent of the airframe would be common with the commercial version. So that part of it will already have enjoyed the economies of scale. And the reason that the new design aircraft, or one of the reasons, why they are not cost effective is because they begin at the top of the learning curve, if you will, and they bear the entire Research & Development (R&D) costs as opposed to simply the R&D for the conversion.

    The reason the used aircraft turn out to be not cost effective is because for each of the possible candidates we could only locate fleets of 50 or 60 or so that would be appropriate given their history and the current configuration mixes that were available. And that suffered some lost economies of scale because it would be a relatively short production run compared to what would be done with a commercial derivative.

    Mr. TAYLOR. Mr. Chairman, I yield back. Thank you.
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    Mr. BARTLETT. Thank you very much.

    Ms. Miller.

    Mrs. MILLER. Thank you, Mr. Chairman.

    Gentlemen, I have a KC–135 base in my district, and I do not want to talk about that specifically, but I did have a question. As we went through the Base Realignment and Closure (BRAC) process, and I do not want to question the beddown requirements in that, but we have 8 airplanes there now, and there was a call originally during the BRAC process to go up to 12, then they decided to stay at 8.

    And I am making no comment about that, I am just wondering, what is the optimal amount of aircraft that you would have for that? And, also, what is the amount of aircrew for each one of the planes that is optimal?

    General KELLY. Ma'am, I think I would answer that by saying that the smallest squadron size unit that we have in any of the three components, the active, Guard or the Reserve, is an eight-aircraft squadron. So that is absolutely the smallest we want to get, and that is for a number of reasons.

    It has to do with being operationally effective, it has to do with being able to maintain, but, also in some areas that are a little remote than others, you still want to be able to have that capability in the Reserve component but allow the unit to have enough of a population to recruit the number of people that they would need to effectively employ that airplane.
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    And so we have found that eight is about as small as we really want to go. There are larger units. Most of those are found in areas where there is a population base that would support the ability to recruit folks to operate, maintain and also have to do to support things that are necessary to keep that unit viable.

    Mrs. MILLER. We are in a major population area. We happen to be in the Detroit area. But that being said, is there an average across the inventory? And I am not lobbying for my—I am just trying to understand what——

    General KELLY. No, I would not say that there is an average. I think that as the Air Force Reserve and the Air National Guard take a look at their states in the case of the Air National Guard and the case of the Air Force Reserve their entire inventory, they try to maintain a balance and they try to even those things out. And so the sizes of units will vary from state to state or unit to unit in the Air Reserve component.

    On the active duty side, because we have a little more stability, we are able to size our units a little bit larger. We have that force in place to keep them viably operational, and so we take advantage of the economies of scale, if you will, by having larger units on the active duty side.

    So there is really no average units; just vary from state to state.

    Mrs. MILLER. I see.

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    General HOFFMAN. Ma'am, I am looking at just the e-mail distribution within the Guard and I am seeing numbers low of 9, high of 21; typical numbers for E models and where they are stationed.

    Mrs. MILLER. I see.

    One other question, if I could, Mr. Chairman, and I appreciated the comment, you describing it as the Eisenhower age. It really struck me, certainly.

    But just trying to follow up some of the asset statements that have been made over the years about this. In 2001, there was the KC–135 economic service life study which said that the fleet was structurally viable until 2040, and then in 2002, the Air Force leadership said that the KC–135 corrosion was worse than previously understood, unpredictable, an imminent threat to the fleet.

    And now the tanker Analysis of Alternatives is saying that the current tanker fleet is viable until the late 30's, 2030's. So I guess I am just trying to understand what is your best projection for how long and how viable the fleet may actually be?

    General KELLY. Obviously, the AOA talked about the years as probably—I think the way, from an operational point of view, I would answer that, ma'am, is the numbers do not seem to be going up, if you will, they seem to be getting closer to us. And then that, to me, would be in a downward trend. And that is because these airplanes continue to get older. And as they get older, we continue to find things on them.

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    For instance, we recently have had to look at modifications to the air cycling motor, which is the largest part of the air conditioning system, because it tends to now break apart. It is located in a part of the airplane when it does break apart that some of that shrapnel could then enter one of the main fuel tanks, which is obviously extremely dangerous. That is not a problem that we had endured with this particular fleet until recently.

    So as they continue to age, we find problems like that that we have to address, and, therefore, I would say that the time of their usefulness would probably move a little bit closer to us.

    I would also want to take this opportunity to mention that these particular airplanes, although they provide us with a great deal of service and we can operate these airplanes, they are not modern airplanes, and they do not give us the capability that we would really want to have in a more modern airplane.

    They do not have defensive systems, for instance, which limits their effectiveness. In the case of the E model, their performance is so poor that we cannot use them in the desert. They do not have modern floors, doors and, as I mentioned, defensive systems, so using them in any other kind of role other than air refueling is not possible.

    So all of those things are things that we would like to address as we move into this new acquisition if we are allowed to do that and would make the new airplanes far more operationally feasible and flexible.

    General WETEKAM. Ma'am, if I might add, you are right, there are numerous studies. In fact, I am aware, personally, of a total of 16 studies, going back to the 1960's, that looked at various aspects of this.
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    We have an Air Force Fleet Viability Board that was chartered by the Secretary of the Air Force and has assessed the KC–135 fleet. The term, ''viability,'' here, as the Fleet Viability Board defines it, and I think they define it pretty well, is really one of three major factors: Operational health, which is the airframe itself, for the most part, and how long will it and the components last, but also the cost associated with maintaining it and then the availability of the aircraft as it gets older, do we have enough airframes available, operational to support the war fighters' needs.

    So viability, really, is a fairly complex and wide-ranging term, as we define it through the Viability Board.

    Mrs. MILLER. Thank you.

    Mr. BARTLETT. Thank you very much.

    Mr. Marshall.

    Mr. MARSHALL. Thank you for being here and testifying, gentlemen,

    And I am going to—I guess I am not going to steal my chairman's thunder, I am just going to make reference to things that he has said about this proposed switch for some time.

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    He will probably, when he makes his statement and asks his questions, he will quote from the year 2000 statements made by the Air Force, which seem to indicate that our tanker fleet was in great shape and was going to be in great shape for 40 years. So something significant has changed since 2000 to put you all here with the idea that the current tanker fleet can't be maintained much longer.

    He will also say, as he said to me and others, that people are happy with the Rs, that the Rs are working; convert the Es, continue the conversion process. And that the Rs will be working, at least the projections are, until the 2030's. So why spend the money now converting to a new platform. And that it is cost effective to convert to Rs and maintain those Rs, that that is a more cost-effective approach. The R does not necessarily have the capabilities that a new platform would have. Certainly, it does not have the capabilities of a new platform, but it will do.

    And then, I guess, I would like to hear your comments about that before I go vote, because I am not sure I can come back; I have got to do something else.

    And one more thing: I guess if you had a choice, more C–17s or this tanker conversion to a new frame, which would it be?

    General HOFFMAN. Sir, let me answer that first. Chief and the Secretary went into a meeting with me yesterday, and it was very clear what their position is on that. He said, ''I will take the first tanker before I take the 181st C–17.'' So his position is very clear on tankers——

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    Mr. MARSHALL. The Chief?

    General HOFFMAN. Yes, sir—as the priority.

    When you talk about do we convert and get by with just a pure refueling capability as we see it today versus an enhanced tanker capability, we just keep pushing the decision then down to when we finally have to recapitalize this fleet. Forty-five years old now. It all ages at the same time then.

    That is the problem we have got right now. We have the high purchase rates, you know, the 60's. They have now got us a very narrow window and we try to recapitalize at fiscally realizable rates, it is a multiyear process. So if we start even at a nominal rate of 15 per year, we are going to be doing this for 30 to 40 years, which means the last aircraft is 80-plus years old when it comes out.

    So the question, when to start, should really be, when do you want to end, when do you want the last tanker to go away? I know it is a question mark, and so just as an historical anecdote, this airplane here was called, ''The Question Mark,'' and in 1929 it set a record of 150 hours airborne with 42 refuelings with famous aviators like Ira Eaker and Carl Spaatz flying it. This aircraft today would be in its 80th timeframe, 75 to 80 years old.

    So if we want to fly airplanes 40 years from now that kind of look like this, we will be in the same historical perspective as if this aircraft was still doing line duty for us.

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    Granted, different scenario, aircraft last longer now than they did then, but 80 years, if that is the endpoint of our recapitalization, 80 years would be a very, very old aircraft.

    General KELLY. And, Mr. Marshall, if I could just add from an operational perspective an anecdote, if you will. On the night of 7 April, 2003, a young captain by the name of Nathan Howard and his crew on board TOGA 33 were in a KC–135R model over Iraq. A call came in that there was an F–15 that was down near Tikrit.

    Captain Howard and his crew, without defensive systems, without any knowledge of other things that were going on around them because they had no other operational awareness other than their own, kind of, wits about them and what their radios were telling them, elected to be a part of what turned out to be a successful rescue event that evening by proceeding from their orbit point up near Tikrit, which was in the heart of the Iraqi defense zone. In fact, there were some plus 50 surface-to-air missile (SAM) sites, 200 different anti-aircraft sites near Tikrit on that night.

    And without those defensive systems and without any other knowledge of what they might be facing, knowing that there was a downed airman, they repositioned themselves up near Tikrit to carry out that mission and allow the F–15s that were providing cover to the downed pilot and so rescue forces could get in and get him the kind of time that they needed in order to do that.

    I guess my argument would be if we could modernize that cockpit situational awareness for that crew, if we could give them modern defensive systems, wouldn't we want to do that? Wouldn't we want them to be operating in a far more secure environment knowing exactly what they face instead of relying on——
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    Mr. MARSHALL. And I assume in the Analysis of Alternatives you have already concluded that you cannot do that on the existing platform?

    General KELLY. Sir, that is correct. I mean, we did it——

    Mr. MARSHALL. Dr. Kennedy.

    Dr. KENNEDY. We did not actually look at those kinds of missions. The Analysis of Alternatives really only considered the refueling mission.

    Mr. MARSHALL. Okay.

    General KELLY. Sir, you are talking about defensive systems?

    Mr. MARSHALL. Yes.

    General KELLY. I am sorry, I misunderstood.

    Mr. MARSHALL. Defensive and more theater awareness.

    General KELLY. Yes, sir. You could probably at a greater—and I do not know that we have even done the analysis. My guess would be that the expense would be at least as much, if not more, to modify the KC–135s to provide that same kind of capability if you did it with a new aircraft. So we would opt to go in that direction.
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    Dr. KENNEDY. I would just say that in the Analysis of Alternatives, when we costed out the new alternatives, we did include the defensive systems and the modern conductivity and electronics on the aircraft, but we did not try to assess its value during wartime.

    General KELLY. Sir, I will just add one other quick thing. For their heroic efforts that evening, the crew of TOGA 33 were awarded the distinguished flying cross. It is the first Air Force crew in the Iraqi war to receive that distinction. So pretty heroic bunch of youngsters that evening.

    Mr. MARSHALL. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you. We have two of three minutes before the vote.

    The order of questions is determined by ranking on the subcommittee, not by the seniority on the full committee or in the Congress, if you have questions as to why who we recognize.

    So next on our priority on this subcommittee is Mr. Saxton. You have a couple of minutes, and then we can return for as long as you wish after the vote.

    Mr. SAXTON. How many KC–135s do we have grounded now out of the entire fleet of E models?
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    General KELLY. Mr. Saxton, I will take that one. If you do not mind, sir, I am going to, kind of, split a hair with you on the term, ''grounded.'' We choose not to call them grounded. We have taken 29 E models off of the flying schedule. There is a technicality there, but there are 29 of those airplanes that we have taken off the flying schedule because of the engine strut problem that we find on those 29 airplanes. And so the cost of repairing those struts as compared to the cost of just letting the airplanes not fly is a choice that at the operational command we have made to just keep them on the flying schedule.

    I would also tell you, sir, that there are eight more airplanes at Beale that are currently also not flying E models. And that is because those crews and maintainers have been converted to the R model as part of a normal conversion process. And so they have been given the more modern R model. And the Air Force Reserve has no need for those additional eight E models, and so those eight airplanes are also not flying.

    Mr. SAXTON. I had a conversation with a previous AMC commander a year or so ago and we were talking about this subject, and he was explaining the cost of fixing the struts and maintaining the aircraft. And he said, ''It is just not worth it.''

    Can you elaborate on that?

    General KELLY. Sir, that is certainly still our current position. And if you do not mind, sir, on the costs, I do not have them right with me, I know we have got those and we can provide those for the record, for sure, Mr. Saxton, but it is still the command's position that through the analysis that we have done, economically, it is better just to not repair those airplanes, keep them in a status that will allow us to, if and when we are allowed to retire them, get them out to the bone yard, and so we have chosen to do that.
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    General HOFFMAN. The R model conversion in 2004 dollars the last time we looked at this was $37 million. We think it is probably closer to $50 million now per aircraft to do the conversion.

    General WETEKAM. If I might add, sir, the cost to just modify the 29 E models that are currently removed from the flying schedule to put new engine pylons, because that is the limiting factor on those, is about $4.5 million per aircraft. I will add that the Fleet Viability Board recommendation, though, was that we not continue to modify those aircraft as E models, and essentially the board said that they did not see a viable future for the E model as an E model.

    Mr. BARTLETT. Our Democrat colleagues have a more attentive staff and they just a couple of minutes ago got their five-minute warning, so we would probably better stand in recess until after the vote. We shall return as promptly as possible.


    Mr. BARTLETT. Our subcommittee will reconvene.

    I do not know how many of our members will be able to get back, but I want to thank you all very much for your testimony. For too many years, I sat at the bottom of the committee and had lots of good questions to ask and never had a chance because there were more senior members. So once I am committee chair, I always ask my questions after everybody else has asked theirs.
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    Two advantages to that: One is, it is appreciated, particularly by the junior members, and the other advantage is that I frequently do not have to ask any questions, because they have been asked by other members.

    I would just like to spend a couple of minutes going a little further in the dialogue that was begun with my friend, Mr. Marshall, that is relative to the KC–135s, how long we can anticipate that they would be operable and the conversion of the Rs to Es.

    I was chair of this subcommittee when we were having the debate over whether or not we should lease the tankers from Boeing, and I noted the GAO request of the Air Force that, ''Aren't these tankers getting old and don't you think you ought to be looking to replace them?'' And the Air Force's response was, I think that was in 2000, that, ''Not to worry. These old birds have only half their service life used. They are going to last till 2040, and we are going to start looking to replace those in 2020.''

    And then a couple of years after that, there were witnesses sitting in front of this subcommittee telling us that the wings are about to fall off, that the sky was going to fall if we did not replace the whole fleet.

    I also noted that there was not much dissatisfaction with the Rs, and at the very time that witnesses were telling me that they just had to have new planes, they had six Es in the depots being converted to Rs, and they had money in the budget to convert four more.

    One of you made the—I think it was General Kelly—made the statement that they are all going to age together. That is not quite true, is it, because an E converted to an R today ought to have a little longer life than an E converted to R 20 years ago? Is that not true?
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    General KELLY. Thirty-six thousand and 39,000 flying hours is the service life, as it is defined right now, for the Es and the Rs. And the data we had a couple of years ago, I think since 9–11, we have overran some of the assumptions there about use rates and all that. So we think that service life based on those flying hour numbers will be in the early 2030's to mid–2030's now.

    Mr. BARTLETT. Because of increased use now.

    General KELLY. Right. Right.

    Mr. BARTLETT. Yes. In spite of the increased use, I noted one interesting statistic, and that was they were spending less time in the depots. How do you account for that?

    General WETEKAM. Sir, if I may, that is a good news story for our Air Force, and we have, in about the last four to five years, seriously taken on commercial process improvement methodology, such as lean-Six Sigma theory of constraints, and our depots have been leading the way to the point where the Secretary has directed the entire Air Force to adopt those same methodologies.

    And so as work packages have increased and then remained at least level and increased slightly during that period of time, we have actually cut our flow days in half since 2000. Between 2000 and 2005, we cut our flow days in the depot in half, despite the fact that the work package was essentially level. It was actually up slightly but only very slightly.
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    So, essentially, we are doing twice the amount of work per day as we were five years ago. So it is a good news story for the Air Force.

    Mr. BARTLETT. Which is why they are spending less time.

    General WETEKAM. Yes, sir. It is not that we are doing less work on the airframe, we are doing essentially the same amount of work.

    Mr. BARTLETT. Doing it more expeditiously, more efficiently.

    General WETEKAM. In half the time; yes, sir.

    General HOFFMAN. Mr. Chairman, I was at Tinker a couple weeks ago on a visit there, and the way they described it, they said, ''The hospital and the hospital staff is getting better and better all the time, but the patients still come in sicker and sicker all the time.''

    Mr. BARTLETT. Okay. That is a good analogy.

    Dr. Kennedy, when we were having all of those hearings on replacing the tanker fleet and whether we should lease them or buy them, I was curious as to why the sudden urgency. And there were two hurdles that you had to get over. One was, did we in fact need to buy the new planes just then, and the second hurdle was, if we needed to get the new planes, should we lease them or should we buy them?
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    I was never comfortably over the first hurdle. I would gather that the results of your study indicates that that probably was not a very uncomfortable position to be in?

    Dr. KENNEDY. Well, I would divide the answer into two parts. The first is, what is the best projection of the life of the aircraft, because you have to have a number to do these kind of calculations. And then what is your certainty about that number?

    And as we looked at maintaining the existing fleet of KC–135s, we projected some pretty substantial cost increases, particularly starting around 2020 in terms of major structural repairs to address some of the issues of corrosion and so on to replace whole parts of the aircraft.

    So we projected a pretty steep increase in the cost of the aircraft to keep them flying until 2040. And we did not see any showstopper that said, ''On this date, they can no longer fly.'' But as we noted in a 350-page—one of our volumes, there is substantial uncertainty about that, and we think we just have to face that. That is, there is uncertainty about the corrosion process, uncertainty about the fatigue process and uncertainty about the subsystem aging process that we do not think we can predict with high confidence how those costs are necessarily going to go.

    Our best projection is that they are going to grow to an extent that recapitalizing now would, in a present sense, just about pay for itself; that is, that the savings one would get from the KC–135 retirements over time would amortize the new investments.

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    But we caveat that by knowing that there is a substantial uncertainty about the future costs, and we think that is just the current nature of our analysis; that is, there could be things that could cause substantial decreases in availability or substantial cost growth, which we enumerate but we can't say for certain that they are going to become unflyable at any certain date.

    Mr. BARTLETT. I have two questions that I want to ask, and then if no other members have comments, I will ask for your parting comments and advice and adjourn the committee.

    The first question is, why shouldn't we convert all of the Es to Rs that are convertible, since you get about three airplanes that way for the cost of one new one?

    Dr. KENNEDY. Well, I will begin. The actual rate of return on investment analysis that we did in terms of the decrease in the maintenance cost and the fuel consumption that we would get as a result of the conversion would only pay for itself if the aircraft were operated into the 2030's. So if the plan is to operate those aircraft into the 2030's, then it is a positive return on investment at the Office of Management and Budget (OMB) rate of 3.1 percent.

    And in our effectiveness analysis, we assigned those aircraft to relatively shorter-range missions, so we got some increase in effectiveness but not a major one.

    Mr. BARTLETT. We have about nearly 40 of these planes that are now sitting on the ground?
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    General KELLY. Mr. Chairman, it is 37.

    Mr. BARTLETT. Thirty-seven?

    General KELLY. Yes, sir. But I would also add to Mr. Kennedy's comment that from an operational point of view, the increased capability that you would get from a modern airplane with floors, doors, defensive systems, the ability to refuel itself, the ability to provide both a drogue refueling and a boom refueling to receivers, all of those kinds of modern improvements to the capability would, from an operational point of view, be a better investment than just re-engine the E models with those limitations in place on the E model itself.

    Mr. BARTLETT. They do a little more than just re-engine. Don't they repair all of the structural problems, the struts and——

    General KELLY. Well, sir, the reason that we have the airplanes not flying is because the struts that hold the engines on are the——

    Mr. BARTLETT. So when you re-engine, you replace those anyway.

    General KELLY. That would be correct; yes, sir. But, again, that does not address some of those operational advantages you would have in a new airplane, like the ability to refuel, the ability to have both a drogue and a probe, the ability to go places that the E model, even if it were converted to an R, cannot go today.

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    General HOFFMAN. And, Mr. Chairman, when it goes to the R model, it does not relieve all of the other structural issues in the aircraft. Even R models, when they go through the depot, they find major members and skinning issues and all that stuff that have to be replaced. So just the conversion itself does not alleviate any of that.

    Mr. BARTLETT. This leads me to my other question. We are very much in the position of a family that has a lot of demands, an old car that it would be really nice to have a new one. It was in the shop less often and had the good GPS system on it so you knew you were going to get where you wanted to get at the end of the day. But you also had tuition for the kids, and the roof is leaking, and so you prioritize these things.

    And my question is, how do we do that in the military?

    It is clear that we would be happier with new tankers that have the capabilities, General Kelly, that you mentioned. But if we bought those, what wouldn't we buy, and how do we in the real world prioritize these things like the family does? Many families would like to have a five-week vacation with the whole family in Aruba. That is frequently too far down the priority list, and you have run out of money before you get that far down, and so you draw a line and you do not do that this year.

    How do we do that in our military? How do we prioritize our needs, and how urgent is this recapitalization of the tanker fleet compared, for instance, to one of the new aircraft systems that we are developing? At what stage does this happen or we do have to fight to see who has the larger voice in the Pentagon? Do we rationally come to a decision in developing a priority list and run that down that list until the money runs out? What do we do?
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    General HOFFMAN. Mr. Chairman, if we had the answer to that question, we could all retire, I think, because that really is the crux of our defense process to take requirements, bona fide requirements, look at what resources are available, make those matches. Within a program like this, I think can you find a thread of logic at the AOA and all that, just talking about this program, what are the options. But your question is bigger than that. It is how does this program compare to a new Army tank or a new Navy ship or another Air Force platform.

    That is a cooperative process, and sometimes a non-cooperative process between all the elements. Combatant commanders establish their priorities, which is really the war fighters vote. Services have their Title 10 responsibilities. They establish their priorities. That all gets melded together at the Office of the Secretary of Defense (OSD) level, and then it gets reshuffled and remolded, I think, again over here in the congressional debate in the role that Congress has in that process.

    Mr. BARTLETT. And it is more than just your needs, because a big argument for securing these planes was that the capability that Boeing represented, and it is kind of premier in the world being challenged now by the Europeans, but that they really needed this. And this is particularly true in shipbuilding and submarine building. We have an industrial base. That just has to be maintained for national security reasons, whether or not the thing that they are going to produce this year is a higher priority than tankers, for instance.

    And I am just curious about how rational the process is that we prioritize all these things so that we can decide—they would all be nice to have. You know, the family would like that five-week vacation and the new car, but there is a leaking roof and the tuition, and those, I think, for the average family are a higher priority.
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    General HOFFMAN. Mr. Chairman, just to stay within the boundaries of that analogy there, I would personally drive old cars until someone has got to tow them away. But when I have to send my children across country in a threat area, I would call it, because they are going by themselves and long distance, there is no difference than our children going into war, I think you take a different view about, you can't just pull over with a broken car and call a taxi.

    So we have an element there of military need that talks about the threat aspects of where that system is going to operate. I think we have to take a little different view of that instead of running a piece of iron until it absolutely no longer moves anymore.

    Mr. BARTLETT. But the people who are in the tanks are going to be making the same argument. The up-armoring of the Humvees are going to be making the same argument that their need is the highest possible priority in the military.

    And I do not know at what level, Mr. Taylor, we ask this question, but I would just like to know, I would love to have new tankers, but I am not sure that in the grand scheme of things that there are not higher priorities.

    General KELLY. Well, Mr. Bartlett, I guess another aspect of this is the department does strive to try to present a balanced program. Obviously, the Air Force within the department tries to produce a balanced program, and so there are obviously tradeoffs, and it is a constant struggle to determine which, as you have mentioned, which of those priorities is the most important. But we also have the responsibility to provide a defense capability to the entire nation, and so there is that constant struggle and dynamic, I think, within the service.
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    I think it also is a struggle and a dynamic that goes on within the department as it tries to balance amongst the services. And then, obviously, there is the role that the congressional branch of our government plays in trying to analyze that presentation of what we believe is a balanced force and determine whether or not those are the same priorities that the congressional branch might have. So it is a balancing act, and we constantly strive to find that balance as best we possibly can.

    Mr. BARTLETT. I am blessed, I guess. There is absolutely nothing of any military relevance in my district, except for Dietrich, which is medical. And so I have no provincial interest. My interest is only what is the best thing for our fighting young men and women, and what is the best thing for the taxpayer.

    Mr. Taylor.

    Mr. TAYLOR. Mr. Chairman, all those things that are not in your district are in my district. [Laughter.]

    We intend to keep it that way.

    Mr. Kennedy, I was wondering if you could give me—and I know this is brief and everyone has places to go—what you consider to be the four best options?

    Dr. KENNEDY. There are actually seven options that we looked at and——
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    Mr. TAYLOR. The four best, in your opinion.

    Dr. KENNEDY. The four best?

    Mr. TAYLOR. Yes.

    Dr. KENNEDY. I would say, in alphabetical order and numerical order——

    Mr. TAYLOR. I would prefer them in your order, what you think are the four best, starting with the best.

    Dr. KENNEDY. I can't do that. I can tell you what I think the best are, and I can tell you in terms of size: Boeing 67, Airbus 330, Airbus 340, 300 and Boeing 777. But I cannot—which one is best depends on specifics of mission mix and other issues. And, literally, all the analysis we did shows them to be approximately equally cost effective.

    Mr. TAYLOR. For each modifications of used aircraft or taking existing airframe and modifying—as a new build taking an existing airframe and modifying it to be a tanker.

    Dr. KENNEDY. Yes. Those are all—building them as new aircraft and building the tanker modifications into them as they come off the line. So setting up a separate production line to assemble the aircraft but assemble the tanker equipment into it at the same time that they are built as a new aircraft, as opposed to taking the used aircraft and then retrofitting it.
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    General HOFFMAN. I think you may have misunderstood the question.

    Dr. KENNEDY. Oh, sorry.

    General HOFFMAN. What four options, of all the options—you all described the four platforms that are within one option, which is commercial derivative.

    Dr. KENNEDY. Okay.

    General HOFFMAN. I think they are asking about which four options would be best.

    Dr. KENNEDY. Oh, I am sorry.

    Mr. TAYLOR. Now, if I may, in no particular order, we will start with Lieutenant General Kelly, what do you consider the four best options? If I was going to bone up on this subject, you tell me the four best options that this committee ought to be looking at? And I would really appreciate you speaking further.

    General KELLY. Sir, I think from an operational perspective, the first best option is a mix of capabilities. There are advantages to a larger airplane, and then there are advantages to a medium size airplane. So a mix would probably be a prudent way to try to find the right balance and where the sweet spot is between large and medium.
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    Mr. TAYLOR. I know, but give me an example of what your large would be and what your medium would be.

    General KELLY. Sir, from the operator's point of view, we are looking forward to a fair and open competition, and, quite frankly, we do not have a preference as to which of the specific airframes——

    Mr. TAYLOR. You do not?

    General KELLY. No, sir.

    Mr. TAYLOR. You do not have a personal opinion?

    General KELLY. Sir——

    Mr. TAYLOR. I would hope you did, because they do not make airplanes—one of the few things we do not do in south Mississippi is make airplanes, so I do not have too much of a horse in this race either.

    General KELLY. Sir, I have not really thought about it from a personal point of view.

    Mr. TAYLOR. Okay. If you are uncomfortable doing it on the record, I would welcome your thoughts off the record.
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    General KELLY. Okay.

    Mr. TAYLOR. Is that fair?

    General KELLY. That is fair.

    Mr. TAYLOR. General Hoffman?

    General KELLY. Sir, Could I add just one other thing, sir?

    Mr. TAYLOR. Sure.

    General KELLY. There was an option that has been mentioned by folks who have read the AOA that from an operational perspective does not make a lot of sense, and that is any combination that would include a small aircraft, 737 equivalent type airplane. That, in a modern context of air warfare, just does not provide us with the kind of capabilities or flexibilities that we really need. So back to your original question, sir, that is an option that I would, from an operational point of view, not consider to be very viable at all.

    Mr. TAYLOR. Lieutenant General Hoffman.

    General HOFFMAN. Personal opinion?

    Mr. TAYLOR. Yes, sir.
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    General HOFFMAN. My top three would be a new commercial derivative, and I would differ with General Kelly. I think we ought to buy one kind there just because development costs are cheaper, fleet management, all those things are cheaper, at least for the first tranche of aircraft, which I am kind of defining as the first 100, which is the congressional authorization vector we were given, is that the first 100 out all look the same. They all be medium. We already have a high-low mix. And it should be a new aircraft commercial derivative.

    I am truly agnostic about who the manufacturer of that platform is, because I think both vendors have bona fide contenders in there. In fact, both vendors have tankers that they are building, as we speak. So that would be my first option.

    My second would be to take all of our existing fleet and make it as healthy as we can. In other words, convert them all to Rs, do what we need to to network them and do the other things with the existing fleet that we have.

    And then my third option would be to buy new-used, if you will. In other words, go out there, find what is in the used market, bring those in, modify them. But that is a distant third option for me.

    General WETEKAM. Sir, I am probably the least qualified person on this panel to answer that. My area of expertise has been sustainment, particularly the KC–135.

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    Mr. TAYLOR. I would think that that would make you extremely qualified.

    General WETEKAM. Well, as far as——

    Mr. TAYLOR. Because whatever we buy we are going to hang on to for a long time.

    General WETEKAM. Yes, sir. But as far as having analyzed the future alternatives. But I would agree, my personal opinion, with General Hoffman that the best option is the commercial derivative, but I, quite frankly, am not—I have no opinion at this point based on what I know as to which might be the best platform.

    Mr. TAYLOR. Okay. I extend an invitation to all of you that if you have a personal preference that you would like off the record, I would welcome those thoughts.

    Dr. KENNEDY. Sir?

    Mr. TAYLOR. Yes, sir.

    Dr. KENNEDY. If I can just say one more thing on the record. We are about to release our publicly available executive summary of the AOA soon, and it identifies the Boeing 767, the Boeing 787, the Boeing 777, the Boeing 747, the Airbus 330 and the Airbus 340 as our preferred candidate. So we are on the record as saying that.

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    Mr. TAYLOR. Are they still producing 767s?

    Dr. KENNEDY. At a low rate now. Yes, they are.

    Mr. TAYLOR. But all the equipment is there to make them.

    Dr. KENNEDY. Oh, yes. There are some 767s being assembled today.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. BARTLETT. Dr. Kennedy, if one wanted, in the most simpleminded way, to summarize the results of your study, would it be fair to say that you concluded that we could make due with the present fleet for a while and that after that the best option is a commercial derivative rather than a new design?

    Dr. KENNEDY. Well, certainly, the latter, and I would say that what we found is that the present value of the cost implications were insensitive to when one begins, but that does imply that we found that the existing fleet could go on for 10 years. We found no clear evidence that it could not, but I would caveat it by saying we did think there was a lot of uncertainty about it.

    Mr. BARTLETT. Yes, understand. That is the risk with an old car.

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    Dr. KENNEDY. Exactly.

    Mr. BARTLETT. It still ends up cheaper than buying a new car.

    So the decision as to whether we buy new airplanes or not will be determined by where this requirement is placed on the priority list of all of the services. Is that a fair statement?

    Dr. KENNEDY. Yes. I would say the way I characterized what the AOA said was that given that we found the total present value cost insensitive, it would depend. Favoring early recapitalization would be the risks associated with the KC–135, which we said we cannot quantify now, and the long-term affordability and the extra capability. But favoring later retirement would be if there is a short-term affordability of the sort you are alluding to if there is some thought that the tanker requirements might be change in the future in a way that one would not want.

    General HOFFMAN. But, Mr. Chairman, I would submit that the President's budget, 2007 budget, is the leading edge of the Future Years Defense Plan, and through the Quadrennial Defense Review (QDR) process, which does that prioritization trades that you talked about there, have created the president's budget. That is the leading edge. And that wedge of money that is in the Future Years Defense Plan is sufficient to be the leading edge for procurement of new aircraft. So that debate has already occurred within the Department of Defense.

    Mr. BARTLETT. My only concern with that is that we are now pursuing the development of more weapons platforms than we are going to be able to procure in the future. And I am always uncomfortable with a budget that keeps going down the road with development when you know that in the out-years there is no way that you can support all the procurement of all of those things that you are now developing.
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    And is the new tanker going to be a casualty? Now, what is going to be the Joint Strike Fighter? Now, what is going to be the 22? What is going to be the casualty? I think it is very clear that we—or is it the second submarine a year? There is something we are not going to be able to do. We can't do everything that we are now doing R&D on. And so what are we not going to do?

    And, Mr. Taylor, I really would like a briefing, and we will ask the staff to put that together, on—what we want to be is responsible, and I guess what you would expect us to do is to say, ''Gee, we have just got to have this because it is our subcommittee responsibility.'' But I want to, if I can—I have a broader view, and I want to do what is best for our military across the board.

    And I would like to know how that prioritization is done, and I would like to have a briefing on how that is done, because we need that kind of guidance for our oversight.

    There are several questions that we would like to ask you for the record that we need to have answers to in the record for our oversight responsibilities. If it is okay with you, we will submit those, the staff will submit those questions to you, and we will look for your response on the record.

    Do any of you have any parting comments?

    I want to thank you all very much for your testimony and for your service to our country.
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    And thank, Dr. Kennedy, for your study.

    Dr. KENNEDY. Thank you.

    Mr. BARTLETT. Thank you all very much.

    General HOFFMAN. Mr. Chairman, I recommend we do not have a break, because the media's questions were much tougher than yours were. [Laughter.]

    Mr. BARTLETT. Okay.

    Okay. We are in adjournment. Thank you.

    [Whereupon, at 7:40 p.m., the subcommittee was adjourned.]