The Buzz

Can The Air Force Juggle All Its Major Acquisition Programs?

 

The U.S. Air Force has a lot of balls in the air when it comes to major acquisition programs.  It is modernizing simultaneously its fleets of tactical fighters, bombers and aerial refueling tankers. The service is about to release the final request for proposals (RFP) for a new trainer to replace the obsolescent T-38. It is working on a strategy for a new airborne ground surveillance platform. Then there is access to space where the Air Force has promoted a competition for launch services.

The secret to successful juggling is timing. This is also the case with managing multiple major acquisition programs. Timing is related to the availability of resources. There is never enough money for the military to buy all the things they want. In fact, as we all have seen over the past eight years, the level of resources available not just for modernization but operations and maintenance can vary greatly. But even if the Pentagon gets its wish for stable and predictable budgets, acquisition programs need to be sequenced over time.  With proper sequencing some acquisition programs come to an end just as the new ones are ramping up. If the military gets its timing wrong, programs stack up, overwhelming the ability to manage all of them and forcing the reallocation of resources in ways that slow down the delivery of new capabilities while also increasing their prices. It’s as if a juggler was continually adding balls until their number overwhelmed his ability to keep them all in the air.

The Air Force already faces a problem juggling all its major acquisition programs.  Simply put, it has about run out of time when it comes to modernization. The Air Force sought to finesse its modernization budget shortfalls by delaying the start of a number of major aircraft acquisitions. This strategy has now resulted in a tanker fleet with an average age of 50, bombers exceeding 40 years (the B-52s are over 50), and training aircraft that are on average 44 years old. The Joint Surveillance and Target Attack Radar System (JSTARS) was built on refurbished B-707s. A number of JSTARS aircraft were recently grounded due to unanticipated maintenance problems.

To be honest, there have been problems with some Air Force programs that have caused them to be delayed, with ripple effects across the service’s entire modernization portfolio. The F-35 Joint Strike Fighter, the most complex and technologically advanced fighter program in history, had a number of programs that caused the development timeline to be extended and necessitate the injection of additional funds. The KC-46A, the new aerial tanker, is more than a year behind schedule and has cost Boeing, who committed to a fixed price contract, over $1 billion. Both these programs are now on track and show every sign of being successful. But stuff happens, even when the technologies involved are mature.

But the way the Air Force is choosing to manage some of its new modernization programs may increase the risk that it will not be able to keep all the balls in the air simultaneously. Take the new bomber program, the B-21. Even though the Air Force was given additional time and resources to work on many of the requisite technologies it still awarded Northrop Grumman a cost plus fee development contract. In a cost plus contract, the government is responsible for any cost overruns. This type of contract makes sense when the key technologies and manufacturing processes are new, possibly even experimental, or requirements are subject to change. But many observers, including senior members of Congress, have questioned the wisdom of making the bomber contract cost plus rather than fixed price. Moreover, according to various reports, the Air Force and the Office of the Secretary of Defense both estimated the cost of developing the new bomber to be significantly higher than the price Northrop Grumman bid. This suggests the possibility of problems that could result in time delays or even necessitate a restructuring.

The program to buy a new jet trainer, the T-X, may pose additional risks to the Air Force’s modernization portfolio. The Air Force has been planning on buying a replacement for the T-38 for many years. It always pushed that day further into the future in order to free up resources for what were deemed more critical acquisitions. Now the requirement cannot be avoided. The plan is to release an RFP this December, award a contract next year and have the new plane flying by 2024. Because all entrants are expected to be production-ready, the contract for the T-X will be firm, fixed price. The winning team will have to absorb any cost overruns.  In addition, there will be no concurrency; the winner must go through a thorough test program before beginning production. Yes, the Air Force will not have to pay directly for any cost overruns. But should such a problem arise that delays initial operational capability – there is only seven years between contract award and IOC – the Air Force will have to pay tens of millions of additional dollars to keep the old T-38s flying.

Another program that may be difficult for the Air Force to juggle in the near-term is the JSTARS replacement. Mind you, we are talking only about eighteen aircraft and one which will make use of either a business jet or commercial airline frame, like the B-737.  Even the sensor technology is mature. So why is the Air Force going to take more than a decade to field the replacement JSTARS? The problem here isn’t with industry, but the acquisition bureaucrats who want a long program that will see them through until they can retire. Such a long program means that this aircraft will be in the production queue at exactly the same time as the F-35, B-21, KC-46, new trainer and lots of weapons systems.

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