GAO-07-367R Defense Acquisitions 

United States Government Accountability Office

Washington, DC 20548 

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 KC10. 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 System1

 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.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 

 

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. 
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.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.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. 

 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. 

Page 2 GAO-07-367R Defense Acquisitions 
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, 

Page 3 GAO-07-367R Defense Acquisitions 
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 

Page 4 GAO-07-367R Defense Acquisitions 
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.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.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.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 

 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).

Page 5 GAO-07-367R Defense Acquisitions 
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.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.9

 After Air 

Force validation, the Chairman’s Joint Requirements Oversight Council, responsible 

for reviewing military acquisitions, approves and validates warfighting capabilities.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,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.12 Absent this 

certification, the acquisition program for the replacement refueling aircraft cannot 

begin.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 KC135.14 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 KC135.15 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. 

 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). 10AFI 10-601, ¶ 2.3.5.2 (July 31, 2006). 1110 U.S.C. §133 (b)(1) (2006). 1210 U.S.C. § 2366a (a) (7) and (a)(10) (2006). 1310 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). 14GAO, U.S. Combat Air Power: Aging Refueling Aircraft Are Costly to Maintain and Operate, 

GAO/NSIAD-96-160 (Washington, D.C.: Aug. 8, 1996). 15GAO, Military Aircraft: DOD Needs to Determine Its Aerial Refueling Aircraft Requirements, GAO04-349 (Washington, D.C.: June 4, 2004). 

Page 6 GAO-07-367R Defense Acquisitions 
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.16 According to DOD officials, the KC135 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.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.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.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.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.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

 16Air Force Policy Directive 10-6, Capabilities-Based Planning and Requirements Development, ¶ 1 

(May 31, 2006), hereinafter cited as AFPD 10-6 (May 31, 2006). 17AFI 10-601, ¶ 1.2 (July 31, 2006). 18AFPD 10-6, ¶ 1.1 (May 31, 2006). 19AFI 10-604, ¶ 3.1.4 (May 10, 2006). 20The 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. 21AFI 10-604, ¶ 3.1.4.2 (May 10, 2006).

Page 7 GAO-07-367R Defense Acquisitions 
identifies the gaps/shortfalls or redundancies.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.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.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.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 cargocapable 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.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.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.

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 

 22 AFI 10-601, ¶ 2.2.1 (July 31, 2006). 23AFI 10-604, ¶ 3.1.4.3 (May 10, 2006). 24GAO-04-349, app. II, p. 34. 25Department of Defense Mobility Capabilities Study, Executive Summary, Sec. II, p. 2 (December 

2005). 26The inventory of 590 air refueling aircraft comprises 114 KC-135Es, 417 KC-135Rs, and 59 KC-10

aircraft. 27GAO/NSIAD-96-160, app. I, p. 41. 28Capabilities-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.

Page 8 GAO-07-367R Defense Acquisitions 
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 capabilitiesbased 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.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 Forcesponsored 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 capabilitiesbased 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.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.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.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.33 In November of 2006, 

the Joint Requirements Oversight Council met, validated, and approved the passenger 

 29AFI 10-601, ¶ 2.3.5 (July 31, 2006). 30AFI 10-601, ¶ 3.4 (July 31, 2006). 3110 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. 3210 U.S.C. § 181 (b)(1) (2006). 33Chairman of the Joint Chiefs of Staff Instruction 3170.01E, ¶ 1 (May 11, 2005) and 5123.01B, Charter 

of the Joint Requirements Oversight Council, Encl. A ¶ 2e(15), p. A-6 (April 15, 2004). 

Page 9 GAO-07-367R Defense Acquisitions 
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.34 However, we found decision makers did not use objective 

analysis in combination with their judgment as required.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.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.37

 34AFI 10-601, ¶ 1.4.1 (July 31, 2006). 35Air 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. 3610 U.S.C. § 2366a (a) (2006). 3710 U.S.C. § 2366a (2006) and DODI 5000.2 ¶ 3.7.1.2 (May 12, 2003). 

Page 10 GAO-07-367R Defense Acquisitions 
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.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.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. 

 38In 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. 39Air Force Policy Directive 16-5, Planning, Programming, and Budgeting System, ¶ 1 (29 July 1994).

Page 11 GAO-07-367R Defense Acquisitions 
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 

Page 12 GAO-07-367R Defense Acquisitions 
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.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. 

 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. 

Page 13 GAO-07-367R Defense Acquisitions 
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. 

William M. Solis, Director 

Defense Capabilities and Management 

Enclosure 

Page 14 GAO-07-367R Defense Acquisitions 
List of Congressional Committees 

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 

Page 15 GAO-07-367R Defense Acquisitions 
Enclosure I 

Page 16 GAO-07-367R Defense Acquisitions 
Enclosure I 

Page 17 GAO-07-367R Defense Acquisitions 

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