United States Government Accountability Office

GAO Testimony 

Before the House Committee on Armed 

Services, Air and Land Forces 

Subcommittee

DEFENSE ACQUISITIONS

Issues Concerning Airlift 

and Tanker Programs 

Statement of William M. Solis, Director 

Defense Capabilities and Management Issues and 

Michael J. Sullivan, Director 

Acquisition and Sourcing Management Issues 

For Release on Delivery

Expected at 3:00 p.m. EST 

Wednesday, March 7, 2007

 

GAO-07-566T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 7, 2007

DEFENSE ACQUISITIONS 

Issues Concerning Airlift and Tanker 

Highlights of GAO-07-566T, a testimony to Programs 

House Committee on Armed Services, Air 

and Land Forces Subcommittee 

The Department of Defense (DOD)

has continuing efforts to modernize 

its airlift and tanker fleets by

investing billions of dollars to 

modify legacy airlift systems, such

as the C-5 and C-130, and procure

new aircraft, such as a tanker

replacement. Acquisition has been

on GAO’s list as a high risk area

since 1990. GAO has reported that

elements contributing to a sound

business case for an acquisition are 

missing or incomplete as DOD and 

the services attempt to acquire new 

capabilities. Those elements 

include firm requirements, mature

technologies, a knowledge-based 

acquisition strategy, a realistic cost 

estimate, and sufficient funding.

Acquisition problems that include 

failure to limit cost growth, 

schedule delays, and quantity

reductions persist, but fiscal 

realities will not allow budgets to 

accommodate these problems any 

longer. 

Today’s testimony addresses 

(1) the analyses supporting the 

Department of Defense’s (DOD)

mobility capabilities and 

requirements and (2) actions that

are needed to improve the

outcomes of weapon system 

acquisitions. 

For this testimony, GAO drew from 

issued reports, containing

statements of the scope and 

methodology used, as well as 

recently completed work not yet 

reported. GAO’s work was 

performed in accordance with 

generally accepted government 

auditing standards. 

Past GAO reports, including two recently issued, raise concerns about the 

quality of analyses underpinning the programmatic decision-making 

surrounding DOD’s airlift requirements. In September 2006, GAO issued our 

report (GAO-06-938) on DOD’s Mobility Capabilities Study (MCS). The MCS 

determined that the projected mobility capabilities are adequate to achieve 

U.S. objectives with an acceptable level of risk during the period from fiscal

years 2007 through 2013; that is, the current U.S. inventory of aircraft, ships, 

prepositioned assets, and other capabilities are sufficient, in conjunction 

with host nation support. GAO’s report stated that conclusions of the MCS 

were based on incomplete data and inadequate modeling and metrics that 

did not fully measure stress on the transportation system. GAO further 

observed that the MCS results were incomplete, unclear, or contingent on 

further study, making it difficult to identify findings and evaluate evidence. It 

was not clear how the analyses done for the study support DOD’s 

conclusions and GAO suggested that decision makers exercise caution in 

using the results of this study to make programmatic decisions. In March 

2007, GAO reported (GAO-07-367R) on the lack of mandatory analyses to 

support a passenger and cargo capability for the new replacement refueling 

aircraft, the KC-X tanker. Contrary to mandatory Air Force implementing 

guidance, the Air Force proposed a capability without analyses identifying 

an associated gap, shortfall, or redundancy. GAO believes that 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 and made recommendations to the Secretary of Defense that 

included conducting the requiring analyses necessary to establish 

capabilities.

Successful acquisition programs make sound decisions based on critical 

product knowledge to ensure that program investments are getting promised 

returns--on time delivery, within estimated costs, and with expected 

capabilities. However, GAO has shown in its work that DOD practices 

diverge from best development practices intended to produce good 

outcomes and, as a result, have experienced significant cost growth and 

schedule delays. DOD expects to invest over $12 billion in new and 

improved capabilities in four airlift programs discussed in this testimony 

between now and 2013—C-5 Avionics Modernization Program, C-5 

Reliability Enhancement and Reengining Program, C-130 Avionics 

Modernization Program, and the C-130J acquisition program. GAO found 

that all four programs failed at basic systems engineering practices to 1) 

fully analyze the resources needed to integrate proven commercial

technologies, 2) achieve a stable design before beginning system 

demonstration, and 3) demonstrate the aircraft would work as required 

before making large production investments. www.gao.gov/cgi-bin/getrpt?GAO-07-566T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis

at (202) 512-8365 or solisw@gao.gov and

MIchael J. Sullivan at (202)-512-4841 or 

sullivanm@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here to discuss the development of aircraft program 

requirements and issues related to the acquisition process. We recently 

issued our report on high risk areas in the federal government, which lists 

DOD’s acquisition process as one longstanding area of concern.1

Acquisition has been on this list since 1990. As we have reported, DOD 

knows what to do to achieve more successful outcomes, but finds it 

difficult to apply the necessary discipline and controls or assign much 

needed accountability. DOD has not been employing a knowledge-based 

development approach and business cases have not measured up. DOD 

has just begun piloting some corrective actions, so the proof of actual 

implementation may be years away. These initiatives also may not 

necessarily be applied to programs already under way. 

DOD has continuing efforts to modernize its airlift and tanker fleets by 

investing billions of dollars to modify legacy airlift systems, such as the C5 and C-130, and procure new aircraft, such as the KC-X replacement 

tanker. We have reported in the past that a sound business case for an 

acquisition contains firm requirements, mature technologies, a knowledgebased acquisition strategy, a realistic cost estimate, and sufficient funding. 

However, we have found many of these elements are missing or 

incomplete as DOD and the services attempt to acquire new capabilities. 

Persistent acquisition problems include failure to identify needs versus 

wants and to limit cost growth, schedule delays, and quantity reductions, 

but fiscal realities will not allow budgets to accommodate these problems 

any longer. 

Today I will highlight for you some issues related to the analyses 

supporting the Department of Defense’s (DOD) mobility capabilities and 

requirements and Mike Sullivan will discuss actions that are needed to 

improve the outcomes of weapon system acquisitions. For this testimony, 

we drew from issued reports, which contain statements of the scope and 

methodology used, as well as recently completed work not yet reported. 

Our work was performed in accordance with generally accepted 

government auditing standards. 

 1

 GAO, High Risk Series: An Update, GAO-07-310 (Washington, D.C.: Jan. 2007). 

Page 1 GAO-07-566T 
DOD has an mandate to deliver high-quality products to warfighters, when 

they need them and at a price the country can afford. However, our work 

shows that acquisition problems will likely persist until DOD provides a 

better foundation for buying the right things, the right way. This 

foundation begins with setting requirements that are based on adequate 

and complete analyses, using current operational data and updated, 

effective models. For the past several years, we have reported our 

concerns with the analyses done to support requirements and have 

recently issued two reports that raise concerns about the quality of 

analyses underpinning the programmatic decision-making surrounding 

DOD’s airlift requirements. In September 2006, we issued our report on 

DOD’s Mobility Capabilities Study (MCS). The MCS determined that the 

projected mobility capabilities are adequate to achieve U.S. objectives 

with an acceptable level of risk during the period from fiscal years 2007

through 2013; that is, the current U.S. inventory of aircraft, ships, 

prepositioned assets, and other capabilities are sufficient, in conjunction 

with host nation support. In our report, we stated that conclusions of the 

MCS were based on incomplete data and inadequate modeling and metrics 

that did not fully measure stress on the transportation system.2

 We further 

observed that, in some cases, the MCS results were incomplete, unclear, or

contingent on further study, making it difficult to identify findings and 

evaluate evidence. It is not clear how the analyses done for the study 

support DOD’s conclusions and we suggested that decision makers 

exercise caution in using the results of this study to make programmatic 

decisions. This week, we issued a report on the lack of mandatory 

analyses to support a passenger and cargo capability for the new 

replacement refueling aircraft, the KC-X tanker.3

 Contrary to mandatory 

Air Force implementing guidance, the Air Force proposed a capability 

without an analyses identifying an associated gap, shortfall, or

redundancy. Air Force officials could not provide supporting information 

sufficient to explain this discrepancy between the required analyses and 

their proposal. 

Summary 

 2

 GAO, Defense Transportation: Study Limitations Raise Questions about the Adequacy

and Completeness of the Mobility Capabilities Study and Report, GAO-06-938 

(Washington, D.C.: Sept. 20, 2006). 

3

 GAO, Defense Acquisitions: Air Force Decision to Include a Passenger and Cargo 

Capability in Its Replacement Refueling Aircraft Was Made without Required Analyses, 

GAO-07-367R (Washington, D.C.: Mar. 6, 2007). 

Page 2 GAO-07-566T 
Successful acquisition programs make sound decisions based on critical 

product knowledge to ensure that program investments are getting 

promised returns—on time delivery, within estimated costs, and with 

expected capabilities. This is important because DOD expects to invest 

over $12 billion in new and improved capabilities in four airlift programs 

discussed in this testimony between now and 2013—the C-5 Avionics 

Modernization Program, C-5 Reliability Enhancement and Reengining 

Program, C-130 Avionics Modernization Program, and the C-130J 

acquisition program. These four programs have diverged from the best 

development practices intended to produce good outcomes and as a result

have experienced significant cost growth and schedule delays. We found 

that all four programs failed at basic systems engineering practices to 1) 

fully understand the resources needed to integrate proven commercial 

technologies, 2) achieve a stable design before beginning system 

demonstration, and 3) demonstrate the aircraft would work as required 

before making large production investments. As a result, each has 

encountered significant delays in delivering capability to the field and as a 

group have spent $962.3 million (fiscal year 2007 dollars) more than 

planned for development. 

DOD must be capable of rapidly deploying armed forces to respond to 

contingency and humanitarian operations around the world. Airlift and 

tanker aircraft play a vital role in providing this capability. Over the past 

25 years, DOD has invested almost $141 billion to develop, procure, and 

modify its airlift and tanker forces with an additional investment planned 

for fiscal years 2007 through 2011 of $32 billion. Recent annual funding 

levels are at the highest levels in two decades. (See figure 1.) 

Background 

Page 3 GAO-07-566T 
Figure 1: Planned and Future DOD Investments in Airlift and Tanker Fleets (1982 to 2011) 

Note: Based on DOD’s Fiscal Years Defense Program (2007). 

In December 2005, DOD issued a report on the study of its mobility 

capabilities. The goal of this Mobility Capabilities Study was to identify 

and quantify the mobility capabilities needed to support U.S. strategic 

objectives into the next decade. The MCS determined that the projected 

mobility capabilities are adequate to achieve U.S. objectives with an 

acceptable level of risk during the period from fiscal years 2007 through 

2013; that is, the current U.S. inventory of aircraft, ships, prepositioned 

assets, and other capabilities are sufficient, in conjunction with host 

nation support. The MCS emphasized that continued investment in the 

mobility system, in line with current departmental priorities and planned 

spending, is required to maintain these capabilities in the future. This 

includes, for example, fully funding Army prepositioned assets as planned

and completing a planned reengineering of the C-5 aircraft. 

Page 4 GAO-07-566T 
In our previous reports concerning acquisition outcomes and best 

practices, we have noted the importance of matching warfighter 

requirements with available resources, a responsibility shared by the 

requirements and acquisition communities in DOD. As described in Air 

Force implementing guidance, there is within DOD a distinct separation 

between the requirements authority and acquisition authority.

4

 Under this 

guidance, this separation requires early and continued collaboration 

between both communities. 

Analyses done for the MCS contained methodological limitations that 

create concerns about the adequacy and completeness of the study and 

decision makers approving the KC-X tanker proposal lacked required 

analyses identifying need and associated risk for a passenger and cargo 

capability. 

Analyses Used to 

Determine Mobility 

and Tanker 

Capabilities Were 

Inadequate 

Mobility Capabilities Study 

Limitations Raise 

Questions about Adequacy 

and Completeness 

While DOD used an innovative approach in conducting the study and 

acknowledged some methodological limitations in its report, it did not 

fully disclose how these limitations could affect the MCS conclusions and 

recommendations. In September 2006, we reported that DOD’s 

conclusions were based, in some instances, on incomplete data and 

inadequate modeling and metrics that did not fully measure stress on the 

transportation system, and that, in some cases, MCS results were 

incomplete, unclear, or contingent on further study, making it difficult to 

identify findings and evaluate evidence. It is not clear how the analyses 

done for the study supported DOD’s conclusions, and we suggested that 

decision makers exercise caution in using the results of this study to make 

programmatic decisions.

As measured against relevant generally accepted research standards, we 

identified limitations in the MCS study and report that raise questions. 

Among our findings 

• Aspects of modeling and data were inadequate in some areas because data 

were lacking and some of the models used could not simulate all relevant 

 4

Air Force Iinstruction 10-601, Capabilities-Based Requirements Development, ¶ 1.2 (July 

31, 2006). 

Page 5 GAO-07-566T 
aspects of the missions. The report did not explain how these limitations 

could affect the study results or what the effect on the projected mobility 

capabilities might be. Relevant research standards require that models 

used are adequate for the intended purpose and represent a complete 

range of conditions, and also that data used are properly generated and 

complete. For example, the MCS modeled hypothetical homeland defense 

missions rather than missions for homeland defense demands from a welldefined and approved concept of operations for homeland defense 

because the specific details of the missions were still being determined, 

and DOD acknowledged that the data used may be incomplete. The MCS 

also was unable to model the flexible deterrent options/deployment order 

process to move units and equipment into theater due to lack of data, but 

the study assumed a robust use of this process, which in one scenario 

accounted for approximately 60 percent of the airlift prior to beginning 

combat operations.5

 In addition, the MCS report contains more than 80 

references to the need for improved modeling, and 12 of these references

call for additional data or other refinements. Additionally, the MCS 

modeled the year 2012 to determine the transportation capabilities needed

for the years 2007 through 2013. The year 2012 did not place as much 

demand for mobility assets in support of smaller military operations, such 

as peacekeeping, as other years. However, DOD officials considered 

2012—the year modeled—as “most likely” to occur and stated that 

statistically it was not different from other years in the 2007 to 2013 period

even though the number of smaller military operations is the least of any 

of the years reviewed. 

As I mentioned, we have reported before on the lack of data available for 

analysis that could benefit decision makers. In September 2005, we 

reported that the Air Force captured data on short tons transported but 

did not systematically collect and analyze information on operational 

factors, such as weather and runway length, that impact how much can be

loaded on individual missions.6

 Therefore, Air Force officials could not 

know how often it met its secondary goal to use aircraft capacity as 

efficiently as possible. Without this information, Air Mobility Command 

officials do not know the extent to which opportunities exist to use 

aircraft more efficiently and whether operational tempo, cost, and wear 

 5

 Deployment orders are issued to deploy specific capabilities as commitment decisions are

made, rather than a deploying unit’s full set of equipment or capabilities. Flexible Deterrent

Options (FDOs) provide escalation options during the initial stages of a conflict. FDOs are 

employed under certain conditions to deter adversarial actions contrary to U.S. interests. 

6

 GAO, Defense Transportation: Air Mobility Command Needs to Collect and Analyze 

Better Data to Assess Aircraft Utilization. GAO-05-819 (Washington, D.C.: Sept. 29, 2005).

Page 6 GAO-07-566T 
and tear on aircraft could be reduced. In addition, DOD officials do not 

have the benefit of such analysis to determine future airlift requirements 

for planning purposes. 

• While the MCS concluded that combined U.S. and host nation 

transportation assets were adequate to meet U.S. objectives with 

acceptable risk, the report, in describing the use of warfighting metrics in 

its analyses, does not provide a clear understanding of the direct 

relationship of warfighting objectives to transportation capabilities. 

Acknowledging this point, the report stated that further analysis is 

required to understand the operational impact of increased or decreased 

strategic lift on achieving warfighting objectives. Relevant generally 

accepted research standards require that conclusions be supported by 

analyses. The use of warfighting metrics is a measure to determine 

whether combat tasks, such as achieving air superiority, are achieved. 

However, they do not measure whether appropriate personnel, supplies, 

and equipment arrived in accordance with timelines. As a result, we could 

not determine how the study concluded that planned transportation assets 

were adequate because the study did not contain a transparent analysis to 

support its conclusion or a clear roadmap in the report to help decision 

makers understand what that conclusion meant in terms of type and 

number of mobility assets needed. Previous DOD mobility studies 

primarily used mobility metrics, which measured success in terms of tons

of equipment and personnel moved per day to accomplish military 

objectives. The use of both warfighting and mobility metrics to measure 

success would allow decision makers to know whether combat tasks were 

achieved and how much strategic transportation is needed to accomplish 

those tasks. 

• In some cases, the MCS results were incomplete, unclear, or contingent on

further study, making it difficult to identify findings and evaluate evidence. 

Relevant research standards require results to be presented in a complete, 

accurate, and relevant manner. For example, the report contains several 

recommendations for further studies and assessments, five of which are 

under way. However, at the time of our report, DOD had no plans to report 

the effect of these studies on the MCS results after the studies are 

complete. In addition, the report contains qualified information that is not 

presented clearly, such as varying assessments of intratheater assets in 

three different places in the report. The lack of clarity and conciseness of 

the reported results can limit the study’s usefulness to decision makers 

and stakeholders. 

The MCS report also made recommendations to conduct further studies, 

develop plans and strategies, and improve data collection and mobility 

models. In fact, DOD officials told us at the time that a Mobility 

Capabilities Study-2006 was underway, as well as studies on intratheater 

Page 7 GAO-07-566T 
lift, aerial refueling, and other mobility issues. However, unless DOD 

addresses the concerns I just outlined for you, decision makers may be 

unable to clearly understand the operational implications of the study 

results and make fully informed programmatic investment decisions 

concerning mobility capabilities. Also, some of the underlying 

assumptions used in the MCS have now changed significantly, such as the

assumption that Army prepositioned equipment is in place and fully 

funded, which will no longer be the case. Therefore, the MCS analyses and 

results, which would be the starting point for any new studies, may no 

longer be relevant. 

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, the KC-X tanker, 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, KCX tanker proposal with a passenger and cargo capability.

Following the approvals of the oversight councils, DOD plans to solicit 

proposals and award a contract for the KC-X tanker late in fiscal year 

2007. At this time, the Under Secretary of Defense for Acquisition, 

Mandatory Analyses Done 

to Support Passenger and 

Cargo Capabilities in the 

KC-X Tanker Were 

Incomplete 

Page 8 GAO-07-566T 
Technology and Logistics, who supervises DOD acquisition,7

 must certify, 

as Milestone Decision Authority for the proposed tanker acquisition, that, 

among other things, the Joint Requirements Oversight Council has 

accomplished its statutory duties and that the proposed program is in 

compliance with DOD policies and regulations.8

 However, 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. Absent this 

certification, the acquisition program for the KC-X tanker cannot begin.9

In this report, we recommended that the Secretary of Defense direct the 

Secretary of the Air Force to accomplish the required analyses to 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. We also recommended that, once these analyses are completed, 

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. 

DOD disagreed with our first recommendation to accomplish the required 

analyses. 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. 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

 7

 10 U.S.C. §133 (b)(1) (2006). 

8

 10 U.S.C. § 2366a § (a)(7) and (a)(10) (2006). 

9

 10 U.S.C. § 2366a (a) (2006) and Department of Defense Instruction 5000.2, Operation of 

the Defense Acquisition System, ¶ 3.7.1.2 (May 12, 2003). 

Page 9 GAO-07-566T 
by mandatory guidance are necessary to inform the decision that begins 

the acquisition. 

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. However, DOD did not offer 

assurance that the Air Force would accomplish the required analyses that

evaluate the proposed passenger and cargo capability as we 

recommended, 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.10 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. 

In light of the DOD comments on our report, we have put forward a matter 

for congressional consideration. Specifically, we are suggesting that 

Congress consider requiring 

• 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 KC135 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.

The Air Force intends to replace the fleet of more than 500 tankers and the

Mobility Capabilities Study of 2005 set the requirement for tankers at a 

 10 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 10 GAO-07-566T 
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, according to the Analysis of Alternatives done for the KC-X 

tanker, to increase costs by 6 percent. The Joint Requirements Oversight 

Council approval of the proposal of a replacement tanker 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. 

In our August 1996 report, U.S. Combat Air Power: Aging Refueling 

Aircraft Are Costly to Maintain and Operate, we recommended 

consideration of a dual-use aircraft that could conduct both aerial 

refueling and airlift operations as a replacement for the KC-135.11 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 dualuse aircraft would be used and whether one mission area might be 

degraded to accomplish the second mission. The lack of analyses done to

support the current proposal still does not give DOD officials information 

about how a dual-use aircraft would be used or whether the primary 

mission of aerial refueling would be degraded. 

Over the past 25 years, DOD has invested more than $140 billion on its 

airlift and tanker forces. Success for acquisitions requires sound decisions 

to ensure that program investments are getting promised returns—on time 

deliveries to the field, predictable costs, and sufficient capability. We have

reviewed four major airlift programs and found they did not meet delivery 

schedules and were over cost. These programs did not involve huge 

technological leaps but presented significant design challenges to 

integrate new systems into the older aircraft. A consistent problem 

plaguing the programs was an insufficient job of analyzing the 

requirements and resources at the programs’ outset, a key systems 

engineering activity. The divergence between these programs’ experience

and best product development practices are contributing factors to their 

outcomes. 

Employing Best

Practices Can Shape 

Better Program 

Outcomes for DOD’s 

Airlift Acquisitions 

 11 GAO, U.S. Combat Air Power: Aging Refueling Aircraft Are Costly to Maintain and

Operate. GAO / NSIAD-96-160, Washington D.C.: (August 8, 1996). 

Page 11 GAO-07-566T 
We assessed four airlift programs as part of our annual assessment of 

DOD’s major acquisition programs and each has experienced cost growth 

and schedule delays. Despite being based largely on low technological

risks involving mature systems, these programs have failed to deliver on

the business cases that justified their initial investment. DOD estimates it 

will need over $12 billion between 2007 and 2013 to develop, modify, or 

procure these aircraft. The specific airlift programs include 

Outcomes of Certain Airlift 

Programs 

• The Air Force’s C-5 Avionics Modernization Program (AMP) is intended to

improve the mission capability rate and transport capabilities, as well as 

reduce ownership costs by incorporating global air traffic management, 

navigation and safety equipment, modern digital equipment, and an allweather flight control system. 

• The Air Force’s C-5 Reliability Enhancement and Reengining Program 

(RERP) is intended to enhance the reliability, maintainability, and 

availability of the C-5 through engine replacements and modifications to 

subsystems such as the electrical and fuel subsystems. The C-5 aircraft 

will require installation of the AMP capabilities before the aircraft engines 

can be replaced. 

• The Air Force’s C-130 Avionics Modernization Program (AMP) is intended 

to standardize the cockpit configurations and avionics of different models 

of C-130 aircraft by providing such things as communication and 

navigational system upgrades, terrain avoidance and warning system, dual 

flight management systems, and new data links. 

• The C-130J, the latest model of the C-130 aircraft series, is designed 

primarily for the transport of cargo and personnel within a theater of 

operation. Variants of the C-130J are being acquired by the Air Force (e.g.,

Air Mobility Command and Special Operations Command), Marine Corps, 

and Coast Guard. 

Each of these programs has experienced problems that have impacted 

cost and schedule (see table 1). The net effect of the outcomes to date is 

that DOD is now paying more to modify or acquire these systems and the 

warfighter has had to wait longer than initially planned before new 

capability is delivered. For example, the Air Force now expects by 2011 to 

have completed the modification of about 135 fewer C-130 airlift aircraft 

when compared to its plan 2 years ago. 

Page 12 GAO-07-566T 
Table 1: Outcomes of Selected Airlift Programs (as of fiscal year 2006) 

(FY 2007 dollars in millions)

Weapon 

Systems 

Latest 

Development 

Cost

Development 

Cost Change 

Since Start 

Program 

Acquisition

Unit Cost 

Increases Program schedule delays 

C-5 AMP $432.1 17 percent 86 percent Initial operational capability 

delayed about 1 year 

C-5 RERP $1,342.9 (16 percent) 10 percent Initial operational capability 

delayed over 2 years 

C-130 

AMP 

$1,627.8 128 percent 43 percent First production delivery 

delayed over 2 years 

C-130J $262.9 Not

applicable

26 percent First production delivery 

delayed about 1 1⁄2 years 

Source: GAO analysis of DOD data 

Note: C-130J development costs have increased by 2,347 percent but this includes costs to correct 

deficiencies and add new capabilities.

We anticipate there could be additional cost increases and schedule delays

reported in the future. For example, the C-130 AMP fiscal year 2008 budget 

indicates that the total program costs have increased almost $700 million 

and planned quantities have been reduced from 434 units to 268 units—

nearly doubling the program acquisition unit costs since December 2005. 

The program recently notified Congress of a critical Nunn-McCurdy 

breach concerning its unit cost increases.12 The budget also shows the Air 

Force plans to fund the modification of 110 C-5 aircraft with AMP 

improvements instead of 59 aircraft as stated in last year’s budget. 

According to C-5 RERP program officials, total program costs are 

expected to increase due to costs with the engine, pylons, and labor. 

Over the last several years, we have undertaken a body of work that 

examines weapon acquisition issues from the perspective that draws upon 

lessons learned from best commercial practices for product development. 

We have found that a key to successful product development is the 

formulation of a business case that provides demonstrated evidence that 

(1) the warfighter need exists and that it can best be met with the chosen 

Airlift Programs Have Not 

Captured Critical Product 

Knowledge at Key 

Decision Points 

 12 10 U.S.C. § 2433 establishes the requirement for unit cost reports if certain thresholds for 

program costs are exceeded (known as unit cost or Nunn-McCurdy breaches). DOD is

required to report to Congress and, if applicable, certify the program to Congress.

Page 13 GAO-07-566T 
concept and (2) the concept can be developed and produced within 

existing resources—including proven technologies, design knowledge, 

adequate funding, and adequate time to deliver the product when needed. 

The business case is then executed through an acquisition process that is 

anchored in knowledge. Leading firms ensure a high level of knowledge is 

achieved at key junctures in development, characterized as knowledge 

points described below:

• Knowledge point 1: A match must be made between the customer’s 

needs and the developer’s available resources—technology, engineering 

knowledge, time, and funding—before a program starts. 

• Knowledge point 2: The product’s design must be stable and must 

meet performance requirements before beginning system demonstration.

This is primarily evidenced by the release of 90 percent of the design 

drawings by the critical design review and successful system integration. 

• Knowledge point 3: The product must be producible within cost, 

schedule, and quality targets and demonstrated to work as intended before 

production begins. 

There is a synergy in this process, as the attainment of each successive 

knowledge point builds on the preceding one. We have found that if the 

knowledge based acquisition concept is not applied, a cascade of negative 

effects becomes magnified in the product development and production 

phases of an acquisition program leading to cost increases and schedule 

delays, poor product quality and reliability, and delays in getting new 

capability to the warfighter (see figure 2). 

Page 14 GAO-07-566T 
Figure 2: Illustration of Cascading Negative Effects of Failing to Follow a Knowledge-Based Acquisition Approach 

DOD programs often do not capture sufficient knowledge by critical 

junctures but decide to move forward regardless. The airlift systems we 

reviewed were not immune to this condition and have experienced 

unnecessary cost growth and schedule delays as a result. While we do not 

have in-depth knowledge on the specific details for these programs, we do 

have a broad understanding of the basic underpinnings that led to the 

problems. All of the programs were considered low technological risks by 

DOD because they planned to rely extensively on proven commercial and 

modified off the shelf technology for its new capabilities. However, these 

acquisitions have turned out to be more difficult than expected. The 

programs did not follow sound systems engineering practices for analyzing 

Page 15 GAO-07-566T 
requirements and for ensuring a well integrated design at the right time. As 

a result, each program has encountered some difficulty in achieving design 

and production maturity as the program moved forward. Some of the 

causes to problems encountered include 

• Failing to fully analyze the resources needed to integrate proven 

commercial technologies and subsystems into a military system before 

initiating development. 

• Not achieving a stable design before beginning system demonstration 

phase resulting in costly design changes and rework. 

• Failing to demonstrate the aircraft would work as required before making 

large production investments. 

In all these instances where appropriate knowledge was not captured 

before moving forward, the impact has resulted in a predictable need for 

additional resources as shown below in specific airlift programs. 

The C-5 AMP entered production without demonstrating that the system 

worked as intended and was reliable. The program entered production just 

2 months after flight testing started and ran into significant design 

problems while trying to complete development. Problems uncovered 

after flight test began required modifications to the aircraft design which 

increased by 50 percent the number of engineering drawings needed for 

the system. Addressing these problems delayed the initial operational 

capability by a year and contributed to the significant growth in the 

program’s unit costs. Even today, 4 years after production was initiated, 

performance concerns remain with the C-5 AMP. The Director of 

Operational Test and Evaluation recently reported that the C-5 AMP is not 

operationally suitable because of high component failure rates, inadequate 

diagnostics systems, and low reliability rates. 

The C-5 RERP did not demonstrate design stability before entering the 

system demonstration phase which resulted in rework and schedule 

delays. At the time the program entered system demonstration, program 

officials believed that they had released 90 percent of the design drawings

but had not successfully demonstrated that the subsystems could be 

integrated onto the C-5 aircraft. During system integration activities the 

program found that the “pylon/thrust reverser” had to be redesigned to 

address overweight conditions and safety concerns. The program’s design 

efforts have also been hampered by the fact that its success is dependent 

upon the success of the C-5 AMP program. Presently, according to test 

officials, the C-5 AMP design is not mature enough to provide a baseline 

design for the RERP efforts. These design issues have contributed to an 

C-5 AMP 

C-5 RERP 

Page 16 GAO-07-566T 
increase in costs and a 2-year delay in delivering an initial operational 

capability. 

The C-130 AMP began development in 2001 without a clear understanding 

of the resources needed to integrate proven commercial technologies into

a military system. According to the program office, they clearly 

underestimated the complexity of the engineering efforts that were needed 

to modify the different models of the C-130. At the critical design review

held in 2005—the point that the design is expected to be stable and ready 

to begin the system demonstration phase—the program had not proven 

that the subsystems and components could be successfully integrated into 

the product.Upon integrating the new avionics into the test aircraft, 

program officials realized that it had significantly underestimated (by 400 

percent) the amount of wiring and the number of harnesses and brackets 

needed for the installation. As a result, the design had to be reworked, 

delaying the delivery of the test aircraft and increasing costs. 

The Air Force procured the C-130J without assurances that the aircraft 

would work as intended. Program officials believed the design was mature 

when procurement began in 1996, largely because the C-130J evolved from 

earlier models and was offered as a commercial item13. However, the C130J has encountered numerous deficiencies that had to be corrected in 

order to meet the minimum warfighter requirements delaying the initial 

aircraft delivery to the warfighter by about 1.5 years. DOD testing officials 

still report performance issues with the aircraft resulting in it being rated 

as partially mission capable. The performance issues involve the aircraft’s 

ability to meet its airdrop operations requirements, its effectiveness in 

non-permissive threat environments, and maintainability issues. Program 

officials plan to address the deficiencies as part of a C-130J modernization 

effort. 

As we said at the beginning, our work shows that acquisition problems will 

likely persist until DOD provides a better foundation for buying the right 

things the right way. This involves making tough tradeoff decisions as to 

which programs should be pursued, and, more importantly, not pursued, 

making sure programs are executable, establishing and locking in needed 

requirements before programs are ever started, and making it clear who is 

C-130 AMP 

C-130J 

Conclusion 

 13 In October 2006, the program completed the transition to a non-commercial negotiated 

contract. 

Page 17 GAO-07-566T 
responsible for what and holding people accountable when these 

responsibilities are not fulfilled. Recognizing this, DOD has tried to 

embrace best practices in its policies, as well as taking many other actions. 

However, DOD still has trouble distinguishing between wants and needs. 

Because of our concerns about the analyses done for both the MCS, which 

has broad implications for DOD’s mobility needs, and the KC-X tanker 

requirements, we would urge Congress and other decision makers to 

exercise caution when making airlift and tanker investment decisions. 

DOD will continue to face challenges in modernizing its forces with new 

demands on the federal dollar created by changing world conditions. 

Consequently, it is incumbent upon DOD to find and adopt best product 

development practices that can allow it to manage its weapon system 

program in the most efficient and effective way. Success over the long 

term will depend on following knowledge-based acquisition practices as 

well as DOD leadership’s commitment to improving outcomes. 

The four acquisition cases we cite in this testimony are not atypical for all 

programs. Even with no major technological invention necessary to meet 

the warfighters needs in these cases, acquisition outcomes are not good.

There are consequences to these outcomes. The warfighter does not 

receive needed capability on time and the Department and Congress must 

spend additional unplanned money to correct mistakes—an expense they 

can ill afford. A knowledge-based product development process steeped in 

best practices from systems engineering can solve many of these problems 

before they start. DOD knows how to do this and, in fact, informs its 

acquisition policy with systems engineering rules. It should redouble its 

efforts to drive these policies into practice. 

Mr. Chairman and members of the Subcommittee, this concludes our 

prepared statement. We would be pleased to answer any questions you 

may have. 

For further information about this statement, please contact William M. 

Solis at 202-512-8365 or Solisw@gao.gov or Michael J. Sullivan at 202-512-

4841 or Sullivanm@gao.gov. Contact points for Offices of Congressional 

Relations and Public Affairs may be found on the last page of this 

statement. 

GAO staff who made major contributions to this testimony include Marie 

Ahearn, Ann Borseth, Cheryl Andrew, Claudia Dickey, Mike Hazard, 

Contact and Staff 

Acknowledgements 

Page 18 GAO-07-566T 
Matthew Lea, Oscar Mardis, Sean Merrill, Karen Thornton, and Steve 

Woods. 

Page 19 GAO-07-566T 
Page 20 GAO-07-566T 

Related GAO Products 

Defense Acquisitions: Major Weapon Systems Continue to Experience 

Cost and Schedule Problems under DOD’s Revised Policy. GAO-06-368. 

Washington, D.C.: April 13, 2006 

Defense Acquisitions: Assessments of Selected Major Weapon Programs. 

GAO-06-391. Washington, D.C.:March 31, 2006. 

DOD Acquisition Outcomes: A Case for Change. GAO-06-257T. 

Washington, D.C.: November 15, 2005. 

Best Practices: Capturing Design and Manufacturing Knowledge Early 

Improves Acquisition Outcomes. GAO-02-701. Washington, D.C.: July 15,

2002. 

Defense Acquisitions: DOD Faces Challenges in Implementing Best 

Practices. GAO-02-469T. Washington, D.C.: February 27, 2002.

Best Practices: Better Matching of Needs and Resources Will Lead to 

Better Weapon System Outcomes. GAO-01-288. Washington, D.C.: March 8, 

2001. 

Defense Acquisition: Employing Best Practices Can Shape Better 

Weapon System Decisions. GAO/T-NSIAD-00-137. Washington, D.C.: April 

26, 2000. 

Best Practices: Better Management of Technology Development Can 

Improve Weapon System Outcomes. GAO/NSIAD-99-162. Washington, 

D.C.: July 30, 1999. 

Best Practices: Successful Application to Weapon Acquisition Requires

Changes in DOD’s Environment. GAO/NSIAD-98-56. Washington, D.C.: 

February 24, 1998. 

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