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AIRCRAFT CANNIBALIZATION: AN EXPENSIVE

APPETITE?

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

MAY 22, 2001

Serial No. 107–70

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

——— ———

——— ———

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

ADAM H. PUTNAM, Florida

BENJAMIN A. GILMAN, New York

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

RON LEWIS, Kentucky

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

DENNIS J. KUCINICH, Ohio

BERNARD SANDERS, Vermont

THOMAS H. ALLEN, Maine

TOM LANTOS, California

JOHN F. TIERNEY, Massachusetts

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

——— ———

——— ———

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

ROBERT NEWMAN, Professional Staff Member

JASON CHUNG, Clerk

DAVID RAPALLO, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on May 22, 2001 ............................................................................... 1

Statement of:

Curtin, Neal, Director, Defense Capabilities and Management, General

Accounting Office, accompanied by William Meredith, Assistant Director, Defense Capabilities and Management, General Accounting Office . 6

Zettler, Lieutenant General Michael E., Deputy Chief of Staff for Installation and Logistics, U.S. Air Force; Lieutenant General Charles S.

Mahan, Jr., Deputy Chief of Staff for Logistics, U.S. Army; and Rear

Admiral Kenneth F. Heimgartner, Director, Fleet Readiness, U.S.

Navy ............................................................................................................... 38

Letters, statements, etc., submitted for the record by:

Curtin, Neal, Director, Defense Capabilities and Management, General

Accounting Office, prepared statement of ................................................... 9

Heimgartner, Rear Admiral Kenneth F., Director, Fleet Readiness, U.S.

Navy, prepared statement of ........................................................................ 69

Mahan, Lieutenant General Charles S., Jr., Deputy Chief of Staff for

Logistics, U.S. Army, prepared statement of .............................................. 52

Zettler, Lieutenant General Michael E., Deputy Chief of Staff for Installation and Logistics, U.S. Air Force, prepared statement of ........................ 40

(1)

AIRCRAFT CANNIBALIZATION: AN EXPENSIVE

APPETITE?

TUESDAY, MAY 22, 2001

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS

AFFAIRS AND INTERNATIONAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:03 a.m., in room

2247, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays, Putnam, McHugh, Gilman,

Lewis, Schrock, Kucinich, and Tierney.

Staff present: Lawrence Halloran, staff director/counsel; Robert

Newman and Thomas Costa, professional staff members; J. Vincent

Chase, chief investigator; Jason Chung, clerk; David Rapallo, minority counsel; and Earley Green, minority assistant clerk.

Mr. SHAYS. I would like to call this hearing to order.

When the military mission must go forward, but a repair part is

not available, maintenance personnel are forced to take the part

from a nearby aircraft, crippling one so another can fly. The practice is called cannibalization, and it is eating into Army, Navy, Marine, and Air Force readiness.

The pernicious effect of longstanding inventory control weaknesses at the Department of Defense [DOD], cannibalization causes

more problems than it solves. Maintenance crews must perform

twice the work to complete a single repair, often using costly overtime under deadline pressure. Morale suffers; maintainers burn

out. The cycle accelerates as less experienced personnel are more

likely to resort to cannibalization as a diagnostic tool, substituting

parts just to find a problem rather than fix it.

For forward-deployed units, some cannibalization is inevitable,

even desirable, to maintain fully mission-capable aircraft, but the

practice now reaches all the way back to Reserve components and

training units. An inefficient, attenuated spare parts supply line

cannot meet the growing unpredictable needs of an aging air fleet.

According to the General Accounting Office [GAO], management

of the Pentagon’s 64 billion spare parts inventory has posed a high

risk of waste and abuse since 1990. In March, Comptroller General

David Walker told this subcommittee, DOD ‘‘continues to spend

more than necessary to procure and manage inventory,’’ yet still

experiences equipment readiness problems because of a lack of key

spare parts. Aircraft mission-capable rates continue to decline.

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So we asked GAO to assess the extent to which the services resorted to cannibalization over the past 5 years, why, and what was

being done to minimize the costly practice. Unfortunately, efforts to

address the problem have been hampered by a failure to define the

problem. The Air Force measures cannibalizations per 100 flights

or sorties while the Navy and Marine Corps log so-called ‘‘canns’’ per 100 flight hours, making comparisons and accurate totals all

but impossible. Up to half of all Navy cannibalizations may go unreported. The Army defines three different types of cannibalization,

but does not collect servicewide data on any.

Nevertheless, reports and anecdotes are legion as to the extent

and impact of hollowing out perfectly good aircraft so that others

can fly. Two years ago, when we visited Seattle’s Whidbey Naval

Air Station, pilots in that reconnaissance squadron said less than

half their 12 aircraft were usually operational, and cannibalization

was not the exception but the norm. Chances are the EP–3 aircraft

sitting on the tarmac on Hainan Island needed parts scavenged

from one or more planes to be ready to fly.

Air National Guard units struggle to keep more than half their

A–10 Warthogs mission-capable at any given time. Routine cannibalization is required to maintain even that level of readiness.

Figuratively, robbing Peter to repair Paul, cannibalization at

least doubles the risks and costs of straightforward maintenance.

The plane being repaired gets a used part. The cannibalized plane

then gets a new part it never should have needed. Overworked aircraft maintainers toil twice as hard, taking at least one plane out

of service for every one they fix.

Unchecked aircraft cannibalization masks systemic inventory

control weaknesses. It is an appetite the military services can no

longer afford to indulge.

Testimony today from GAO and from the Navy, Army, and Air

Force offer some hope more spare parts are getting to the right

place at the right time to meet needs of a fully mission-capable

force. We truly welcome their testimony and we look forward to

their continued efforts to address this problem.

At this time I would like to recognize the ranking member of the

committee, Dennis Kucinich.

Mr. KUCINICH. I thank the chairman, and I want to welcome our

distinguished witnesses from the General Accounting Office and

from the three services.

As Mr. Curtin indicated in his written testimony, cannibalization

or raiding an aircraft’s parts in order to fix another aircraft is a

practice that wastes time and money, reduces morale and personnel retention, renders expensive equipment unusable, and risks

mechanical side effects. Clearly, it is an issue that needs addressing.

To do so effectively, we must examine cannibalization in the context of larger, more fundamental questions. The first is obvious:

Why are maintenance crews pulling items off aircraft rather than

from stock supply shelves? Why is there a shortage of spare parts?

GAO’s examination of the Department of Defense’s inventory

management practices sheds light on this question. In 1990, GAO

issued a report describing Federal Government programs with the

greatest potential for waste, fraud, and abuse. This was the first

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of what GAO called its high-risk series. In the 1990 report, GAO

said that management of DOD inventory was one of those high-risk

programs.

Since then, GAO has issued updates of its high-risk report every

2 years, and DOD inventory management has been on the list

every time. In January, GAO issued its update for the 107th Congress. Again, GAO said the Pentagon’s inventory management

process was ‘‘one of the most serious weaknesses in DOD’s logistics

operations.’’ GAO found that about half of DOD’s $64 billion inventory exceeds war reserve or current operating requirements. GAO also

concluded that, as of September 1999, the Department ordered $1.6

billion worth of inventory not based on current requirements. Not

only is DOD ordering too much inventory, but it is ordering items

it does not need.

What about aircraft cannibalization? The services say they do not

have spare parts. This is clearly not due to a lack of funding since

DOD is wasting billions on unnecessary items. What accounts for

the so-called spare parts shortage then? In its January report, GAO

came to this conclusion: ‘‘The aircraft spare part shortages were

due in part to DOD’s weaknesses in forecasting inventory requirements and the failure of DOD’s logistics system to achieve expected

inventory management improvements.’’ This is the same problem that has plagued the Pentagon since

1990. Indeed, U.S. Comptroller General David Walker said the

same thing when he testified before us in March, but more bluntly,

‘‘DOD may have the item. They may not know where it is or they

may not know how many they have. And what’s the result of that?

They may order it when they don’t need it. They may not be able

to access it when they need it for operational purposes.’’ One would think that, after more than a decade, improvement

would be imminent. But at the same March hearing, Chairman

Shays asked David Warren, a GAO Defense Specialist, about DOD

initiatives in this area. Mr. Warren replied that the likelihood was

‘‘very great’’ that these reforms were destined to fail.

A more fundamental, and perhaps more important, question concerns DOD’s overall aircraft acquisition strategy. In its written testimony, GAO raised the problem of aging aircraft and its relationship to cannibalization. As aircraft age, they tend to break more

often. They take longer to inspect and maintain, and they’re less

available for operations. One can see how cannibalization and its

attendant negative effects could increase as a result.

The Pentagon’s current plan for acquiring replacement planes,

however, will not reduce the average age of each aircraft. As GAO

has pointed out elsewhere, the Pentagon is investing in extremely

expensive programs that will yield very few aircraft. The F–22 program, for example, originally planned for the purchase of 880

planes at $40 billion. Because of the Pentagon’s inability to accurately predict costs or meet testing hurdles, we now expect fewer

than 339 planes, and these will cost over $64 billion. Rather than

updating our fleet, the F–22 purchase will actually increase the average age of each aircraft.

But let me reiterate: The Pentagon is spending $24 billion more

than it planned to buy 64 percent fewer planes. It is spending over

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$60 billion for an older arsenal of fighters, one more prone to the

management problems that prompt cannibalization.

So we also need to ask why the Pentagon is proceeding on this

course. If these purchases are simply to result in a fleet that

breaks down more and flies less, does it not make sense to buy

more aircraft that, although less sophisticated, may be more reliable? Currently, defense spending is approaching the average levels

of the cold war in the 1970’s. Yet, the Pentagon is seeking billions

of dollars more. Congress deserves reassurance that this money is

going toward a force that is more effective, not less.

My point, then, is that our examination of the problem of cannibalization must necessarily take place in the context of the Pentagon’s overall mode of operation and culture. Cannibalization and

other such problems are the symptom of systemic issues, and these

need to be addressed.

I thank the Chair.

Mr. SHAYS. I thank the gentleman and at this time recognize

Ron Lewis, the gentleman from Kentucky. Mr. Gilman.

Mr. GILMAN. Thank you, Mr. Chairman, and thank you for conducting this very critical hearing. I want to commend our committee for examining the increasingly widespread problem of aircraft

cannibalization in the Nation’s military, and I hope we will also

look at the cannibalization of equipment in other portions of our

Armed Forces.

Over the last 10 years, our military forces have had to function

in an environment of increased overseas deployments and reduced

operational budgets. As operational tempo has increased, so has

the frequency of malfunctions and the breakdowns in sensitive,

high-maintenance military equipment, particularly aircraft, but not

limited to aircraft.

Faced with the lack of extra spare parts, military forces in the

field are often forced to cannibalize fully functioning aircraft in a

particular unit to keep the rest of the aircraft in that unit operational. This has had the effect of reducing our overall strength in

our airwings, subsequently affecting their ability to effectively

carry out their missions.

Not only does cannibalization affect our airwings, as I indicated,

but it has also had an impact upon the effectiveness of our antidrug war with regard to equipment which the DOD furnishes to

our drug-producing nations’ police agencies. This problem has been

pervasive throughout all of the service branches and has worsened

in recent years. A tank commander in our Germany’s forces recently commented to me that similar cannibalization in our tank

equipment, where our tanks had to be cannibalized due to a lack

of spare parts, affected their overall efficiency and capability.

I look forward, Mr. Chairman, to hearing the testimony of today’s

witnesses in the hopes that we can begin to find a workable solution to this ongoing cannibalization problem, which dilutes our

military strength, dampens the morale of our forces, and places unnecessary risks on our Armed Forces personnel. Thank you, Mr.

Chairman.

Mr. SHAYS. Thank you, Mr. Gilman. I appreciate your being here.

The vice chairman of the committee, Mr. Putnam.

Mr. PUTNAM. No, thank you, Mr. Chairman.

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Mr. SHAYS. OK. I would like to recognize at this time John

McHugh, who also sits on the Armed Services Committee.

Mr. MCHUGH. Thank you, Mr. Chairman. I don’t have a prepared

statement, but I want to echo the comments of my colleague from

the great State of New York, Mr. Gilman, in emphasizing the importance of this hearing. I want to thank you, Mr. Chairman, for

the leadership in convening this, I think, very, very important session.

The chairman was kind in mentioning I am a member of the

Armed Services Committee. I have the honor of serving as chairman of that Personnel Subcommittee on that particular body. Obviously, anything, as the GAO report suggests, that affects the morale of our men and women in uniform is important to me, but this

is a wider issue. This is an issue of, as Mr. Kucinich said, our duty

to the taxpayers, but I think even more to the point, it is a vital

issue of our national security and the safety of the men and women

that we ask to serve our interests all across this planet with respect to the equipment that they either work on or utilize in the

pursuit of that national interest.

So, Mr. Chairman, you are to be thanked for the effort to focus

on this, to ensure that where there are systemic problems not arising out of a budgetary shortfall, that we take every step to resolve

them for the betterment of all parts of the system, from the people

of this country to the people who serve this country. So, again, Mr.

Chairman, my appreciation, and I yield back.

Mr. SHAYS. Thank you very much. I appreciate all the Members

who are here.

At this time we will call our first panel and recognize Neal

Curtin, who is the Director, Defense Capabilities and Management,

General Accounting Office, accompanied by William Meredith, Assistant Director, Defense Capabilities and Management, GAO.

Gentlemen, I would like to swear you in, and then we will just

do some business. If you would just stand and raise your right

hands—is there anyone else who might testify with you?

Mr. CURTIN. I don’t think so.

Mr. SHAYS. OK.

[Witnesses sworn.]

Mr. SHAYS. For the record, both our witnesses have answered in

the affirmative.

I think we have a statement from you, Mr. Curtin, but both will

participate in answering questions.

If I could just deal with the requirement of asking unanimous

consent that all members of the subcommittee be permitted to

place an opening statement in the record and that the record remain open for 3 days for that purpose. Without objection, so ordered.

I ask further unanimous consent that all witnesses be permitted

to include their written statement in the record, and without objection, so ordered.

Mr. Curtin, Neal Curtin, we welcome your testimony, and we will

do 5 minutes and then we will roll it over 5, but we would like you

to be done before the 10 minutes.

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STATEMENT OF NEAL CURTIN, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY WILLIAM MEREDITH, ASSISTANT DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, GENERAL ACCOUNTING OFFICE

Mr. CURTIN. Thank you, Mr. Chairman and members of the subcommittee. It’s a pleasure to be here today to talk about this issue,

and I share your concern about the importance of this and hope

that this hearing will help get at some of the bottom-line issues

here.

As you said, my testimony today is based on work that was requested by the subcommittee to look at four aspects of cannibalization as it relates to military aircraft. Mr. Gilman is right that it’s

not just an aircraft problem, but the focus of our work on aircraft,

I think, is kind of keying on the main issues right now.

We looked at four things: the extent that the military services

are using cannibalization to repair aircraft, the impacts that cannibalization has and the reasons for it, and what the services are

doing to address it. We should have a report on this later this summer, hopefully, with recommendations aimed at tackling some of

the issues that we’ll discuss today. But we’re in a good position now

to summarize our findings for the committee and this hearing

today.

Cannibalization, as you said, is taking a part off of one aircraft

to replace a broken part on another aircraft. The chart that’s on

page 7 of my prepared statement, and that we’ve blown up over

here, I think illustrates it pretty well. It illustrates, too, one of the

adverse impacts of cannibalization in that you’ve doubled at least

the workload, and we’ll talk about how it may be more than doubles the workload because of some of the things that happen during

that cannibalization process. I’ll talk at some length about this adverse impact. I think that’s really the key to our findings.

But let me start out with a few pieces of data on what we found

regarding the extent and causes of cannibalization. We looked at

the Army, Air Force, and Navy, and the Navy data included Marine Corps data, for the last 5 years, fiscal year 1996 through 2000.

And for just the Navy and Air Force aircraft, we found a total of

850,000 reported cannibalization actions during that 5-year period.

That’s about 170,000 cannibalizations per year. I mention that’s

just Navy and Air Force.

The reason the Army is not included in those numbers is that

they do not collect and consolidate complete data on

cannibalizations in a way that can be used at headquarters level.

Not only does that make it impossible for analysts like us to get

a handle on what’s going on in the Army, it seems to me it makes

it pretty difficult for Army managers to understand and address

the issue as well.

But, even in the other services, even in the Navy and Marines

and Air Force, we found indications that the data may be underreported. So that 850,000 may not be all the cannibalizations that

are going on.

Two Navy studies in the past couple of years have highlighted

the underreporting. In fact, one of the studies said that it may be

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as much as half; that the reported cannibalizations may only be

half of what’s actually going on out there.

Why the level of cannibalization? What’s causing this? The main

thing that is leading to this is really the two ongoing phenomenon

here. One is the push, and the important push, for readiness to

meet training requirements, to meet operational requirements, to

keep OPTEMPO at the levels that we’ve expected out of our service, on the one hand. Then, on the other hand is this supply system

which is not being as responsive as it needs to be to provide the

spare parts to maintain those high operational tempos.

If you didn’t care how high your readiness was, when a part

broke, you’d wait until somewhere along the way the supply system

feeds it. On the other hand, if the supply system was working well,

you could maintain high readiness without having to resort to cannibalization. But those two things together are what drives the

bulk of the cannibalizations.

Now why aren’t spare parts available? As some of the panel

members have already pointed out, GAO’s tried to tackle that inventory management problem in the military services for a long

time, and spare parts, of course, is a big part of that. Since 1990,

we’ve had it on our high-risk list, and as recently as earlier this

spring, the Comptroller General testified before this committee on

the continuing problems of inventory management. It’s on the highrisk list again, and it’s one of the key management challenges facing the Department. The ultimate answers are still not within our

reach, as far as we can tell.

There are other reasons, too, for cannibalization besides the

spare parts systems: Inexperienced or inadequately trained maintenance personnel, outdated maintenance manuals, lack of testing

equipment in many cases, all contribute to the cannibalizations.

Let me return to the effects related to cannibalization because I

think these are really the key. The good effect of them is that they

do help maintain readiness levels. They do help to get planes in the

air at the time the pilots are ready to do a training mission or an

operational mission. But it comes at a very high cost, and it’s kind

of a hidden cost. The extra maintenance hours that were recorded

by Air Force and Navy, again just Air Force and Navy, during that

5-year period associated strictly with cannibalizations total about

5.3 million hours. That’s the equivalent of almost 500 additional

maintenance personnel working full time during that 5-year period.

That cost doesn’t necessarily show up anywhere in the balance

sheets. We don’t pay overtime to the maintenance personnel.

So what you’ve got is an extra workload on top of a work force

that’s already somewhat shorthanded and already stressed at fairly

operational tempo levels. There have been several studies that

have documented the adverse morale impact that has, and, in fact,

that it can contribute to retention problems among maintenance

personnel.

You know, this extra work, sometimes late at night, on weekends, takes a toll on a work force, especially when they’re returning

from a deployment. The Navy has a regular 6-month deployment

cycle, and even in the Air Force now, and the Army as well, because of the operations going on overseas, soldiers are frequently

deployed. When they come home, at their home station they want

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to spend some time with their families, and instead, in many cases

they’re working long hours at their home stations.

While we haven’t been able to make a direct link from cannibalization to retention problems, because there’s a myriad of things

that affect why someone decides to stay or leave the services, clearly, cannibalizations are a factor that’s contributing to the frustration that’s out there among the work force.

There’s some other adverse impacts of cannibalization, too. Anytime you take parts off an aircraft, you risk damaging not only

those parts, but parts around it. Sometimes you have to remove

other parts to get at the part you really need, and you run the risk

of additional rework and damage to those as well and to the wiring

that connects it all.

Moreover, when aircraft are cannibalized for long periods—and

we have a couple of examples in my statement and on the

posterboards over here—they can become virtually unusable without a major rebuild, and that’s what happened to the F–18’s pictured here. Some of them have been in cannibalization status for

years, not just months but years. One of them had over 400 parts

removed for cannibalization and eventually had to be actually

shipped by truck to the depot to be rebuilt.

The services generally consider cannibalization what I’d call a

necessary evil. They’d rather not have to do it, but until they get

the spare parts they need and get the system feeding them what

they need when they need it at the place they need it, they have

an incentive to do what’s necessary to maintain adequate levels of

readiness.

Service policies all call for minimizing the use of cannibalization,

but there are really no incentives or guidance to meet that goal.

The real incentives are on the other side to push for that high

maintenance level, that high readiness level.

Mr. Chairman, let me stop there. I think that summarizes the

key points of my statement. We would be glad to take questions

from the panel.

[The prepared statement of Mr. Curtin follows:]

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Mr. SHAYS. Thank you. It’s my intent to start with Mr. Gilman

and then we’ll go to Mr. Kucinich and then we’ll go to the other

Republicans.

Mr. GILMAN. Thank you, Mr. Chairman. And, Mr. Curtin, we

thank you for your testimony.

Why is the full magnitude of cannibalization not known? The

GAO report points out that we don’t have any full information with

regard to the extensiveness of cannibalization. It would seem to me

that would be a very critical issue that we ought to be able to resolve quite quickly.

Mr. CURTIN. I agree. First of all, you have the Army who captures some of this data at the local level, but we’re not convinced

that the local units capture it all either, but they don’t surface it

in any way that’s aggregated or could be used for management purposes.

And then in the other services, what we have seen, even though

the Navy and the Air Force have a system for capturing data,

we’ve seen many cases, anecdotal for the most part, but also based

on prior studies, that the data just doesn’t get entered into these

systems sometimes.

Mr. GILMAN. Well, why are there different measures for cannibalization? It would seem to me that, if this is a critical issue, there

ought to be a standard by the Department of Defense for all of the

agencies and for all of the departments, and to have similar methods of reporting, similar criteria.

Mr. CURTIN. Yes, it makes a lot of sense. There are some reasons

why the Navy and Air Force do it differently, and you may want

to explore that with the next panel. It would be a lot better from

an OSD, from a Secretary of Defense management level, to have

a common way of looking at these across all the services; there’s

no question about it.

Mr. GILMAN. Well, who in the Defense Department is in charge

of all of this?

Mr. CURTIN. Well, I’m not sure there is much of an OSD-level

focus on it. There are readiness aspects to this. There are logistics

aspects to it, and it gets fragmented, frankly. The services have

been left for the most part to deal with cannibalization as they see

fit. Most of the services have chosen to delegate authority and guidance and everything on cannibalization down to lower levels, leave

it up to the local commanders to decide how much cannibalization

to do, with just that general policy guidance that says try to minimize it. And the result is what we’ve seen.

Mr. GILMAN. Mr. Curtin, are you telling us that there’s no one

in the Department of Defense who has the responsibility of making

certain that equipment is not being cannibalized?

Mr. CURTIN. Unless you’re aware of anyone?

Mr. MEREDITH. No, I’m not aware of any central control.

Mr. GILMAN. No central control?

Mr. MEREDITH. No central control that I’m aware of.

Mr. GILMAN. That’s a major failing, and, Mr. Chairman, I hope

we look into that aspect.

I recently visited an auto parts central agency for the whole

Northeast, and I was amazed how they can get parts out to their

dealers, and there are hundreds of thousands of dealers nationVerDate 11-MAY-2000 08:47 Aug 21, 2002 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\DOCS\79974.TXT HGOVREF1 PsN: HGOVREF1
30

wide, parts within a 24-hour period. It would seem to me, with the

money we spend in defense, we ought to be able to get parts out

across the world quite quickly to prevent cannibalization, and I

would hope you could come up with some recommendations for us.

We appreciate the report and we appreciate your review, but

maybe you can also provide some good, sound recommendations to

the Department of Defense to correct this.

We have been upgrading Vietnam era Huey helicopters to new

Huey II upgraded status in our drug war in Columbia. Yet, the

poor condition of the Hueys has made these upgrades very costly.

The equipment is costly in itself, and they have been slow and inefficient. In addition, their supplying 1952 Korean era 50-caliber ammunition to protect the Blackhawks, new Blackhawks, where we

spend millions of dollars on that equipment in Columbia, hasn’t

worked either.

So something is wrong with the kind of supplies we’re sending

out. Something is wrong with the kind of spare parts for equipment. As I mentioned earlier, and you have re-emphasized, it does

not apply to any one segment of our military forces, but it is across

the board. I think if we had a full total of the cannibalizations and

the cost to our Armed Forces, I think it would be something that

would make this even more critical, and should be brought to the

attention of our Chief Executive.

Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman. Mr. Kucinich.

Mr. KUCINICH. Thank you very much, Mr. Chairman.

I, first, want to for a moment reflect on things that were said by

two colleagues here. What Mr. McHugh had to say concerning the

effect on the men and women who serve is something that needs

to be kept uppermost in mind. It seems to me that, at least on the

ground level, this would drive mechanics crazy. Did you spend

much time talking to mechanics?

Mr. CURTIN. Yes, we got up to several squadrons, and you’re

right, when you get down to that level, you hear the griping coming

out, and I have to be careful sometimes of griping——

Mr. KUCINICH. I understand. These are my constituents.

Mr. CURTIN [continuing]. But a lot of it’s real.

Mr. KUCINICH. But I also have to say that mechanics are the

ones who would know exactly what is going on because they have

to deal with the reality of it, and in a way it is counterintuitive to

the working mechanic: On the one hand, you’re told to keep a plane

in repair and then, on the other hand, you’re told to start picking

it clean, so that you can provide for others. At the same time, the

real issue is, you know, what about the parts, which goes back to

what Mr. Gilman said.

We are urged in so many different ways to try to run government

like a business, at least to try to have business principles of management and inventory. I think Mr. Gilman put it well, but I have

to say that if we’re talking auto parts or Auto Zone, or any of those

companies that stock parts, you get them like that. It seems to me,

with the defense budget being what it is, we might want to transit

to a more sensible inventory management approach.

Mr. CURTIN. A lot of the problem seems to be in the high-cost

parts that don’t break very often. Those are the tough ones. How

31

much are you willing to invest in keeping this part in your stocks

when it may or may not break very often? As planes get older, and

those parts that never used to break before now they’re starting to

break because the fleet is a lot older than we expected it to have

to be, those become the real sticky problems.

Mr. KUCINICH. Well, is it fair to say that a large portion of the

cannibalizations occur in tactical-type aircraft?

Mr. CURTIN. Yes. Yes, of course, you have 1,200-and-some F–16’s

in the Air Force. So you have so many planes that you do get a

high number of cannibalizations associated with that. The rate of

cannibalizations per flight for the F–16’s is not one of the highest

one. The F–15’s are above average in rate and in total.

Mr. KUCINICH. You’re familiar with the report that GAO issued

in February, ‘‘Tactical Aircraft Modernization Plans Will Not Reduce Average Age of Aircraft’’?

Mr. CURTIN. Yes.

Mr. KUCINICH. And it basically described the Pentagon’s future

acquisition plans and it found that, ‘‘the Navy and Air Force will

not be able to procure enough new tactical aircraft to reduce the

average age of tactical aircraft.’’ Rather than reduce the average

age, Pentagon plans will increase it, isn’t that right?

Mr. CURTIN. Because you’re buying fewer of the more expensive

new ones and you still have a lot of the old ones in your inventory.

So, yes, the average age will—all the old ones are just getting

older.

Mr. KUCINICH. And we have three different aircraft development

programs going on right now, is that right?

Mr. CURTIN. As of today. We’ll see what the Secretary of Defense

comes up with in his strategy studies.

Mr. KUCINICH. In the next minute that I have, in the case of the

F–22, for example, even if everything works out as planned, we will

not be able to reduce the average age of aircraft, correct?

Mr. CURTIN. I believe that’s what the report said, yes.

Mr. KUCINICH. Well, page 11 of your report, ‘‘As aircraft age,

they tend to break more often, take longer to inspect and maintain,

and they’re less available for training and operations.’’ So if nothing else changes in the types and number of aircraft the Pentagon

plans to acquire, is it logical to assume that the problem of cannibalization could become even more aggravated?

Mr. CURTIN. Yes, if everything else stays as it is now, no question.

Mr. KUCINICH. So, in your opinion, could cannibalization be more

likely for future planes, such as the F–22, which are extremely

complicated technologically and which are extremely expensive

compared with other planes?

Mr. CURTIN. Well, I think that’s the key. We’ve got to avoid that.

We’ve got to find—we’ve got to fix this system. We can’t go another

10 years or 20 years with the inventory system shortchanging everybody.

Mr. KUCINICH. But if we don’t fix it, that is what we’re headed

for, right?

Mr. CURTIN. That’s where we’re headed, exactly.

32

Mr. KUCINICH. So you think it is important that we look at these

future aircraft programs when reviewing the cannibalization problem?

Mr. CURTIN. No question.

Mr. KUCINICH. Do I have another minute here?

The February GAO report recommended that DOD in its 2001

quadrennial defense review ‘‘consider alternatives to the current

tactical aircraft modernization plans.’’ One alternative, I suppose,

would be cutting the F–22 program or at least scaling it down? Is

that a possibility?

Mr. CURTIN. It appears to be on the table, but I don’t know how

much of a possibility—— Mr. KUCINICH. OK. I thank the gentleman.

Mr. SHAYS. Mr. McHugh.

Mr. MCHUGH. Thank you, Mr. Chairman.

Gentlemen, I understand you have not completed your report as

yet, and that makes the discussion of final conclusions somewhat

difficult, somewhat problematic. So let me start with a general

question. When you do issue your final report, to what extent do

you envision yourselves being able to, aside from assessing how

each service handles the reporting, your very accurate determination of the effects of it, are you going to be able to determine between those reasons that are fiscally driven and those that are systemic or management-driven?

Because that seems to me to be a very key difference here in

terms of what do we need to do both as a subcommittee and as a

Congress to help resolve this. Money, it’s either easy or hard, you

know. We understand the cause of that. Systemic issues are quite

something else.

Mr. CURTIN. Yes. It’s going to be very difficult for us to quantify

what happens if you put ‘‘X’’ dollars into the system in one end,

what the improvement in cannibalization will you get at the other

end. I think our focus is going to be on the management side. Regardless of how much money the Congress chooses to give the Department of Defense, it should be spent on the right things and in

the right way, and that’s where the improvements in the management system for supply, for inventory on spare parts, but also in

tackling this cannibalization problem more directly.

Most of the efforts underway in the services now, to the extent

there are efforts, are aimed at the inventory system, aimed at fixing the long-term fixes to the inventory system. There’s nobody focusing too much on what to do about cannibalization in the meantime. Until that supply system starts providing you better responsiveness on the parts you need, what do you do about the cannibalization? That’s where we’d like to see some more attention paid,

and it needs to be probably at the—certainly at the service level,

maybe at the OSD level, to really get a handle across the military

on what’s going on here. So a strategy for tackling, you know, other

things we can do in the meantime to fix this cannibalization, because of the impact it has on the personnel.

Mr. MCHUGH. So the suggestion that I hear you making is that

this is not just a supply management problem in that there are apparently reasons for cannibalization at the base level, at the facility

level, that may have nothing to do with the availability of the part?

33

Mr. CURTIN. Yes, there really are, and the extent of that we don’t

know because the data just isn’t there. The reasons for cannibalization aren’t always recorded. The Navy does a little better job on

reasons. The Army, of course, doesn’t have anything. The Air Force

has some data.

Mr. MCHUGH. I don’t mean to interrupt you, but I’m on the yellow light here.

Can you give me just a couple of ideas, a couple of thoughts as

to what those reasons for cannibalization at the management level

may be other than inventory?

Mr. CURTIN. Something we would call cannibalization for convenience happens quite a bit. A pilot is ready to taxi out for a training

flight and something breaks on the plane. If it can be fairly quickly

fixed, they’ll try to replace that part right there on the flight line.

Even if that part is in the system, it may be right on the base, it

may be a mile away at the other side of the base in the hangar,

but the plane is out on the flight line, they’ll pull it off a nearby

plane and fix it, get that pilot out. So he gets his training slot. It’s

kind of a quick turnaround. We call it a cannibalization for convenience.

Mr. MCHUGH. I don’t know as a pilot would agree that’s convenience. You lose your training slot and you’ve lost a lot—— Mr. CURTIN. Yes.

Mr. MCHUGH [continuing]. But I understand. I understand your

point.

Mr. CURTIN. We want to hit those training requirements.

Mr. MCHUGH. Yes, I understand.

Mr. CURTIN. Other things that happen: Diagnostics, sometimes

the maintenance people have never seen this kind of problem or

they’re new; they haven’t been familiar with that kind of problem.

They’re not sure if that part’s broken or not. They’ll take a part off

a working plane—they know that part was working—and try that,

plug that in, see if that fixes the problem. So instead of being able

to figure out the problem, they do some cannibalization to diagnose

it.

A big problem with test equipment out there and a fair amount

of cannibalizations seem to be happening because the test equipment is not giving you the results you need, and you need to find

some way of fixing the problem. So you pull a part you know is

working. Those kinds of things are going on.

Mr. MCHUGH. Refresh my memory; when will the final report be

done?

Mr. CURTIN. This summer, probably by July, is our target.

Mr. MCHUGH. I’m looking forward to seeing it. Thank you.

Thank you, Mr. Chairman.

Mr. SHAYS. I was going to recognize Mr. Putnam, but, Mr. Gilman, did you want to——

Mr. GILMAN. Just one more question, if you would.

Mr. SHAYS. Sure.

Mr. GILMAN. I note in your testimony you talk about the C–5’s,

and I happen to have a large squadron of C–5’s up at Stuart Airport in Newburgh. They provide all the logistics of our manpower

overseas, and yet you rate them as one of the highest needs for

maintenance. I note here in your testimony that—well, your chart

34

shows that they have 49 percent of cannibalization rate in the year

2000, and it was 51 percent in the year 1999. You say for the C– 5’s alone there are 31,400 manhours used to perform cannibalization and 126 aircraft. When you add up the cost of all of that on

this kind of equipment, where we’ve spent hundreds of millions of

dollars for each unit, billions of dollars, as a matter of fact, each

unit, it just doesn’t make economic sense to allow this to continue.

I hope you can make some very critical recommendations for DOD

in your subsequent report.

Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman. I might point out to the gentleman that we are seeking to have a meeting with the Secretary

because we think this is a gigantic problem. We think that security

clearances, the backlog that we have there is just truly outrageous,

and we need to wake up some people in DOD to get them to tell

us what they need us to do to make a difference.

Mr. GILMAN. Thank you, Mr. Chairman. I would like to work

with you on that approach.

Mr. SHAYS. Thank you.

Mr. Putnam.

Mr. PUTNAM. Thank you, Mr. Chairman. Thank you, Mr. Curtin,

for your work on this. I would like to followup on some of Mr.

McHugh’s questions about the difference between an episodic or a

systemic problem with inventory management.

One of your potential causes for this cannibalization rate was a

lack of training, and that is something that we spend an awful lot

of time in the Congress talking about. To what degree have you determined that lack of adequate training for maintenance personnel

contributes to this?

Mr. CURTIN. Yes, I don’t think we can quantify that, but what

we do know, that there is a shortage of personnel in aviation maintenance, especially at the senior levels. They’re the levels that actually train the younger mechanics as they come on. Without that

good senior leadership, you don’t get the on-the-job training that

you need at the lower levels. With the turnover they have been experiencing and the loss of staff, they’re in kind of a constant flux

of bringing in new people. I mean, the basically training, I think,

that’s done of mechanics is fine, but where you really learn is on

the job, and that part is suffering a little bit.

Mr. PUTNAM. Are you able to determine the parts that are most

frequently cannibalized? You make the distinction between the

small bits and then you take it up a notch if you can’t—you know,

these aren’t Ford Explorers. There’s only 1,200 F–16’s spread

around the whole planet. Having a back storeroom full of carburetors for a Ford Explorer is very different than having one full of

F–16 replacement parts. So at what point do we strike the balance

between sound, just-in-time inventory and having the parts? And

how many of these parts are routine or, for an F–16, cheap replacement parts? And how many are substantial, very expensive, very

technical types of pieces of equipment?

Mr. CURTIN. See, part of the problem in getting a good handle

on this is that there is no one answer. There is no single solution

to it. There are a lot of small, cheap parts that we ought to have

handy; we should never have to cannibalization some of the nickelVerDate 11-MAY-2000 08:47 Aug 21, 2002 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\DOCS\79974.TXT HGOVREF1 PsN: HGOVREF1
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and-dime things. But, on the other hand, with this aging fleet,

some parts that just have never broken—the way you get spare

parts in the system is through a demand history. Parts break; you

order them; the supply system produces them. Part of the problem

is that things are breaking now because of the age of the aircraft

that just haven’t broken before or haven’t broken in the numbers

that they’re breaking now.

And the other side of this aging problem is that many of the

manufacturers who originally provided the parts for these planes

have gone out of business or have left the defense industry, have

gone into other things, and it’s hard to find anybody willing to

make some of these parts anymore. So it’s very complex. To say

how much are these tough ones where you don’t have a producer

out there who can supply them, it’s almost case by case, and that’s

what’s made it hard—frankly, that’s what’s made it hard for DOD

to solve this problem, is because it is not easy when—— Mr. PUTNAM. I mean, did you evaluate, and if you did, is there

a difference between Guard and Reserve units and active-duty

units in terms of their cannibalization rates?

Mr. CURTIN. Well, we’ve focused just on the active, and I can’t

imagine that the Reserves are in any better situation, and sometimes you see the Reserves getting resourced at lower levels, depending on what their role is. So they may have even a worse problem, but this focused on the active.

Mr. PUTNAM. And one final question, because I’ve got the yellow

light, too: The B–1B requires the most cannibalization per hundred

sorties. Is that because there was such a short production run? I

contrast that with the B–52, which has a much lower rate even

though it is considerably older. Is that because there are so many

B–52’s around in the bone yards to provide spare parts?

Mr. CURTIN. Well, it’s probably a good question for the Air Force

after me, but I would make one comment. I think the bulk of the

problems with the B–1B are in the electronic counter measures systems, and I can remember GAO reports back on the original B–1A

program when it was first killed that the electronic counter measuring system was the problem system in development and all the

way through. And the same thing happened with the B–1B. The

electronic counter measures system never quite worked the way it

was supposed to and was always a problem, and that seems to be

where most of the cannibalizations are now. It’s just been a problem system, a problem component.

Mr. PUTNAM. Thank you. Thank you, Mr. Chairman.

Mr. SHAYS. Thank you.

Mr. Curtin, I would like you to just explain to me why it is so

difficult for us to get a handle on inventory in general and this

whole issue of cannibalization. What becomes the disincentives to

resolving this issue?

Mr. CURTIN. There’s a couple of things going on. One, you’ve got

the individual services who have developed their systems years

ago, back—the system is not too different than it was for World

War II and thereafter. So you don’t really have as much of an OSD

level, as much of a DOD inventory system as you do individual

services, and that gets wrapped up in title 10 and all the responsibilities of the services.

36

Mr. SHAYS. That is one issue. What is another one?

Mr. CURTIN. I think it’s, to some extent, the size of the Department of Defense. There’s no other corporation in the world that’s

got the number of activities, the number of pieces of equipment, the

management challenges that the Department of Defense has. Some

of it has to do with the way we purchased equipment, the way we

acquire weapons systems, and what you see, even with one aircraft,

the F–18 aircraft, there must be 20 different lots of F–18’s that

have been built over the years, and each one has some common

parts, but brings in new parts. So you’ve got a multiplier effect of

the number of things that can go wrong even within one squadron.

Certainly within a wing you have old planes, new planes, all within

one wing. So it’s all those kinds of things—— Mr. SHAYS. Is another factor that we just don’t have that many

of any particular—I mean, I look at the analogy of an automobile

and how we can get it out, but there is an incentive to have a certain number of parts on hand because you know you are going to

send out hundreds each day. But I am just wondering, does this

make it more of a challenge, if you only have 200 planes or 300

planes?

Mr. CURTIN. It is a challenge because different parts break at different times on different planes. It is not that predictable, unfortunately.

Mr. SHAYS. Well, that is another issue. It is not predictable, but

I am asking something else. See, you have given me another issue;

it is not predictable. But the other issue is, does having so few of

the particular aircraft make it more difficult rather than—— Mr. CURTIN. Yes.

Mr. SHAYS. OK.

Mr. CURTIN. No question, yes.

Mr. MCHUGH. Mr. Chairman.

Mr. SHAYS. Yes?

Mr. MCHUGH. Would you yield for 1 second?

Mr. SHAYS. Sure. Definitely.

Mr. MCHUGH. I think you have raised a very important point. I

wanted to ask the gentleman, to what extent do you see the current way in which military commanders at the base level are

judged—and by that, I mean, it would seem to me that from the

Pentagon perspective in evaluating commanders, the readiness

issue—and some of us may recall it became an issue during the

Presidential campaign about two divisions in the U.S. Army that

slipped to a C–4 rating, readiness rating, became big news. Where

that rating question of readiness is valued at a much higher level

than whatever your rate of cannibalization is, and if it comes to the

commander’s decision, or certainly those under him who understand the commander’s interest in your readiness, you are not

going to let that training slot go by because it might ultimately be

the final straw that affects your readiness rating down to 2 or 3,

isn’t it so? The question, isn’t it also an issue of how the Pentagon

rates commanders either consciously or unconsciously vis-a-vis

readiness?

Mr. CURTIN. Yes, that’s exactly the discussion I had. A couple of

weeks ago, I was down at Oceana at the Naval Air Station there.

The wing commander there was very clear. He knew what his priVerDate 11-MAY-2000 08:47 Aug 21, 2002 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\79974.TXT HGOVREF1 PsN: HGOVREF1
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ority was, and he had to meet mission-capable rates and he had to

get his pilots in the air. Cannibalization, he knew it was happening. He saw it happening. He knew what effect it was having on

his maintenance force, but he said, ‘‘Hey, my future and my ratings

depend on meeting those readiness rates.’’ Very clear.

Mr. MCHUGH. Thank you. Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman.

Which basically gets me into the whole disincentive—it seems to

me, though you have given me a number of reasons why you would

see cannibalization, why it is difficult to get parts sometimes, the

predictability, the number of aircraft, and so on, but it seems to me

at least recording and documenting the cannibalization would be

very important. There seems to be disincentives to doing that.

So let me ask you, what would be the—you talked about why it

is difficult for inventory, but what are the disincentives for keeping

the data?

Mr. CURTIN. I’m not sure there’s any penalty associated with reporting cannibalizations. I think it’s just the time it takes. We’re

talking about a work force that’s already stressed and probably

underresourced, and now they’ve had to spend a lot of time on cannibalization. It’s extra time to stop and record, take care of the paperwork, which is really computer work, but still it takes some

time, and a lot of times is not seen as a priority for them.

Mr. SHAYS. OK. Just one last question. Let me just ask this

question: I can’t picture how this system works. You make a plane

for a number of years. You have a life expectancy which turns out

the plane has twice as much life as we write into it. You stop making the plane. Do they still keep making parts?

Mr. CURTIN. Some. Others are so unique to that plane that the

company may go out of business. If there aren’t a lot of—you know,

you’ll use up whatever you have in stock, hoping that will last you

long enough, and when the time comes you’re running out, you’ve

got to find somebody else willing to manufacture that part, and

usually at a very high cost.

Mr. SHAYS. Automobile manufacturers, there was this wonderful

article in Time magazine where they showed what the car would

cost if you bought it in parts, and it was like $100,000 for a

$25,000 car. Do we establish a contract—or maybe you don’t know

this; if you don’t, tell me—but do we establish a contract up front

that guarantees a certain amount of parts?

Mr. CURTIN. It’s not in my specialty area. We do what we call

initial spares. When you build a new system, you buy enough spare

parts to get that up and running, and then you build your history

of demands for different parts that break. That’s what triggers

your supply system.

Mr. SHAYS. We will ask some of these questions of the next

panel.

Mr. CURTIN. I think that would be good.

Mr. SHAYS. Mr. Schrock, would you like to ask any questions?

Mr. SCHROCK. No, Mr. Chairman.

Mr. SHAYS. Mr. McHugh, we are happy to go back to you or Mr.

Gilman or Mr.—excuse me, the gentleman, the ranking member, do

you have any questions?

Mr. KUCINICH. No, Mr. Chairman.

38

Mr. SHAYS. I think what we will do, then, is go to our next panel.

Thank you very much.

Our next panel is Lieutenant General Michael Zettler, Deputy

Chief of Staff for Installation and Logistics, U.S. Air Force; Lieutenant General Charles Mahan, Jr., Deputy Chief of Staff for Logistics, U.S. Army, and Rear Admiral Kenneth Heimgartner, Director, Fleet Readiness, U.S. Navy.

Gentlemen, if you have anyone else—please remain standing—if

you have anyone else that may respond to a question, I would like

to swear them in as well, so we don’t have to do it twice.

[Witnesses sworn.]

Mr. SHAYS. Thank you. Gentlemen, we swear in all our witnesses, as you know, even Members of Congress. The only one I

chickened out on was Senator Byrd. [Laughter.]

But he is the only one.

All right, why don’t we take you in the order that we called you.

Gentlemen, we are going to do 5 minutes, roll it over, but we would

like you to finish before the 10. Thank you.

STATEMENTS OF LIEUTENANT GENERAL MICHAEL E.

ZETTLER, DEPUTY CHIEF OF STAFF FOR INSTALLATION

AND LOGISTICS, U.S. AIR FORCE; LIEUTENANT GENERAL

CHARLES S. MAHAN, JR., DEPUTY CHIEF OF STAFF FOR LOGISTICS, U.S. ARMY; AND REAR ADMIRAL KENNETH F.

HEIMGARTNER, DIRECTOR, FLEET READINESS, U.S. NAVY

General ZETTLER. Thank you, Mr. Chairman, members of the

committee. Thank you for the opportunity to appear before you and

discuss cannibalization in the U.S. Air Force. It is an important

issue to us.

On behalf of our Acting Secretary, Dr. Delaney, our Chief, General Ryan, and most importantly, the fine men and women of our

Nation’s great Air Force, we would thank this committee and all

the Members of Congress for their recent support to support our

readiness initiatives.

Cannibalization is a cross-cutting issue. It impacts many aspects

of our mission accomplishment, and therefore, whatever we do with

spare parts impacts our people. General Ryan has stated our position very clearly. We cannibalize only as a last resort.

Unfortunately, as the GAO has pointed out, all too often we’ve

had to go to the last resort. This statement is rooted in the delicate

tradeoff: the need to meet mission goals while managing the workload for our dedicated men and women.

Our analysis shows improvements. The analysis indicates that

cannibalizations have significantly declined since the high-water

mark in 1997 of 82,000 cannibalizations. Last year cannibalizations

decreased to 70,000. That’s a 15 percent improvement. That’s a

great start. But there’s more work to be done. Your support was

a major factor in this 12,000 ‘‘cann’’ reduction over that 3-year period.

The Air Force is absolutely committed to continue this favorable

trend even further. To do so, we’re prepared to discuss the many

challenges that have been discussed by the GAO today and as we

see them: full funding for spare parts; compensating for the diminishing industrial base; adapting modern, business-like policies for

39

repair, procurement, stockage, storing, and issuing of spare parts,

but not necessarily in a centralized fashion; ensuring viable organic

and contractor sources of repair, and recapitalizing our aging aircraft and the subsystems that are so important to enhancing the

reliability.

To overcome these challenges, we in the Air Force have implemented the broad strategy to improve overall system supportability

and reduce ‘‘canns.’’ These include fully funding the known spares

requirements in fiscal year 2001. We’ve created an office that will

manage diminishing manufacturing sources and material shortages. We’re establishing and adequately funding our weapons systems depot maintenance programs for all repairs of aging aircraft

and engines. We instituted policy changes to retain inventory when

reasonably prudent to do so, which does, in fact, reverse policies

which deleted now-needed inventory of the mid-nineties. And we’ve

created organizations such as the Regional Supply Squadrons

whose purpose it is to optimize inventory distribution. Finally,

we’ve improved deployed spare support with enhanced direct support objectives for our fighters and overall readiness spares packages for all of our aircraft.

With your support, we’ve seen cannibalizations decline 15 percent since 1997. Importantly, our total backorders that we as an

Air Force experience have fallen 50 percent since 1998, and we’ve

had a 10-year decline in the mission-capability reversed, an upturn

for the first time since 1991. Our latest cannibalization rates indicate the positive trend is continuing with the most recent fiscal

year 2001 ‘‘cann’’ rates at 11.1 ‘‘canns’’ per 100 sorties, the lowest

rate since 1996.

There’s more to be done for our men and women and to improve

our readiness. With your support, we will continue to aggressively

pursue our strategy to drive cannibalizations to the lowest possible

level while optimizing our overall readiness.

At this time, I am ready to take your questions. Thank you, Mr.

Chairman.

[The prepared statement of General Zettler follows:]

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Mr. SHAYS. Thank you, General.

General Mahan.

General MAHAN. Thank you, Mr. Chairman and honorable members of the committee. It’s my pleasure to be here today to report

to you on the Army’s view of cannibalization. I have submitted my

full testimony, and in the interest of time, I will keep my comments

short and to the point.

The Army views cannibalization as a tool that unit commanders

must use judiciously, we assume, and direct, in their efforts to

meet mission and operational readiness requirements. Minimum

use of this tool is prudent in that it provides commanders an ability to attain readiness and mission requirements when parts are

not immediately available.

Army maintenance policy supports the use of this tool under certain specified conditions, since there are additional costs, as already enumerated, in manpower and in spares to our units that

use this tool. Although Army reporting systems do not completely

capture all cannibalization activity, there is evidence that cannibalization rates have increased over the past 2 years, as Army aviation supply availability has decreased.

Commanders’ increased reliance on this tool to meet operational

requirements and readiness goals is evidenced, we believe, by a review of recent active Army readiness rates. Over the past 12

months, two of our modernized fleets probably would not have

made goal without the use of cannibalization since they met readiness goals by 3 percent or less. Regardless, overreliance on cannibalization has the undesirable side effects which you’ve already

alluded to and which commanders at every level attempt to minimize. The negative side effects include those manpower requirements, longer mechanics hours, lower morale, increased cost certainly.

As there is an inverse relationship between repair parts availability and cannibalization rates, the problem the Army is focusing

on is supply parts availability. Cannibalization is only a symptom

of the real problem, in our view. Due to a decade of underfunding

and an OSD focus on reducing inventories to save money, as General Zettler talked about, in the early 1990’s, the Army’s repair

part stocks are neither sufficiently wide nor deep at both retail and

wholesale levels to meet commander requirements.

Consequently, the Army has failed to meet the Army’s supply

availability goal of 85 percent in 4 of the last 5 years, and that’s

for both ground and air fleets, and in 8 of the past 12 months.

Aviation supply availability performance is even worse, failing to

meet goals in any of the last 16 years or in any of the last 12

months.

Exacerbating that problem is an increasing demand for repair

parts due to the aging fleets and decreased reparable spares reliability due to our past policy of inspect and repair only as necessary, as opposed to full refurbishment to depot-level standards.

While that policy will be changed under the National Maintenance

Program to one that is a rebuild to depot standards, it does, in fact,

contribute to today’s cannibalization rates.

In addition, a key tenet of our ongoing transformation is recapitalization of the fleets of our aircraft. This program addresses our

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aging fleet and our increasing operations and support cost problems for key weapons systems that require rebuild or selected upgrade.

In closing, our view is that cannibalization is a symptom of the

real problem of parts availability, and to minimize the use of that

cannibalization we must improve spare parts availability and reliability, which will require a substantial investment of our funds.

I thank you for the opportunity to appear before you today. I look

forward to working with you all and responding to your questions

at the appropriate time.

[The prepared statement of General Mahan follows:]

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Mr. SHAYS. Thank you, General Mahan.

General Heimgartner.

Admiral HEIMGARTNER. I like being a ‘‘general.’’ Mr. SHAYS. Admiral, I’m sorry. [Laughter.]

Admiral HEIMGARTNER. When I call you a general and you’re an

admiral, it is kind of like when people call me a Senator when I’m

a Congressman. I kind of prefer Congressman. [Laughter.]

Well, Mr. Chairman, Congressman Kucinich, members of the

committee, I appreciate the opportunity to appear before you and

discuss cannibalization and how it relates to naval aviation readiness and answer questions. I have submitted a written statement

for the committee and ask that it be entered into the record, and

I have a brief, 3-minute or so, oral summary of my written statement.

First of all, I’m Rear Admiral Ken Heimgartner, the Director of

the Fleet Readiness Division on the Chief for the Naval Operations’ staff, a new position established in October 2000 by the Chief of

Naval Operations to help focus the Navy leadership’s attention on

current readiness. I work closely with the fleet to identify current

readiness issues, validate those requirements to meet those readiness concerns, and advocate those requirements within the planning, programming, and budgeting system up here in D.C.

As far as background, I’m a naval flight officer. I have over 22

years of operational flying experience, over 4,500 hours of flight

time in fighters and 3,000 of those in the F–14 Tomcat. I served

a 2-year exchange tour with the Air Force on flying status. I’ve

been a squadron maintenance officer, a squadron commanding officer, and an airwing commander on an aircraft carrier and had to

make the hard decisions on cannibalization.

Cannibalization and its impact on fleet readiness is an area of

huge interest to not only my division and me, but at the highest

levels of the Navy and the Marine Corps. The Department of the

Navy position is that, in support of our training and operational

mission requirements, cannibalization, while not a preferred maintenance practice, can be a viable maintenance tool in certain circumstances. It is, therefore, authorized by Navy Department instructions. As long as the Navy and the Marine Corps operate complex, high-performance aircraft in difficult environments in support

of our Nation’s defense, pragmatic, constrained, and managed cannibalization will occur to ensure that we have enough missionready aircraft to meet operational and training missions.

Having said that, we in the Navy and the Marine Corps recognize that cannibalization generally highlights shortfalls in our logistics systems and other areas. The sailors and marines that repair our planes don’t want to tear down another plane to fix that

plane that they are assigned to repair. Our maintenance technicians strongly agree that only extraordinary circumstances should

drive cannibalization. Therefore, we track cannibalization and are

taking actions to fix specific cannibalization problems as well as attacking negative trends in overall cannibalization rates.

Our focus on this problem, along with Congress’ help, has

stopped the recent increasing trend in cannibalization across naval

aviation. While the trend for the total force is declining, we still

have ‘‘cann’’ problems, cannibalization problems, within certain

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types of aircraft, exacerbated by the increasing age of our naval

aircraft inventory, which now averages over 18 years for our carrier fixed-wing aircraft and 21 years for our helicopters. For comparison purposes, the average age of our surface combatants in the

Navy, the ships, is only 15 years.

The challenges associated with an increasing demand for parts

as aircraft age, unanticipated parts failures on older aircraft, limited space for repair parts afloat, and long delays in delivery time

for some parts, all contribute to the need for cannibalization. Because of these specific challenges and the dissatisfaction that lack

of needed parts, equipment, and materials has on our sailors and

marines, we are continuing our efforts to reduce the need for cannibalization of aircraft and have programs in place to do so.

With your help, our deployed forces are ready today. There has

been no degradation in our deployed force readiness over the last

20 years, but at a readiness price for our nondeployed forces. And

the same as the Air Force, this last year was the first year that

we have been able to reduce a downward trend in readiness for our

nondeployed forces.

The key to reducing the impact of our aging aircraft inventory

and cannibalization is to establish a proper balance between acquisition of new equipment, which helps reduce maintenance requirements, and properly funding the spare parts for the aircraft that

are currently in the inventory.

Thank you for the opportunity to discuss this issue with you and

answer questions.

[The prepared statement of Admiral Heimgartner follows:]

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Mr. SHAYS. Thank you, Rear Admiral.

We will go to Mr. Gilman.

Mr. GILMAN. Thank you, Mr. Chairman. I want to welcome our

experts here on logistics.

Let me ask the entire panel, do you three Chiefs of Staff for Logistics and Director of the Fleet of all three major components of

our military ever get together to discuss your mutual problems of

cannibalization?

General MAHAN. Sir, I can tell you that we get together quite frequently. The Joint Logistics Commanders Conference, we meet

often with the Joint Logistics Chief, Lieutenant General McDuffy.

We talk about issues, all types. Cannibalization has not been one

of the premiere subjects, but it certainly is embedded in our readiness discussions as we talk to that.

Mr. GILMAN. Well, General Mahan, you say you never get into

the cannibalization or touch it lightly?

General MAHAN. Sir, it has not been a specific subject that we

have dealt with as a unique subject. It is embedded in our discussion topics about readiness, about ways to enhance that readiness,

etc. We talk more about the other issues, such as test equipment,

diagnostics, the long lead times for administration and procurement lead times. We talk about funding levels. We talk about management systems.

Mr. GILMAN. But do you feel, all three of you, do you feel that

cannibalization warrants more attention than it has been given by

the services?

General ZETTLER. I think when we meet—— Mr. GILMAN. Could you put the mic a little closer to you, General?

Mr. SHAYS. Gentlemen, I’m sorry, we seem to be having a little

bit of trouble with our mics. They used to project better.

General ZETTLER. I think when we meet, we try to go to the root

cause of cannibalizations. We recognize that there’s a cannibalization issue out there, but we go to some of the things that you discussed: inventory management policies and practices, stockage levels, minimum readiness levels that we’re willing to accept, and how

you drive from those minimum readiness levels to a stockage objective.

Mr. GILMAN. Well, who meets with you from DOD?

General ZETTLER. That’s a very fair question, and in the past Dr.

Kallock, who was the Deputy Under Secretary of Defense for Logistics, was the leader of this tribe as we worked our way through this

process and these issues.

Mr. GILMAN. You’re talking about past. Is he no longer there?

General ZETTLER. No, sir, he’s no longer there.

Mr. GILMAN. Has that post been replaced?

General ZETTLER. Pardon me, sir?

Mr. GILMAN. Is there anyone who has been replaced for that responsibility?

General ZETTLER. There are plans in the Department to replace

him.

Mr. GILMAN. But at the moment there is no one there?

General ZETTLER. That’s correct, sir.

Mr. GILMAN. And how long has that been vacant?

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General ZETTLER. Since the change of administration.

General MAHAN. Sir, I might add, we have an Acting DUSDL,

Deputy Under Secretary of Defense for Logistics, Mr. Allen

Beckett. We have met with him. He continues to bring to us the

issues that are important from a readiness perspective, but, sir, he

is an acting.

Mr. GILMAN. Then it would be that post that would have the central control of logistics, is that correct? That staff level person?

General MAHAN. Sir, there is. I would submit to you that it is

not merely the logistics chief that has that responsibility, nor that

can impact on readiness and spares. I would suggest that the acquisition process, which is, in fact, separate, just as the science and

technology is also separate, has much to do with the issues of

spares, reliability of spares, and the levels of spares that are acquired as part of the initial systems process. So it is a partnership

among all of those staff leads within the Secretary of Defense, just

as it is in our—— Mr. GILMAN. I have to interrupt you because my time is running.

Have you, the three of you, made any recommendation on how to

avoid this growing problem of cannibalization to the Department of

Defense?

Admiral HEIMGARTNER. From the Navy’s perspective, not directly.

Mr. GILMAN. Pardon?

Admiral HEIMGARTNER. Not directly.

Mr. GILMAN. Not directly? What would you think about the services—how would you response to a proposal of partially or wholly

privatizing the supply system for spare parts and other equipment

management? What would your response be to that? Since we’re

not doing such a good job in the services, maybe the private sector

could do a better job.

General ZETTLER. I think there is room for a study of that approach. We have various systems, such as the KC–10 or the F1– 17, where we allow industry to do our supply chain management

for the platform unique parts. We get good support. It is with a

cost.

We know that in cases where we have gone to industry to allow

them to do that, we have also had supply chain difficulties. So I

think when you move down that path, you have to be very careful.

It’s something that the Air Force would not immediately throw up

a stop sign to, but it’s one that we would say we need to go cautiously.

Mr. GILMAN. But worthwhile studying, is that what you’re saying?

General ZETTLER. Absolutely worthwhile studying.

Mr. GILMAN. Do the others feel the same?

Admiral HEIMGARTNER. If I may comment——

Mr. GILMAN. Admiral.

Admiral HEIMGARTNER. Yes, anything that may highlight why,

the systemic reasons, if that’s the case, that cannibalization is

where it’s at and where it needs to go. But I may add that cannibalization itself may just be a small symptom of larger problems.

And from my own experiences, the sailors and the troops have no

adverse reaction to cannibalizing if that action leads to a sortie

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that gets off the ground, training that’s completed, an operational

sortie flown while deployed overseas, and mission accomplishment.

They take great pride in preparing those airplanes and getting

those airplanes off the flight deck.

Mr. GILMAN. I can understand that, and they do a good job of

that, but what about the cost factor to all of this of a piece of equipment close to several millions of dollars lying there idle because

you cannibalized it?

Admiral HEIMGARTNER. Well, let me finish. The other elements

that cannibalization may mask, and were alluded to by others as

well as the GAO, and that may be an inadequate training issue.

It may be the inadequate number of personnel. It may be improper

engineering and logistics support for components on aging airplanes on which we have no data as to when they may break and

the magnitude in which that fix may exacerbate the length of time

in which components may be down.

Let me just say that we don’t normally stock entire landing gear

assemblies because those landing gear assembles are supposed to

last thousands of hours, but if they break prematurely, it can take

as long as 2 years until the time that we’ve been able to get those

parts back in the inventory. And that has been the recent case in

the year 2000 with engines on AV8-B’s, engines on H–46’s, landing

gear on the F–14, and landing gear on the F–18.

Mr. GILMAN. Admiral, how much does an F–14 cost the service?

What’s the cost of that 14?

Admiral HEIMGARTNER. Do you mean to buy a new one?

Mr. GILMAN. Yes.

Admiral HEIMGARTNER. Difficult to determine since the average

airplane—— Mr. GILMAN. Well, approximately.

Admiral HEIMGARTNER [continuing]. Is over 20 years old. Re- placement cost, probably $50–$60 million, but that’s a guess.

Mr. GILMAN. Millions of dollars sitting there idle, it seems to me.

My time is running. Mr. Chairman, one question more——

Mr. SHAYS. Your time ran out a long time ago, but we’re trying

to accommodate you. [Laughter.]

Mr. GILMAN. The GAO noted the inability to determine the full

extent of cannibalization because the services aren’t really reporting the full extent of cannibalization. Can we do something about

more accurate reporting, so that the Congress will have an opportunity to take a good look at the assessment of the cost and how

it affects our—— Mr. SHAYS. Let me do this: That is a question I am going to come

back to. That is a whole new line of questions that we really do

need to get into, and I really thank the gentleman for asking these

very important questions.

Mr. GILMAN. Thank you, Mr. Chairman.

Mr. SHAYS. I’m going to give Mr. Kucinich 10 minutes, and then

we’ll go to you, Mr. Schrock.

Mr. KUCINICH. I thank the chairman, and hopefully, it won’t take

that long to go through these questions.

I want to begin by thanking each of the representatives of the

service. I want to thank you for your service to our country. You

should know that those of us who serve in Congress understand

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that you are performing an essential service to our Nation in taking responsibility in the respective services, and also, just as I don’t

like to be held accountable for the institution of Congress relative

to certain things that happen around here, I would expect that any

of the individuals who serve proudly also have some concerns about

the institution that you are now serving. You do the best you can,

and I believe that.

But, nevertheless, I want that to serve as a backdrop for the

questions that I have, and I ask that you not take them personally,

but take them as the responsibility that I have to ask the questions. I hope that you will understand the spirit in which the questions are conveyed.

General Zettler, I am sure you are aware of GAO’s finding that the Department of Defense maintains almost $30 billion worth of

current inventory that exceeds both war reserve levels and current

operating requirements. Are you familiar with that?

General ZETTLER. Yes, sir, I am.

Mr. KUCINICH. What do you think of that?

General ZETTLER. Well, I feel that I have to look at the Air Force,

where we work that issue for the Air Force. Our inventory in the

Air Force over the last 10 years has been drawn down from, rough

number, 35 billion to a number today of 25 billion. I think that

those stock levels that are out there are in the ballpark of appropriate.

Do we have some things out there that may not be used for 8

or 10 years? Probably. Do we have a lot of parts that we don’t have

right now? Absolutely.

When I look at what the Materiel Command says keeps them

from repairing parts to the needs in the field, the largest constraint

that they repeatedly report to us is a shortage of carcasses, which

says we don’t have an inventory of spare parts to fix, to put back

out in the field. So I think our inventory figures are probably in

the ballpark.

I will tell you that we’ve also made some policy changes, as I

made in my oral statement, recently to retain inventory for a

longer period of time. We’ve done that because we’ve had some

solid studies done by the men and women that are out in the field

that say, the current policy says, since we haven’t had a demand

for this, we should get rid of it. But we know that in 2 years we’re

going to go through the same life cycle on this airplane again, and

that part is going to be in demand. So my bottom line on the inventory question is that we need to have a balance here. We can bring

that inventory down dramatically, only to find out in a few years

we’ll need it again.

We’re also buying a great deal of spare parts, and those, I believe, are valid requirements that we have gone to great lengths to

identify properly what’s required and try to replenish the stocks

that were drawn down in the nineties for demands that we said

weren’t going to happen.

Mr. KUCINICH. Thank you, General. General Mahan, would you

like to respond to that same question?

General MAHAN. Sir, I would. I share the same perspective as my

comrade from the Air Force.

Mr. KUCINICH. Do you have the same numbers?

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General MAHAN. Sir, I have better numbers than that in terms

of reduction from the OSD-mandated perspective. We had a memorandum directing reductions in inventory. At that point that we

started, we were at a little over about 18 billion in the Army. We

have gone down below 8 billion. We are now back to 9.3 billion because we recognized that readiness rates could not be sustained

with those levels of spare parts inventories.

Our current procurement for aviation spares, the purchase, if you will, from field organizations, average about $1.6 billion per year.

So, in terms of inventory turns, we wouldn’t meet the inventory

turn average for industry at large, but we have, as already alluded

to, some inventory that will not change as rapidly.

If you went back and looked at our recapitalization efforts, much

as General Zettler has already alluded to, we find that carcass rebuild, which we depend on 25 to 30 percent of the time for spares,

is inadequate because of piece parts that are subordinated to that

spare. So we have to go through and really look at the high readiness drivers and the high dollar cost drivers, so that we can get

the best return on investment for what we will purchase in spares

requirements.

Mr. KUCINICH. You’re familiar with the same report that I cited?

General MAHAN. Sir, I am.

Mr. KUCINICH. What do you say about one of the aspects of that report that said that $1.6 billion worth of inventory was purchased

without any valid requirements? This is GAO saying it. Is that a

problem?

General MAHAN. Sir, I could tell you that, from the Army’s perspective, we contributed to that. Until we have—and we are in the

process even as we speak of going to a single visibility of all Army

inventory. It’s called total asset visibility. Before, our wholesale

system believed and acted as if, when they issued a part, that part

was considered consumed because our standard management information systems would not allow you to count as part of our requirements determination process all of the assets that were in the

hands of field units when purchases were made from the original

equipment manufacturers or when decisions were made to rebuild

spares. Today we have made changes that will give us from the factory to the foxhole, if you will, the inventory in motion, both from

a maintenance perspective, from an inventory perspective, and it

will always be available for that acquisition objective determination.

So, yes, sir, I would suggest that we did that. In my first tour

in the Pentagon as a general officer, I was Director of Supply and

Maintenance, and, in fact, we purchased into long supply, rebuilt

into long supply, and failed to induct the appropriate readinessdriving carcasses into short supply into the production lines because we had poor visibility of those assets. We have changed that.

Mr. KUCINICH. So, General, when GAO said that the Army didn’t

know if it shipped inventory, inventory had been lost or stolen, because of weak inventory control procedures and financial management practices, you are saying these are things that you not only

are aware of, but you are working to address?

General MAHAN. Sir, we have been vigorously attacking that

through several issues. As I said, the total asset visibility program,

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the single stock fund program that will get us to visibility of all

those assets, be that at, if you will, the flight line equivalent for

the Army in the motor pool, in the authorized stockage list of units

down to that retail level, through the installation level, if you will,

retention accounts, and at the wholesale level. We are through

milestone two. Basically, we have captured the installation stocks

and the retention stocks at the core, mainly the repair parts companies, and we are now moving into milestone three, which is down

at the retail stock level of the authorized stockage list inside the

units themselves.

Mr. KUCINICH. A quick question—thank you, General.

General MAHAN. Yes, sir.

Mr. KUCINICH. I want to go to Admiral Heimgartner. GAO reported in its high-risk series that the Navy was unable to account

for more than $3 billion worth of inventory. Do you have any response to that, Admiral? And what are you doing about it?

Admiral HEIMGARTNER. Well, similar approaches as the other

two services. I mean, as we all know, the resources have been difficult to maintain in service aircraft as well as recapitalized, and

we can’t afford to have mispositioned, ill-positioned stock. So we’re

attacking that aggressively.

But, if I may, I would just like to mention for comparison’s sake

that we have about roughly 16,000 parts on a carrier. When an aircraft needs a part, we’re able to fill that about 75 to 85 percent of

the time immediately, and then it takes about 4 days on average

for the other parts to come to the carrier. And if we’re looking at

shore-based operations, it takes 8 to 12 days.

So what we have is a little bit of a mismatch, as much as 25 percent, perhaps 15 percent. So can we do better? Absolutely, yes.

Mr. KUCINICH. Yes, one of the things I want to say before I go

back to the Chair here is that there is a certain level of confidence

that comes in the midst of all this when you have representatives

of the service taking responsibility, first of all, because you have

been very certain about that, but also stating that you are really

making an effort, you have been making an ongoing effort to try

to deal with this. I think that should give the public a certain degree of confidence that an effort is being made. I would say that,

based on the presentations that I have seen here, I think the people should know that you are really working very hard to try to

straighten this out. It is not something that you created, but you

are trying to resolve it. So I want to thank you for your testimony.

Thank you.

Mr. SHAYS. I thank the gentleman. Mr. Schrock.

Mr. SCHROCK. Thank you, Mr. Chairman. I think what my friend

from Ohio said last is probably the most important thing. I am not

sure—we’ve missed the point here, as far as I am concerned.

General Zettler, first of all, said that they try to cannibalize as

a last resort, and he also said full funding—keyword ‘‘full funding’’—for these parts is necessary if he is going to keep his planes

running.

General Mahan said underfunding is the main problem. Underfunding is the main problem. More spare parts because of aging

fleets, that is a key. The older these things get in the Navy, the

Air Force, the Marine Corps, or the Army, they’ve got to be fixed.

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Admiral Heimgartner said aging inventory means more spare

parts. And, folks, we just have done a lousy job of that, and I place

the blame right here behind this desk. If these men are going to

do what they are supposed to do, and if the fleets are supposed to

do what they are supposed to do, we’ve got to fund them. We

haven’t killed the military over the last 8 years, but we have kept

the water level up to here so they are strangling. Unless we do

something about that, this isn’t going to change.

These three men are doing exactly what they are supposed to do.

I heard my friend Mr. Gilman say, if the services aren’t doing a

good job of this, maybe we ought to let the civilians do it. I nearly

came out of my seat at that one. They are doing a magnificent job.

It is the civilians that aren’t making sure they have the parts that

they need.

We can never predict when a ship is going to break, when a tank

is going to break, and when an airplane is going to break, Mr.

Chairman. A ship is only so big, and you’re not kidding, there are

lots of parts. I was in the Navy 24 years. I have talked to the people at Oceana a lot because that is in the district I represent. And

they cannot predict when these things are going to happen. If you

have to produce these things after the problem exists, then there

is no way we are going to keep our fleet running, and they are not

going to be able to carry out the missions they have been tasked

to do.

You have to understand, too, the military has been cut by 40 percent in the last decade with requirements going up 400 percent.

That is not their fault; that is our fault. In the last 8 years, the

last President had our forces in more areas of the world than all

Presidents and Franklin Delano Roosevelt combined, and that was

out of the budget. There was not a contingency fund to do that or

a supplemental fund. These men had to try to operate with all

those things going on and they simply can’t do it.

We shouldn’t be having this discussion. We shouldn’t have to

look at airplanes like we see up there. Because if we were funding

exactly as we should and we were providing the parts, that

wouldn’t have to happen.

I sat next to a former 35-year-old major in the Air Force a year

ago coming back from San Francisco. I said, ‘‘You’re 35 and you’re

a former major. What’s that all about?’’ He said, ‘‘I was flying

planes day-in/day-out, week-in/week-out, month-in/month-out, and

every night when I parked them, I wasn’t sure any maintenance

was going to take place on those, and I wasn’t even sure if I came

back in the morning that all the parts I left there the night before

were going to be there. And my wife said to me 1 day, she said,

’You know, we’ve got three small kids. One day you’re going to go

up and you’re not going to come back. What would I do?’’’ He was

a smart guy. He got out. He’s got a big, fancy, high-paying job in

Silicon Valley, but the fact is we needed that guy, and we needed

the hundreds and hundreds of others that have gotten out because

of the same thing.

I hear this from commanders and squadron commanders all the

time in Virginia Beach and Norfolk, the area I am privileged to

represent, and the enlisted people as well. The morale of the troops

sucks. It stinks. Because they don’t have the parts to do what they

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have been trained to do. Unless we at this level put the money in

the budget to make that happen, and unless we do something

about a supplemental real fast, the CNO has told me he’s going to

start parking planes June 1st. The Chief of Staff of the Air Force

said he is going to start parking them August 1st. It is not these

gentlemen’s fault; it is our fault. We have got to make sure the

funding is there.

If we truly want to have the best military we have ever had—

and everybody keeps saying we do, but I am starting to question

that—we’ve got to make sure we provide them with the funding

that is necessary. I didn’t mean to get on my soapbox like this, but

I was in the military 24 years. I know what it takes to run an operation, and we are not doing it. We are not letting them do it. Until

we do, nothing is going to change.

Thank you.

Mr. SHAYS. I thank the gentleman.

Let me just say to all three of our witnesses that, while I agree

with a lot of what my colleague has said, having been here 14

years, I have been here when the military has come before the Appropriations Committee and said, ‘‘We have all the money necessary to do everything we need to do.’’ I served 14 years in the

Statehouse, and quite often people would come and say, ‘‘We have

everything we need.’’ Then, later on, we find we didn’t. So I will

fault Members of the Congress when the statements are clear and

the testimony is honest, but when people take the party line to be

good soldiers for their command, they totally distort our knowledge

and understanding.

And let me just say to you that I am trying to get a handle on

a few things, and it is very important that we proceed with this

hearing and understand exactly where the problems are and where

the remedies are. I can understand the age of the aircraft means

that we are going to use parts more often. I can understand that,

if we are no longer in production, we have a problem. I can understand that this number of units that we may have, the number of

aircraft, may make it much more difficult to supply inventory. I

can understand that we use this aircraft continually. They don’t sit

in the garage for a weekend usually. So that is a problem. And I

can understand the whole funding issue.

What other issues cause the shortage?

General ZETTLER. Let me address that at least in part. Our stock

management is pretty sophisticated business. We try to optimize

aircraft availability. When we do that, we set some limits that

we’re willing to accept in not having the spare part where we

would like it to be when the mechanic says, ‘‘I need it.’’

We do that from the modeling approach that says some of these

parts are terribly expensive, and so you try to optimize by having

a few lesser ones than the very most expensive one. When we do

that, the reason we do that is you try to drive to 100 percent availability of every aircraft; you start to run vertical on the cost curve

against the probability line that says I want 95 percent or 98 percent or 99, and you’re literally going to infinity to assure you have

the distribution of spare parts. So we put some cost constraints

into our equations.

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When we do that, that means there’s going to be times where a

mechanic says, ‘‘I need this part,’’ and he doesn’t have it. It’s a simple variability of demand. He may have used one yesterday, too,

and he may not use another one for 2 weeks or 3 weeks while the

system replenishes it.

Having said that, we have obviously undershot that mark, and

we’re going back and look at those equations. I will also tell you

that in our overall Department policy with the Defense Logistics

Agency, what the Defense Logistics Agency is tasked to do is give

us the parts that we need 85 percent of the time when we order

them. That’s their stockage policy. So that builds in some criteria

here or some shortages in here. And, again, that’s a matter of looking at where you’re going to go on that probability-versus-cost

curve.

In order to overcome that one on the Defense Logistics Agency,

for example, the Department of Defense 18 months ago authorized

an additional $500 million of inventory augmentation, of which 60

percent comes to the Air Force as they buy it over 4 years to help

us with our spare parts problems.

So when a mechanic tells any of us out there, ‘‘I don’t have the

parts,’’ you really do have to bore down into the details of what is

the part that you don’t have or the one that’s really giving you the

problem and why. In many of our cases in our weapons systems

right now, very currently, this year and last year, we closed two

depots; we moved 40 percent of the repair capability between the

depot at Kelly and the depot at McClellan in Sacramento, CA, and

we put that into other depots or into the private sector. That’s a

huge workload change; 40 percent of our workload moved. And that

has had perturbations.

So you really need to start to peel the onion back before we talk

about centralization, before we talk about making major policy

changes: What is it we’re really trying to fix here? I think that all

of us are doing that, and I think you will recognize that we are

doing that when we’re done here today.

In my service, for example, I have taken my Director of Supply

and sat him aside with 120 to 150-day tasking to go through the

complete supply chain management policies and procedures that

we have and we operate under in the Department of Defense and

in the Air Force, and to come back to the corporate body of the Air

Force and tell us what are the high payoff ones that we need to

go change, and we’re prepared to do that. I’ve been to the Chief

with the outline of how we’re going to do that. I’ve made my case.

The Chief supports it, and I think that General Mansfield will

come back in the July/August timeframe with, ‘‘These are the

things that we absolutely have to do,’’ from stockage policy, from

financial operations, from distribution policies, from how we do

readiness spares kits, and bring that all together. I think he will

bring in 30 to 50 initiatives, and I’m hopeful that we will get 75

to 85 percent of those accomplished in the next year.

Mr. SHAYS. OK. General Mahan, we have an aging aircraft. We

are no longer in production in some. We have small numbers of

units, aircraft. We have a lack of predictability. We have a turnaround problem. We have full funding, and General Zettler has

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talked about cost constraints and that proper balance. What would

you add to this list?

General MAHAN. Sir, I would tell you that policy, as it relates to

stockage availability—as mentioned already, DLA used to have a

90 percent stockage availability requirement in the early nineties.

They were mandated, I believe by Congress, to go to an 85 percent

stockage availability criteria, as a result of the excesses that were,

in fact, noted after the buildup of the Desert Shield/Desert Storm.

I think at the end of that, because of the numbers of dollars that

we had that were in—— Mr. SHAYS. Let me just explain something, to add a little reality

to my colleague’s comments. We were ordering, because we had

such poor inventory control—I mean, this is not the first hearing

we’ve had. We are not babes in the woods here. We have had

countless hearings talking about billions of dollars of parts being

ordered because all the military didn’t know they already had the

parts. So we have to get at this.

And the reason we started to see Congress respond differently

was we wanted to know why the hell we were ordering parts we

already had, and we were ordering them not just 1 year; we were

ordering them a year and a year and a year. So we hadn’t used the

parts for years and we kept ordering them because we have such

poor control.

We wondered why it is that our masks—and this isn’t aircraft,

but our masks—some of them were not made properly. Forty percent of them were not performing to the requirements, and we

mixed them in with the inventory, and when we wanted to get

them out of the inventory, they couldn’t tell us which masks were

what.

So, I mean, there are a real lot of problems here. I suspect that

they just didn’t relate to the Marines on the ground and the Army

on the ground, but it related to the same endemic kinds of problems.

So you are talking about coming down to 85 percent, and that

was a factor, you think. What else do you think?

General MAHAN. Sir, if I could expand on that—— Mr. SHAYS. Sure.

General MAHAN. Mr. Chairman, I think we’re violently in agreement in terms of our inability to articulate very clearly the real requirements. Our systems have grown up in stovepipe systems. Financial does not talk to supply. Wholesale did not talk to retail. We

are attacking those systems. Maintenance did not talk to supply

appropriately at the wholesale level. So I had swivel-chair technology taking place at the corporate leadership of the Army, where

our Army Materiel Command had to, in fact, take one diskette, do

a swivel-chair for every national stock number that it was trying

to manage of the 6,400 reparable items, much less the hundreds of

thousands of consumable items that have been transferred to DLA.

Sir, that is an unacceptable way of doing business, and we have to

get at that.

That is one of the efforts that we are making today, to try to get

visibility over all those systems, so that we make the right corporate decision. Where we can, we need to run our Army and our

Armed Forces as a business. As we have already alluded to, it still

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has to be passed through the prism every day of readiness and mission capability, but where we can—and that’s where I go back to

single stock fund and the National Maintenance Program, reliability of the spares, refurbishment of the platforms that will allow us

to do that.

So systems, spares reliability, and how we can look at our policies, not the least of which is inventory management, as we’ve spoken to, but also maintenance management. If I continue to repair

only as necessary—and I’ll give you probably one that to me is far

more meaningful, but it clearly, I think, underscores the importance of having appropriate policies.

Today we have an inspect-and-repair-only as-necessary policy

that for the M–1 tank engine, when we originally bought, it was

supposed to be 1,500 hours mean time between failures, delivered

between 1,350 and 1,400. Because of inspect-and-repair-only asnecessary, if I open an engine at the unit level and that engine has

a problem with one or the other of its forward or rear mods—and

there are four in that—they can replace a forward mod and put the

engine back together, and they just bought into the life expectancy

of the worst of the remaining three modules of that engine. By

doing that, that means that the mechanics are going to be probably

repairing it three times more frequently than they should, had they

gone back to refurbishment; i.e., the depot-level DEMAR standards

that will go back and recapitalize and refurbish to zero miles an

hour.

So our policies, be that inventory management, be that maintenance management, certainly be that the financial management as

in single stock fund, all coalesce, hopefully, into a better capability

to do exactly what you would expect of us, and that is to manage

appropriately and efficiently all those different policies and procedures.

So, sir, we are in agreement in terms of where we must go. It’s

now pushing the dollars into the systems to be allowed to do that.

My management information systems are, in fact, from wholesale

logistics modernization program, which is for the first time trying

to get at a capability instead of buying hardware and software in

stovepipe fashion that has first, among equals, the ability to coalesce all of the disparate data elements from supply, maintenance,

finance, etc. So that we can begin to see all of those things that

we could not see before.

That’s what led us to this inventory mismanagement. Clearly,

guilty as charged, because we did not have visibility. Once we

issued, it was considered consumed. And GAO, I believe, would go

back and could confirm for you that those things that were bought

into long supply or repaired into long supply were at least partially, if not wholly, due to our inability to use those systems

automatedly. So that an automatic feed to a requirements determination process included the elements that were down at the retail level in the hands of the flight lines and the motor pools, as

well as all the way up.

Mr. SHAYS. K-Mart can tell you what they sold in any store almost instantly. The military at this time cannot tell you what they

have, where they have it, when it goes out. They can’t tell you, in

a sense, what the consumer is buying. And I am just saying to you

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that we all recognize that and we are trying to deal with it, but

it is why we are here.

General MAHAN. Yes, sir.

Mr. SHAYS. Because if you can do it as well as the private sector,

then we want you to continue to do it. If the private sector can cut

your costs, so your military personnel who have been trained to do

so many things can do their jobs and not have to handle inventory,

although you have people trained to handle inventory, that may be

a plus. So these are all things that I know you are considering and

we are aware that you are as well.

General ZETTLER. Mr. Chairman.

Mr. SHAYS. Yes?

General ZETTLER. In our Air Force today, implemented in fiscal

year 2001, being refined in fiscal year—or implemented in 2000,

being refined this year, when our reparable parts sell at a base, in

short order, not instantaneously, the item manager for that part

and his supply chain manager, his bosses, know what parts have

sold, and that allows them to make more management-level decisions of what parts need to be repaired and driven into the repair.

So we have a program out there. By acronym, we call it KEYSTONE. It’s certainly not perfect, but a vast improvement over

what we had in 1999 to tell us what parts are being consumed and

how to, then, replenish those, rebuild the budgets for the future

years.

General MAHAN. And, sir, likewise, I think through all the services, we are going to more and more of a real-time DRID–54, which

is an OSD directive that forces us to go to real-time, if you will,

even wireless kind of activities, so that we can relate supply activity to real mission requirements. That’s one of the underpinning responsibilities of the services as we go to more of this business process-related—— Mr. SHAYS. Let me just say, my colleague is welcome to join in

anytime, but when you only have two Members, we have the opportunity to turn off the light. It also gives you a chance to give a

more extended answer, if you want to.

Mr. SCHROCK. I would like very much to—— Mr. SHAYS. Sure.

Mr. SCHROCK. I agree with two things you said completely. One

was that for a long time we were overbuying and things were

stacking up on one another, and that is not good. But I think you

will be pleased to know that the Navy at the SPA Wars Command

in Chesapeake has developed a system, a K-Mart-type system, a

Wal-Mart-type system.

Mr. SHAYS. Right.

Mr. SCHROCK. And, oddly enough, it was developed by an ED–

7 Chief Petty Officer and a First Class Petty Officer. And I had a

briefing on that a couple of months ago, and it’s actually magnificent and is going to stop some of these problems.

And another thing you said, you’re absolutely right, the Joint

Chiefs do come up here and say they want this much money when

they knew they needed this much. I went back and talked to two

of them, and their response was, ‘‘Well, that’s just the way business

was done the last 8 years. We knew we were going to ask for this

much, but we had to beg for the rest.’’ We shouldn’t have to do

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that. Those men ought to be able to come up here and say frankly

what they need for the whole period and then be done with it. And

I think that mindset is going to change.

Mr. SHAYS. Right, and they are going to say what they need, and

we are not going to agree with everything, but at least the record

is honest. Then we can have accountability where it belongs. I

think if you tell the American people the truth, they ask you to do

the right thing. And I think if you ask their Representatives, their

Congressmen and women, what you believe to be the truth, they

attempt to do the best they can to accommodate.

But, we are also dealing with—I mean, I am interested in National Service in general. I had a Member say he is not going to

vote for it because three out of their seven accounts weren’t

auditable. And then in my work on the Budget Committee, working

with DOD, none of DOD’s accounts are auditable—none. None.

Over 7.6 trillion transactions were not auditable. That lends itself

to extraordinary abuses. So we just have to make sure that we are

demanding the same accountability ultimately.

Admiral, I didn’t give you a chance to just respond. I do want to

get to the second part, which I do fault the military for, and I am

going to give you a chance—in other words, we can say it is other

people that should have done this or that and we could do a better

job. I am at a loss to know why we aren’t keeping better documentation and why the documentation can’t be uniformly understood. And if it can, then I want to know how it can be.

But we have traveled the bases and we ask these questions of

the rank-and-file, and they tell us how much down time exists for

the inventory. Thank goodness, they are telling us because I want

to do something about it. But it seems to be higher than what the

statistics tell us.

But, Admiral, just going back on the issue of the age of the aircraft, no longer in production, small number of units, lack of predictability, turnaround time is a problem, full funding issues,

whether we are fully funding the cost, what’s the proper balance

between inventory on hand, and so on—I mean, those are issues

that obviously you have to think about. Is there anything else I

should add to that list?

Admiral HEIMGARTNER. Let me, if I could, just take a couple of

minutes to address that in broad terms, and then maybe more specifically.

I agree, since the early nineties, requirements was not something

that the system focused on. I’ve been—this is my fourth tour in the

Pentagon, and I’ve been in requirements and readiness in most of

the tours with some budget experience. But the CNO, when he

came in last year, his first priority for his first year was current

readiness. The reason that he put together this division that I

head, which is Fleet Readiness, was to get to the real requirement

and challenge all assumptions, measure the product of the plan, a

number of items that are good business-sense issues and which we,

frankly, hadn’t focused on in a number of years.

We used to have a robust requirements generation process in the

Pentagon, but we went out of that when we were top-line-driven.

So now we’re back into that, and we’re back into it big time. I say

that to kind of add a strategic underpinning to understanding canVerDate 11-MAY-2000 08:47 Aug 21, 2002 Jkt 000000 PO 00000 Frm 00095 Fmt 6633 Sfmt 6633 C:\DOCS\79974.TXT HGOVREF1 PsN: HGOVREF1
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nibalization and other things that we do. We can’t look at them in

a stovepipe environment. We have to look holistically.

One thing that we’re doing in the Navy is we’re trying to understand why we can’t execute the flying hour program and match the

hours that we had programmed to the cost per flight hour. In other

words, we fly up the money, but we don’t fly the hours. So why is

it that the costs are going up? And it’s more than just cannibalization. And you’ve mentioned almost every item that has to be taken

into account when you look at our ability or inability to meet the

mission.

So my particular division, just to give you some idea of what has

been invested by the Navy and the Marine Corps in trying to get

to the heart of the requirements, we’re the ones responsible to assess, develop the metrics, the models, and the methodologies for

the flying hour program, manning for aviation, training for aviation, support equipment for aviation, publications for aviation, the

programmed logistics in order to do the analysis to decide if these

parts are reaching an age in which we ought to overhaul them instead of just repair them. I also have depot maintenance for aircraft, airframes, and engines, the spares, and a look at the facilities

as well as the shipping and handling of those particular parts.

Then I have about the same thing on the ship and the submarine

side, too.

So we’re expending a considerable amount of effort in order to

try and find out the real requirement, that linkage to readiness, so

that we can better articulate what it is that we need so that we

can get our arms around what it really costs.

Mr. SHAYS. And that is a work-in-process that will have some

conclusion when, do you think?

Admiral HEIMGARTNER. We’ve already been able to assess the flying hour program for 2001 and determine what the real shortfalls

were in the flying hour program and those accounts that support

the flying hour program, and those have been articulated with

Members of Congress as well as the ongoing supplemental negotiations within our own Department.

Then, in a formal way, because of the nature of this beast here

and the periodic nature of how we do budgets, we’ve already put

all those pieces into play for the PR–03 or PALM–03, but we have

good knowledge of where the key areas are from having gone

through this in 2001 as well as 2002.

Yes, we have to be patient. We can’t fix something that’s been

broken for a number of years, but we have to approach it. We’re

dedicated and obligated to doing that.

Mr. SHAYS. Let me ask you this: It strikes me that you, as commanders, want information and you want it to be as accurate as

possible. I think GAO’s analysis, particularly on how the data is organized and how we describe it, and the fact that they think it is

quite inaccurate, I think has got to be of concern to all of you. It

would strike me that you help your cause by truly having that data

be as accurate as possible.

Admiral HEIMGARTNER. Let me address that, if I may?

Mr. SHAYS. Sure.

Admiral HEIMGARTNER. Because of the Navy IG team that visited

our naval installations about 2 years ago, and other studies and inVerDate 11-MAY-2000 08:47 Aug 21, 2002 Jkt 000000 PO 00000 Frm 00096 Fmt 6633 Sfmt 6633 C:\DOCS\79974.TXT HGOVREF1 PsN: HGOVREF1
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spections that we’ve had, in order to get the data that’s so critical

to not only making decisions at the headquarters level, but understanding at the execution level, down in the squadrons, how that

money is being spent and then what it’s being spent on—the acronym is called NOWCOMUS Optimized. We have a legacy

NOWCOMUS which, as the GAO mentioned, gathers as much information as it can, to use cannibalizations as an example, and has

some degree of relevance. It’s debatable whether it’s 50 percent, 75

percent, but it’s less than the full requirement as to exactly how

often we cannibalize and the reasons that we cannibalize.

This new system that we’re going to, which is in about a third

of our squadrons, and will be in all of the commands associated

with aviation and shipboard support by fiscal year 2004, it’s impossible now to make a transaction with a part unless it’s entered into

the system. There’s a whole number of reasons as to why parts are

removed or the repair actions, including a lot of degree of fidelity

and granularity on cannibalization.

So we are in the process of fixing it. We understand that, unless

you have full visibility into how the funds are being executed, you

can’t make the right decisions up here in the headquarters, and

this NOWCOMUS Optimized will do that for the Navy.

Mr. SHAYS. Now will the terminology be the same for all three

branches?

Admiral HEIMGARTNER. I can’t answer that, sir.

General ZETTLER. We’re not going to implement the Navy system

there. I recognize how much you travel and have the opportunity

to talk to our great people. I think that the GAO may have overstated a bit the lack of data in the Air Force. We don’t step up to

that. We will obviously go work when the report is published.

It’s not a perfect system. We certainly miss some maintenance

transactions, but, by and large, the cannibalization actions that we

do require entries into the system to track the aircraft status. So

there’s a self-checking audit process that goes on in the automation

system.

The mechanics are pretty reliable in making their data entries.

Once they’ve got the data in the system, we’ve got it captured.

Mr. SHAYS. Let me ask you: Is there any disincentive, though, to

not highlight this issue? In other words, it strikes me that you

might be judged based on—well, I mean, the B–22, when it was not

in operation, you know, whether you said it was in operation before

the vacation period or after, different factors came into play that

seemed to us like real games.

General ZETTLER. Our field commanders are judged, obviously on

their overall readiness status, but our field commanders also are

given wide latitude in how they achieve their mission ratings. I

have not learned, nor I think we would be surprised as an Air

Force to learn, that a commander at the field level was suppressing

cannibalization data. We recognize it’s a problem. We want accurate accounting, and the mechanics are willing to make that entry

into the data base.

The shortcoming of the system probably is, after 11 hours or 12

hours of working, when he has to go back into the shop and enter

that piece of data into the core automated maintenance system,

taking the time to do it. But, as a general rule, I said there’s

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checks and balances that show up that this airplane is not missioncapable because it’s got these parts off of it. How did that part get

out of it? Well, we ‘‘canned’’ it. And it gets entered.

In our data system world, we’ve been using the core automated

maintenance system for about 20 years. It’s a dated system. It’s

still green screens, but we have a refurbishment ongoing, and

shortly after the first of the year it will be a Windows-based system

and then spiral development to make it much more user-friendly

and totally capture the data that the mechanics are doing.

But, as I said, once the mechanic puts that data into the system,

it’s captured at the base-level data base. That transfers to an Air

Force data base, and then we have several management information systems that can tap into that data warehouse and allow us

to pull it down.

The order of magnitude may be off by a couple of percents in ‘‘canns.’’ I don’t know. Maybe we’re not at 12.7 in 1997. Maybe

we’re 13. But that’s the order of magnitude I’m really confident

with that we’re dealing with.

The trendline is absolutely accurate because it’s been the same

system out there over this period of time. So, from 12.7 in 1997 to

11.1 for this fiscal year, that’s a significant improvement that’s

going in the right direction, and we intend to keep it going in that

direction.

Mr. SHAYS. Mr. Kucinich, any questions?

Mr. KUCINICH. Gentlemen, when you have to requisition spare

parts, are any of the spare parts from your respective branches of

the service requisitioned from overseas? I mean, are they made

overseas, the stuff that you requisition? Do you know?

Admiral HEIMGARTNER. I don’t know.

General MAHAN. Sir, I could tell you that primarily, unless we

have an original equipment manufacturer, meaning a U.S. company, that has subcontracted out overseas, we don’t see that. Ours

is primarily, because of many reasons, policy as well as statute, are

pretty much defined in terms of U.S. production facilities. I believe

that is where we’re headed.

Mr. KUCINICH. Yes, I am familiar with the Defense Production

Act. One of the reasons I asked the question, Mr. Chairman—and

thank you, General—one of the reasons I asked the question is

this: This whole hearing today is essentially about inventory management. As the United States continues to see the collapse of its

basic industry which provides the parts, if not the actual equipment, that then complicates accessing the goods that you need to

do the job that you do. Is that correct?

General MAHAN. Absolutely. Yes, sir.

Mr. KUCINICH. And that is why we have the Defense Production

Act to begin with. And at some point, Mr. Chairman, that might

be something that might be worthy of your consideration. So I appreciate that, and thank you, gentlemen.

General MAHAN. Mr. Chairman, if I could expand on that just a

bit?

Mr. SHAYS. Sure.

General MAHAN. The production base—and that’s really what

we’re talking about, not only the organic inside our depots, but the

defense industry at large—we have gone and have seen, and we

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have had, as an example, between 1999, we had 18 safety-offlights, which as a safety-of-flight message that says that, if I have

a catastrophic failure of this part, and we have had one, obviously,

that caused that safety-of-flight, that then we have life and limb

of the aircrews at risk.

When we went back into that on many of those, and in the A8– 64, our Apache aircraft, one of our most sophisticated platforms, we

find that they have subcontracted parts out to a subcontractor who,

in fact, defaulted, and actually the subcontractor had in some cases

contracted out to another contractor. So the original equipment

manufacturer had gotten to the point where we were depending on

a partnering effort with them when, in fact, they were doing it for

business reasons, to the extent that we could not fly airframes.

We had the most serious one that grounded the entire Apache

aircraft fleet as a result of that, and we, then, had to go back in

and, were it not for double shifts at Corpus Christi Army Depot,

to be able to get those things remanufactured, we would have been

only this past April 2001, basically a year, because of the extremely

long lead times between administrative lead time and production

lead time of these kinds of aircraft spares. It can be up to 2 years

from the time that you sense you have a problem until you can do

something about it.

That’s why, as the aircraft ages, we have some of these design

flaws that crop up only after significant aging, and one was the

Sprague clutch and flange problems inside some of our aircraft

componentry that then caused us—we had not used any in the previous 6 to 8 years, again, that obsolete inventory that we talk

about. But when it was needed, those parts did not meet the specifications originally manufactured to, and we had to go back in and

refurbish, again, because of the subcontracting process.

So it’s a very delicate balance between organic and certainly

OEM, but it has extended beyond OEM to then subcontractors to

that OEM. That’s a balancing act in terms of the readiness piece.

So, sir, I think it very clearly underlies your premise that says industrial preparedness is certainly an issue.

Mr. KUCINICH. Thank you, sir. Thank you, Mr. Chairman.

Mr. SHAYS. It strikes me we are always going to have a cannibalization problem. It is almost like we fly our parts in one plane and

that is how we deliver the parts to the base. I mean, you are going

to have that, and you are certainly going to have it with older aircraft. It is a marvel that our mechanics in some cases are able to

have an airworthy aircraft.

So it is going to be there, and the issue is, to what extent? And

the other issue is, in my judgment, how on top of this you all are,

how on top of it we are. It seems to me that we have to keep working to get the data more accurate. So we will be working with you

in this process.

If there is anything you had prepared to answer that you felt we

should have asked, even if it was a tough question that we didn’t

have the sense to ask you, I would love you to answer the question

you were prepared for. [Laughter.]

And if you would like to make any closing statement—see, I like

to make an assumption you stayed up all night preparing for this

and there’s something that we should have asked you. [Laughter.]

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General ZETTLER. I would like to finish with a remark.

Mr. SHAYS. Sure.

General ZETTLER. Congressman Kucinich brought in the F–22.

Mr. Gilman brought in privatization of suppliers. I would say that

new airplanes demonstrably give us improved reliability and improved availability.

Mr. SHAYS. Right.

General ZETTLER. The C–17 is doing marvelous for us. The ‘‘cann’’ rate on the C–17 is down less than 4, and many of those

are parts that the government supply system would provide. We

have a contracting arrangement with the Boeing company providing overall spares management on the C–17. They’re doing a great

job. Our mission availability rate is up in the high 80 percent.

The F–117, we have the same type contractor support arrangement on. We have an availability rate, again, in the high 80 percent.

The KC–10, we again have a contractor arrangement providing

parts for us. Again, a high mission capability rate and a very low

‘‘cann’’ rate.

As we move into new weapons systems, such as the F–22 or the

Joint Strike Fighter, we’re optimizing those for reliability and

maintainability and availability. When we do that, we are looking

at partnering with the industry that’s going to provide those to

help us with supply chain management, to ensure us that we have

improved availability.

The converse is true on our aging platforms, such as the C–5 and

the B–1 that you see over here. The B–1, the GAO properly characterized the main problem with cannibalization on that as being the

defensive avionic system. In the defensive avionic systems we have

some parts in there that are only repaired by one vendor in the

United States, and he has a limited capacity. And why should we

incentivize him to increase that capacity when we know that we’re

going to try to replace that defensive avionic system? So we go

along that line of, where do you spend that dollar? To modernize

that system or to pay for more repairs to that system? So those are

the tradeoffs that we have to bring.

But, since those platforms were brought up, I wanted to bring

out how our new systems are doing and what the effects of recapitalization of our Air Force can be.

Thank you for allowing us to be here today.

Mr. SHAYS. Thank you. It would strike me that maybe, when we

take a second look at this, we try to divide up the different weapons systems based on age to see what the difference is in terms of

cannibalization.

General, did you want to make any comment?

General MAHAN. Sir, in summary, I would like to thank the committee for having us here today to help us articulate to you, and

I think to our Nation, some of the issues at hand. Everyone is

working as hard as they can. We are partnering with industry, and

they have been a valuable partner in ensuring that we have tried

to maintain readiness of our fleets.

We, just as the Air Force has done, are trying to eliminate some

of the old fleets that we could not incentivize the original equipment manufacturers to continue to produce, even if we wanted to.

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They are unwilling to because of the low numbers of the airframes,

and the UH–1 and the AH–1 are great examples of that.

But, regardless, we know that, as we try to remanufacture, we

still have a long way to go. Three of our aircraft fleets in the Army

are already past their half-life metric. Because of that, we have

seen our operations and support costs increase 10 percent per year

across the Army for the past 3 years.

Refurbishment and recapitalization is one of our key initiatives

to try to get back some of that life, and as we do so, to either incorporate new technology and new reliability, but certainly to get back

to a standard that we can expect to fly and be able to do what we

need to do from a mission-readiness and a mission-effectiveness

standpoint.

So, sir, we are happy that you asked us to come, and we look forward to working with you in the future.

Mr. SHAYS. Well, we are happy you came.

Rear Admiral.

Admiral HEIMGARTNER. Thank you, sir. Let me just make a couple of comments along the same lines as the generals have brought

out.

We just completed a very in-depth study on why the cost of doing

business, primarily repairing depot-level repairs and the consumption rates—in other words, how often do you put parts in an airplane and how long do they last? We, too, are showing figures of

roughly 6 to 8 percent per year, and most of our aircraft that are

on the decks of our carriers, which are in the more extreme environments, are up at the 8 percent level. So we have a cost of doing

business that’s going up 8 percent.

We’re doing exhaustive studies of trying to determine how we

can flatten that curve. I mean, 8 percent compound interest over

the life of our airplanes, which now is 17 years, is a huge, huge

operational support bill. We want to flatten that curve. You can

flatten that curve by investing money into reliability fixes, which

we do as best we can, or you can buy new airplanes.

As Congressman Kucinich mentioned earlier, about this flattening the aging curve, the Navy needs to buy about 170 aircraft per

year in order to keep the average age of our airplanes at 15 years

or less. For the last several years, the best we have been able to

do is buy 120. So if you can’t invest the money for reliability fixes

and if you can’t make the force younger, then we’re potentially

faced with a real challenge that may be extremely difficult to meet.

I can assure you that the readiness of our deployed units is as

high as it’s ever been, but it comes on the back of those next to

deploy. Those next to deploy are the ones that are greater than 90

days from being in the forefront of going overseas. That’s the folks

that are the most frustrated, where morale suffers. These are people that are priority 3 on parts. These are the ones that, if there’s

a major component for an airplane, that component for an airplane

goes to a deployed or a soon-to-deploy squadron.

As I said, our sailors and marines take great pride in being able

to maintain these airplanes. They will do anything, and they have.

You’ve seen the statistics on how long they work and how dedicated they are. But we owe them a better workday, a better quality

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of services, and we’re doing the best we can to try and quantify

that with all the challenges that we faced for a number of years.

Thank you very much, sir.

Mr. SHAYS. Thank you, and I think the committee agrees with

all three of your closing statements. We appreciate your good work

and look forward to working with you. Thank you.

This hearing is adjourned.

[Whereupon, at 12:25 p.m., the subcommittee was adjourned, to

reconvene at the call of the Chair.]

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