Navy F/A-18E/F and EA-18G Aircraft Program
Released: 2011-10-19T00:00:00

Introduction

The Navy has been procuring F/A-18E/F Super Hornet strike fighters since FY1997. Super Hornets and older F/A-18A/B/C/D Hornets currently account for the majority of the aircraft in the Navy's 10 active-duty aircraft carrier air wings (CVWs)—of the 70 or so aircraft in each CVW, more than 40 typically are Hornets and Super Hornets.

In FY2006, the Navy also began procuring the EA-18G Growler, an electronic warfare version of the Super Hornet. Growlers are replacing older Navy and Marine Corps EA-6B Prowler electronic attack aircraft. Super Hornets and Growlers were procured in FY2005-FY2009 under a multiyear procurement (MYP) arrangement.

The Navy's proposed FY2012 budget requests about $2.4 billion for the procurement of 28 F/A-18E/F Super Hornet strike fighters and about $1.1 billion for the procurement of 12 EA-18G Growler electronic attack aircraft.

The Navy's FY2011 request for 22 F/A-18E/Fs comes in the context of a projected shortfall in Navy and Marine Corps strike fighters. Estimates of the extent of the shortfall vary, with the peak of the shortfall ranging from 100 aircraft by one estimate to 243 or more aircraft according to other estimates.

Background

F/A-18E/F Super Hornet Program

The F/A-18E/F Super Hornet is a Navy strike fighter, meaning a tactical aircraft that can perform both air-to-ground (strike) and air-to-air (fighter) operations. The Super Hornet is a larger, more modern, and more capable version of the earlier F/A-18A/B/C/D Hornet, which is operated by both the Navy and Marine Corps.

The Navy has been procuring F/A-18E/F Super Hornets since FY1997. Hornets and Super Hornets currently form the core of the Navy's aircraft carrier air wings (CVWs)—of the 70 or so aircraft in each CVW, more than 40 typically are Hornets and Super Hornets.

In FY2012, he Navy is also procuring the F-35C—the Navy version of the F-35 Joint Strike Fighter (JSF). Navy plans call for phasing Hornets out of service and for CVWs in the future to include a strike fighter mix of Super Hornets and F-35Cs.

As shown in Table 1 , through FY2011 the Navy has procured a total of 489 F/A-18E/Fs. Super Hornets were procured in FY2000-FY2004 under an MYP arrangement, and both Super Hornets and Growlers were procured in FY2005-FY2009 under a second MYP arrangement. In September 2010, during consideration of the FY2011 defense budget, Congress approved a third MYP arrangement retroactive to FY2010.

The Navy's proposed FY2012 budget requests funding for the procurement of 28 F/A-18E/Fs, estimating the total procurement cost of these aircraft at $2,369.0 million, or an average of about $84.6 million each. These 28 aircraft received $2.3 million in prior-year advance procurement funding, leaving $2,366.7 million to be provided in FY2012 to complete their procurement cost. The proposed FY2012 budget also requests $65.0 million in advance procurement funding for F/A-18E/Fs to be procured in future fiscal years, and $77.2 million in funding for F/A-18E/F initial spares, bringing the total amount of procurement funding requested for FY2012 to $2,508.9 million.

The estimated average procurement cost of about $84.6 million for the 22 F/A-18E/Fs requested for FY2012 is higher than the estimated average procurement costs of the 23 F/A-18E/Fs procured in FY2008 (about $80.8 million), but less than the 18 F/A-18E/Fs procured in FY2010 (about $86.9 million). This may reflect the fact that the F/A-18E/Fs procured in FY2009 were procured under an MYP arrangement.

The FY2012 budget submission projects a total procurement of 556 F/A-18E/Fs, with the final 39 aircraft to be procured in FY2013-2014. This is 41 aircraft more than envisioned in the FY2011 budget submission "to mitigate Joint Strike Fighter delays." The Navy's FY2012 budget justification materials state that F/A-18E/F advance procurement funding requested in FY2012 is to support the planned procurement of 28 aircraft in FY2013.

The F/A-18E/F was approved for export in June 2001. A sale of 24 to Australia was completed in May 2007. The first of the 24 was accepted by Australia on July 8, 2009, and 12 of the 24 are being wired to provide an option for converting them relatively easily into EA-18Gs.

The F/A-18 is currently competing in a major fighter procurement in Brazil. Decisions on sales to other countries reportedly could be announced in 2012.

EA-18G Growler Program

The EA-18G Growler is an electronic warfare aircraft for jamming enemy radars and communications. The EA-18G shares the F/A-18F's airframe and avionics and is built on the same assembly line. The Department of the Navy is procuring EA-18Gs as replacements for aging Navy and Marine Corps EA-6B Prowler electronic attack aircraft, which help protect Navy, Marine Corps, and Air Force aircraft operating in hostile airspace.

As shown in Table 1 , through FY2011 the Navy has procured a total of 90 EA-18Gs.

The Navy's proposed FY2012 budget requests funding for the procurement of 12 EA-18Gs. The FY2012 budget estimates the total procurement cost of these aircraft at $1,134.4 million, or an average of about $94.5 million each. These 12 aircraft received $55.1 million in prior-year advance procurement funding, leaving $1,079.4 million to be provided in FY2012 to complete their procurement cost. The proposed FY2012 budget also requests $28.1 million in advance procurement funding for EA-18Gs to be procured in future fiscal years, bringing the total amount of procurement funding requested for FY2011 to $1,107.5 million.

Although the Navy had testified that it is planning a total procurement of 88 EA-18Gs, the administration's FY2012 request projects a fleet of 114, which would leave a final 12 aircraft to be procured in FY2013.

In March 2008, it was reported that the Australian government was considering to purchase some number of EA-18Gs for that country's air force. As mentioned earlier, it was reported in July 2009 that 12 of the 24 F/A-18E/Fs purchased by Australia are being wired to provide an option for converting them relatively easily into EA-18Gs.

Recent Developments

Multiyear Procurement

The FY2012 budget submission includes an analysis of the multiyear procurement plan authorized by Congress in September 2010. Under this plan, 107 F/A-18E/F and 58 EA-18Gs will be acquired from FY2010 through FY2014 under a fixed price incentive fee contract. DOD estimates the total cost avoidance by using multiyear procurement to be $580.9 million.

Navy-Marine Corps Strike Fighter Shortfall

The Navy and Marine Corps, which are both part of the Department of the Navy (DON), each operate strike fighters. Strike fighters constitute the majority of the aircraft in each of the Navy's 10 active-duty aircraft carrier air wings (CVWs) —of the 70 or more aircraft typically embarked on a Navy aircraft carrier, 44 typically are strike fighters. Strike fighters also constitute a significant portion of the Marine Corps' three active-duty Marine air wings (MAWs). Some Marine Corps strike fighters are assigned to Navy CVWs.

As of early 2009, the Navy operated about 380 F/A-18E/F Super Hornet strike fighters, the Navy and Marine Corps operated a total of about 620 older F/A-18A-D Hornet strike fighters, and the Marine Corps operated about 125 AV-8B Harrier II short takeoff, vertical landing attack aircraft. In coming years, the Navy plans to retire its Hornets and shift to a combination of Super Hornets and F-35Cs, while the Marine Corps plans to retire its Hornets and Harriers and shift to strike fighter force composed entirely of F-35Bs.

DON's inventory of strike fighters currently falls short of the number that Navy officials state is required to fully support requirements for Navy and Marine Corps air wings, and the Navy is projecting that this shortfall will grow in coming years. DOD's addition of 41 aircraft to the F-18 force is intended to partially mitigate this shortfall.

How Large Is the Shortfall?

In testimony to the House Armed Services Committee, Secretary of Defense Robert Gates projected the shortfall at "about a hundred aircraft in 2018," noting that "there are a number of strategies that people have in mind for—for mitigating that shortfall." In testimony before the House Armed Services Committee on March 24, 2010, the Navy's acquisition chief put the shortfall at "177 aircraft in a 2017 timeframe."

Commentators have referred to other estimates, including Navy testimony, putting the shortfall as high as 243 aircraft. Asked to reconcile the various numbers, Rear Admiral Allen G. Myers, USN Director of Warfare Integration, stated:

Last year in PB '09, I briefed that we were forecasting in the later teens, starting in 2016 through 2018, a Strike Fighter shortfall with the U.S. Navy of 69 aircraft, and the Department of Navy, 125.

That was assuming that all of our legacy F-18s, A through D, could get to 10,000 hours. So that was sort of a bookend. The other bookend was if none of those aircraft got past 8,600 hours, that it'd be 125 and a 243 shortfall.

Although "(t)he current inventory of Hornets and Super Hornets is short—by about 60 planes—of the 'validated requirement' of 1,240," Secretary "Gates said talk of gaps, and how to fill them, misses the point. 'Before making claims of requirements not being met or alleged "gaps"—in ships, tactical fighters, personnel or anything else—we need to evaluate the criteria upon which requirements are based in the wider, real-world context,'" Gates said during a May 8 (2010) speech.

Service Life Issues

As Admiral Myers's testimony indicated, the projected Navy-Marine Corps strike fighter shortfall could be affected by Hornet and Super Hornet service life. The F/A-18A-D Hornets currently operated by the Navy and Marine Corps were originally built for a service life of 6,000 flight hours. This was later extended to 8,000 hours. It is now being extended again, to 8,600 hours, through a High Flight Hour (HFH) inspection effort that closely examines the condition of each aircraft. Extending the Hornets' service lives further, to 10,000 hours, would require significant depot work to rebuild various parts of each aircraft. The cost of such a service life extension program (SLEP) is uncertain, but on March 24, 2010, Navy acquisition chief Sean Stackley stated:

Service-life extension has many pieces to it. So the first part of service-life extension I'm going to hit you with is the center-barrel replacement.… There's north of a billion dollars for 421 aircraft that we're already in process with.

The second part is planning for the more extensive SLEP program, which takes the aircraft from 8600 to 10,000 hours. We are in that planning phase.

As shown in the left half of Figure 1 , the Navy has projected that if about 300 older F/A-18A-D Hornets have their service lives extended from 8,600 flight hours to 10,000 flight hours, the strike fighter shortfall would peak in 2017 at 125 aircraft, including a shortfall of 69 in the Navy and 56 in the Marine Corps.

As shown in the right half of Figure 1 , the Navy has projected that if the 300 or so older F/A-18A-Ds Hornets do not have their service lives extended to 10,000 hours, and are instead removed from service when they reach 8,600 flight hours, the strike fighter shortfall would peak in 2018 at 243 aircraft, including a shortfall of 129 in the Navy and 114 in the Marine Corps. (Note that these charts do not reflect the 41 aircraft added to the Future Years Defense Plan [FYDP] budget in 2011.)

In June 2009, the Navy testified that strike fighter shortfall might peak sooner than indicated in Figure 1 —in 2015—because the HFH inspections on the F/A-18A-D Hornets are taking longer to accomplish than was first expected.

The projections in Figure 1 assume that F-35 procurement will increase from year to year as currently planned and eventually reach a sustained rate of 50 aircraft per year. If F-35 procurement is delayed or if the sustained rate of production is less than assumed—say, for example, 35 aircraft per year vs. 50 aircraft per year—then the projected strike fighter shortfall would increase above that shown in Figure 1 .

Following the HFH inspections, in March 2010, 104 Hornets were grounded after discovery that "airframes were developing cracks much earlier than engineers had thought." Following more detailed inspections, most were returned to flight, but seven aircraft "will require depot-level maintenance to replace the aft wing shear attach fitting, where the back portion of the main wing attaches to the fuselage."

As one means of mitigating the projected strike fighter shortfall, the Navy is examining the option of accelerating planned purchases of F-35C Joint Strike Fighters (JSFs) for the Navy. "Lockheed Martin officials told Chief of Naval Operations Adm. Gary Roughead … that the company could ramp up the production of F-35 Joint Strike Fighters by as much as 30 additional Navy aircraft over the future years defense plan (FYDP), according to the program manager."

However, the F-35 program is experiencing delays, and F-35 initial operating capability for the Navy has been moved to FY2016.

When the F-35 was expected to enter Marine Corps service in 2012, the Corps believed it could manage its shortfall by extending the life of some of its Hornets to 10,000 hours. "If JSF stays on track, I have a lot of confidence, personally, that we can manage our way through any kind of gap that's out there," said Lieutenant General George J. Trautman III, USMC, then Deputy Commandant for Aviation. However, Trautman's successor says the Marines' F-35B has now "gone from 2012 to probably 2014, and my guess now it'll probably be somewhere in the 2015 timeframe."

Additional information relating to the projected Navy-Marine Corps strike fighter shortfall appears in Appendix B .

Issues for Congress

Size of the Shortfall

The size of the shortfall will drive both the impact on the naval services and the options available for its relief. The difference between Secretary Gates's projection of "about a hundred aircraft" and the earlier Navy estimate of as high as 243 is more than two carriers' inventory of strike fighters. Fixing a number will enable Congress to choose among proposals to accelerate F-35 acquisition, SLEP more Hornets and Super Hornets, stand down or retire carriers and/or air wings, or other options.

How Many F/A-18E/Fs to Procure in FY2012

DOD has proposed acquiring 28 Super Hornets and 12 Growlers in FY2012.

Proponents of procuring additional F/A-18s in FY2012 could argue that doing so would further mitigate the projected Navy-Marine Corps strike fighter shortfall and the operational risks associated with it. Proponents could also argue that increasing the number of F/A-18E/Fs procured in FY2012 to something more than 28 could increase economies of scale for the current F/A-18E/F multiyear purchase, reducing the average procurement cost of each FY2012 aircraft, and extend the life of the F/A-18 production line, which could offer insurance against further delays in F-35 production.

Opponents of procuring additional F/A-18s in FY2012 could argue that in a situation of limited defense funding, procuring additional F/A-18E/Fs could require reducing funding for one or more other defense programs, which could lead to operational risks in other areas. Opponents could also argue that further F/A-18 production could restrict Navy combat capability by increasing its inventory of older-design fighters rather than addressing current and future threats with the most technologically advanced aircraft, and that additional F/A-18s would not help the Marine Corps, which has committed to move exclusively to F-35s.

FY2012 Legislative Activity

FY2012 Defense Authorization Act (H.R. 1540/S. 1253)

House

As passed by the House, H.R. 1540 funded the F-18 program at the requested levels.

Senate

As reported to the Senate, S. 1253 cut $495 million and nine aircraft from the request for F/A-18E/Fs, citing Navy projections that the fighter shortfall would be less than earlier anticipated. The committee report ( S.Rept. 112-26 ) stated:

F/A–18E/F

The budget request included $2,431.7 million to purchase 28 F/A–18E/F aircraft. This is 27 more than was planned in the fiscal year 2010 future-years defense program (FYDP).

The Navy requested these additional aircraft as part of an overall increase of 41 F/A–18E/F in the FYDP. The Navy increased the request in fiscal year 2012 and over the FYDP made to reduce fighter shortfall to a ''manageable level of 65 aircraft.''

Since then, Congress passed the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (Public Law 112–10), which included $495.0 million to purchase an additional nine F/A–18E/F aircraft. More recent information from the Department of the Navy, which accounts for the extra nine aircraft and other changes, estimates that the shortfall is now expected to be 52 aircraft.

The committee accepts the Navy's word that the Navy can manage the shortfall at a level of 65 or fewer aircraft. Therefore, the committee recommends a reduction of $495.0 million and nine aircraft from the fiscal year 2012 authorization request.

FY2012 DOD Appropriations Bill (H.R. 2219)

House

As passed by the House, H.R. 2219 reduced the EA-18G request by $77.8 million. Of that, $26.6 million was cut for "CFE (customer-furnished equipment) Electronics cost growth," $9.2 million for "Engine cost growth," $36.0 million for "Avionics PGSE cost growth," and $6.0 million for "Other ILS cost growth." H.R. 2219 reduced the F/A-18E/F request by $63.5 million, including $29.1 million for "Engine cost growth," $15.5 million for "CFE Electronics cost growth," $4.5 million for "GFE (government-furnished equipment) Electronics cost growth," $2.6 million for "Armament cost growth," and $11.8 million for "ECO (engineering change order) increase."

Senate

As reported by the Senate Appropriations Committee, H.R. 2219 cut $7 million from the EA-18G request to "reduce engineering change orders to 2010 levels." The SAC also cut $99.7 million from the F/A-18E/F request, including $21.0 million for "ECO excess," $10.7 million for "Government furnished equipment engine cost growth," and $68.0 million for "Multi-year procurement savings." The SAC recommended cutting $1.7 million from advance procurement funds for "Airframe termination liability growth" and a further $54 million from the overall program ($20.9 million for "Integrated Logistics Support excess to need," $14.0 million for "Digital Communications System reduce quantities," $12.8 million for "Other support growth," and $6.3 million for "Net Centric Operations reduce A kits").

Appendix A. FY2011 Legislative Activity

Summary of Action on FY2011 Aircraft Quantities and MYP

Table A -1 summarizes congressional action on the number of EA-18Gs and F/A-18E/Fs to be procured in FY2011, and on whether bill language is provided to authorize a new multiyear procurement (MYP) arrangement for EA-18Gs and F/A-18E/Fs starting in FY2010.

FY2011 Defense Authorization Act ( H.R. 5136 / S. 3454 )

House

In its report accompanying the FY2011 defense authorization bill ( H.Rept. 111-491 , accompanying H.R. 5136 ), the House Armed Services Committee added $500 million to the president's $1.8 billion request for 22 F/A-18E/Fs. The panel said the Navy should use the added funds—coupled with the $130.5 million in savings realized as a result of a multiyear procurement deal for the Boeing-built aircraft—to buy eight more of the planes.

Under Items of Special Interest in Aircraft Procurement, Navy, the House report stated:

Department of Navy tactical aircraft inventory

The budget request contained $1.8 billion for the procurement of 22 F/A–18E/F Super Hornet strike-fighters.

The committee is concerned by the manner in which the Navy and the Marine Corps are managing and accepting an unprecedented level of operational risk within the Department of the Navy tactical aircraft force structure while waiting for the F–35B and F–35C to complete development, testing, and fielding. The committee does not expect that the Navy and Marine Corps will be able to fully meet future operational strike-fighter requirements of any combatant commander if the tactical aircraft inventory management plan remains unchanged. The committee remains concerned with five areas of the Navy and Marine Corps tactical aircraft portfolio:

(1) strike-fighter inventory requirements and estimated shortfalls;

(2) sustainment and viability of the strike-fighter legacy fleet;

(3) courses of action that are being implemented, resulting in unprecedented levels of operational risk;

(4) F–35B and F–35C affordability;

and, (5) closure of the F/A–18E/F production line.

The committee is disappointed with the manner in which officials of the Department of the Navy have conveyed strike-fighter inventory requirements and estimated shortfalls over the past several years. The committee notes that the validated strike-fighter inventory requirement is 1,240 aircraft, but currently the Navy is using the current operational demand figure of 1,154 aircraft as its baseline for projections of future shortfalls. This is an inaccurate depiction of the actual shortfall of tactical fighters in the inventory, and the Navy and Marine Corps strike-fighter shortfall mitigation strategies are either optimistic or not credible since the mitigation strategies are not funded.

Elsewhere in this report, the committee describes the ongoing development problems with the F–35 series Joint Strike Fighter (JSF) and notes that the JSF is significantly delayed, well over cost projections, and not likely to arrive in the Navy-Marine Corps inventories in sufficient numbers to offset the pending retirements of F/A–18 series and AV–8B aircraft. The committee estimates that by fiscal year 2017 the Navy-Marine Corps inventory could easily be 250 aircraft short of requirements, or the equivalent of 5 carrier air wings. This is an unacceptable outcome and the committee will not support future budget requests that fail to address the factual realities of a naval strike-fighter shortfall. Absent a complete reversal of development and production performance in the JSF program, the committee expects future budget submissions to extend the production of the F/A–18E/F series aircraft to prevent U.S. naval airpower from losing significance in the nation's arsenal. Although the Marine Corps chose not to recapitalize its current fleet of fixed-wing F/A–18A/D aircraft with F/A–18E/F aircraft, the committee believes that procuring F/A–18E/F aircraft should be considered as a means in resolving the Marine Corps' inevitable strike-fighter inventory shortfall.

The committee recommends an increase of $500.0 million, which when combined with $130.5 million excess funding as a result of the third multiyear procurement, shall be available for the procurement of an additional eight F/A–18E/F Super Hornet strike-fighters.

Senate

Section 123 of the Senate report accompanying the FY2011 defense authorization bill ( S.Rept. 111-201 , accompanying S. 3454 ), included the following language:

Reports on service life extension of F/A–18 aircraft by the Department of the Navy (sec. 123)

The committee recommends a provision that would require the Secretary of the Navy to conduct a business case analysis comparing two options: (1) conducting a service life extension program (SLEP) for legacy F/A–18 aircraft beyond 8,600 hours; and (2) buying new F/A–18E/F aircraft. The provision also would specify the elements of that analysis. The Secretary would be required to complete that analysis and submit it to the congressional defense committees before he could begin such a SLEP effort.

The Department of the Navy has testified that, among the alternatives available to the Department for managing the shortfall it has projected in tactical aircraft inventory, one is to conduct a SLEP for some portion of the F/A–18 fleet that extends their service life beyond 8,600 flying hours. However, several objective reports have suggested that extending the service life of legacy F/A–18A–D aircraft to 10,000 hours may require significant depot work to rebuild parts of each aircraft. Such a situation raises uncertainty about the costs of such a program.

The provision would also require the Secretary of the Navy to submit to the congressional defense committees a report on the operational risks and effects of any decision to reduce the size of F/A–18 squadrons before the Secretary takes any such action. The provision would also specify topics or issues that this report should address. The committee understands that the Department of the Navy is planning to ask for funding to extend the service life of F/A–18 aircraft in fiscal year 2012 and will start reducing the size of its land-based F/A–18 squadrons in fiscal year 2011. Therefore, the committee directs the Secretary of the Navy to submit the reports at the time the President submits his fiscal year 2012 budget proposal to Congress.

One of the ways that the Navy has decided it could deal with the shortfall of strike fighter aircraft would be to reduce the squadron size for expeditionary F/A–18 squadrons from 12 to 10 planes, beginning in fiscal year 2011. The committee understands that the Navy also intends to reduce the size of F/A–18 training squadrons. The committee, however, has seen no evidence that the Department of the Navy has conducted an operational risk assessment and analysis of the effects of these reductions. The committee believes that a final decision on reducing operational or training squadrons should be made only after the Department has completed those analyses and has reported on them to the congressional defense committees.

Also, Section 125 of the Senate report stated:

Multiyear procurement authority for F/A–18E, F/A–18F, and EA–18G fighter aircraft (sec. 125)

The committee recommends a provision that would amend section 128 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 110–84). Section 128 of the National Defense Authorization Act for Fiscal Year 2010 provided specific authorization, the Secretary of the Navy to enter into a multiyear contract for the purchase of additional F/A–18E, F/A–18F, or EA–18G aircraft under certain conditions, including that: (1) the statutorily required written certifications be submitted to the congressional defense committees; and (2) the Secretary sign the contract by a certain time. This provision would change the effective dates in section 128 to reflect the fact that the Department was unable to meet those specified dates.

The committee strongly cautions the Department that how it proceeded here is neither preferred nor desirable, and should not be viewed as setting any precedent for acquiring major systems on a multiyear basis in the future. However, the committee believes that, against the backdrop of challenges to the Navy's managing its projected shortfall in tactical aviation (discussed elsewhere in this report), the savings of $590.0 million identified by the Secretary of Defense is ''substantial'' within the meaning of section 2306b of title 10, United States Code, and sufficient reason to accept the delayed agreement. Therefore, the committee recommends authorizing the Secretary of the Navy to sign a multiyear contract for these aircraft before the end of the fiscal year.

Extracting substantial savings from major systems near the end of their production is hard to achieve. In this case, the committee approves of the Department's proposal to: (1) implement certain cost reduction initiatives; (2) avoid certain sources of cost peculiar to this program; (3) implement a proposed multiyear contract free of certain ''reopener'' clauses that, if exercised, could easily extinguish its savings estimate; and (4) adopt a fixed price-type contract as the vehicle for implementing the multiyear agreement.

Under Budget Items, Navy:

F–18 multiyear procurement savings

The budget request included $1,083.9 million to purchase 12 EA–18G and $1,787.2 million to purchase 22 F/A–18E/F aircraft. Since the Navy had not completed negotiations for proposed multiyear procurement contract for these F–18 aircraft, the Navy based the budget estimates on executing a series on annual procurements.

The committee understands that a multiyear contract for F–18s will result in $130.5 million savings in fiscal year 2011 compared to the budget request, consisting of $45.9 million savings for EA–18G and $84.6 million for F/A–18E/F.

The committee has included a provision elsewhere in this Act that would enable the Navy to sign the multiyear contract, and, therefore, recommends a reduction of $130.5 million to the budget request.

F/A–18E/F

The budget request included $1,787.2 million to purchase 22 F/A–18E/F aircraft. This is four more than were approved in the fiscal year 2010 budget. This is also an increase of 5 aircraft from the fiscal year plan for 17 aircraft included in the last future-years defense program (FYDP) by President Bush.

The committee has expressed concern that the Navy is facing a sizeable gap in aircraft inventory as older F/A–18A–D Hornets retire before the aircraft carrier variant (F–35C) of the Joint Strike Fighter is available. The committee raised this issue in the committee reports accompanying: (1) S. 1547 (S. Rept. 110–77) of the National Defense Authorization Act for Fiscal Year 2008; (2) S. 3001 (S. Rept. 110–335) of the National Defense Authorization Act for Fiscal Year 2009; and (3) S. 1390 (S. Rept. 111–35) of the National Defense Authorization Act for Fiscal Year 2010.

Two years ago, the committee received testimony from the Navy about a projected shortfall in Navy tactical aviation. The Navy indicated that, under assumptions current at that time, it would experience a shortfall of 69 tactical aircraft in the year 2017, a number that swells to 125 when requirements of the United States Marine Corps are included.

Last year, the Chief of Naval Operations said that the projected gap may be as high as 250 aircraft total for the Department of the Navy.

This year, the Navy says that through various ''management techniques,'' the maximum shortfall is now projected to be around 150 aircraft, or 3–4 carriers' worth of airplanes.

This change is not based on a change in overall requirements. The committee is disappointed that, despite promises that the Department of Defense intends to review the whole issue of tactical aircraft force structure in the pending Quadrennial Defense Review, no decision on force structure came from that effort. The committee had hoped that the Department's tactical aviation procurement strategies would have been informed by the Quadrennial Defense Review.

The committee is still seeking details behind the changed assumptions that lead to the new estimates. At first impression, some of these appear to be legitimate actions that the Navy should take. For example, changing the fielding plan for the Marine Corps F–35B to replace older F/A–18 aircraft, rather than first replacing AV–8B aircraft that still have service life remaining, seems to be reasonable. Other changed assumptions do not appear to be so legitimate. For example, a portion of the shortfall reduction comes from 12 to 10 aircraft. The committee has seen no analysis that would indicate that the effect of taking such action has been assessed in terms of war fighting capability. In fact, it represents the sort of action to modify requirements arbitrarily that the committee feared would be taken in the face of the impending shortage.

The change does not derive from implementing a service life extension program (SLEP) for older F/A–18s. The Navy says that any decision on undertaking a SLEP to solve some portion of that shortfall will not be made until the time the President submits the budget request for fiscal year 2012.

The committee understands that a SLEP to extend the life of select legacy F/A–18s from 8,600 to 10,000 flight hours is currently estimated to cost on average $26.0 million per plane. In light of such costs, and in anticipation of the Navy's negotiating a multiyear procurement contract that could result in substantial savings over current procurement costs, the committee expects the Navy to present a thorough business case analysis with the fiscal year 2012 budget of the appropriate mix of alternatives for addressing the potential shortfall of aircraft, including both SLEP and new procurement.

The committee is encouraged by the increase in F/A–18E/F procurement in the fiscal year budget, both compared to fiscal year 2010 and compared to the plan for fiscal year 2011 in the last Bush FYDP. The committee understands that this increase was part of the Department's effort to address the shortfall and buy enough aircraft in the FYDP to make a multiyear procurement achieve the substantial savings that would make such a commitment attractive. On April 30, 2010, the Secretary of the Navy informed the Navy was still working through the details of negotiating with the contractor team on a multiyear contract that would take advantage of the authority provided by section 128 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111–84).

The committee applauds the Navy's efforts to reduce the shortfall, but believes that more action now is necessary. The committee is concerned that delays in the F–35 Joint Strike Fighter program could exacerbate the problem beyond what it appears to be now.

Therefore, the committee recommends an increase of $325.0 million to buy six additional F/A–18E/F aircraft in fiscal year 2011.

FY2011 Defense Appropriations Act ( S. 3800 )

Senate

The Senate Appropriations Committee report accompanying S. 3800 reduced funding in Aircraft Procurement, Navy for the EA-18G by $45.9 million and for the F/A-18E/F by $84.6 million, both for "savings from multiyear procurement," and the F-18 program overall by $9.4 million for "unjustified cost growth." The F-18 Squadrons line in Research and Development, Navy was increased by $3.2 million for "High Performance Military Aircraft Noise Reduction." S. 3800 also included a general rescission from funds appropriated for the F-18 program in FY2009 of $14.1 million.

Final Action

In lieu of a defense appropriations bill, the House and Senate passed a series of continuing resolutions maintaining spending at FY2010 levels from October 1, 2010, through April 15, 2011.

FY2011 DOD and Full-Year Continuing Appropriations Act

The FY2011 Department of Defense and Full-Year Continuing Appropriations Act ( H.R. 1473 ), signed into law on April 15, 2011, provided DOD funding for the remainder of FY2011. F-18 funding in the act included an addition of $495.0 million for 9 F/A-18E/Fs above the budget request for "Strike Fighter Shortfall Mitigation." H.R. 1473 also cut funds from the Aircraft Procurement, Navy account as follows:

EA-18G Multi-year Procurement Savings, $49.8 million;

EA-18G Support Funding Carryover, $7.7 million;

F/A-18E/F Multi-year Procurement Savings, $92.7 million;

F/A-18E/F Support Funding Carryover, $8.0 million;

ECP 904 Modification Kit Cost Growth, $2.3 million;

ECP 583R2 Installation Equipment Kit Cost Growth, $3.8 million;

ATFLIR Installation Equipment Kit Cost Growth, $11.8 million;

Mission Planning/Unique Planning Component Growth, $2.4 million;

OSIP 002-07 Excess ECO Funding, $9.0 million;

ECP6279 Radar Modification Kits Ahead of Need, $7.9 million;

OSIP 001-10 Integrated Logistics Support Growth, $2.5 million;

Unjustified Cost Growth, $9.4 million.

In total, H.R. 1473 increased the F-18 program budget by $287.7 million.

Appendix B. May 19, 2009, Hearing on Naval Aviation Programs

This appendix presents material relating to the Navy-Marine Corps strike fighter shortfall and F/A-18E/F procurement from a May 19, 2009, hearing on naval aviation programs before the Seapower and Expeditionary Forces subcommittee of the House Armed Services Committee.

Excerpts from Chairman's Opening Statement

The chairman of the subcommittee, Representative Gene Taylor, stated the following in his opening statement for the hearing:

I'd like to outline the program and policy issues that, at a minimum, I would like our witnesses to address.

First, the primary policy issue I would like to address is that of the strike fighter inventory for the Navy and Marine Corps. Over the last three years, all four congressional defense committees have had a steady stream of Navy and Marine Corps witnesses testify before them about an impending strike fighter shortfall. This shortfall is predicted to peak in the middle of the next decade.

Right now, current analysis puts that peak at 243 aircraft in fiscal year 2018, but if you account for the accepted risk that each service has informed Congress that they are currently incurring, the peak shortage of aircraft climbs to 312 in that same year. What is more troubling is that it appears there is a disconnect between the Office of the Secretary of Defense (OSD) and the Department of the Navy.

Officials from OSD have recently briefed this committee that there is no strike fighter shortfall but that the totality of the strike fighter inventory is a matter for analysis in the Quadrennial Defense Review (QDR). In other words, OSD has already predetermined the answer and now they'll use the QDR to build the equation.

I request that the witnesses explain today what the position of the Department of the Navy is regarding the strike fighter shortfall and if they are aware of any new analysis by the Joint Staff or OSD which would contradict what is apparently simple arithmetic. Because, the last time I checked, an aircraft carrier is only worth its weight in gold if it has an embarked air wing. Otherwise, 90,000 tons of American sovereignty becomes 90,000 tons of American helicopter transportation.

Excerpt from Ranking Member's Opening Statement

The ranking member of the subcommittee, Representative Todd Akin, stated the following in his opening statement for the hearing:

Unfortunately, our Navy faces a significant strike fighter shortfall in the near future, and what good is an aircraft carrier without aircraft? Last year the Chief of Naval Operations (CNO) testified to a fighter shortfall of approximately 125 planes for the Department of the Navy by 2017. This year, based on an updated analysis, the Navy has told Congress that a more realistic estimate is a shortfall of over 240 planes. This assumes that the Joint Strike Fighter delivers on time and that the Navy will continue to resource its carrier air wings with fewer aircraft than is called for in the national military strategy. Should the Navy resource to its full strike fighter requirement, the shortfall would be greater than 300 aircraft.

What does all of this mean? Simple math shows that at least five of our eleven carriers would be without fighter aircraft, or we would be forced to severely limit the number of aircraft per carrier and available for training. In either case, the solution would pose a significant strategic risk. I am deeply concerned that this budget actually makes the shortfall worse, by cutting the number of Super Hornets the Navy is buying. Facing a gap of at least 243 planes, the Navy is only asking for nine Super Hornets. In a few months, the Navy has gone from considering another multiyear procurement of Super Hornets, to cutting the buy of F/A-18s in half. This makes no sense. As I told the CNO last week, we either need more planes or fewer carriers, and I do not think anyone in this room believes that fewer carriers are the solution.

Unfortunately, as Congress has tried to wrestle with this issue, the Department of Defense (DOD) has refused to obey the law and has been anything but transparent. The DOD has:

• not delivered a report on costs and benefits of a multi-year procurement of F/A-18's required by law by March 1, 2009;

• not delivered the 30 year aviation plan required by law;

• not delivered a future-years defense program with the budget, as required by section 221 of title 10, United States Code; "and

• has refused to brief Congress on the apparently differing estimates on the size of the fighter shortfall.

Is this the transparency that President Obama promised? Does the Department of Defense consider itself above the law? Let us be clear—the mere existence of a Quadrennial Defense Review (QDR) does not exempt the Department from fulfilling its legal obligations. While I understand that the witnesses this afternoon are not responsible for these decisions to violate the law, let me say at the outset that the Department cannot expect to use the QDR as a get out of jail free card. Our witnesses should understand that this Committee expects and deserves answers, not evasive maneuvers.

First Excerpt from Transcript

AKIN: Thank you, Mr. Chairman. And I appreciate you all being here today. And there have been a number of themes that we've heard throughout a series of hearings on where we are and probably wouldn't surprise you that we would pick up on one of those.

And that is the situation with the lack of aircraft, particularly, because of the planes having to be retired with over 8,000 hours on them. And I understand that the 10,000 hours doesn't really work; that it costs too much to try to take care of the—changing the different parts that would be stressed.

So that resulted, this year, in an estimate of—instead of 120- some aircraft shortfall on our aircraft carriers, to about 240-some. I guess my question—and everybody is saying—and I guess really what they're saying is give us more time to figure this out. But what they're saying is "we've got to do this quadrennial review."

Well, it isn't like this is too complicated. We say we're going to have 11 aircraft carriers. For a certain brief window, we're going to be down to 10. You got 44 aircraft on an aircraft carrier. If you're 240-some aircraft short, you got five aircraft carriers with no planes on them.

So my question is: One, first of all, how does that affect the number of missions that you have to fly just to practice? Because I was watching night landings of these things. It looked to me like it was pretty tricky business. And I would think you would want to have plenty of practice for your pilots. And if you've got fewer planes, then I would think it would affect your training schedule. That's the first question.

Second question would be: Let's say that you can't have 44 aircraft on an aircraft carrier. Is an aircraft carrier just about as good if you've got 20 aircrafts? You could split the aircraft half and half? If that's not the case—let's just answer those first two question.

MYERS: [Congressman] Akin, I'd like to take the first stab at that. First of all, to go back to your numbers. Last year in PB '09, I briefed that we were forecasting in the later teens, starting in 2016 through 2018, a Strike Fighter shortfall with the U.S. Navy of 69 aircraft, and the Department of Navy, 125.

That was assuming that all of our legacy F-18s, A through D, could get to 10,000 hours. So that was sort of a bookend. The other bookend was if none of those aircraft got past 8,600 hours, that it'd be 125 and a 243 shortfall.

Now, that was last year and what I'd like to do is talk to you for a few minutes and outline what's changed.

AKIN: OK, it's got to be pretty short because—so just a minute—just get to the number, that'd be...

TAYLOR: I want to remind the ranking member that, as the ranking member, you have all the time you want.

AKIN: Well, OK, shoot, then.

Well, proceed then.

MYERS: OK. Those were the bookends. And what we've discovered since then is that doing the analysis for the service life extension—has informed us that there are a number of areas that we want to be focused on when we open these aircraft up when they go to the depot.

To cut to the end, we're not sure exactly the number of aircraft that we're going to be able to get through. And the reason we're not sure...

AKIN: Between about 142 and 240—it's somewhere between there, would be your guess?

MYERS: We're not sure right now, Representative Akin. And the reason is because we're still discovering a lot by looking at these aircraft when they go through the depot. We've had 39 aircraft that have gone through the depot, to date. We thought there was about 159 focus areas, or areas of interest, on the airplane.

We've got about nine that have come through the depot. And what we found is there were 50 additional areas. Each airplane is going to be a little bit different. But as we go through a three-phase process to determine what the limits are on service life extension, we're going to be able to refine the technical baseline, and understand more.

Now, currently today, the Navy has the—currently has the aircraft necessary to fulfill the missions that the COCOMs have laid upon us. So we have the aircraft we need today. So the focus is, how do we get through the next summer? What are the levers that we need to look at to understand, not only what the Strike Fighter shortfall is, but how to mitigate it?

And there's four ways to mitigate it. One is to maintain our continued, unwavering support for the Joint Strike Fighter. Second is to maintain our buys of F-18 EFs. Third is to maintain the funding, in terms of logistics, or our current legacy aircraft—our Strike Fighters. And fourth is to understand how many of these F-18s, A through Ds, we can get through this lev (ph) process.

And it's going to take time. Now, you had another question about the number "44" on our carriers. Forty-four is the requirement for the Navy for Strike Fighters on our aircraft carriers. Forty-four represents the number that the combatant commanders are expecting when those carriers show up overseas to provide the necessary backs (ph), for everything from contingency ops, to major combat operations. And it also represents the most effective use of a Nimitz class size flight deck. So 44 is a number that's required for our aircraft carriers, and that's what we intend to do.

AKIN: So—then following up, you are saying, you would not deploy a carrier that had significantly number less than 44 planes on it. You'd want to keep that number pretty close if you had a carrier that size. Is that what you're saying?

MYERS: Congressman, what I'm saying is that 44 is the requirement. And that's what we're basing—from the Navy staff and from a programming perspective, that's what we program towards.

AKIN: OK. So if you had a shortfall, then you're saying you would rather have some aircraft carrier left behind then to have one with half the planes on it or something? You wouldn't consider that probably. Or are you saying that you just don't know, or...

MYERS: That's a fleet commander decision on exactly how he loads out a carrier airwing. We understand the requirement. We understand the way that we're deploying ships and our aircraft carriers and their airwings today. But how that would be done in the future would depend on the needs of the combatant commander and the fleet commander.

But currently, the requirement is for 44, and that's what we're doing right now.

AKIN: Right. Now, what I heard you say, though—you gave me a lot of detail. But what I heard you say was still the shortfall is probably going to be between the 125 number and the 243 number. Because 243 was worst case. That's assuming you can't get any more than 8,600 hours. And the 125 was assuming that you could get 10,000 hours. And you're saying until you actually look at the planes, you won't know exactly how many of them fit into which category. But it's going to fall in that number. Is that correct?

MYERS: There's a possibility that some of them could fall outside that number. And that's part of the analysis. The second phase of the analysis—it's ongoing right now that NAVAIR is doing. And working with their depots to understand exactly the extent of whether or not it's going to be exactly in that...

AKIN: ... in that bracket even?

MYERS: Yes, sir.

AKIN: You're not even sure that bracket—is what you're saying?

MYERS: The bracket is the best information that we have at this moment, but we've still got work to do, Congressman.

AKIN: Now, what would it cost—let's say that you find some aircraft that are 8,600 hours and they're going to need some repairs. Do we have any idea of what that would cost? I have—my understanding was it was prohibitive to do that; that it would be cheaper just to get some news ones. Is that true? Or not necessarily? Or do we know?

MYERS: It's not necessarily true. What we know is that a center barrel costs about $5 million. And a center barrel is going to be required on the earlier lot aircraft, meaning lot 16 and earlier. What we know is that the inner wing could cost as much as $4 million or $5 million. What we know is that the inner wing is a focus area of the aircraft that have gone through the depot, in terms of the additional hot spots we're focused—but what we don't know is whether or not all of the aircraft that go through are going to need all of those repairs.

So it could be expensive, and it might not. And right now, that's what the second phase...

AKIN: So we don't have a current cost estimate of what it would take—if we wanted to extend the service life on them? We don't really know what that number is, is what you're saying? Depends on the individual plane—is that what you're basically saying?

MYERS: Yes, sir. It depends on the plane. We have programmed some monies, because we do know about the center barrel replacements. And the analysis that will go on through the summer, and is expected to finish in the March 2010 timeframe, is set to be a palm (ph) 12 [sic: POM 12] issue, and that's the way we've set up the analysis—to feed into palm (ph) 12 [sic: POM 12]. And that would be—give us enough time to buy the equipment and make sure that we programmed in place everything we need in the depots or the SLEP [Service Life Extension Program].

AKIN: I think the Navy has completed its analysis of the benefits of the multiyear procurement of the F-18As. What's the minimum number of aircraft required to be purchased over the contract period that would result in a savings of at least 10 percent, as required by law? Is there some particular number that you've got to get? Because we saved, what, a billion dollars on that before on multi-year two?

ARCHITZEL:

Sir, if I could take that question. You're correct on the—on the multiyear on the Hornets, that have been two. The first multiyear was for 210 aircraft. It resulted in about a $710 million savings. It was a five-year program. We followed that with a multiyear two, which just ended in '09. That saved about $1.1 billion over the same five-year period.

To make a multiyear value, we need economic ordered quantities, which means we have to have volume. We've also got to have a lengthy of period of time. It wouldn't do us any good to give volume, and put it in one or two or three years. We need to have some length of time to get that return on investment. So to answer your question, if we look at multiyear one, we had about a 7.5 or 6 percent savings. That equates to multiyear two, about 11 percent savings.

You have those kinds of savings when you go five years and get economic order quantity buy. We want to have a significant savings which is on the order of 10 percent, or $500 million would be the kind of bookends, if you were using that term here, that we'd seek to get in a multiyear procurement, sir.

AKIN: Well, I still didn't hear the answer to my question. I guess the question is: What number do you have? Let's say we're say we're starting 2010, right now.

ARCHITZEL: Yes, sir.

AKIN: And let's see, JSF is scheduled to be ready to go at 2015. Are we sure that, that's going to happen on time? That gives you five years, right—10 to 15?

ARCHITZEL: Yes, sir.

AKIN: So let's assume JSF actually is there at 2015. So you do have the five years. So what would the number be to get to the 10 percent? Have you figured that?

ARCHITZEL: Sir, let me—FY '10 is a single year buy of Hornets. As you know, the Growler (ph), we put into the multiyear for multiyear two. And we were able to take advantage of that. With the single year buy, we don't have the economic order quantity to do it. So '10 is in the books. We don't have that ability to incorporate that into a multiyear now.

AKIN: So we're talking '11 now—'11 to '15?

ARCHITZEL: Yes, sir.

AKIN: Are you sure that we're going to have JSF in '15?

ARCHITZEL: I know—I can speak to the IOCs we have today, which is for the Marine Corps. and the Navy and say that, on plan we have today, we will, sir. I mean, we're developing those programs to go forward on those timelines. But I also will say that we will have to wait to find out what the department's direction is on aircraft. We need to know the numbers, so we can get that common quantity, and timeframe involved, before we can enter into a multiyear. But if we were to—but the multiyear is certainly something we do aggressively go after when we can—and multiple programs, as you're aware. B22 is an example—60 Romeo (ph), 60 Sierras (ph)—so we definitely want to get multiyears when we have them there.

AKIN: Yes, I'm having a hard time getting anything. I feel like I'm trying to mail jello to a wall, gentlemen. You know, I'm asking for a time for a multiyear. And you're saying, "No, we really don't know what the requirements are." I thought we were looking at 125, and then 243. Now, you're saying, "Yes, but it could be this other way." Somewhere along the line, we got to make a plan as to what we're going to do. I mean, maybe JSF could be there 2015. And that's obviously something that's very important. I know the Marine Corps. has a keen interest in the Stovall (ph) [sic: STOVL, meaning short takeoff and vertical landing] version because you're kind of putting all your eggs in that basket; where the Harriers, I guess, are getting older and older.

But somewhere along the line, we've got to be able to do some planning. And it seems like no matter how you look at the numbers, you're coming out short on fighter planes. So I guess that's the reason we're having the hearing—is, where are we?

MYERS: Yes, sir. Congressman, for the record, just want to correct the correct number that we should be referring to is "69 to 129" for the U.S. Navy. And that's what I briefed last year. That—those were the bookends of 10,000 hours for 300 aircraft and 8,600 no aircraft SLEP'ed. So that gives you about a 70 aircraft shortfall. And...

AKIN: But let's start with 70. If you had 70 additional aircraft over a five-year period, would you get 10 percent then?

ARCHITZEL: Sir, I'm not trying to be anything but direct in answering. If I can, from an acquisition standpoint, if we were to get to—two things, we need to have an economic order quantity. We need to have an economic rate of production, which would be—the minimum sustained rate for the—is about 24 aircraft to go through. The economic requirement is somewhere between 30 and 36, depending on the numbers we have.

So if you can generate on the order, 30 per year for five years, you would be able to enter into a multiyear that would produce 10 percent savings.

MYERS: But...

AKIN: You're saying 30 per year, so that'd be 150 then?

ARCHITZEL:If they—in the scenario of a multiyear, that's what would happen, sir, regardless of what aircraft we're dealing with. When you can get those types of quantities and be able to produce them to allow economic order quantity buys, or some significant period of time, then you will definitely get savings in a multiyear. That's why—that's the only reason we're allowed to enter multiyears is if we can assure significant savings.

AKIN: So are you saying the minimum you'd have to buy is about 150 over five years today in order to get that 10 percent?

ARCHITZEL: Sir, under the scenario you presented to me, yes, sir, that would be what we'd have to do. I would say that. But again, we—I don't set the requirements. This is from an acquisition standpoint. You asked me to give you the numbers as they applied to multiyear, and that's what I've done, sir.

MYERS: And to reinforce Admiral Architzel, the requirement is 44 Strike Fighters on our carrier wings and based on the PB '09 data, the shortfall for U.S. end (ph) is still about 70 aircraft, best case, right now. But we still have some discovery to do this summer as we go through SLEP and we still have some levers to pull.

AKIN: The numbers was higher because you had Marine Corps F-18s that you were including also? Is that correct?

MYERS: What I gave you was an inclusive Department of Navy and U.S. Navy before. The 69, 129 is a U.S. Navy number. And the 125, 243 is a Department of Navy number. It included Navy and Marine Corps and that was what was briefed last year—yes, sir.

ARCHITZEL: Sir, if I may comment? Maybe help with the variables that are involved here. First of all, the PB '09 numbers are no longer relevant to this discussion, in my opinion. For example, if the program purchases more point (ph) [sic: Joint] Strike Fighters than we did in PB '09, which it does, the Strike Fighter shortfall would come down by a commensurate number of F-35, both B and C models.

Secondly, this issue of the service life assessment program and the service life extension program—is very much filled with variability at this point. We're are part way through phase B of a three-phase process of examining these airplanes to decide how many of the 623 existing A through D hornets can be extended.

By talking to NAVAIR as recently as Friday, there are approximately 330 A through Ds, which she identified as "prime candidates" to be extended. And so, we will extend by bureau number by bureau number, making wise business case decisions associated with the choices that will have to be made to extend those aircraft going forward.

AKIN: So you say you've identified 130...

ARCHITZEL: Three hundred thirty.

AKIN: ... A through D? Oh, 330.

ARCHITZEL: Three hundred thirty of the 623 existing are prime candidates for extension. There are no technical impediments to extension at this point.

AKIN: So are you saying that this means you wouldn't have to put more money in them? Or they would be prime candidates to put more money into them to get them to 10,000?

ARCHITZEL: You said it right, sir...

AKIN: The second time?

ARCHITZEL: Yes, sir. Putting more money into them on a case by case basis to decide how much would need to be extended. But even that has variability. For example, the majority of the interest areas are in the center barrel. That's the majority interest area. We already have $1.14 billion in the budget to pay for 417 center barrels to be replaced. Second most are in the wings. There are options with regard to the wings. One is repair. Two is to remove and replace. And the admiral gave you the cost of a new wing. But the third is to take wings out of AMOR (ph) [sic AMARC, or the "Boneyard"] which we're doing right now, and replace those wings with wings that are essentially free.

And then the third large area that we're concerned about, as we go through the assessment program, is in the aft-end (ph) of the A through Ds. That's probably where most of the uncertainty lies now with regard to the cost.

Second Excerpt from Transcript

AKIN: Yes, I had just a couple more questions.

General Trautman, my understanding is that the Marine Corps currently has four F/A 18 fighter squadrons that are supposed to have 40 aircraft allocated to them, but actually have no aircraft allocated to them. And the Marine Corps does not apparently include those in the shortfall. And if so, why did you not include them in the shortfall?

TRAUTMAN: Sir, about three years ago we made a proactive decision to cadre two active and two reserve fighter attack squadrons. We did this in anticipation of the arrival of the Joint Strike Fighter.

We learned when we transitioned to the V-22 from our large medium-lift population of CH-46s that one thing you need to do when you have a large population changing as our tactical aircraft are going to change beginning in 2012, is to create a manpower pool from which you can draw because, particularly when you're changing from a 46 to a V-22 or from a Legacy Hornet to a Joint Strike Fighter, it's not a lightswitch. It's a rheostat and you have to have time to train and prepare both air crew and maintainers.

So we set aside those cadre personnel and now thank goodness we did because over the last few months we picked the squadron commander for our first fleet readiness squadron, the VMFAT-501, which will stand up beginning this summer.

We picked the first six aviators that will go into that squadron. We're detailing the maintainers that will go into that squadron. And beginning in 2012 and 2013, we'll bring back those two active cadre squadrons as Joint Strike Fighter squadrons and that's been our plan.

With regard to the two reserve cadre squadrons, we'll bring them back three, four, five years into the Joint Strike Fighter transition about the time that reserve aviators and maintainers are looking for a place to go if they decide to remain engaged in the Marine Corps via the Reserves.

So we think we've got this laid out right, and that's why we did what we did.

AKIN: So in a sense your strategic decision of three years ago was while you started with four squadrons, you're going to go down to two, so in the transition you've got just less aircraft available to you so you realize that you are at a lesser strength and you accept that risk because you're transitioning from one aircraft to another. That's what I think I'm hearing you say.

TRAUTMAN: That's exactly right, sir. These transitions are challenging and that's why we take the decision that we took to set aside that manpower pool to make it right.

AKIN: Right. And as long as the other plane comes online, you're saying we can live with being at half strength for some—a few years to make that transition. If they're not on line in time, then that becomes increasingly problematic, I suppose.

TRAUTMAN: Well, it does. The good news is that we are—we're meeting our current obligations with the force structure that we have. The challenge is, of course, that Marine TacAir is at a higher op tempo than either the Navy or the Air Force TacAir, and so in some ways we're playing out the risk on the backs of our Marines and we don't like to do that.

But we think it's a proactive step that was worth taking in order to get to the Joint Strike Fighter in 2012 and '13.

AKIN: Yes, OK, so those 40 are not counted in the shortfall then that we were talking about before.

TRAUTMAN: Well, they're not really a shortfall sir. For example, if we decided to have those squadrons up and we didn't want to take the manpower, we could take the 30 Lot (ph) 10 and 11 F-18Cs that we're putting into preservation. We could have those round out those squadrons in the near term if we chose to do so. I think that would not be a very wise decision, though. I prefer the decision we made.

AKIN: You're saying there are aircraft around, but they're just old?

TRAUTMAN: Lot (ph) 10 and 11, that's right.

AKIN: Yes. OK. And you also mentioned the idea of reworking some of the F-18s. You're saying that's a possibility depending on the analysis of what those look like. The numbers we're seeing in that is you're looking at about $15 million if you got to put that rework in and that gets you, whatever it is, 1,000, 500 hours or something.

It seems like to me that's almost costing you twice the cost per hour and a lot less capability than if you just got a new F-18. Is that—would you ever look at doing that?

TRAUTMAN: I was advised that putting any kind of number on the cost of extending a Hornet from 8,000 to 10,000 at this point would be premature. As I said, we're only half way through phase B of a three- phase process. Until we get through that process, there are too many variables associated to put a number on it.

I haven't heard a number as high as $15 million. That's a new one to me. I've heard lower numbers.

AKIN: I thought that was—what's the engine? About five? Or is it 10? What was the engine, the central component? What was it? I forgot.

TRAUTMAN: The center barrel?

AKIN: Yes.

TRAUTMAN: Yes, sir. We already have $1.1 billion in the budget. It's already paid for to do 417 center barrels. So the good news is that's a risk mitigator against the challenge that we face in order to do the service life expansions. And as I said, most of the areas of interest are in the center barrel area.

AKIN: It still costs money though whether it's—right?

TRAUTMAN: No doubt, sir. You're exactly right, and we'll have to make wise case-by-case, bureau number-by-bureau number assessments and then decisions about how to expend our scarce resources.

AKIN: If you had to do a center barrel and you had to do the wing sections, what are you talking actual dollars to do that on a plane?

TRAUTMAN: Well, for example, if we already have the center barrel budgeted, if we went to AMARC as we're doing this year to get 24 wings out, we could do both of those for no additional dollars.

If we had to buy a center wing, I'm not sure what the current cost of that is. I'll have to defer to Admiral Architzel or to Admiral Myers.

ARCHITZEL: Sir, I'll give Admiral Myers a second too, but so that the whole, what you have to do with the center barrel, that's Lot (ph) 17 and prior. If you did a center barrel replacement, which we funded in the first lot (ph), it would take about 6,000 hours.

That's for those number of Hornets and I think the number is somewhere around 400-plus numbers we have there. That's funded in the budget when we go forward. That runs at about, just for the center build, about $2.5 billion—$2.5 million excuse me. So if you would then add in...

AKIN: OK. So $2.5 million for a center barrel and then you've got the—let's say you had to do the wings.

ARCHITZEL: Well, the number I have is 2.5, and so we'll have to get back to you then. They're being quoted 4.5 here so—but the center if you hit the wing sections and the center fill, it's just about $5 million for those.

Now as General Trautman says, if you take wings off an existing aircraft, (inaudible) you still have to rework those wings. So I mean you're going to have some cost involved. You're absolutely right, sir.

If you want to look at where we go to get above to the 8,600 hours and you want to go past that to 10,000, we have a high-flying hour inspection. That inspection alone is running around—up more than $75 million.

That's—you get to the point where you can open, inspect and look at the airplanes to see what you have. And I agree with General Trautman, we don't know what we'll have in those airplanes. Probably in those where we designed into the center barrel on that Lot (ph) 18 and beyond, we should not expect to replace center barrels.

But in those areas that are fatigued hot points on the aircraft, we have to do—and we have to do extensive work or maybe, depending on what we have, some fatigue stress cracking or issues on the empanage or tail and then on top of that you also have to do system work on the airplane.

So that's I think—the quandary comes in is what is the exact cost of each aircraft, and you won't know until you open them up and find out what you have, sir.

AKIN: Basically I think you've made it clear to me today that you don't really know what the fighter aircraft shortfall is. You're saying it's somewhere and I thought it was variable between two numbers. You said that you can't even count on that. When will you know for sure what your shortfall is? When will you actually have a number?

MYERS: The shortfall right now is about 70 aircraft and that's based on the analysis that I brought to you.

TAYLOR: Would the gentleman yield?

AKIN: Yes, sir.

TAYLOR: Seventy aircraft when, Admiral, give me your...

MYERS: It peaks in the 2016 to 2017 timeframe.

TAYLOR: OK. And when does your shortfall kick in, what year?

MYERS: Shortfall starts to develop in the mid- to later-2013 timeframe, now that's, Chairman and Congressman, that's based on the analysis that was brought last year. What's ongoing right now is, as General Trautman mentioned, we're in the second phase of a three-step process and we're refining the technical baseline and cost estimates to see exactly what we want that's left and what is in the realm of the possible.

What we knew last year was conceptually what the cost would be and a preliminary estimate on what it would take, and that's why we gave bookends. What we're starting to do now is better understand.

Last year when we came to you, the 8,600 and 10,000 numbers, the 69 and 129 was based on 295 aircraft being able to be SLEP'd. Right now the number is about 330 aircraft that we think might be candidates or are targeted to be SLEP'd, but through the summer we're going to have a lot more information and the second phase is set to complete next March.

We've got lots of work to do, and I want to make sure that everybody understands that it's not just the SLEPing of the aircraft that is our focus on mitigating the shortfall. It also means that we maintain our buy of the JSF. It means that we maintain the logistics support of the current fleet, and it also means that we maintain the current buy of our F/A -18E/Fs.

TAYLOR: I appreciate the gentleman yielding, please continue.

AKIN: Well that brief—I mean I've got a chart here that shows the number you're talking about 69 it says here for '17. I think that was the Navy, if I'm correct.

MYERS: Yes, sir.

AKIN: The total number is 125. And then I think the chart also says what happens if you can't get to the 10,000 hours and then that jumps it to 129 and 243. Have you seen this?

MYERS: Yes, sir.

AKIN: That's what I was pulling my numbers off of, was this chart.

MYERS: Yes, sir, and...

AKIN: Are these numbers still the best we know for the moment?

MYERS: Those numbers have not been officially changed and updated. We are currently doing analysis and looking at assumptions that might impact those numbers and that's also ongoing. We're taking a look at...

AKIN: And so the answer to when we'll know pretty sure is going to be a year or next March. Would that—would we have a pretty good handle on it at that point?

MYERS: We will know a lot more through the summer, sir, and through the summer we'll also be able to better understand what the assumptions are if it will go into that model in terms of our productive ratio or the efficiencies that we used on the air wings that are not deployed.

There's a lot of things that go into the model besides just 44 and the Marine Corps requirement, and that's one of the things that the Marines and the U.S. Navy are currently undergoing is some understanding of ways that we can more efficiently get aircraft out to the warfighter.

TRAUTMAN: Congressman, if I could add to Admiral Myers' excellent answer about the variability. That chart that you held up last year is no longer relevant. It is not an accurate depiction at this point, and I can just give you the simplest example I can is if we have decided to buy additional F-35Bs and Cs compared to last year, which we have done, that changes all of those equations, just for example.

AKIN: You could picture yourself in our shoes. We got this information from you in March, and I'm hearing you say that it's increasingly irrelevant right now. That's hard for us to get a number. I'm just saying when are we going to have something that we can understand what we're planning?

TRAUTMAN: We owe you better and more current information. And in March, sir, that was the best that we had.

AKIN: Right.

TRAUTMAN:And we owe you the benefit of understanding what we think the future is going to hold in terms of F-35 production and in terms of the ongoing SLAP [Service Life Assessment Program] and SLEP analysis.

AKIN: So are you saying then at the end of this summer you think we're going to have some pretty reliable numbers? Or is it going to be March of next year? I mean where are we going to be within plus or minus 10 percent on the number?

TRAUTMAN: I'll have to get back to you, sir, and take that back to our leadership not only in the fleet, but also in the Systems Command to make sure that we get you...

AKIN:Well, we're trying to put budgets together. We've got to have something to work with. Thank you very much.

TRAUTMAN: Yes, sir.