Statement of Senator John McCain, Chairman, Subcommittee on AirLand, Senate Armed Services Committee, during the AirLand Subcommittee Hearing on Air Force and Navy Tactical Aircraft Programs (March 28, 2006):
1. The AirLand Subcommittee meets today to receive testimony on Air Force and Navy tactical aviation programs. The hearing will be conducted in two panels. The first panel will testify on the Air Force proposal to incrementally fund the multiyear procurement of the F-22 and enter into a multiyear procurement contract for 60 aircraft beginning in fiscal year 2007.
2. The second panel will testify on the Joint Strike Fighter’s progress through the Systems Development and Demonstration phase of the program with regard to cost, schedule and performance. The subcommittee is also interested in hearing testimony on the proposed termination of the F136 Alternate Engine Program. Most of our witnesses will describe how historically competition resulted in lower acquisition costs for engines, better responsiveness from the contractors, but most importantly, better readiness for the warfighter. The subcommittee is interested in hearing why such benefits are not achievable today for the Joint Strike Fighter competitive engine environment.
3. The F-22 represents the Air Force’s top priority for providing the military with air dominance and cruise missile defense for the next twenty-plus years. However, all of this capability comes with a cost, and the F-22 must compete with other weapons systems within the Defense budget. Looking at the Air Force’s desire to procure F-22s, Joint Strike Fighters, C-130Js, Joint Cargo Aircraft, a replacement tanker for the KC-135, just to name a few of the major Air Force procurement programs, one begins to wonder how were going to pay for it all. And now, it appears, the Department has come to the same realization by proposing an incremental funding scheme for its proposed multi-year procurement of the F-22. With that proposal, the Air Force seeks to restructure the procurement profile to 20 aircraft per year for a three year multiyear procurement of 60 aircraft.
4. Under current law, the Air Force can’t incrementally fund a multi-year procurement contract. So, in order for the Air Force to do so here, the Air Force needs legislative relief. But, the last time the Air Force came to Congress with a proposal to incrementally fund the multi-year procurement of aircraft (regarding the C-17 cargo aircraft), that proposal was rejected. It is not clear to me why the same result should not be obtained here. In this case, the Air Force is initially requesting incremental funding to pay for only components of the aircraft and, at the same time, excludes funding for cancellation liability. Why would Congress agree to this? Under this approach, Congress would have to authorize and appropriate more money – more money than it originally authorized – to either get completed, fully functional aircraft or cancel them. In my mind, the Air Force needs to state a case that justifies why Congress would want to hamstring itself on the F-22 program in that way. In my view, where the current acquisition environment counsels visibility, transparency and simplicity, that justification should be just about overwhelming.
5. Although I appreciate that Congress has approved incremental funding for other defense programs, such as certain Navy ships, we have never authorized incremental funding for aircraft. For instance, the Congress authorized incremental funding for the LHD-8 amphibious ship and CVN-78 nuclear power aircraft carrier because it takes 7 and 9 years respectively to build these multi-billion ships. Aircraft, on the other hand—even ones as costly as the F-22--are less expensive than Navy ships and they are easier to budget for in full. Budgetary constraints can be accommodated by purchasing fewer aircraft in a given year rather than by funding only a part of the cost of the aircraft.
6. I am also concerned about whether the Air Force’s proposal to acquire F-22s under a multiyear procurement contract complies with the requirements of the federal multiyear procurement statute: Title 10 United States Code section 2306b. Among other things, this statute provides that: “The Secretary of Defense may obligate funds for procurement of an end item under a multiyear contract for the purchase of property only for procurement of a complete and usable end item.”
7. I believe the intent of Congress is very clear on this subject: full funding within each fiscal year of the multiyear contract.
8. Setting the incremental funding scheme aside, the statute also requires the Air Force to provide Congress with a Business Case Analysis that shows that entering into a multiyear procurement contract results in “substantial savings” as compared to procurement through a series of annual contracts. In this case, the Business Case Analysis has not yet been completed. Accordingly, it is premature for Congress to consider this proposal until that requirement has been completed and fully ventilated in the authorizing committees.
9. Among the concerns that will be conveyed today is the fact that the Air Force F-22 funding plan does not request appropriations sufficient to cover the potential cancellation liability—thus not offering sufficient protections for the taxpayer. This sounds all too familiar, and there is a record of this similar funding scheme that was proposed in the Boeing 767 tanker scandal.
10. While in his written testimony, Air Force General Hoffman advocates a “back to basics approach in how we do acquisitions.” While I appreciate the sentiment, in my view, I see nothing “basic” in the Air Force’s proposal to acquire F-22 aircraft under a multiyear procurement contract. Like other acquisition methodologies that have proved so problematic in the past, the Air Force’s proposal is opaque and Byzantine. To date, the case as to why we should revert to an acquisition methodology that actually limits visibility and accountability has not been persuasive.
11. I expect that some of today’s witnesses will convey concern that incremental funding a multi-year procurement contract and underfunding cancellation liability on a multibillion procurement program are moves in the wrong direction. I look forward to hearing the Air Force’s response to those concerns today.
12. Deferring recognition of the full cost of the F-22 would understate the nature of the government’s obligations; potentially distorting budgetary choices by making the program appear less expensive than it is—AND CERTAINLLY IS NOT A RETURN TO THE BACK TO BASICS APPROACH WHICH THE TAXPAYER SHOULD BE GUARANTEED. (ends)
Click here for opening statements made during the March 28 hearing, on the Committee website (PDF format)