Summary

Congress, concerned about the C-17's history of cost, schedule, and performance problems, required the Defense Department to acquire a commercially available transport aircraft as a substitute for, or as a complement to, a fleet of C-17s. Despite possible cost savings from a mixed fleet of C-17s and commercial transport aircraft, the Defense Acquisition Board recommended in 1995 that the Air Force acquire 120 C-17s and no commercial planes. GAO believes that an option not considered by the Board--purchasing only 100 C-17s--could satisfy the military's airlift needs and save $7 billion. The only mission that would require more than 100 C-17s is an extended range brigade airdrop to a small, austere airfield directly from the continental United States. A fleet consisting of 100 C-17s and modified C-5s could support an extended range airdrop to such an airfield until the Air Force begins replacing the C-5--now slated to begin in 2007. GAO cautions, however, that the aircraft's wake turbulence problem has forced the Army to restrict paratroopers from jumping from C-17s in close airdrop formations. Until this safety issue is resolved, the C-17 cannot be used to support the brigade airdrop mission.

GAO found that: (1) an option not considered by the Defense Acquisition Board would be to acquire 100 C-17s and no commercial transport aircraft; (2) this option would save the government over $7 billion in life cycle costs; (3) airlift needs could be met with this reduced number of C-17s if the Department of Defense (DOD) implemented other individual measures; (4) costs for implementing the measures would not be significant compared with the potential savings and have been accommodated in GAO's estimate of the potential savings; (5) a fleet with 100 C-17s would also be sufficient to support missions that require the unique military capabilities of the C-17; (6) until fiscal year 2004, however, the Air Force will not be able to support an extended range brigade airdrop to a small, austere airfield as called for in the Army's concept of operations; (7) in the interim, the Air Force and Army are considering other alternatives to perform the extended range brigade airdrop mission now required in DOD's Defense Planning Guidance; (8) GAO believes alternatives could be used, with a fleet with 100 C-17s and modified C-5s, to support an extended range airdrop to either a small, austere or larger airfield either indefinitely or until the Air Force begins replacing the C-5, currently planned to begin in 2007; (9) if DOD and Congress determine that an extended range brigade airdrop to a small, austere airfield is a valid need, this need could be considered in choosing a replacement airlifter for the C-5; (10) for safety reasons, the Army has imposed a restriction on paratroopers jumping from C-17s in close airdrop formations due to turbulence created by the C-17; (11) until this safety concern is resolved, the C-17 cannot be used to support the brigade airdrop mission; (12) although Congress has approved and DOD has awarded a multiyear contract with an accelerated production schedule for the final 80 C-17s, that contract contains a clause that would permit the government, if full funding for a production lot under the multiyear contract were not available, to revert to single-year options without paying cancellation costs; (13) while there would be an increase in program discontinuation costs to close out the contract at 100 rather than at 120, those additional costs have been accounted for in GAO's estimate of the potential savings; (14) DOD and McDonnell Douglas have implemented initiatives to reduce the total program cost of the 120 C-17 program; and (15) however, the current estimated cost of $43 billion is about the same as that estimated in 1994.