Military Airlift:

C-17 Settlement Is Not a Good Deal

NSIAD-94-141: Published: Apr 15, 1994. Publicly Released: Apr 15, 1994.

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Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) C-17 aircraft program, focusing on: (1) whether the proposed settlement with the contractor is in the government's best interest; and (2) alternatives to the C-17 program.

GAO found that: (1) significant doubts remain about the C-17 program's cost-effectiveness and credibility because of cost increases, poor contractor performance, operational deficiencies, and lengthy schedule delays; (2) the proposed settlement with the prime contractor is not in the government's best interest because the exact cost of resolving its and the contractor's claims cannot be determined and the prime contractor's costs may be significantly overstated; (3) although Congress has directed DOD to identify alternatives that would reduce program costs and meet its airlift requirements, DOD has not determined the minimum number of C-17 aircraft needed for its operations and delayed action on the C-17 program until 1995; (4) delaying action until 1995 would unnecessarily add $5 billion to the total program cost because most of the benefits from the contractor's management improvements will not be realized until 1996; and (5) DOD needs to establish specific cost, schedule, and performance criteria to evaluate the contractor's performance and determine whether more than 40 aircraft are needed.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress endorsed the C-17 settlement.

    Matter: Congress should not endorse any settlement until DOD has provided information on the minimum number of C-17 aircraft needed to meet its specialized airlift requirement and the criteria DOD intends to use to evaluate contractor performance under the settlement.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD is conducting a number of studies related to determining the number of C-17s needed for unique military capabilities. These studies are to serve as part of the information to be considered at the Milestone IIIB decision in November 1995. DOD will not make a determination of the number of C-17s needed until that time.

    Recommendation: The Secretary of Defense should determine immediately the minimum number of C-17 aircraft needed to provide specialized military airlift capabilities.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD developed criteria to serve as the basis for a decision on the number of C-17s to be acquired. This criteria was used to support the milestone IIIB decision to acquire 120 C-17s. However, those criteria were not as specific as intended in the recommendation. As a result, DOD's action is not fully responsive to the recommendation.

    Recommendation: The Secretary of Defense should establish specific cost, schedule, and performance criteria to evaluate improvements in the contractor's performance in order to make an informed decision on whether to continue the program.

    Agency Affected: Department of Defense

 

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