C-17 Aircraft:

Comments on Air Force Request for Approval of Multiyear Procurement Authority

T-NSIAD-96-137: Published: Mar 28, 1996. Publicly Released: Mar 28, 1996.

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GAO discussed the Air Force's proposed multiyear procurement of the C-17 aircraft. GAO noted that: (1) the Air Force's estimate that the multiyear procurement could save about $896 million is overstated; (2) the Air Force could save about $300 million without entering into the multiyear agreement and a portion of this savings could be invested in cost-reduction initiatives; (3) savings from the C-17 engine contractor are also overstated; (4) the multiyear procurement will be based on the Lot VIII contract which contains fixed-price options and incentives; (5) the government and contractor have reduced costs and accelerated the aircraft's production rate in order to keep total costs from exceeding the 1994 $43-billion estimate; (6) it is unclear how the changes that the contractor is making to the aircraft's design and production methods will affect the proposed production schedule; and (7) the Air Force has identified sufficient funds to support the proposed procurement at the planned production rate.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In approving the multiyear contract authority, Congress obtained a commitment from DOD to include the relevant provision in the contract. This provision was subsequently included.

    Matter: Congress should require that a provision which would allow reverting to the Lot VIII annual buy contract is included in any multiyear contract.

  2. Status: Closed - Implemented

    Comments: The Congress did not require DOD to provide assurance along with its 1999 budget request that the contractor is actually ready to move to the higher production rate. Since the window of opportunity has passed, the recommendation is no longer applicable.

    Matter: Congress should require the Department of Defense to provide assurance along with its 1999 budget request that the contractor is actually ready to move to the higher production rate.

 

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