Military Airlift:

The C-17 Proposed Settlement and Program Update

T-NSIAD-94-172: Published: Apr 28, 1994. Publicly Released: Apr 28, 1994.

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GAO discussed the status of the Department of Defense's (DOD) C-17 aircraft program, focusing on: (1) C-17 cost, schedule, and performance issues; and (2) the proposed settlement agreement between DOD and the prime contractor. GAO noted that: (1) total program costs for the C-17 continue to increase; (2) the average unit price negotiated with the C-17 contractor continues to increase; (3) although delivery schedules have slipped recently, they are improving overall; (4) some aircraft have been delivered with unfinished work or known deficiencies that need to be corrected after government acceptance; (5) technical problems continue to occur in the C-17 program; (6) DOD has proposed relaxing the C-17 specifications to levels that the C-17 will probably be capable of achieving, since the contractor is unable to meet the current specifications; (7) DOD has not established cost, schedule, or performance criteria to evaluate contractor performance; (8) the contractor's settlement claims are questionable and should not be paid until a price analysis is performed; (9) the government has made concessions without establishing the value of potential claims both parties have against each other; (10) DOD should immediately determine the minimum number of C-17 aircraft needed to provide specialized military airlift capabilities and pursue a strategy to acquire aircraft to meet additional requirements; and (11) the proposed settlement is not in the best interest of the government, and Congress should not endorse any settlement until C-17 performance issues are resolved.

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