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Opening up the C-17 Globemaster Piñata April 23, 2010

Posted by Matthew Leatherman in Analysis.
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C-17 subcontractor data in this post is the product of original research by Robert Miller at the Institute for Policy Studies.

Parents, worn out by the chaos of their child’s carnival-esque birthday party, dread concluding with a piñata.  It’s that much more mess to clean, and that much more intense of a sugar high for the kid.

Peering inside military hardware procurements is a similar experience for the American taxpayer.  Sub-contractors distributed across the country, each a delicious ‘economic development’ nugget for some member of Congress, spill out seemingly without end.  This stuffing is the root of our military-industrial complex – votes that Congress members can win and business that contracting firms can corner.

Map: Geographic Distribution of C-17 Subcontractors

One such example is the C-17 Globemaster.  Unlike many other programs, taxpayers have a detailed glimpse into its supply chain, which now includes 268 firms spread across 219 cities in 36 states.  The 10 aircraft included in the Pentagon’s FY10 budget will distribute $2.5 billion among these firms (pg. 16).  Each is a valued part of some Congress member’s district and, seemingly not by coincidence, they are located our country’s most populous areas.  Only 8% of Americans live in the 28% of states (14 out of 50) unrepresented in the C-17 supply chain (est. 07/2009).

We’ve come to expect patterns like this, but they are not immediately intuitive.  Such a stunted supply chain wastes money and constrains profits.  Private sector prime contractors wouldn’t tolerate these efficiency gaps.

On its face, neither should Pentagon prime contractors.  Yet they have learned that this waste is more than compensated for by the new demand it generates.  Specifically, demand for defense materiel originates from Congress as well as from the Pentagon.  Investing in members’ districts is a cost of entry into the congressional market.  Once inside, though, it’s a booming industry.

FY2010’s ten C-17’s help explain why.  The Pentagon did not want these aircraft or their $2.5 billion cost.  In fact, Congress forced them back into the Pentagon’s budget over Secretary Gates’ objection, and is poised for a repeat this year.  The delicious political candy inside this piñata helped to generate demand that otherwise was wholly lacking.

We now have a win-win-tie situation.  Congress members get votes and contractors get business.  The Pentagon in this instance is forced to accept unwanted hardware but, just as often, it’s glad to receive additional kit without the hassle of public justification.

Everyone else loses, though.  Congressionally-based demand is driven by politics and ideology rather than policy or strategy.  Purchases such as these consequently miscommunicate and misdirect our policy and strategy, setting back American interests overseas.  Adding insult to injury, the taxpayer is stuck with a $2.6 billion bill for this counterproductive behavior.

Unlike children’s parties, where parents’ joy outweighs dread of the piñata, public celebrations are not the norm when cracking open military hardware piñatas.  Transparency brings the partiers only embarrassment in this case.  Seeing into the C-17 supply line thus is a rare break for the taxpayer, evidence that can be valuably used to hold Congress to account for its fiscal indiscipline.

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1. Myron D. Stokes, Managing Member, Global HeavyLift Holdings, LLC - April 23, 2010

Matthew: Your commentary is well reasoned up to the point of your seemingly suggesting the C-17 has no supportable role in DoD airlift scenarios beyond the present.

In our estimation, allocation of USD2.5 billion for 10 more Boeing C-17 Globemaster III’s is most appropriate and timely. (note: unless the number has radically and inexplicably changed, there are 702 suppliers in 44 states)

Here’s why: Since so many editorials are containing C-17 catch phrases like “unnecessary”, “not requested”, “The Air Force says 180 was/is enough”, one assumes that such assertions are fact checked to ascertain the worthiness of these comments. Also, we trust the following and lengthy observations do not abuse response guidelines, comments which we believe may add to author and reader knowledge base relative to this superlative, and quite necessary, airlifter which has no true near, mid or long term replacement:

Global HeavyLift Holdings, LLC, a Florida incorporated, Bloomfield Hills, Michigan based Defense Logistics Agency listed (www.ccr.gov) entity has stated publicly and often, the data to which the SECDEF, the SECAF and others have referred to as reasons for termination of C-17 production, have been debunked as based on flawed analytics and inapplicable, outdated, conflict assumptions by the GAO and Congress, or do not exist. They can only be referring to the 2005/2006 Mobility Capabilities Study(MCS) produced by the Pentagon Office of Program Analysis and Evaluation (PA&E) and the Strategic airlift section of the 2006 Quadrennial Defense Review (QDR) which echoes MCS conclusions that “180 C-17s augmented by 112 REAMP/RERP C-5s was enough”. Conclusions, by the way, which were merely repeated in the 2010 MCS.

In defense of what seems to be a dichotomy of that which is publicly stated and actual airlift requirements, the AF was pretty much hamstrung and stuck with the C-5s, which the service desperately wanted to get rid of, thanks to behind the scenes maneuvering (well, that’s the way of the Beltway, right?) resulting in a 2004 Congressional Mandate authored by Sens. Kennedy and Biden that prevented retirement of any models save for those 14 AC that were absolutely beyond repair.

Being part, for nearly a decade, of an industry/government team which included National Security strategist Dr. Sheila R. Ronis, (a valued member of the Project on National Security Reform http://www.PNSR.org, tasked with rewriting the 1947 National Security Act), that helped restructure the original CAMAA (Commercial Application of Military Airlift Aircraft program, the comments of a very upset AF General were relayed to us the day the mandate was implemented: “We keep trying to push these aircraft [C-5s] out the back door, and they [Congress and LMCO] keep pushing them in the front door. From this point on, it’s going to be darned difficult to get C-17s at the levels we need them (at least 222, with 300+ quite usable).”

I should also note that Dr. Ronis and I were privileged to work with former SECAF Dr. James Roche who asked us to craft what we felt would be a more readily implementable CAMAA strategy in the form of a white paper linked below.

http:// www. slideshare.net/GHHLLC/ghhsecafroche-the-grand-strategy13-presentation

http:// commercial_application_of_military_airlift_aircraft.totallyexplained.com/
http:// en.wikipedia.org/wiki/Commercial_Application_of_Military_Airlift_Aircraft

The General mentioned above was of course, quite correct; it has been a yearly struggle to keep the C-17 Long Beach line open. And because the existence and continuance of C-17 is so vital to our implementation of a US/NATO-controlled Heavy and Outsized industry utilizing modestly, very modestly, modified Globemasters designated BC-17, we have worked diligently to maintain its production as the following releases from last year, following the April announcement by Dr. Gates of DoD intent to end production, demonstrate:

http:/ / www. slideshare.net/GHHLLC/global-heavylift-holdings-llc-internal-dod-analyses-referenced-in-bid-to-kill-boeing-c17-nonexistent

http:// www. slideshare.net/GHHLLC2/global-heavylift-states-c17-production-must-be-maintained-to-seek-faa-bc17-exemption-separate-from-boeingcontinues-pursuit-of-usd184b-capital-raise-to-implement-usnatocontrolled-heavy-and-outsized-air-cargo-industry-based-on-wellproven-airlifter

http:// www. slideshare.net/GHHLLC/global-heavylift-holdings-llc-submits-rfp-to-boeing-for-ten-7478f-freighters

http:/ /www. slideshare.net/GHHLLC/global-heavylift-holdings-llc-pushes-120-boeing-c17s-for-20102020-budgets

http:// www. slideshare.net/GHHLLC/global-heavylift-holdings-llc-provides-copy-of-publicly-unavailable-dept-of-commerce-boeing-c17-industrial-base-impact-study

http:// www. slideshare.net/guestde926c4/global-heavylift-holdingsllc-cites-absolute-need-for-commercial-boeing-c17-bc17based-permanent-air-augmentation-of-us-industrial-base-global-supply-chain-notes-chinas-virtual-control-of-oceanborne-shipping-and-rise-as-naval-power

May 2007 Jonathan Club Presentation

http:// www. slideshare.net/GHHLLC/speed-news-aerospace-and-defense-conference-an-usnato-controlled-heavylift-industry-utilizing-boeing-bc17-globemaster-iii-commericalmilitary-airlifters

Puzzling Behavior

The arguments presented by C-17 antagonists have at best been puzzling to us and most certainly to Boeing, since we know there is no basis whatsoever for their assertions of “we have enough C-17s and buying more is a waste of money, epitomizes ‘pork barrel’ spending and is a poster child for the extremes of earmarks.”

Nothing is further from the truth, and we openly challenge our colleagues both within government and those who represent the private sector cheering section calling for the demise of this indispensable airlifter, currently flying at over 159% of mission utilization projections, to produce the data to support their arguments. It is not enough to say “planes the AF did not request or need”, “unwanted C-17s”, or, “The SECAF says they have more than enough to handle even worst case scenarios”. No, one must be able to support such contentions, and we must not forget the DoD spends 10s of millions to contract Russian/Ukrainian owned An-124s to make up for in-theater strategic airlift shortfalls. So much for “we have enough”…

Short story? The data do not exist to support C-17 termination.

Also, we have to marvel at the lengths certain colleagues in the private sector constituting elements of what we believe to be an “intellectual” assault on C-17, are willing to go in demanding the end of this aircraft. This, in the form of specious, if not fallacious, claims relative to C-17 cost which one think-tank claimed was USD376 million (included per plane development costs; an atypical publicly stated cost representation that goes beyond the disingenuous), another organization, 276 milliion. The AF gets them according to Boeing and the service itself, for 200-230 million or soon, even less, as Boeing Long Beach administrative and production personnel become more efficient everyday through the process of continuous improvement. Economies of scale will reduce costs even further, thereby reinforcing the wisdom of a multi-year buy (2010-2020) for 120+ C-17s.

And then, there are those who make an “apples to oranges” comparison of retrofitted C-5s versus new C-17, citing “USD81 million for the larger capacity (120 ton) Galaxy as opposed to 200 million for the smaller (87 ton) Globemaster III. As noted last year in an Aviation Week piece by Amy Butler, the comparative numbers presented in response to a clearly planted question, taken at face value, would cause any reasonable person to conclude that support of C-17 would justify an immediate psychiatric examination. That is, up until the moment they are gobsmacked by the operational realities of Iraq and especially Afghanistan: C-5s require significant infrastructure, and as a colleague said “There ain’t a lot of that in Afghanistan.”

Their operation, large targets they are and not likely to be missed by even the most incompetent of attacking enemy fighter pilots, also requires control of the air in the battlespace (ask any driver what ship they’d like to be in, C-5 vs C-17, in a chance encounter with a Mig-35. Some may also remember Tom Clancy’s treatment in his book World War III of troop-laden C-5s encountering armed Russian bombers) .

Indeed, C-17, owing to its extraordinary ability to operate on underprepared, even unprepared, runways as long as it’s flat or near flat, earth (the proposed C-17B is designed to land in mud or beach sand) in austere in-theater locales makes it the indispensable, life-saving, battle winning, strategic/tactical airlifter it has proven to be. In Air Force tests, it has landed and taken off with 22 tons aboard in distances less than 1350′.

Its amazing performances, whether humanitarian/disaster relief (think Haiti) or conflict support missions, caused me to remark in a presentation some years ago, “The only way the DoD could do better relative to a mission capable aircraft is to introduce a 489 knot, 2500 nautical mile range Sikorsky Skycrane with 87 ton capacity. To be sure, comparing C-17 to C-5, An-124 or B-747 is like comparing Fat Albert (the Cosby character) to Michael Jordan.”

Most importantly, C-17 is the ideal, if not perfect, airlift platform for addressing the potential of conventional and asymmetric warfare existing concomitantly, along with an observable increase in the frequency of disaster/humanitarian relief scenarios. This reality dictates need for an ability to rapidly project significant force in a way that acknowledges the comfortable bi-polarity of the Cold War has been replaced by the dangers and unpredictability of a militarily/economically emergent China, a nuclear armed Iran, the traditional uncertainties associated with North Korea’s beligerence and terrorist organizations possessed of global reach.

We will state, and will continue to state, our firm belief that the continuous and intense efforts to kill Boeing C-17 — we are in full expectation of efforts, despite a very high probability of failure, to remove or neutralize approved funding for the additional 10 AC from the 2010 Budget — are directly the result of a desire by involved parties to ensure retrofit all remaining C-5s and introduce the non-0perational Airbus/EADS A400M 37 (now 25; it is 12 tons overweight) ton capacity turboprop tactical airlifter into USAF inventories… both aspirations requiring the demise of C-17, and perhaps, Boeing itself.

It goes without saying that the loss of the country’s last wide body airlifter production line and its product will have critical, long lasting and perhaps unrecoverable negative economic, national security and industrial base/defense industrial base cohesiveness and viability implications; contentions supported in the officially unavailable 2005 “Department of Commerce Study National Security Assessment of the C-17 Globemaster Cargo Aircraft’s Economic and Industrial Base Impacts”

http:// http://www.emotionreports.com/downloads/pdfs/GHHDOC_C17_2005.pdf

We strongly recommend review of this very important document by our, with all due respect, underinformed colleagues who, by their public comments such as “Don’t Waste Money Buying More C-17s”, have yet to grasp that the defense industrial base and the industrial base are one and the same, symbiotic, inseparable and inextricably linked. They would also do well to take a refresher course in Keynesian economics.

Lastly, we believe that we have addressed the ultimate conversation stopper when it comes to annual funding of new or existing DoD programs, which is “is there money in the budget?”. The process is called “Transformational Recapitalization” and as articulated by Dr. Ronis in the November/December 2004 issue of Defense AT&L, will forever change the DoD acquisition process by allowing the AF to resell in-fleet aircraft to commercial (airlifters, tankers) and military customers (fighters, bombers, tankers) when 50% of service life is reached. The funds derived from this actvity will flow back into the budget (requiring a change in scoring law) thus recapitalizing it, and then used to place new orders.

Another core element of Trans-Recap calls for the slowing down of assembly lines (Boeing is indeed slowing the C-17 line to preserve plant longevity) rather than building the contracted AC as fast as possible. This allows upgrades in avionics and weapons systems to be incorporated while in production, thus precluding the necessity and costs of a complete retrofit 15 to 30 years later. This way, the service is always operating new or fully upgraded aircraft at all times, and when sold to NATO aillies at their half-life, will create new levels of operational readiness and interoperability.

http:// www. dau.mil/documents/publications/dam/11_12_2004/rons-nd04.pdf

Nevertheless, we appreciate your observations Matthew, in trying to add substance to what has become chaotic, non-solutions oriented, discussion.

Myron D. Stokes
Managing Member
Global HeavyLift Holdings, LLC
74 W. Long Lake Rd.
Suite 103
Bloomfield Hills, MI
48304

Defense Logistics Agency listed
http://www.ccr.gov
http://www.emotionreports.com
email: globalheavyliftholdings at ymail.com

About Global HeavyLift Holdings, LLC:
Founded in 2002, GHH is a strategic air transport solutions entity that was born of a multi-year public/private effort among forward thinkers in both the private sector and government to mitigate emerging and observable vulnerabilities in the U.S. industrial base global supply chain. Such vulnerabilities are represented by the fact that no ocean-borne shipping is in U.S. hands at present, thus potentially subjecting American corporations, especially automotive, and their global operations to the whims and perhaps economically hostile activities of and by foreign governments. Add to this the risk of terrorist activities, which have, according to the Department of Homeland Security, targeted maritime operations; i.e., ships, ports and ocean containers.

Defense Logistics Agency (DLA) listed, it is the goal of GHH and its strategic partners around the planet to work with key logistics personnel within these corporations and government agencies to conceptualize, craft and structure long-term global supply chain alternative transportation methodologies through continuous — not stop gap or emergency — air augmentation solutions. Its most important mission, however, has been in the co-development of global architecture for infrastructure of a new American controlled industry, Heavylift, utilizing the excellent airlift performance characteristics of the Boeing BC-17.


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