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The 'Business Case' for the F-22A
InsideDefense.com NewsStand | Carlo Munoz | January 27, 2007

Senior Air Force leaders are confident that a new business case analysis on the service’s multiyear procurement plan for its F-22A fighter fleet will continue to showcase the significant cost savings potential of the effort, Air Force Secretary Michael Wynne tells Inside the Air Force.

“We promised the Congress a savings of about $225 million, we think that is very achievable and we continue to think that is very achievable,” he said during a Jan. 17 interview in his office at the Pentagon. “Every program has its ups and downs, but I do believe that the $225 million is achievable, and I think we can demonstrate it. So I am not worried about it.”

The $225 million cost savings estimate derived from the service’s plan, which calls for the purchase of 60 F-22A Raptors in 20-plane increments over a three-year period from fiscal year 2007 to FY-09, based largely on a prior business case analysis conducted by the Alexandria, VA-based Institute for Defense Analyses.

The report stated that the service could save as much as $3.7 million per aircraft, should Congress green light the Raptor multiyear plan.

Despite such estimates, panel members on the Senate Armed Services Committee nixed the procurement plan from its version of the defense legislation, with former committee Chairman John Warner (R-VA) and current Ranking Member John McCain (R-AZ) leading the charge to ax the plan from the bill.

But Sen. Saxby Chambliss (R-GA) was able to rebuff Warner and McCain’s efforts and resurrect the F-22A multiyear plan, attaching the proposal as an amendment to the authorization bill on the Senate floor. The full Senate approved the Chambliss amendment by a 70-28 vote.

However, financial ties between IDA’s former president Dennis Blair and New York-based F-22A subcontractor EDO Corp., cast considerable doubt over the validity of the organization’s findings.

Blair, according to news reports published in The Washington Post, held stock options in EDO Corp. and was a member of the company’s board of directors during the time IDA was conducting its analysis of the multiyear procurement plan.

The IDA chief defended his ties to EDO in a July 26, 2006 letter to Warner, stating emphatically that he did not play an “active role” in IDA’s review of the F-22A multiyear plan and retired from the organization shortly thereafter.

Defense legislators in both chambers approved the multiyear plan in the final version of the FY-07 Defense Authorization Act, but also imparted a number of requirements, including a new business case analysis of the plan.

Wynne said that even if the results of the new business case analysis do not match dollar-for-dollar with the estimates outlined in the IDA report, Congress will be hard pressed to ignore any substantial cost savings that the new report may show.

“I do think that we have to go through with all due reasonable speed and we cannot be laggard in our response, but most in Congress realize that savings are savings,” the service secretary said.

Any Air Force dollars saved as a result of the Raptor multiyear plan “funds people, it funds programs, it funds gasoline,” he added, noting that lawmakers “will look at you like you have two heads if you give up a significant savings.”

The use of a multiyear procurement plan for the Raptor also would prevent instances of “requirements creep” -- when a program is so loaded down with requirements that subsequent cost overruns and schedule delays make the effort fiscally impossible, Wynne said.

“It inhibits the customer from making changes to the airplane that would otherwise screw up a really nice production line,” Wynne said. “It also encourages the contractor to maximize their savings throughout that period.”

The plan would also keep the Lockheed Martin-based Raptor production line humming until 2009, opening the door for service officials to argue for extending production beyond the 183 Raptors it now plans to buy, according to sources..

Air Force officials still contend the service needs 381 F-22A fighters as the minimum requirement to carry out its expected slate of future missions for the fifth-generation fighter.

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Copyright 2008 InsideDefense.com NewsStand. All opinions expressed in this article are the author's and do not necessarily reflect those of Military.com.

 
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