REDUCING THE DEFICIT: SPENDING AND REVENUE OPTIONS
Congressional Budget Office - March 1997


DEF-13 BUY NO MORE THAN 72 C-17S AND PREPOSITION EQUIPMENT INSTEAD

	

Annual Savings							Five-Year  
Savings from			(Millions of dollars)		Cumulative
the 1997 Plan		1998	1999	2000	2001	2002	Total  

Budget Authority	80	290	1,210	3,540	3,560	8,680

Outlays			10	10	120	690	1,640	2,470

The C-17 Globemaster III is a four-engine transport aircraft that can carry a cargo payload of at least 110,000 pounds for a distance of 3,200 nautical miles without aerial refueling. It is being produced as the next-generation airlift aircraft to replace the C-141 Starlifter. Because it is designed to land at relatively small airfields with short runways, the C-17 might also play a role in meeting transport needs within a combat theater and could substitute for other aircraft, such as the C-130, that traditionally perform that role.

The Congress has already authorized 48 C-17 aircraft through 1997, and the Administration plans to purchase a total of 120. By buying a maximum of 15 C-17s per year, the Administration would complete procurement in 2003. CBO estimates that under the terms of a multiyear arrangement, acquiring the aircraft would cost $18.7 billion between 1998 and 2002. Operating and supporting all C-17s in the Administration's plan would cost an additional $3.5 billion over the same period.

The Department of Defense has two alternatives to airlift for transporting military equipment over intercontinental distances--sending cargo from the United States on sealift ships or placing sets of equipment closer to regions where conflict might occur (called "prepositioning"). Although the Administration is investing in all three modes of transportation, DoD has recently focused on prepositioning equipment in two places where military planners believe conflict is most likely: the Persian Gulf region and the Korean Peninsula. That approach would allow DoD to deliver heavy forces (units that include tanks and armored fighting vehicles) much more quickly to major regional conflicts; sealift ships would take about three or four weeks to steam from the United States and unload their cargo, and airlift planes can carry only one or a few heavy vehicles at a time. By prepositioning heavy equipment on large roll-on/roll-off ships anchored in the Indian or Pacific Ocean, military planners can retain some flexibility in where they choose to send U.S. forces yet deliver the larger volume of cargo typically provided by sealift.

This option would limit purchases of C-17s to a total of 72 aircraft, or eight per year in 1998, 1999, and 2000. In the place of airlift planes, DoD would purchase one additional large, medium-speed, roll-on/roll-off ship (LMSR) that would carry prepositioned equipment. Since DoD would procure fewer C-17s each year than under the Administration's plan, CBO assumed that the average cost of each plane would be higher. CBO also assumed that DoD would incur some costs associated with closing down the C-17 production line, and it would purchase new equipment to preposition rather than rely on current stocks. Yet even after those costs, CBO estimates that the option would save $10 million in outlays in 1998 and $2.5 billion through 2002 relative to the Administration's plan to purchase 120 C-17s. Savings in budget authority would be considerably larger--almost $8.7 billion over the next five years.

Compared with the Administration's plan, this alternative would allow DoD to deliver roughly the same amount of equipment and supplies even in the most challenging scenario. But how could one ship substitute for 48 C-17s? Each newly constructed LMSR can preposition at least 250,000 square feet of cargo, compared with approximately 1,200 square feet to 1,500 square feet on each C-17. Based solely on floor space, it would take a total inventory of 38 to 52 C-17s to deliver the same amount of cargo to the Persian Gulf in the same 11- to 12-day period as one LMSR that had been prepositioned in the Indian Ocean. But using floor space as a measure understates the comparison because airlift loads are constrained more by the weight and three-dimensional shape of their cargo than by floor space. Thus, one LMSR, which is less constrained by the weight and volume of cargo, may very well be able to perform the same early deliveries as 48 C-17s. (See Congressional Budget Office, Moving U.S. Forces: Options for Strategic Mobility, February 1997, for more details.)

Defense leaders might prefer to keep prepositioning to a minimum for two reasons. First, the units that military planners intend to deploy would have to be selected long before any sign of conflict. Yet if circum-stances changed, a different mix of units might better address the situation. For that reason, the option might not provide regional commanders with as much flexibility as would the Administration's plan.

Second, prepositioning can complicate a deployment by breaking up the integrity of military units. Some equipment is not appropriate for prepositioning: it may be in short supply, contain sensitive electronic components, or be difficult to maintain aboard ships. For example, helicopters can be shrink-wrapped before they are transported on ships to lessen their exposure to salt water, but such a measure would not be suitable for long-term storage since it would prevent the ship's crew from running the helicopters' engines or performing routine maintenance on them. As a result, military planners divide units into equipment that is considered suitable for prepositioning and its "fly-in echelon"--the troops and more sensitive cargo that would be airlifted to meet up with stocks already in place.

The complexity added by dividing up units, however, is not insurmountable. As the military services have begun prepositioning more equipment in recent years, they have also conducted training exercises in which troops learn how to "marry up" with their gear. Increasing the amount of training could offset much of the complexity added by another prepositioning ship.

Finally, opponents of this option would argue that at a time when the U.S. military is preparing to face di-verse regional conflicts on short notice, the Air Force needs more of the versatile C-17 airlifters. A 1995 study by the Secretary of Defense's Director for Program Analysis and Evaluation found that if the United States became involved in crises requiring special military missions, U.S. forces might need more than 72 C-17s. For example, the Army has a military requirement to be able to perform airdrop operations with large, brigade-size forces over long distances--a mission that DoD believes would require at least 100 C-17s. Having more C-17s could also be important if military commanders chose to devote one or two squadrons of C-17s to moving larger pieces of equipment within a combat theater at the same time as a deployment from the United States was under way.

But DoD has rarely dropped brigade-size forces in actual missions. The United States conducted airdrops into Grenada in 1983, Panama in 1989, and came close to performing a large-scale drop into Haiti in 1994, but the Air Force could have used shorter-range C-130s in all those situations. Since a brigade airdrop over longer distances would be more physically demanding on the troops and more difficult to execute, some analysts have suggested that the United States is unlikely to use such a capability. And although DoD officials have justified buying 120 C-17s partly on the requirement to conduct brigade-size airdrops over strategic distances, that plane has experienced persistent difficulties in airdrop tests.

Supporters of the option would contend that DoD could continue to use trucks and rail cars to move the largest pieces of cargo within a combat theater. Moreover, based on DoD's own analysis, the option would include enough C-17s to deliver cargo to many types of smaller contingencies such as humanitarian assistance operations, evacuating noncombatants from foreign countries, peacekeeping missions, or even delivering heavier cargo to a peace enforcement mission such as current operations in Bosnia.