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 40 C-17 aircraft through 1996. In 1993, the Administration placed the C-17 program on probation because the plane's producer experienced difficulty controlling the aircraft's costs and quality. Since then, however, McDonnell Douglas has delivered new C-17s on time, reduced the number of manufacturing defects, and taken steps to lower production costs. After observing how the initial squadron of C-17s has operated and reviewing the costs and capabilities of two alternative airlift planes (the new D model of the Lockheed C-5 and the C-33, a Boeing 747-400 freighter modified for military use), the Administration announced in November 1995 that it will plan and budget for 80 additional C-17s (a total purchase of 120 aircraft). If the Congress purchases the planes relatively slowly (building up to a maximum of 12 C-17s per year in 2001), that plan will require approximately $25.4 billion in funding to complete. In its 1997 plan, however, the Administration has proposed buying 80 more C-17s using multiyear procurement and a more aggressive schedule of purchases (building up to a maximum rate of 15 planes per year by 2000). The Department of Defense esti

mates that completing the purchases under the new plan will cost $22.1 billion.

This option would instead keep the C-17 fleet at 40 aircraft and substitute purchases of 56 wide-body commercial aircraft such as the C-33. Those purchases would provide the Air Force with roughly the same amount of airlift capability as 80 more C-17s. Compared with the 1996 plan, this option would save about $2.6 billion in 1997 and $7.2 billion over six years. That estimate includes the cost of operating a larger number of C-141s than the Air Force currently plans in order to keep airlift capability at the same level until the C-33s are delivered. Compared with the Administration's plan to purchase 80 C-17s more quickly, the option would save nearly $2.2 billion in 1997 and $8.1 billion through 2002.

The option would minimize purchases of a plane that is significantly more expensive than other strategic airlift aircraft. CBO estimates that purchasing another 80 C-17s at an annual rate of 12 aircraft (after 2000) would result in an average unit procurement cost of $262 million (in 1997 dollars). By comparison, the C-33 would cost about $190 million per plane (in 1997 dollars). Since the C-33 would be manufactured on the same well-established production line as commercial 747s, its cost would be much less sensitive to the number of planes purchased each year. Restarting the C-5 manufacturing line and producing 65 of the D model aircraft would cost an average of about $182 million per plane. However, since the D model includes significant upgrades that have not yet been demonstrated, that program may present a greater degree of technical risk than the C-17 or C-33. Both the C-33 and C-5D have larger average

payloads than the C-17, and thus DoD might be able to purchase fewer than 80 of them.

Critics of the C-17 program contend that the Air Force may not need as much capacity to carry outsize cargo as 120 C-17s would provide. For example, nearly half the total cargo airlifted during the early stages of the Persian Gulf War could be fit on standard pallets (so-called bulk cargo), as was nearly two-thirds during the peak months of airlift operations (January and February 1991). Civilian widebody jets can deliver bulk cargo more efficiently than the C-17, but they cannot fit most pieces of outsize cargo such as an M1 tank or an Apache helicopter.

Defense Department officials claim that a key factor in their decision to purchase 80 more C-17s was the plane's size. Since the C-17 is smaller than the C-33 and easier to maneuver on the ground, DoD believes that a fleet of 120 C-17s could deliver more cargo than a fleet with fewer C-17s and some C-33s-particularly if there were few airfields available and only a limited amount of ramp space. In addition, commercial planes require long runways and special equipment to be loaded or unloaded. Yet in a recent analysis of cost and operational effectiveness that took those factors into account, the Air Force estimated that a fleet of 40 C-17s plus 56 C-33s could deliver nearly as much as a fleet with 120 C-17s: 96 percent (by weight) of the amount of outsize cargo to two major regional contingencies that occurred nearly simultaneously.

Opponents of this option would argue that at a time when the U.S. military is preparing to face diverse regional conflicts on short notice, the Air Force needs more of the versatile C-17 airlifters. A recent study by the Secretary of Defense's Director for Program Analysis and Evaluation found that if the United States became involved in crises in which it would need to perform special military missions, U.S. forces might need more than 40 C-17s. For example, the Army has a military requirement to be able to perform airdrop operations with brigade-size forces from the United States to contingencies overseas--a mission that might require more than 40 C-17s. Although the Air Force is likely to use its current C-5s to air-drop heavy equipment and bundles of cargo, it may still need more than 40 C-17s to air-drop personnel and the remaining equipment.

Having more C-17s could also be important if the United States became involved in lesser regional contingencies in which U.S. forces needed to deliver large amounts of heavy equipment to an area that had few, small airfields. As recent airlift operations to Bosnia show, however, the speed with which cargo must be delivered can vary considerably. And fewer C-17s combined with C-33s or C-5Ds would probably be adequate for smaller operations like the U.S. humanitarian intervention in Rwanda in 1994 and 1995.

The C-130 Hercules is an airlift plane that the Air Force uses to transport cargo and supplies within a theater of operations. The C-130 is much smaller than strategic airlifters like the C-17 or C-5, which can carry an average of at least three times more weight over much longer distances. Nor is it big enough to carry the largest pieces of equipment such as Apache helicopters or Patriot missile batteries.

Nevertheless, the C-130 remains a critical element of the Air Force's tactical airlift fleet. Lockheed Martin has produced more than 2,100 of those aircraft over the past 40 years, and the C-130's airframe has proved highly effective and versatile. Its turboprop engines do not ingest loose dirt and materials from unpaved runways, thus giving the C-130 better access to austere airfields than the turbofan engines used in most strategic airlifters. The turboprop engine also permits more rapid changes in thrust than most turbofans, which contributes to the C-130's ability to take off and land on short runways and descend quickly into airfields that are hard to reach. And since the average unit procurement cost of the J version is about $55 million, the Air Force could purchase at least three C-130Js for the price of one C-17, which some defense analysts would like to use for tactical airlift operations.

To produce the J version, which the Air Force is now buying, Lockheed Martin has taken the basic airframe of the C-130 and upgraded a number of the plane's systems. For example, the C-130J includes an integrated avionics system that eliminates the need for a flight engineer and incorporates a new engine that is more powerful and fuel-efficient. The plane can be modified for in-flight refueling, al

though the Air Force did not request that capability in the basic C-130Js that it is purchasing.

The Air Force maintains a fleet of about 400 C130s for tactical airlift. The Congress authorized the purchase of two new C-130Js in 1996 to replace the Air Force's older E version aircraft in the active-duty forces, and last year the Administration had planned to continue procuring two per year. In its most recent plan, however, the Administration proposed buying only one C-130J in 1997, followed by two per year throughout the 1998-2001 period. Although the C-130Es are the oldest of those aircraft, until recently the Air Force had no plans to begin retiring them until the middle of the next decade.

Identifying a clear numerical requirement for the C-130J, however, is difficult. The Air Force sent only 149 of its large inventory of C-130 aircraft to the conflict in the Persian Gulf. Since they move equipment and supplies from main operating bases closer to the battlefront, a substantial number of C-130s may be needed during two major regional contingencies that occurred at nearly the same time. But predicting the type and number of intratheater airlift movements that would be needed is difficult, and other modes of transportation such as trucks, trains, and watercraft can substitute for some airlift deliveries.

This option would postpone procurement of C130Js until well into the next decade. Relative to the Administration's 1996 plan, deferring modernization of the C-130 would save about $110 million per year, or a total of $658 million over the 1997-2002 period. In its budget request for 1997, the Administration

proposes buying one C-130J in 1997 and two planes per year thereafter. Compared with that plan, the option would save $72 million in 1997 and $668 million over the next six years.

As with all cuts in weapons programs, this option would eventually have negative repercussions on the defense industrial base. Following in a long tradition of export sales to more than 60 countries, Lockheed Martin is currently building a stretch model of the C130J for Britain and Australia and may sell others to replace the C-130s it sold abroad years ago. The manufacturer used its own financial resources to develop the upgrade program, which it hopes to recoup with the first 120 planes it sells. If the U.S. Air Force purchased the J version today, that might also help to secure export sales in the world market.

Critics of this option might also argue that it would leave the Air Force with a less capable fleet of intratheater airlift planes. In recent years, the Congress appropriated funds to purchase new C-130s for the Air National Guard and Air Force Reserve, but many of the older E version remain in the Air Force's inventory. Ultimately, an older fleet might prove more expensive to operate and support. Lockheed Martin contends that since the J version uses a

smaller crew and will be easier to maintain, the annual cost of operating and supporting a squadron of C-130Js will be significantly lower than that of the C-130s already in the Air Force's inventory.

But although the average E-model plane is about 30 years old, the fleet has flown an average of about 21,000 hours--well below the aircraft's planned 40,000-hour service life. Since the Air Force flies its C-130Es an average of 600 hours per year for activeduty forces and 375 hours to 450 hours per year for those flown by Guard and Reserve crews, it might be able to retain most of those planes until the latter part of the next decade.

A recent Air Force analysis has suggested that the costs of the ambitious upgrade might be higher than expected or that the program's schedule might be delayed. Furthermore, no one knows whether operation and support costs for the J version will be as low as the producer has advertised. Since Lockheed Martin has been developing the C-130s for its export customers, the Air Force might avoid technical and cost uncertainties associated with the program by waiting to modernize its forces until the development phase is complete.

The Air Force owns a large fleet of tanker aircraft to refuel transports, fighters, and bombers while they are airborne. Being able to do so is important for tactical air operations and for deploying forces by air from the United States to other parts of the world. By the end of 1996, U.S. tanker forces will consist of 472 KC-135 aircraft and 52 KC-10 aircraft (both figures reflect primary aircraft authorized--those planes available for operational use, excluding aircraft used for training).

During the past several years, most of the aircraft in the KC-135 fleet have been retrofitted with new CFM-56 engines that increase their fuel-carrying capacity. About two-thirds of the KC-135s have been or will be modernized with this engine by 1997. The remainder (designated as KC-135E aircraft) have been retrofitted with less efficient engines for the Air Force Reserve and Air National Guard.

This option would retire 100 E-version aircraft-those with the least efficient engine technology and the smallest capacity for fuel delivery--at a rate of 20 planes per year through 2001. That would still leave the military with more than 420 operational tanker aircraft (including KC-10s). Compared with the Administration's 1996 plan, this approach could save $42 million in 1997 and nearly $1.7 billion through 2002.

Historically, the tanker fleet has played an important role in the nuclear deterrence mission by supporting long-range strategic bombers. Today, however, most of the requirements for aerial refueling are derived from regional threats. The tanker fleet provides an "air bridge" for deploying conventional forces, thus reducing the amount of time it takes to

place U.S. forces in distant theaters and decreasing the degree to which the United States must rely on foreign bases en route. Tankers can be used to refuel airlift aircraft, as was done to support the C-5 aircraft that carried heavy equipment to Somalia. To a limited extent, KC-135s can also transport cargo during peacetime; in the event of a major regional contingency, 26 would be used in a transport role. Once in theater, tanker aircraft support fighters and bombers, increasing their combat range and endurance. For example, about 300 tanker aircraft supported operations in the Persian Gulf War.

This option could provide enough tanker capacity to meet the requirements of future regional contingencies. The combination of planned KC-135 retirements and the changes proposed in this option would amount to a 16 percent reduction in the Air Force's total capacity for fuel delivery by 2001 compared with its current level. Relative to 1990 levels, those reductions in numbers of tankers are commensurate with the Administration's plans to reduce the number of attack and fighter aircraft by about 40 percent.

Retiring the older KC-135E aircraft would also avoid other problems. The KC-135E has a refurbished engine used formerly by Boeing 707 aircraft in commercial service. Although that engine has greater fuel efficiency than the KC-135's original engine, it gives the aircraft less capacity for fuel delivery and slightly higher operating and support costs than aircraft equipped with the more modern CFM56 engine. In addition, the older engine does not comply with Federal Aviation Administration Stage III noise standards set for 2000. Since tankers often operate from airfields used for both military and