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C-5 Upgrade Costs Climb

by Ward Carroll on September 25, 2007

The Air Force senior leadership confirmed Monday that the estimated cost for upgrading the C-5 Galaxy fleet is far above what contractor Lockheed Martin has contracted for — a circumstance that may threaten the future of the upgrade program.
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“We see the disparity [in the figures] and we see that no matter whose costs you use the cost of the program is going to go up through at least the 15 percent if not the 25 percent, which requires a Nunn-McCurdy announcement,” Air Force Secretary Michael Wynne said Monday at the Air Force Association symposium in Washington, D.C.

Under the Nunn-McCurdy Pentagon budget statute, a cost overrun of 25 percent or more requires the Defense Department to make a case for keeping the program alive. To do that it has to show the program is critical to national security, that there is no other viable alternative, and the department must demonstrate that the problems that caused the overruns are under control.

Former senior Air Force leaders have said the Air Force may use the cost breach to justify killing the C-5 program. The program to re-engine the giant cargo carrier and also upgrade the avionics has been estimated to cost about $13 billion.

Air Force officials said the service is trying to reconcile the costs now, and intends to give Lockheed its “best shot” at showing it can do the program within cost. Lockheed has previously said it could do the re-engining work for about $83 million per plane.

But former senior Air Force officials and others report that the service thinks it will actually cost up to $119 million per plane.

Both Air Force chief Gen. Mike Moseley and Wynne say they are now trying to explain to Congress and the Defense Department that a formal announcement of contract breach could be coming. The two have made no secret of the fact they’d like to get rid of at least some C-5s, but Congress to date has made that impossible by requiring the service to keep the entire existing fleet intact.

“Right now there are two laws on the books which we are complying with,” Wynne said. “One is to finish the testing on the airplanes [already upgraded] and the other prohibits us from retiring C-5s, and we’re in compliance with those.”

“If the money sounds right and Congress holds the laws together,” he said, “we’re going to execute the C-5″ program.

– Bryant Jordan

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