Upgrading Fleet Still Top Priority

or many years, the Air Force has kept its eye on the same procurement prize: buying new airplanes and upgrading old ones. In the service's proposed $34 billion procurement budget for fiscal 2004, more than one out of every three dollars is slated for aircraft. That trend will continue at least through the end of the decade as the service's latest aircraft, the F/A-22 Raptor and the Joint Strike Fighter, enter production.

Marvin Sambur, assistant secretary of the Air Force for acquisition, says the service faces a "procurement death spiral" if it does not invest heavily in a new fleet. Most of its aircraft have been flying for close to two decades, some far longer. Sambur says an older fleet leads to high maintenance bills that drain dollars that could be used to develop new weapons.

"We haven't turned the corner yet [on upgrading the air fleet] but have taken steps to get it under control," says Sambur. In fiscal 2004, the service proposes spending $5.2 billion on the F/A-22, $3.6 billion on C-17 cargo aircraft, and $2.1 billion on the Joint Strike Fighter.

The Air Force also is increasing its investment in one of the military's hottest technologies, unmanned aerial vehicles. In fiscal 2004, spending on the drones is projected to rise by more than 50 percent over fiscal 2003 levels, to $1.06 billion.

Another top priority for the Air Force is high-precision weapons. The service plans to increase spending on smart bombs by 15 percent in fiscal 2004, to just over $1 billion. That includes $461 million for the Joint Direct Attack Munition, a satellite-guided bomb that won high marks for its accuracy during Operation Iraqi Freedom.

The most important procurement decision the Air Force made this year was not to buy something. In May, the service announced an unprecedented deal to lease the next generation of refueling tanker aircraft from Boeing. This is the first time the Pentagon has opted to rent rather than buy for a major weapons program. "We are getting a real good deal," says Sambur.

The budget impact will not be felt until 2006, when the Air Force begins a six-year lease with Boeing for 100 modified 767s at a cost of $138 million per aircraft. After six years, the Air Force can opt to buy the tanker fleet for $4 billion. The planes will replace the Air Force's KC-135 tankers, which have been flying for nearly five decades. The Air Force sees the deal as a way to get new tankers quickly without a large upfront investment.

"If this goes through and proves successful, it will be something considered [for other weapons], but it won't be widely used," says Sambur.

Some lawmakers have sharply criticized the deal. "Every analysis has shown that it would be considerably less expensive to either modernize our existing tanker fleet or purchase new tankers. The only reason to lease new tankers is that they are more, not less expensive and, thus, a greater windfall to the Boeing Company," said Sen. John McCain, R-Ariz., after the deal was announced. He said the Air Force could get the same capabilities by upgrading its existing tankers-and for $20 billion less.

Meanwhile, a recent Air Force inquiry found Boeing violated federal law in a 1998 competition to launch weather, space, intelligence and communication satellites. Three Boeing space subsidiaries were suspended from winning new federal contracts and $1 billion in launch work was taken from Boeing and given to Lockheed Martin.