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Cost analyses pit active against Guard

No agreement on how best to save by redistributing missions

Aug. 13, 2013 - 06:00AM   |  
An active-duty F-16 is refueled by a KC-135 from the Wisconsin Air National Guard during Red Flag exercises at Nellis Air Force Base, Nev.
An active-duty F-16 is refueled by a KC-135 from the Wisconsin Air National Guard during Red Flag exercises at Nellis Air Force Base, Nev. (Richard VanderMeulen / Air Force)
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In the coming months, two major reviews will be completed that could drastically change the number of people, aircraft and bases the Air Force needs, and how much of them will go to the active-duty force, Reserve or Guard.

In the coming months, two major reviews will be completed that could drastically change the number of people, aircraft and bases the Air Force needs, and how much of them will go to the active-duty force, Reserve or Guard.

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In the coming months, two major reviews will be completed that could drastically change the number of people, aircraft and bases the Air Force needs, and how much of them will go to the active-duty force, Reserve or Guard.

The budget battles have drawn down to a simmer after last year’s explosive debates on Capitol Hill, mostly to allow the National Commission on the Structure of the Air Force and the Air Force’s Total Force Task Force to do their work.

The biggest challenge: calculating the true cost of placing missions — and specific aircraft types and people — in the active-duty force compared with the Guard and Reserve. And at a time when budgets are being slashed, airmen are being forced to leave the service and programs are on hold or canceled, the cost comparisons will carry even greater import.

“I’ll tell you this, I don’t know exactly what the numbers are. We’re sorting through all this right now,” Air Force Chief of Staff Gen. Mark Welsh said at an Air Force Association event in June. “Everybody’s got their own view of what costs really mean between the active and Reserve, and anybody who tells you there’s a simple answer doesn’t know what they’re talking about. This is really complex stuff.”

The conventional wisdom that has dominated budget discussions on Capitol Hill is that it’s less expensive to operate squadrons in the Air National Guard, but that’s not always the case, according to a recently released Rand Corp. study. The study, which compared the costs of flying active-duty F-16s, KC-135s and C-130s versus Guard and Reserve aircraft, proved what Air Force leaders have been saying for the past year: Comparing costs is complicated.

“We’re looking at how we can move a greater percentage into the Reserve component, how far can we go?” said Welsh, who inherited the tug-of-war over people and assets when he became chief of staff last August. “And it’s got to be by individual mission areas. Every mission area is different.”

Economies of scale

The Air National Guard and its advocates have said that the Guard provides 35 percent of Air Force capabilities for 6 percent of its budget. The Guard provides 31 percent of the fighter capability, according to the National Guard Association of the United States. An active-duty F-16 costs $29,190 per flying hour, compared with $22,296 for a Guard aircraft, the association states.

But those figures don’t take into account the cost savings in flying more active-duty planes more often, Rand found.

“Because active Air Force units are the part of large [continental U.S.] flying units and flying at a larger scale ... they gain the economies of scale,” Rand senior policy researcher Albert Robbert told the National Commission on the Structure of the Air Force on June 26. “Their average tends to be near the average of Reserve units. While Reserve units are cheaper, the active is much more active and can reach the economies of scale.”

The Rand study’s simulation to reach this conclusion kept the fleet size constant; used the same historic levels of operational, test and training hours; and kept the same overseas units based on statistics from fiscal 2006 through 2010. The authors found that overall, active fighters were cheaper per operational flight hour because they required fewer training hours to stay current. Active F-16s needed 1.3 training hours per operational hour, compared with Reserve fighters, which require three training hours per operational hour.

Rand’s models for a “cost-minimizing mix” recommended a total of 421 F-16s in the active, and 239 in the Reserve component, a configuration that would save $60 million when compared with the current mix of340 in the active and 319 in the Reserve.

Models for C-130s found negligible savings by adjusting the mix, while a KC-135 fleet in the active force could produce significant savings.

The Air Force has 88 C-130s in the active component, with 198 in the Reserve. Their cost-minimizing mix amounted to 73 in the active and 213 in the Reserve, with little effect on the cost. For the KC-135 fleet, the current mix of 128 active and 203 Reserve was moved all to the active duty for a savings of $800 million.

Rand’s model, however, does not differentiate between the costs of training and operational flying hours, which could show more savings for active crews.

“Compared with Reserve-component units, active units typically fly a higher proportion of their total flying hours as operational. ... When total unit costs are spread across active units’ larger proportions of operational flying hours, their costs per operational flying hour are often lower than in Reserve-component units,” the study stated. “For the purpose of meeting strategic demands, Reserve-component units provide mission-ready aircraft with competent aircrew and maintenance workforces at lower cost per aircraft than active units. In contrast, active units have often met operational demands at lower cost per flying hour.”

And going forward, if the Air Force needs to reduce its total number of aircraft, the service should keep planes flown by pilots with the ability to fly more often, Robbert said.

“The Air Force faces budget-driven reductions in its fleet sizes, but no immediate reduction in operational demands,” the study states. “For the three fleets we examined, this suggests that near-term fleet reductions should be taken in the Reserve components,” the report stated. “This will allow the remaining fleets to meet continuing operational demands with fewer total flying hours and less deployment stress on individual active air crews and maintenance workforces. If operational demands subsequently subside, the stage will then be set for tilting the mix back toward the Reserve components.”

Air Force Reserve Command disputes Rand’s findings, according to comments included in the report. The command called for “prudence when applying the insights” of the study, and said the conclusions are not supported by Defense Department planning and policy.

In response to a request for more information, Col. Robert Palmer, Reserve Command director of public affairs, said: “The Air Force Reserve stands by the comment included in the Rand study and does not wish to elaborate further.”

Long-term health

Guard proponents say that even though their crews will be among the first to receive new aircraft, it won’t do enough for the long-term health of their fleet.

The Air National Guard is expected to receive a squadron of F-35s at Burlington Air Guard Station, Vt. But the Guard is flying older fighters that will need to be retired in the meantime, including the oldest block 30 variants of the F-16, aging F-15Cs and A-10s that have repeatedly been the target of cuts.

Last year, the component lost two fighter squadrons: the 188th Fighter Wing at Fort Smith, Ark., and the 132nd Fighter Wing at Des Moines, Iowa. Additional units, such as those in Indiana and Michigan, were also targeted to lose their planes.

“The shifting capability mind-set diminishes the Guard as a Reserve component,” said Mary Catherine Ott, the legislative affairs manager at NGAUS. “What we’re seeing now is that as we are transitioning back [from Afghanistan], resources are much more scarce. Across the board, the Air Force wants to hold on to what they have and cut from the Guard.”

The loss of A-10s in Arkansas and F-16s in Iowa doesn’t mean the loss of many Guard personnel, however. Both states are slated to receive Predator or Reaper remotely piloted aircraft squadrons. This move has been something politicians have begrudgingly accepted.

“Some states are very concerned about not having a manned mission and only going to an unmanned mission,” said Lt. Gen. Stanley Clarke, the director of the Air National Guard, at a congressional hearing earlier this year.

The Guard faces the same situation with the KC-46A tanker. While the component will get its first operating base in 2017, it will be another eight years before it gets its second base. In that time, the component will go from flying 40 percent of the Air Force’s tanker capability to 25 percent, Ott said.

Rand found by studying each Reserve KC-135 wing that their operational flight hours are more expensive than those of the active Stratotankers, because they rarely fly enough hours to show any savings.

“The Reserve components face an offsetting disadvantage in that their fleets are dispersed across many small-scale operations too small to realize available economies of scale,” the study states. “Most Reserve-component KC-135 units flew less than 6,000 hours in a year, whereas no active component did so.”

One area where fighters are especially necessary in the Guard is in homeland defense, where guardsmen fly F-15Cs and F-22s for aerospace alert duty.

“Considering that the defense of this nation is the number one priority of our military, it can be said that our homeland air defenses are dependent upon the experience and capabilities of the Air National Guard,” said retired Col. Peter Duffy, the director of legislation for NGAUS. “The U.S. Air Force has invested significantly in the aerospace control alert, both in terms of readiness and equipment, recognizing that the experience the Guard brings to the table is required to fulfill this mission.”

The Rand study does make a suggestion to help the Reserve component save money, one that would seem to be politically impossible. The fiscal 2013 budget debate hinged on a “capstone principle” of one flying unit per state. While governors have hinted they would be willing to move away from that focus, the study states that a “promising path” toward efficiency would be fewer, larger units.

“The Reserve components, however, will be reluctant to follow this path because considerations other than cost lead them to value wider geographical dispersion of their operating locations,” the study states.

'They are broke'

The reasoning behind the large shift in missions and long-term plans for aircraft is simple, said Douglas Birkey, the head of government relations at the Air Force Association.

“It’s because they are broke,” he said. “They are out of money.”

The full cost of sequestration will be $50 billion out of the Air Force budget for the next 10 years, Welsh said. This comes as the service needs to recapitalize its fleet and the Defense Department faces mounting personnel costs. The chorus on Capitol Hill has been the Guard is cheaper, but there has been no agreement between advocates and the Pentagon on the actual cost of each component to begin to be able to make any decisions, Birkey said.

“Until they agree on a math equation to determine cost and value, it will be very difficult to have an instructive conversation,” he said.

The Guard’s statement that it is cheaper on the whole compared to the active doesn’t show that a deployed guardsman will cost about the same as an active-duty airmen for the same capability, Robbert said. While the Rand estimation shows that it takes more time and money to keep a Guard pilot trained enough to deploy, it doesn’t take into account the possible savings of using simulators to keep currency, said retired Gen. Raymond Johns, the former head of Air Mobility Command and a member of the National Commission on the Structure of the Air Force.

Retired Marine Maj. Gen. Arnold Punaro, chairman of the Pentagon’s Reserve Forces Policy Board, said the refusal of the Pentagon to adopt a basic cost metric comes from its push to keep the largest active force possible.

“They don’t know,” he said. “They don’t want to know.”

Welsh said that the service’s Total Force Task Force, a group of three two-star generals from the active, Guard and Reserve, have been working toward agreeing on an actual cost of each component.

“There’s lots of analysis that’s behind this but the key to this is group is we’re doing it all together,” Welsh said. “They’ve gone through a couple of months of beating each other and yelling at each other and throwing things across the room at each other, and it’s interesting because now they probably understand this issue better than anybody else does. They’ve started to kind of come together on a view of the world.”

The group’s final recommendations are expected this summer, with the National Commission’s report to follow next February.

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