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C-5 may be doomed by upgrade’s overruns

The embattled C-5 Galaxy modernization program is about to take a body blow that casts new doubts on the plane’s long-term future in the Air Force.

Defense Secretary Robert Gates is expected, before the end of the month, to announce that cost overruns on a Lockheed Martin contract to re-engine the giant cargo plane now exceed 15 percent.

The finding could set the stage for elimination of the multibillion-dollar program and focus renewed attention on the purchase of more C-17s, a smaller airlifter that can carry much the same cargo as the Galaxy but is younger, capable of tactical missions and less prone to breakdowns.

Two retired senior Air Force leaders, both speaking on condition of anonymity, confirmed that the program has tripped cost-overrun limits set in the so-called Nunn-McCurdy provision, a procurement oversight law that requires the Pentagon to notify Congress when cost increases on a major acquisition program exceed 15 percent or when schedule delays reach six months. If the cost overruns hit 25 percent, the Pentagon must justify continuing the program based on three main criteria: its importance to U.S. national security; the lack of a viable alternative; and evidence that the problems that led to the cost growth are under control.

One of the sources said Gates is expected to make the announcement Sept. 28, though a Pentagon spokeswoman said she had no information on that.

The Air Force now estimates the re-engining work will cost up to $120 million per plane, including for the older A models, according to two well-placed sources, including one of the retired senior Air Force leaders. Lockheed Martin is contracted to do the work for about $83 million per plane. So the cost overrun could exceed 40 percent, by Air Force estimates.

But Lockheed Martin, in a Sept. 20 statement, said that the Air Force has not advised the company of a Nunn-McCurdy breach and that modernizing the Galaxy fleet “remains a fiscally sound solution for meeting the nation’s strategic airlift requirements.”

“Lockheed Martin has submitted a firm-fixed price offer to modernize the remaining C-5 aircraft in the Air Force fleet at a per unit average price of $83 million — a price below Nunn-McCurdy thresholds,” said Jim Grant, vice president of Aero Business Development, Air Mobility and Special Operations Forces for Lockheed. “We have confidence in our cost estimates but are currently working with the Air Force to further refine those estimates.”

It is unclear why the discrepancy between the two estimates is so large.

Meanwhile, Sen. Claire McCaskill, D-Mo., introduced a bill Sept. 20 calling for an independent analysis of airlift requirements, a study that is expected to help Congress and the Air Force decide whether to stick with the C-5 modernization program, buy more C-17s or do a little of both.

“Right now, we still do not have sufficient data to thoroughly understand cost and capability differences as we look at various approaches to providing strategic airlift to our military,” McCaskill said in a statement. “Reports of major cost growth paired with discouraging news about performance shows the need to be prudent as we make decisions about how to meet future airlift needs, even as we seek out more data.”

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