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GAO-04-169R 1 (2003-10-14)

handle is hein.gao/gaobaamio0001 and id is 1 raw text is: I AGA ~G A 0 Acco untability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 14, 2003 The Honorable John Warner Chairman The Honorable Carl Levin Ranking Member Committee on Armed Services United States Senate Subject: Military Aircraft: Observations on DOD's Aerial Refueling Aircraft Acquisition Options During the Senate Armed Services Committee's September 4, 2003 hearing on the Department of Defense's (DOD) proposed lease of 100 Boeing KC-767A aerial refueling aircraft, you expressed concern about a significant bow-wave funding requirement in future years to pay for leasing and then buying these 100 aircraft at the end of their leases, while continuing efforts to modernize the remainder of the tanker fleet. Subsequently, you requested that DOD analyze the option of leasing 25 aircraft, followed by a procurement of the remaining 75 aircraft. The Deputy Secretary of Defense responded to your request on September 22, 2003, identifying several alternative acquisition strategies, with associated cost and savings estimates. On September 25, 2003, you asked that GAO review the DOD response and assess the validity of the department's assumptions and the accuracy of the cost and savings estimates, and identify any other alternative acquisition strategies that the Committee should consider. This letter responds to your request. DOD's response compared the six acquisition options offered by the Deputy Secretary to acquire 100 KC-767A aircraft: (1) leasing all 100 aircraft as outlined in the Air Force plan reported to the Congress in July 2003; (2) purchasing all 100 aircraft at the time of order under the same multiyear conditions as the lease; (3) leasing the first 25 aircraft and purchasing the remaining 75 when the order is placed; (4) leasing the first 25 aircraft and purchasing the remaining 75 when the aircraft are delivered; (5) leasing 25 aircraft, followed by a traditional multiyear procurement of 75 aircraft under a separate contract, and (6) leasing all GAO-04-169R Military Aircraft Page 1

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