This document is a thesis submitted to the Pennsylvania State University examining the potential benefits of adopting a commercial off-the-shelf (COTS) technology approach to USAF aircraft procurement. It argues that current procurement programs are unsustainable due to excessive costs, technical requirements, and delays. The aging fleet is also driving up operations and maintenance costs. The document reviews past problematic programs and proposes that adopting readily available commercial airframes could provide more cost-effective and adaptable solutions for global strike, air mobility, and intelligence missions while keeping pace with evolving technology and objectives. Case studies of current commercial derivatives demonstrate the potential of this approach.

1. The Pennsylvania State University
World Campus
Smeal College of Business
Department of Supply Chain and Information Systems
USAF AIRCRAFT PROCUREMENT BASED ON
CONSUMER OFF-THE-SHELF TECHNOLOGY
A Thesis in
Supply Chain Management
by
Mark Lepczyk
Submitted in Partial Fulfillment
Of the Requirements
For the Degree of
Master of Supply Chain Management

2. Table of Contents
THESIS STATEMENT........................................................................................................ 1
INTRODUCTION................................................................................................................ 2
1.THE FLEET...................................................................................................................... 3
AGE..............................................................................................................................................4
AGE DRIVES COST ....................................................................................................................6
INADEQUATE PROCUREMENT...............................................................................................9
2. ANALYSIS OF PAST PROCUREMENT PROGRAMS................................................ 10
F-22A RAPTOR..........................................................................................................................11
F-35 LIGHTNING ......................................................................................................................13
C-17 GLOBEMASTER...............................................................................................................15
RQ-4 A/B GLOBAL HAWK.......................................................................................................17
3. FIXED-PRICE VS COST-PLUS CONTRACTS............................................................ 18
4. MILITARY MARKET LIFE ......................................................................................... 20
5. PARADIGM SHIFT....................................................................................................... 21
6. BENEFITS OF COTS .................................................................................................... 22
SIGNIFICANT DECREASE IN TOTAL ACQUISITION COSTS:............................................22
INCREASE MILITARY CAPABILITY:....................................................................................23
7. CURRENT MARKET EXAMPLES .............................................................................. 26
ISRAELI AEROSPACE INDUSTRIES EL/W-2068 CAEW/ELI-3001 AISIS ............................27
LIGHT UTILITY HELICOPTER (LUH) – UH-72A LAKOTA .................................................28
MC-12W LIBERTY....................................................................................................................30
AIR TRACTOR AT-802U ..........................................................................................................30
TEXTRON AIRLAND SCORPION JET....................................................................................32
THE TAKEAWAY .....................................................................................................................33
8. UNMANNED AERIAL SYSTEMS (UAS): A FRESH START...................................... 34
9. CONCLUSION .............................................................................................................. 36
Bibliography........................................................................................................................ 38

3. FIGURES
Figure 1: “USAF Force Posture Over Six Decades” Source: (Ruehrmund, 2010).......................................3
Figure 2: “Air Force Outlays for Procurement, Operations and Maintenance, and Research, Development
Test and Evaluation FY48-FY10 Constant Dollars (Millions)” Source: (Office of the Under Secretary of
Defense (Comptroller), 2012))......................................................................................................................4
Figure 3: “Average Age of U.S. Commercial Aircraft: 1995-2006” Source: (United States Department of
Transportation, 2008)....................................................................................................................................5
Figure 4: “USAF O&M Outlays and TAI (Not including ICBM) FY50-FY09” Sources: (Office of the
Under Secretary of Defense (Comptroller), 2012) (Ruerhmund, 2010))......................................................6
Figure 5: “Increasing Factors Considered in AFCAIG and OSD CAIG CPFH Models” Source: (Miller,
2012).............................................................................................................................................................7
Figure 6: “MDS Ownership Cost Per Hour With Modifications” Source: (Thompson, 2013) ....................8
Figure 7: “Aircraft Availability” Source: (Tirpak, 2009) .............................................................................9
Figure 8: “F-22 Raptor” Source: USAF/TSgt Ben Bloker..........................................................................11
Figure 9: “F-35C In-Flight Refuel” Source: Lockheed Martin/Michael D. Jackson..................................13
Figure 10: “C-17 Globemaster” Source: Boeing Photo..............................................................................15
Figure 11: “RQ-4 A/B Global Hawk” Source: USAF/Tech Sgt. Johnny Saldivar.....................................17
Figure 12: “Contract Risk” Source: (AFMC Contracting, 2007) ...............................................................19
Figure 13: “Supper Guppy” Source: NASA ...............................................................................................25
Figure 14: “Dreamlifter” Source: Boeing ...................................................................................................25
Figure 15: “EL/W 2068” Source: Flightglobal.com ...................................................................................27
Figure 16: “ELI-3001 AISIS” Source: Flightglobal.com ...........................................................................28
Figure 17: “UH-72A Lakota” Source: Airbus ............................................................................................29
Figure 18: “MC-12W” Source: Defense Industry Daily.............................................................................30
Figure 19: “AT-802U” Source: Air Tractor................................................................................................31
Figure 20: “Scorpion Jet” Source: Textron Airland....................................................................................32
Figure 21: “Inventory of DoD UAS” Source: (Department of Defense, 2013)..........................................34

4. 1
THESIS STATEMENT
USAF aircraft procurement programs, notorious for their excessive costs, exaggerated
technical requirements, and delayed contract fulfillment, are no longer sustainable due to federal
fiscal constraints as well as a lack of operational justification. The mentality that only aircraft
developed exclusively for the military provide the capabilities necessary to meet strategic
military objectives must be abandoned. The Department of Defense must comprehensively
overhaul its procurement process, looking to readily available commercial airframes to supply its
operational aircraft inventory. Utilizing commercial off-the-shelf (COTS) technology can
provide efficient, innovative, flexible, adaptable, and cost-effective airframes that will deliver
global strike, air mobility, and Intelligence Surveillance Reconnaissance (ISR) solutions to the
Department of Defense and keep pace with technology and military objectives as they continue
to evolve and develop.

5. 2
INTRODUCTION
The effectiveness of the United States Air Force (USAF) in modern war is rarely contested.
The organization can proudly boast that since 1953, no United States ground forces have been
killed by an enemy air strike (Greer D. , 2011). For the Air Force, this record translates into
clear-cut proof that air superiority has been gained and maintained throughout every conflict the
country has participated in since the end of the Korean War: “It is an accomplishment officials
have long believed speaks to the superiority of the American approach to airpower-and the need
to pay the price in money and effort to maintain that superiority” (Greer D. , 2011).
Unfortunately, we find ourselves in a period where national fiscal constraints impede our
ability to continue procuring mass quantities of cutting-edge aircraft, particularly when the cost
of such aircraft is increasing at an alarming rate to astronomical levels. Continuing to base our
nation’s air superiority on its conventional inventory is simply not financially or operationally
sustainable.
Aside from lack of available funds, the prevalence of our participation in unconventional
conflicts forces us to analyze the efficiency with which we employ our conventional arsenal. Due
to the length of unconventional conflicts paired with the complexity of our response and rapid
pace of technological growth, we need to create a more flexible and adaptable arsenal of aircraft
to meet both current and unforeseen future challenges – and do so cheaply and efficiently.
The intent of this paper is to introduce a fundamentally different way of employing airpower
through the application of supply chain management principals aimed at the procurement stage
of USAF aircraft acquisition.

6. 3
1. THE FLEET
As of September 30, 2012, the USAF holds a total of 5,551 aircraft in its total force
inventory. This figure accounts for the Total Active Inventory (TAI) of the Total Force, which
includes Active Duty, Reserves, and Air National Guard aircraft. The numbers depict an
emphasis on Fighter/Attack aircraft with 2,025 aircraft in the inventory. The rest of the fleet is
comprised of 162 bombers, 117 Special Operations Forces, 805 Transport, 507 Tankers, and 511
ISR/BM/C3 (to include Unmanned Aerial Systems), 1,213 Trainers, and 202 helicopters (Air
Force Association, 2013).
A visual representation of fleet composition over time helps put into perspective the physical
size of our current force. It is not, however, an indication of capability or effectiveness as
compared to a snapshot in the past (Figure below includes Intercontinental Ballistic Missile
(ICBM) inventory).
Figure 1: “USAF Force Posture Over Six Decades” Source: (Ruehrmund, 2010)
First glance at Figure 1 and the reader may assume the decreasing trend in inventory numbers
are likely associated with a similar trend in congressional budget outlays for procurement. As
Figure 2 depicts, that is not the case. Using constant dollar figures, we can view the “real”
fluctuations in Procurement, Research Development Test and Evaluation (RDT&E), and
Operations and Maintenance (O&M) outlays from FY48 through FY10.

7. 4
Figure 2: “Air Force Outlays for Procurement, Operations and Maintenance, and
Research, Development Test and Evaluation FY48-FY10 Constant Dollars (Millions)”
Source: (Office of the Under Secretary of Defense (Comptroller), 2012))
The shrinking USAF inventory is due largely to technological advancements and superior
aircraft designs that allow newer aircraft to replace several older aircraft. Even though the force
is “doing more with less” in terms of aircraft, the cost of those aircraft is rapidly increasing. The
increase in cost associated with procuring new aircraft has forced the USAF to increase the
longevity of aircraft currently in the arsenal; oftentimes well beyond their intended lifespan, in
lieu of the procurement of new aircraft. This has two notable effects on Figure 2: 1) high costs of
procurement relative to the number of aircraft entering the inventory 2) an increase for O&M and
RDT&E outlays relative to Procurement. Increases in Procurement outlays no longer correlate to
an increase in TAI, in fact TAI is at an all-time low. O&M outlays and RDT&E outlays are at an
all-time high even as the inventory is once again, at an all-time low. With fewer aircraft being
procured for the inventory, we are left with a fleet that is rapidly aging despite continuous and
costly efforts to upgrade and modernize.
AGE
The average age of our 5,551 Total Force Aircraft mentioned earlier is 24.4 years. The
most geriatric of which include the B-52H Stratofortress (50.8), KC-135R Stratotanker (50.9),
HC-130P King (46.0), and the T-38C Talon (45.2) (Air Force Association, 2013). An aging
fleet is disconcerting for two main reasons: 1) the obvious safety concerns of flying 50+ year
old aircraft 2) the increased cost associated with keeping those aircraft operating. The
problem of aging aircraft has fully revealed itself and yet there is still no plan to recapitalize a
majority of the fleet. In fact, the KC-46A (replacing the KC-135/KC-10) is the only planned
new aircraft procurement program through 2025. Furthermore, the troubled F-35 Joint Strike
Fighter is not expected to meet required force levels until 2035, additionally no strategic
0
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8. 5
airlifters or long range bombers will be built for at least 10 years (USAF Safety Advisory
Board, 2011).
The B-2 Bomber is slated to retire in 2058 with a fleet average age of 64.2 years, the KC-
135R/T in 2045 at 84, the B-52 in 2040 at 79, KC-10 in 2042 at 57.7, F-15E in 2035 43.8, A-
10 in 2040 at 59.3, and the F-16 Blk42 in 2020 at 40 (USAF Safety Advisory Board, 2011). I
view all of these retirement goals as optimistic considering the lack of a truly viable plan to
recapitalize such a large portion of the fleet. Retirement of the KC-135 and KC-10 is
dependent on the success of the KC-46 delivery. This is also true for the retirement of the F-
15E/F-16/A-10 which is dependent on the F-35 being produced and delivered in sufficient
numbers to fill the void of the aircraft it is intended to replace.
The average aircraft age of USAF aircraft, 24.4 years, is not common for U.S. domestic
air operations. Commercial air carriers maintain fleet age averages well below that of the
USAF.
Average Age of U.S. Commercial Aircraft: 1995–2006 I
All commercial aircraft
Major
airlines
aircraft
Major airlines
share of
commercial
aircraft (%)
1995 12.4 11.3 76.1
1996 13.2 12.3 72.5
1997 13.5 12.4 78.7
1998 13.6 12.3 77.8
1999 12.9 11.8 78.5
2000 12.8 11.8 78.8
2001 12.3 11.6 82.9
2002 11.7 11.7 77.8
2003 11 11.7 72.9
2004 10.8 11.1 74.9
2005 11.3 11.3 81.5
2006 11.8 12.1 75
Figure 3: “Average Age of U.S. Commercial Aircraft: 1995-2006”
Source: (United States Department of Transportation, 2008)

9. 6
AGE DRIVES COST
Pushing military aircraft well beyond their designed life span makes them vulnerable to
structural and mechanical failures unanticipated in the aircraft’s development.
As the Air Force relies on sustaining and modernizing aging aircraft to constitute
the bulk of its fleet, it must confront the issue of how aging drives costs. There
are two distinct types of aging: chronological aging and cyclic aging or usage.
Chronological aging is driven by multiple temporal factors, such as: system
obsolescence, problems related to corrosion and environmental degradation at
the basing location, and wear. Cyclic aging is driven by the way in which the
aircraft is operated or used, such as: fatigue cycles, thermal and stress damage.
Both of these aging modes impact the rising O&M costs as the aircraft age.
(USAF Safety Advisory Board, 2011)
As a result of growing old, aircraft end up spending considerable more time in depot
maintenance, the aircraft availability rates suffer, and spare parts become increasingly
difficult to source due to decreasing Original Equipment Manufacturer (OEM) involvement.
Figure 4: “USAF O&M Outlays and TAI (Not including ICBM) FY50-FY09” Sources:
(Office of the Under Secretary of Defense (Comptroller), 2012) (Ruerhmund, 2010))
Figure 4 offers a visual depiction of how “O&M” costs do not follow the trend of “Total
Aircraft Inventory”. In fact they have predictably grown apart since the early 1960s
confirming increase cost associated with fewer aircraft.
0
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10. 7
Seeking a more tangible metric to gauge the efficiency of military aircraft, many look to
Cost per Flying Hour (CPFH). The Air Force Cost Analysis Improvement Group (AFCAIG)
and Office of Secretary of Defense Cost Analysis Group (OSD CAIG) utilize a CPFH, based
on predetermined variables, to predict costs associated with annual flight hour allotments
(Miller, 2010).
Figure 5: “Increasing Factors Considered in AFCAIG and OSD CAIG CPFH Models”
Source: (Miller, 2012)
Time Magazine published a list of Operational and Ownership CPFH, obtained via a
request to the Air Force Comptroller, from 2008-2012 for a majority of the aircraft in the
USAF inventory. It is important to note that there is not a linear correlation between hours
flown and cost per hour; the Air Force cannot simply fly less to reduce cost. This is due to a
multitude of variables, most prominent being that the more time an aircraft sits on the ground
the more rapidly mechanical and structural problems are likely to manifest themselves,
particularly because they are old aircraft (USAF Safety Advisory Board, 2011). Even if a
flying hour reduction did yield cost savings, it would be a moot point. Flying hour allocations
are determined based on an operational necessity driven by combat operations requirements
as well as aircrew readiness requirements. What CPFH does show is how much it costs to
provide a particular capability. Seeing that cost is real dollar figures forces a debate as to
whether or not that capability is consuming a disproportionate amount of resources compared
to others and if there is a way to reduce overall costs without creating an ineffective force.

11. 8
MDS 2008 2009 2010 2011 2012
A-10C $10,710 $21,141 $22,602 $20,132 $17,716
AC-
130U $54,279 $51,271 $53,376 $46,072 $45,986
B-1B $63,551 $68,239 $70,696 $71,026 $57,807
B-2B $161,244 $200,939 $180,708 $139,098 $169,313
B-52-
H $67,866 $67,750 $78,376 $62,041 $69,708
C-130J $15,864 $16,477 $12,543 $13,468 $14,014
C-17A $23,817 $22,777 $22,161 $22,743 $23,811
C-5B $56,267 $52,222 $62,221 $74,459 $78,817
F-15E $33,966 $31,595 $32,700 $30,641 $36,343
F-16C $21,201 $23,138 $22,407 $21,639 $22,514
F-22A $64,163 $73,792 $67,524 $138,749 $68,362
KC-
135R $17,928 $18,826 $19,609 $16,687 $19,193
U-2S $31,017 $31,640 $29,185 $29,879 $30,813
Figure 6: “MDS Ownership Cost Per Hour With Modifications” Source: (Thompson, 2013)
High costs are not the only consequence to operating an aging fleet. The availability of
that aircraft to be used for its intended purpose suffers significantly. An Aircraft Availability
rate is the “percentage of a fleet not in Depot possessed status or NMC [Non Mission
Capable] aircraft (that are unit possessed)” (Burke, 2007). Those high costs per flying hour
are indicative of frequent, expensive, and laborious maintenance procedures, which can only
be done when an aircraft is confined to a maintenance facility. Aircraft sitting idle while
undergoing maintenance results in the low aircraft availability rates that are evident across the
fleet.

12. 9
Figure 7: “Aircraft Availability” Source: (Tirpak, 2009)
The decreased availability of each aircraft is further evident in the amount of flying per
individual airframe. In 2012 the Active Duty USAF held 3,934 aircraft (Air Force
Association, 2012) and flew 845,001 hours via normal appropriations (Department of the Air
Force, 2013) and 257,862 via Overseas Contingency Operations appropriations (Department
of the Air Force, 2013) for a total of 1,102,863 hours. Comparatively, in 2012, American
Airlines held only 597 aircraft in its fleet and yet managed to fly 1,841,536 hours
(Technology, 2013).
INADEQUATE PROCUREMENT
The overall decrease in the size of the aircraft inventory, increase in average age, increase
in Operations and Maintenance costs, and decrease in Aircraft Availability rates is clear. It is
left to conclude that in order to maintain current capabilities and ensure future capabilities, the
fleet must be recapitalized. But when reviewing the FY 2013 Programs Acquisition numbers,
we are further reminded that aircraft procurement has slowed to a trickle and is unlikely to
change unless the financial situation of our country drastically changes in the near future.

13. 10
DoD–wide for FY 2013, a total of $178.8 billion (including Overseas Contingency
Operations funding) was requested for Major Weapons System modernization. This total
includes $109.1 billion for Procurement and $69.7 billion for RDT&E. $47.6 billion of that
money, down from $54.2 billion in FY 2012, is allocated for Aircraft modernization for the
Army, Air Force, Navy, and Marines. For the USAF this translates into $885.4 million for
twenty-four MQ-1/MQ-9 drones, seven C-130Js, nineteen F-35, and four V-22 Osprey. The
rest of the money will either procure new aircraft for the other branches or be used to
modernize, test, or missionize aircraft already in the inventory (Office of the Under Secretary
of Defense (Comptroller)/Chief Financial Officer, 2012).
The DoD is constantly battling for their share of funding within the U.S. government as a
whole and each branch of service competes within the DoD for their share of that money.
Congressional funding is always subject to the priorities and dedication of the standing
administration as well as the overall health of the US economy. That being considered, it is
unlikely that the problems facing the health of the USAF fleet will change based on the
current actions being taken to recapitalize the fleet.
2. ANALYSIS OF PAST PROCUREMENT PROGRAMS
Analyzing past procurement efforts is beneficial because it highlights the negative trends
inherent in past pursuits to procure military aircraft. Four programs in particular offer valuable
insight: the F-22 Raptor, F-35 Lightning II (Joint Strike Fighter), the C-17 Globemaster, and the
RQ-4 A/B Global Hawk. The F-22 is the world’s first and foremost fifth-generation fighter
aircraft intended to preserve and ensure air superiority for the U.S. well into the foreseeable
future. The F-35 was intended to complement the F-22 fleet as a more affordable, multi-role
aircraft with ground attack capabilities and Low-Observable (Stealthy) characteristics. The C-17
was built to be an outsize (oversized) cargo carrying, strategic airlifter, capable of operating at
reduced length, unpaved airfields. The RQ-4 Global Hawk is the largest, most advanced
unmanned system in the DoD inventory and was fielded to provide persistent long-range, high-
altitude ISR capabilities. All four are modern programs that share a few common themes: over
budget and behind timeline.

14. 11
F-22A RAPTOR
Figure 8: “F-22 Raptor” Source: USAF/TSgt Ben Bloker
The F-22 program, at the time coined “Advanced Tactical Fighter”, was initiated in the
early 1980s. Lockheed Martin made the first delivery in 2003 and Initial Operational
Capability was achieved in 2005. Full operational capabilities are scheduled to occur in 2017,
seven years later than originally planned. The initial order by the USAF was for a fleet of 750
aircraft. That number fell to 648 in 1991 and after several subsequent cuts, we find ourselves
at the conclusion of FY 2013 with the F-22 production line closed, having delivered only 187
operational aircraft (195 total) (Gertler, Congressional Research Service: Air Force F-22
Fighter Program, 2013).
Runaway costs made the program increasingly unpopular in the eyes of the public as well
as Congress. Determining the true unit cost of a Raptor can be difficult due to the myriad of
ways the cost can be calculated: Figures fluctuate between $137 million and $678 million
each based on what types of costs are included in the calculation (Axe, 2011). The variation in
cost is best explained in a 2013 Congressional Research Report:
As of December 31, 2010, the final Selected Acquisition Report for F-22
procurement, DOD estimated the total acquisition cost (meaning the sum of
research and development cost, procurement cost, and military construction
[MilCon] cost) of a 179-aircraft F-22 program at about $67.3 billion in then-year
dollars (meaning dollars across various years that are not adjusted for inflation).
This figure includes about $32.4 billion in research and development costs,
about $34.2 billion in procurement costs, and $676.6 million in MilCon costs.

15. 12
(Gertler, Congressional Research Service: Air Force F-22 Fighter Program,
2013)
As of December 31, 2010, the 179-aircraft F-22 program had a Program
Acquisition Unit Cost (or PAUC, which is the program’s total acquisition cost
divided by the total number of aircraft acquired [including non-production
aircraft]) of $369.5 million in then-year dollars, and an Average Unit
Procurement Cost (which is the program’s total procurement cost divided by 179
production aircraft) of $185.7 million in then-year dollars.” (Gertler,
Congressional Research Service: Air Force F-22 Fighter Program, 2013)
Those numbers can begin to approach the figure of $678 million, as cited above, when the
projected life-cycle costs per unit are introduced (Axe, 2011). Many suspect the manufacturer,
Lockheed Martin, of transferring cost into sustainment and modernization in an effort to
control developmental and production costs. There appears to be sufficient evidence to
support that claim. In the next few years, USAF will need more than $100 million in F-22
retrofits just to enable the aircraft to fly all 8,000 hours of its originally designed life span.
Additionally, there is already $11.7 billion (a figure that has more than doubled) outlined for
designed upgrade and modernization programs (Gertler, Congressional Research Service: Air
Force F-22 Fighter Program, 2013). In FY 2013 $283.8 million was requested for F-22A
modernization and an additional $285.8 million in FY 2014 through procurement
appropriations (Department of the Air Force, 2013). Another $140.1 million in FY 2013 and
$131.1 million in RDT&E funding has been outlined for the scheduled $3.2 billion upgrade
(Department of the Air Force, 2014).
There is no doubt that the F22 is a technological marvel, a true feat of engineering and a
tribute to the military might of our country. “Lockheed Martin Corporation's F-22 is the most
lethal fighter jet in the world. But it has also become a symbol of a broken procurement
process that's failing to deliver advanced weapons systems on time, on budget, and in
sufficient quantities” (Vartabedian, 2013). Pundits of the F-22 are quick to point out that the
aircraft has never seen combat despite over ten years of armed conflict in Operation Iraqi
Freedom, Operation Enduring Freedom, and Operation Odyssey Dawn. There is some merit
to their criticism. While it is important for the US to actively deter and prepare to respond to
potential future conventional threats, such efforts must be undertaken in a more balanced
manner with increased focus on the proper stewardship of available resources. We know how
much the aircraft has cost the government and the capabilities it provides us, but we are left
wondering how much value we gain for that cost and increased capability. “While it’s
undetectable in isolated flyaway, unit and lifecycle cost figures, value is inarguably important.
A cheap used car that never leaves the driveway is, in a real sense, more expensive than a car
you pay sticker price for and drive every day” (Axe, 2011).

16. 13
F-35 LIGHTNING
Figure 9: “F-35C In-Flight Refuel” Source: Lockheed Martin/Michael D. Jackson
The story of the F-35 reads similar to that of its bigger brother the F-22. The F-35
program is unique in the sense that three variants are being created in order to replace the
legacy aircraft of the US Air Force, US Navy, and US Marine Corps. The three models
include: the F-35A Conventional Takeoff and Landing (CTOL) for the Air Force, F-35B
Short Takeoff and Vertical Landing for the Marine Corps, and the F-35C Aircraft Carrier
Suitable Variant for the Navy. Additionally, there are eight international partners (United
Kingdom, Italy, The Netherlands, Turkey, Canada, Australia, Denmark, and Norway)
participating in the cooperative acquisition program with two foreign military sales customers
lined up. The Air Force alone is scheduled to purchase 1,763 F-35A variants through 2037,
the Navy and Marine Corps plan on a total of 680 aircraft through 2032. Low Rate Initial
Production of 365 aircraft, for all customers, began in 2006 and is scheduled to terminate in
2018 (a three year slip from 2001 estimates). PAUC estimates have ballooned from $81.3
million in Oct 2001 to $133.1 million in Dec 2012, a ~50% increase (Defense Acquisition
Management Information Retrieval , 2012).
The program has been plagued with excessive delays and cost overruns due largely to
unforeseen challenges with developmental technology and changes in program scope.
Software integration, the heads up helmet mounted display system, and concerns over
premature fatigue in the engine have been of particular concern. A decision on Full Rate
Production is scheduled to be made in April 2019. Initial Operational Capability is now listed
at TBD for all three branches of service. Test and Evaluation is not scheduled to be complete

17. 14
until February 2019 after hundreds of the aircraft have already been built. Total Program
Total Acquisition Cost currently sits at $391.2 billion (Defense Acquisition Management
Information Retrieval , 2012). At this stage, attempting to predict life-cycle costs is difficult
although few are optimistic that they will be manageable. An article originally published by
Foreign Policy offers a bleak outlook:
The current appraisal for operations and support is $1.1 trillion—making for a
grand total of $1.5 trillion [assuming a 2011 estimate of $395 million per
aircraft], or more than the annual GDP of Spain. And that estimate is wildly
optimistic: It assumes the F-35 will only be 42% more expensive to operate than
an F-16, but the F-35 is much more complex. The only other "fifth generation"
aircraft, the F-22 from the same manufacturer, is in some respects less complex
than the F-35, but in 2010, it cost 300% more to operate per hour than the F-16.
To be very conservative, expect the F-35 to be twice the operating and support
cost of the F-16. (Wheeler, 2012)
The future of F-35 is uncertain due to decreasing confidence domestically as well as
among international partners, combined with austere defense budgets worldwide. The
consequence of a severely decreased production run on the F-35 will have far reaching
consequences. The U.S. military currently has all of its eggs in the F-35 basket and is
depending on the program to recapitalize the bulk of the aging fighter/attack fleet discussed
earlier.

18. 15
C-17 GLOBEMASTER
Figure 10: “C-17 Globemaster” Source: Boeing Photo
The purpose of introducing the C-17 Globemaster, the Air Force’s premier air mobility
platform, is to demonstrate that current military aircraft procurement problems are not isolated
to future-generation type fighter-aircraft. Furthermore, a direct comparison can be made to a
comparable commercial freightliner in the civilian sector: the Boeing 777. Author A. Lee
Battershell performed a thorough comparison on the matter in his book, DOD C-17 versus
Boeing 777: A Comparison of Acquisition and Development, where he answers the question:
Why did it take the DOD 24 years to build the C-17 yet took Boeing only 9 to build the 777?
While Battershell identifies a myriad of contributing factors, stand-outs include: constant
changes in project scope, unrealistic project costs leading to reduced production rates, and the
lack of a compelling argument for why the USAF needed the C-17 to begin with. In 1989 the
military was calling for 210 aircraft to be produced. That number was temporarily slashed to
120 in the early 90s due to runaway costs. “DOD’s original plan was to buy 210 aircraft for a
total cost of $41.8 billion. In December 1992, total program costs for 120 aircraft were
estimated to be $39.5 billion at a maximum production rate of 16 aircraft per year”
(GAO/NSIAD-95-26, 1995). Subsequently, McDonnell Douglas reduced that number further
to 40 in the mid 90s in reaction to unsatisfactory performance.
Mounting cost, schedule, and performance problems continue to plague the C-
17 aircraft program. Total C-17 program costs are soaring; the current $43
billion estimate for 120 aircraft now exceeds the last Pentagon estimate for 210

19. 16
aircraft by $1.3 billion. Delivery schedules have again slipped and aircraft are
being delivered with increasing amounts of unfinished work or known defects
that must be fixed after government acceptance. (GAO/T-NSIAD-94-115, 1994)
The cause for the reduction was furthered by a lack of substantiated need for the aircraft.
A 1995 GAO report explains:
Serious concerns about the C-17's cost-effectiveness have prompted Congress
to direct DOD to explore alternatives to the full C-17 program. The COEA [cost
and operational effectiveness analysis] identified less costly alternatives that
could meet airlift requirements and save billions of dollars. In addition, the C-
17's program cost continues to increase. Therefore, the savings associated with
a mixed fleet of C-17s and commercial freighters could be significantly greater
than the COEA reported. (GAO/NSIAD-95-26, 1995)
Ultimately, the Air Force bought more than the originally proposed 210 aircraft and
purchased zero commercial freightliners. On September 12, 2013, the USAF received its 223rd
and final C-17, delivered to Joint Base Charleston, S.C. (Joint Base Charleston Public Affairs,
2013). The alternatives proposed to the Globemaster included extending the life of existing C-
141s, ordering additional C-5s, and adding Boeing 747s to complement the fleet (Greer W. L.,
2010). The Air Force succeeded in procuring the C-17 when it added additional requirements
that included delivering outsize cargo to forward deployed locations involving short, semi
prepared surfaces. The aircraft boasts the ability to land outsized cargo on semi-prepared
surfaces measuring 3,000ft x 90ft. There is strong evidence to cause the belief that this
advertisement is suspiciously optimistic, particularly when considering the operational
limitations of repeatedly landing an aircraft weighing up to 447,000 pounds on a semi-
prepared surface. “The yet-to-be-resolved issues include the ability of SPRs [Semi-Prepared
Runways] to support the weight of the C-17, the inaccuracy of takeoff and landing data, and
the inability to predict the ability of targeted SPRs to support intended operations” (Hansen,
2002). The concerns were validated on March 26, 2003, when the USAF lifted the 173rd
Airborne Brigade into Bashur Airfield, Iraq. Bashur is a 6,700-foot, asphalt runway. “Some of
the C-17s carried huge M1-A Abrams tanks, and weighed from 250,000 to 300,000 pounds
when they landed. The runway, made of asphalt reinforced with more asphalt, took a
pounding. The areas where the aircraft touched down began to crack and crumble. The heavy
transports ground the runway's asphalt into dust” (GlobalSecurity, 2011).
The merits and accuracy of the cost benefit analysis conducted by the DoD in order to
justify procurement of the C-17 can be heavily debated. The bottom line is the USAF pursued
the development and large-scale production of an aircraft to meet specific niche capabilities,
and its ability to execute those capabilities to the extent advertised can be questioned. The C-

20. 17
17 is a very capable aircraft and has, by many standards, performed well in Operation
Enduring Freedom and Operation Iraqi Freedom (OEF/OIF). But, it is important to question
whether or not similar capability and performance could have been achieved without 24 years
of toil and $69.6 billion spent (TY) (Department of Defense, 2009).
RQ-4 A/B GLOBAL HAWK
Figure 11: “RQ-4 A/B Global Hawk” Source: USAF/Tech Sgt. Johnny Saldivar
The RQ-4 Global Hawk, built by Northrop Grumman, is the DoD’s largest, most
advanced Unmanned Aerial System (UAS). The Global Hawks wingspan, at 116 feet, is
nearly twice that of the second largest UAS, the MQ-9 Reaper. With a top speed of 400 mph
and range of over 1,300 miles, the Global Hawk was created to replace aging legacy manned
ISR platforms, and being free from the restrictions of human physiological needs, allow for
substantially extended loiter times. In 2000, the Global Hawk successfully flew for more than
31.5 hours at a mean altitude of 65,100 feet (National Museum of the US Air Force, 2011).
Acquisition of the Global Hawk and subsequent operational effectiveness of the vehicle
has been a disaster. Slated in 2000 for a production run of 63, that number has been slashed to
an estimated 45 platforms. PAUC has ballooned from $85.6 million (TY) in 2001 to $200.2
million (TY) in December 2012 (Defense Acquisition Management Information Retrieval,
2012). As of July 1, 2013, thirty-five Global Hawks were in the DoD inventory (Department
of Defense, 2013) with an additional six funded in FY 2013, two funded in FY 2014 and zero
funded for FY 2015 (Office of the Under Secretary of Defense (Comptroller), 2014).

21. 18
The program twice breached Nunn-McCurdy thresholds (congressional measures to
control acquisition programs) for program cost, once in 2005 and again in 2011. The USAF
removed all Block 10 aircraft from service in 2011. The service attempted to fit the Block 20
aircraft with a Battlefield Airborne Communications Node (BACN) to provide intra-theater
communication relays. However, the two retrofitted vehicles were unable to fulfill the
“around-the-clock” tasking due to poor reliability and availability, therefore funding for
additional modified aircraft was pursued. From October 2010 through July 2011, the Air
Force conducted Block 30 Initial Operational Testing and Evaluation and concluded the
system was not operationally effective for near-continuous ISR; the very role it was designed
to accomplish (The Office of the Director, Operational Test and Evaluation, 2011). In 2013
the President’s Budget completely divested RQ-4 Block 30s (Defense Acquisition
Management Information Retrieval, 2012).
Production, testing, and operation of Block 40 aircraft continues as the DoD attempts to
resolve airframe and sensor package issues. Despite operational ability as well as cost
effectiveness remaining a concern, DoD has restored funding to 21 Block 30 aircraft and
associated modernization efforts, with $762.7 million allocated in FY 2014 (Office of the
Under Secretary of Defense (Comptroller), 2014).
3. FIXED-PRICE VS COST-PLUS CONTRACTS
Government contracting can be split up into two broad categories, Fixed-Price and Cost-Plus
Contracts (Cost Reimbursement):
Fixed Price: “…provide for a firm price or, in appropriate cases, an adjustable
price. Fixed-price contracts providing for an adjustable price may include a
ceiling price, a target price (including target cost), or both. Unless otherwise
specified in the contract, the ceiling price or target price is subject to adjustment
only by operation of contract clauses providing for equitable adjustment or other
revision of the contract price under stated circumstances.” (Governement
Services Agency, 2014)
Cost-Plus (Cost-reimbursement): “…provide for payment of allowable
incurred costs, to the extent prescribed in the contract. These contracts establish
an estimate of total cost for the purpose of obligating funds and establishing a
ceiling that the contractor may not exceed (except at its own risk) without the
approval of the contracting officer.” (Governement Services Agency, 2014)

22. 19
Figure 12: “Contract Risk” Source: (AFMC Contracting, 2007)
Cost-Plus contracts are typically prevalent in the contracting of major developmental
weapons systems because of the projected risk incurred by the bidding contractor. Most common
are Cost-Plus Award-Fee, Incentive Fee, and Fixed-Fee. These contracts, however, are becoming
increasingly controversial, as they are often perceived as causal to the runaway costs associated
with modern developmental programs. While many advocate a shift to Fixed-Price contracting in
order to provide contractors with an incentive to control costs, pundits argue that it is not
possible due to the inability to accurately predict cost (as illustrated in the previous section) as
well as a lack of provided incentive for companies to assume risk and accept contracts. “Michael
Sullivan, GAO’s [Government Accountability Office] director of acquisition and sourcing
management, argues that contractors would simply not bid on high-risk endeavors, such as R&D
projects, if they were operated under fixed-priced contract structures” (Sanders, 2008).
The original intent was for Cost-Plus contracts to carry a program through the developmental
stage until costs could become more predictable and therefore Fixed-Price contracts become
appropriate. However, major acquisition programs are increasingly undertaken with highly
unstable and immature developmental technology and vague, poorly defined requirements. This
leads to runaway Cost-Plus contracts and ultimately delayed delivery, increased total acquisition
costs, and underperforming equipment. In 2007 the GAO assessed a portfolio of 72 major
defense acquisition programs and found that developmental costs increased by 40% from first
estimates and total acquisition cost increased 26% from first estimates. Furthermore, the average
delay for delivering initial capabilities was 21 months (GAO, 2008).
Of the 72 weapon programs we assessed this year, no program had proceeded
through system development meeting the best practices standards for mature
technologies, stable design, and mature production processes-all prerequisites

23. 20
for achieving planned cost, schedule and performance outcomes. Eighty-eight
percent of the programs in this assessment began system development without
fully maturing critical technologies according to best practices. Ninety-six
percent of the programs had not met best practice standards for demonstrating
mature technologies and design stability before entering the more costly system
demonstration phase. Finally, no programs we assessed had all of their critical
manufacturing processes in statistical control when they entered production, and
most programs were not even collecting data to do so. (GAO, 2008)
Fixed-Price contracting can only be utilized when costs associated with the contract can be
estimated with a high degree of certainty. With Firm-Fixed Price contracts, the contractor
shoulders 100% of the risk associated with the contract. These contracts can be applied, “when
there is adequate competition, prior purchases of similar/same supplies or services, when
adequate cost or pricing data is available or the contractor is willing to accept a FFP contract, at a
level which represents assumption of a reasonable proportion of the risk” (AFMC Contracting,
2007). While many types of Fixed-Price contracts exist, such as Fixed-Price-Incentive,
Economic Price Adjustment, Award Fee, etc., the biggest takeaway is that if program risk is
controlled, the contractor has no incentive to inflate a proposal in order to reduce the probability
of incurring a loss, Fixed-Price contracts reduce risk to the government and would help improve
the overall health of the DoD procurement process. With a Fixed-Price contract, the contractors
have incentive to clarify requirements, set realistic expectations for technology involved, and
make an on time delivery.
4. MILITARY MARKET LIFE
As explained in previous sections, keeping an aircraft not only flying, but performing a
relevant purpose, is a very expensive and challenging task. The rapid rate at which a military
aircraft approaches obsolescence is attributable to two main factors: threat evolution and
Moore’s Law. When the DoD identifies a specific threat or perceived threat, our adversaries
invariably design and procure a counter-measure. The seemingly obvious flaw in this reactionary
procurement plan is that the delay we have documented between an idea to an operational
capability can often span the better part of three decades. In that time, many threats have come
and gone, changed, adapted, and manifested itself in ways we never thought possible. Just as in
business where all competitive advantage is temporary, the same holds true in the military. Our
potential foes will, predictably and continually, evolve in an effort to undermine our best efforts
to gain and hold a strategic and tactical military advantage.
The famous “Moore’s Law”, developed by Intel co-founder Gordon Moore, has gained
notoriety since he published a paper in 1965 predicting the near linear increase in integrated

24. 21
circuit efficiency, increasing by a factor of two every year (Moore, 1965). The article came to
represent, more broadly, the rate at which technology would continue to advance in the decades
to come. “Moore's Law is so perennially protean because its eponymous formulator never quite
gave it a precise formulation. Rather, using prose, graphs, and a cartoon Moore wove together a
collection of observations and insights in order to outline a cluster of trends that would change
the way we live and work” (Stokes, 2008). When Moore’s Law is applied to technology-
intensive programs such as an aircraft, one can clearly see the implied pitfalls of taking 20 plus
years to produce a technologically advanced weapons system that is in turn expected to maintain
relevance decades into the future.
Constant threat evolution combined with “Moore’s law” effectively accelerates the rate at
which a military aircraft approaches its operational obsolescence, thereby decreasing its military-
centric market life. If the rate at which a major weapons system such as the F-35 or F-22
becomes technologically or tactically irrelevant increases, then the government’s opportunity to
recoup its billions of dollars in capital outlay through deterrence or employment of the weapons
system, simultaneously decreases.
Author Charles Fine describes the rate of evolution in terms of product life as “product
clockspeed”. While a product such as a major motion picture might represent the fastest-
clockspeed end of the spectrum, due to the fact that its “half-lives” can be measured in hours, if
not days, commercial aircraft production has typically represented the slowest-clockspeed end of
the spectrum. Take for example the venerable 747; “Mega–profits still flow from the sales of its
747 jumbo jet 30 years after its launch. The 747s produced in the 1990’s rely on the same basic
design and the same manufacturing plan that rolled out the first of these aircraft almost three
decades ago” (Fine, 1998). Fine goes on to group military aircraft into the same clockspeed
category, but that is incorrect. Current military aircraft, with a high emphasis on integral,
developmental technology, built to counter a specific threat or achieve a specific operational
objective, have a product clockspeed much faster than that of a commercial product and
therefore require a different approach to procurement.
5. PARADIGM SHIFT
In order for the DoD to remedy its broken aircraft procurement process by way of a focus on
COTS airframes, a paradigm shift regarding the composition of the fleet must occur. In 2012,
The Economist distilled an article written by Admiral Jonathan Greenert, published in the
periodical Proceedings, which influenced, articulated, and summarized this key point well.
“Military procurement is too focused on building ever-costlier new ships and aircraft of complex
design, with built-in capabilities to meet specific threats. Instead of procurement being
“platform-centric”, he wants it to be “payload-centric”: highly adaptable platforms able to carry
weapons and sensors that can be added or removed, depending on the mission or on

25. 22
technological progress” (Trucks, not limos, 2012). The DoD needs to view aircraft as a delivery
vehicle for a particular operational capability. The requirements for that capability, defined in
terms of range, payload, speed, loiter ability, etc., should be assessed and subsequently paired
with a suitable COTS airframe able to fulfill the determined need. The DoD should focus its
developmental efforts on creating modular, open-systems architecture, and therefore
interoperable and upgradeable components and mission systems (radar, sensors, munitions, etc.)
that enable a COTS airframe with militaristic function. As documented in the previous section, a
COTS airframe may have market-life of 30 years or more. This is because that airframe’s life
cycle is dictated by its ability to effectively and efficiently deliver performance metrics such as
range, payload, speed, etc. When military technology is made an integral part of an airframe, it
artificially shortens its effective life-cycle, increasing the rate at which the entire system
approaches obsolescence and demands far greater capital investment to operate and maintain its
relevance.
There will be no shortage of opponents to this line of reasoning, touting a litany of
characteristics inherent in modern military aircraft that cannot be duplicated when utilizing
COTS airframes. Where a COTS airframe may fall short in aspects such as maneuverability or
stealth, it must compensate with the technological capabilities of its payload as well as in the
way we employ military airpower. This is because the advantages of a COTS-dominated
procurement strategy are too pronounced and advantageous as a solution for sustained and cost
effective military procurement. Developing stealthy, or low-observable weapons systems is not
only outlandishly expensive, but it forces significant concessions in the realm of an aircraft’s
size, payload, range, etc. in exchange for a lower radar signature, simultaneously incurring high
life-cycle costs and once again hinging the relevance of that platform on our enemy’s inevitable
ability to procure counter-stealth defenses. Instead of depending on the perpetual advantage of
stealth technology to penetrate enemy air defenses, “It may be better ‘to play a different game’,
relying more on precision strikes from afar, perhaps using hybrid transport-bombers carrying
cruise missiles or swarms of drones” (Trucks, not limos, 2012).
6. BENEFITS OF COTS
Utilization of consumer off-the-shelf technology (COTS) to source military airframes is the
best course of action as it provides the following benefits.
SIGNIFICANT DECREASE IN TOTAL ACQUISITION COSTS:
- Enable Fixed-Price Contracting. A shift to COTS technology would allow for
increased competition in contract bidding due to higher prevalence of desired products and
potential suppliers in the marketplace. When the government shops for a venerable and

26. 23
versatile platform versus a complete weapons system, options are plentiful. Removal of cost
uncertainty from the proposed program would enable Fixed-Firm Price contracts to become
the overwhelming norm, furthering cost savings and providing incentive for stable and
predictable production timelines.
- Eliminate requirement creep. By buying readily available airframes, and therefore
working with a drastically shorter timetable from order to delivery, opportunity for
requirement creep, particularly that occurring as the result of changes in strategic leadership
(Presidential Administrations), would be largely eliminated. As highlighted in the
development of the C-17 and F-35, late requirement adds or reworks can exacerbate cost
structures and development/delivery timelines. In the assessment of 72 major programs in
2007, cited previously, “Unsettled requirements in acquisition programs can create significant
turbulence. Sixty-three percent of the programs we received data from had requirement
changes after system development began. These programs encountered cost increases of 72%,
while costs grew by 11% among those programs that did not change requirements” (GAO,
2008).
- Allow sourcing from aircraft in commercial production. By purchasing large-scale,
commercially available aircraft, the DoD would reap the benefits of low initial purchase price
attributable to increased economies of scale. Developmental cost and risk would shift to the
manufacturer, essentially allowing the DoD to exit the airplane-building business and focus
on airplane procurement, complete with sound, responsible, multi-bid contracts. The DoD
would be able to structure long-term purchase and delivery plans and benefit from the
potential for bulk order discounts from manufacturers.
- Decrease life-cycle costs. Once again benefiting from competition and economies of
scale, life-cycle costs would predictably decrease due to the increased availability of spare
parts and maintenance solutions ranging from routine aircraft servicing to depot-level
maintenance. The DoD would depend less on unique, proprietary parts manufactured and
stockpiled in quantities estimated to sustain a fleet (which the DoD is the sole owner of)
throughout its predicted life span. Instead, they would be able to competitively source parts
from a much larger market, where parts are produced in quantities to sustain a much larger
fleet.
- Enable fleet recapitalization. Instead of waiting for the next major developmental
aircraft to revive and replenish an aging fleet, long term strategic recapitalization plans would
allow the preservation of a fleet-age similar to that of a major commercial airline, furthering
the reduction in overall life-cycle costs that typically escalate relative to an aircraft’s age.
INCREASE MILITARY CAPABILITY:
- Flexible platforms capable of filling multiple roles and purposes. The DoD has
struggled to procure a balanced force to meet the prospect of a conventional conflict (mass air

27. 24
war with similarly advanced opponent) along with the demands and requirements of the more
prevalent non-conventional conflict (Counter-Terrorism/Counter-Insurgency). This has been
highlighted throughout the lengthy campaigns in Afghanistan and Iraq, where conventional
platforms such as the B-52 or B-1 bombers have flexed to fill missions such as Close Air
Support or Armed Overwatch; missions they were not specifically designed to execute. While
both airframes have been effective in their new found roles, that doesn’t mean they are the
most effective or efficient option to complete the desired task. A Humvee can effectively
fulfill the role of a family’s grocery-getter, but many would view this as impractical,
inefficient, and over-kill. This too is true of using the already aging legacy airframes in our
arsenal to perform the non-traditional mission sets in unconventional conflicts. A fleet
structured to meet both conventional and unconventional threats, based on common platforms
and payload-centric capabilities, would lead to a leaner, more cost effective fighting force
prepared to meet any challenge that may arise in the near or distant future.
- Adaptable platforms capable of simple and cost effective upgrades or
modifications. Upgrading a highly integrated weapons system dominated by proprietary
technology such as an F-16 or F-22 can be a formidable and fiscally exhaustive task. A “plug
and play”, payload-centric approach would simplify weapons systems upgrades by enabling
expeditious and efficient upgrades to modular mission systems. A less invasive and more cost
effective approach to upgrading a system’s capability will enable the force to keep pace with
technological advancements as well as relevant threats, producing a more lethal, effective
fighting force.
Furthermore, for specialty mission-sets that do have unique platform requirements, but
do not warrant or require an entire fleet with such capabilities, major airframe modifications
can be undertaken to accommodate those requirements and still be substantially cheaper than
a developmental aircraft. Relating back to the case of the C-17, there was the desire for
limited outsize cargo-carrying capability to support a potential contingency requiring the
transport of out-sized Army equipment to remote unimproved runways. This drove the design
requirement for the entire C-17 program, as well as formulating the justification for its
purchase. It would be more prudent to identify a number of aircraft necessary to meet a
particular requirement and subsequently modifying them to fulfill that niche capability. Much
like when NASA identified a requirement to move outsized (oversized) components across
the country for its operations, they procured the “Supper Guppy”, originally a “stock” Boeing
aircraft, it was heavily modified to carry the outsized cargo in the capacity NASA deemed
necessary (NASA, 2013).

28. 25
Figure 13: “Supper Guppy” Source: NASA
Boeing pursued a similar course of action in order to facilitate the transport of its own
outsized cargo supporting the assembly of the 787 Dreamliner. The heavily modified 747-
400, dubbed the “Dreamlifter” can “haul more cargo by volume than any airplane in the
world” (Boeing, n.d.).
Figure 14: “Dreamlifter” Source: Boeing
- Rapid procurement to enable a scalable force. Crucial to allowing a force to
maintain its warfighting potential through fluctuating periods of fiscal strength as well as
periods of war and relative peace, is the introduction of scalability into a force. The ability to

29. 26
rapidly procure or divest COTS airframes empowers the DoD to scale the force appropriately
based on the needs of the nation, while preserving the force into a state of constant readiness.
The DoD will be able to respond appropriately to demand fluctuations for different
capabilities as military conflicts begin and end, or circumstances and priorities change and
evolve. Currently, due to lengthy lead times for aircraft that provide any particular role, the
DoD must hold that aircraft in its inventory to ensure availability should demand for the
aircraft’s role arise. As we have documented, maintaining military aircraft in the DoD’s
inventory is astronomically expensive because whether or not they are being used for their
intended purpose, they must be flown, maintained, and supported nonetheless. If the DoD
adopted COTS, it could postpone differentiation of aircraft until the latest possible moment in
order to provide a force scaled to meet relevant demands. Should demands change
significantly at any point in time, due to their modular nature, aircraft can be quickly
converted to fulfill different roles; the basic airframe composition of the fleet remains the
same, yet its capability greatly altered.
- Simplified personnel/training/infrastructure costs. Reducing the number of different
airframe types in the fleet (since one airframe can fulfill multiple mission sets) allows the
DoD to mimic the business model that has driven the success of Southwest Airlines. In an
interview with Slate, Southwest V.P. of Ground Operations, Chris Wahlenmaier, summarized
the benefits of the airline’s all Boeing 737 fleet: “We only need to train our mechanics on one
type of airplane. We only need extra parts inventory for that one type of airplane. If we have
to swap a plane out at the last minute for maintenance, the fleet is totally interchangeable—all
our on-board crews and ground crews are already familiar with it. And there are no challenges
in how and where we can park our planes on the ground, since they’re all the same shape and
size” (Stevenson, 2012). The DoD, similarly, would be able to reduce and consolidate
maintenance, training, and operations to accommodate fewer types of airframes, as well as
benefit from the pre-existing knowledge base that supports similar aircraft types in
commercial fleets. Everything from spare-parts management to aircrew and maintenance
technician training would be simplified and streamlined as a result. Furthermore, ground
facilities and support infrastructure would require less specialization, necessitating fewer
bases and maintenance support facilities.
7. CURRENT MARKET EXAMPLES
Several modern examples of COTS airframes modified for military use exist in the current
market. They have been acquired in lieu of developmental aircraft programs for many of the
reasons stated in this paper. These examples act as a proof of concept for the COTS acquisition
model and serve as a stepping stone for justifying the future acquisition and role expansion of
COTS airframes.

30. 27
ISRAELI AEROSPACE INDUSTRIES EL/W-2068 CAEW/ELI-3001 AISIS
Israeli Aerospace Industries’ subsidiary ELTA Systems LTD has unveiled two modified
Gulfstream 550 variants, the EL/W-2068 Conformal Airborne Early Warning and Control
(CAEW) and the ELI-3001 Airborne Integrated SIGINT (Signal Intelligence) System (ASIS).
Capitalizing on the long-range, high performance, and low operating cost of the Gulfstream
550, the EL/W 2068 features a conformal integrated sensor suite visible on the side of the
aircraft’s fuselage (IAI ELTA Systems Ltd., 2007).
Figure 15: “EL/W 2068” Source: Flightglobal.com
The aircraft’s mission systems allow rapid target acquisition and target information within
a full 350 degrees of the aircraft’s position. The aircraft has been fitted with a robust sensor
and communications package, as well as a missile approach warning system, chaff and flare
decoy dispensers, and directed infrared countermeasures to increase survivability. It has
retained its fully COTS, Honeywell Primus avionics package, as well as COTS Rolls-Royce
BR710C4-11 Turbofan engines. In addition to its modified fuselage to accommodate the low-
drag conformal sensor suite (sensors/antennas blended with and conformed to the aircraft
body), the aircraft has an increased zero-fuel weight to accommodate the added weight of its
mission systems, additional cabling, three (instead of one) power generators, and a liquid
cooling system to cool the added onboard electronics. Gulfstream was awarded the contract
initially in August of 2003 with the initial flight of the modified aircraft in May 2006.
Customers include the Israeli Air Force as well as the Singapore Air Force (airforce-
technology.com).
The ELI-3001 AISIS is based on the same Gulfstream 550 airframe, although modified to
fulfill a dissimilar role. Geared more towards intelligence collection, the ELI-3001 was

31. 28
designed to “cope with the challenges of the electronic signals in the modern theater” (Israel
Ministry of Defense). The primary tasks of this aircraft include long-range, high endurance
missions to search, intercept, locate, and analyze communication and radar transmissions as
well as provide real-time reporting of intelligence to field commanders and intelligence
organizations (Israel Ministry of Defense).
Figure 16: “ELI-3001 AISIS” Source: Flightglobal.com
LIGHT UTILITY HELICOPTER (LUH) – UH-72A LAKOTA
The UH-72A Lakota was initially approved for acquisition by the United States Army
and Army National Guard in 2006. It was acquired to perform “general support” functions
typically performed by the rapidly aging, more expensive to operate, UH-60 Blackhawk.
Specific tasks performed by the Lakota in permissive environments include Homeland
Security taskings, search and rescue, MEDEVAC, supporting counter drug operations,
general support, and reconnaissance and surveillance (Defense Acquisition Management
Information Retrieval, 2012). The helicopter is produced by American Eurocopter, with 325
airframes funded through 2014 and an additional 55 in 2015 and expected 45 in 2016 (Office
of the Under Secretary of Defense (Comptroller), 2014). Total Program Acquisition Cost
(PAUC) through 2014 is $1.8 billion ($TY) for 315 airframes. This equates to a unit cost of
$5.7 million at the 2012 Selected Acquisition Report down from $5.8 million forecasted in
June 2006 (Defense Acquisition Management Information Retrieval, 2012).

32. 29
Figure 17: “UH-72A Lakota” Source: Airbus
The UH-72A has been a rare success story in the realm of military aircraft procurement.
Airbus Group (parent of American Eurocopter) won the contract on June 30, 2006, and
officially delivered the first airframe to the army on December 11 of the same year. Airbus
proudly boasts: “Every aircraft on time, on cost: 290 and counting”, “Lowest cost to buy,
own, operate”, “Unbroken record of on-cost delivery”, “30-50% less expensive to fly than
Blackhawk”, “Greater than 90% availability”, “More than 150,000 flight hours in total”
(Airbus Group, 2014).
Beyond the realm of its procurement, the COTS model is proving successful by relieving
the burden of maintenance support and spare-parts management from the United States Army.
The Army and National Guard both employ a mix of Contractor Logistics Support (CLS). For
both organizations, spare parts and tools are managed and provided (with fill rates greater
than 90%) by American Eurocopter for the Guard and Helicopter Services International
(under contract by Airbus) for the Army. Additionally, the Army outsources labor performed
on the aircraft to its contractor, with a contractually obligated minimum rate of 80%
availability (Burke, 2010).
The Lakota remains one of the most outstanding examples of COTS acquisition to date.
The aircraft is starting its career in the Army as a utility workhorse, but will undoubtedly be
introduced into additional roles as it continues to prove itself as an operational airframe and
low-cost weapons system. “The application of proven and new COTS technologies result in
an aircraft that is exceptionally easy and affordable to operate and maintain. Extensive use of
new, lightweight manufacturing materials and extensive system modularity simplifies
maintenance, reducing lifetime ownership costs and logistics requirements” (Airbus Group,
2014).

33. 30
MC-12W LIBERTY
Figure 18: “MC-12W” Source: Defense Industry Daily
The Liberty Project was initiated in response to then Secretary of Defense, Robert Gates’,
demands in April 2008 for an immediate increase in USAF Intelligence Surveillance and
Reconnaissance (ISR) capabilities to support the wars in Iraq and Afghanistan. The USAF
purchased an initial seven Beechcraft King Air 350 turbo prop aircraft and converted them
into ISR platforms by adding an exterior sensor suit, improved communications package, and
revamped interior to support the crew of sensor operators. By November 2008 a $171 million
contract had been signed with Hawker Beechcraft and in June of 2009 the first MC-12W
Liberty flight took place over Iraq. The USAF went on to procure 37 MC-12W at a total cost
of $17 million per aircraft (Command, 2009). Project Liberty is an anomaly in USAF
acquisitions; the USAF succeeded in fielding three expeditionary squadrons within 18
months, and the MC-12W became one of the most heavily tasked assets in theater, proving
invaluable to aiding troops on the ground and field commanders alike (Erwin, 2013). “In
2012, the MC-12W was directly responsible for the kill or capture of 710 high value
individuals, including senior Taliban leaders, bomb makers, and field commanders for the
Afghan insurgency. Project Liberty has also removed more than 3,000 anti-Afghan forces
from the battlefield” (Buchanan, 2103).
AIR TRACTOR AT-802U
Air Tractor has been producing aircraft for agriculture spraying, firefighting, and utility
purposes since the 1950s. Based in Olney, Texas, Air Tractor has produced over 3,000 aircraft
for customers worldwide and are renowned for their rugged, reliable, heavy lifting, and low
cost capabilities. The AT-802U was first flown in 1990, and in 2002 eight airframes were

34. 31
purchased by the U.S. State Department to spray and eradicate coca crop in South America.
The U.S. State Department received its 15th AT-802U in 2007. In 2009 an AT-802U gunship
variant was fielded and unveiled at the Paris Airshow (Air Tractor, 2014). Prior to adding
weapons and mission systems, the AT-802U costs a mere $2.5 million (Catts, 2013).
Figure 19: “AT-802U” Source: Air Tractor
Capitalizing on its impressive payload of 8,000 pounds combined with its 10 hour ISR
mission capability, the Air Tractor can be fitted with a robust communication/sensor suit, over
a ton of weapons, and retain the ability to land on short, unimproved dirt “runways”. With
cockpit and engine armoring, high dust environment air induction system, self-sealing fuel
tanks and lines, ballistic glass windshields, steel tube airframe, inflatable restraint airbags, and
eleven munition hard points on the wings and fuselage, the AT-802U provides overwhelming
low-tech, yet highly effective capabilities (Air Tractor, 2010). Twenty-four of the aircraft
have been ordered by the United Arab Emirates (PR WEB, 2013). Six of the twenty-four are
expected to begin service in Jordan after being donated by an “unknown operator” in the
region (Jennings, 2013).

35. 32
TEXTRON AIRLAND SCORPION JET
A joint venture between Textron, parent of Cessna and Bell Helicopter, and Airland
L.L.C., a relatively new company formed by a group of investors, the Scorpion represents an
attempt to design, build, and market a COTS based aircraft to the U.S. DoD without them
actually requesting it or outlining any requirements. The intent behind the venture is to field
an aircraft capable of performing the USAF’s “low-end” missions; low intensity missions that
it performs a majority of the time, utilizing overly capable legacy platforms. This would allow
the USAF to preserve the “high-end” missions for aging legacy platforms such as the F-16 or
F-15 and advanced weapons systems such as the F-22 and F-35 that were not or will not be
procured in large quantities (Textron Airland, 2013). The prospect of foreign sales is also
relatively strong for the Scorpion as it offers a low purchase price and promised low operating
cost of less than $3,000 per flying hour (Butler, 2103).
Figure 20: “Scorpion Jet” Source: Textron Airland
The Scorpion advertises as a tactical military jet platform using commercially available
technologies and processes. The extent to which it incorporates these technologies and
processes is unknown as Textron was unable to respond to a request for information due to
the programs classification. While the Scorpion doesn’t have a direct civilian equivalent, it is
likely sourced largely from COTS parts, processes, and technologies used in the Cessna
family of aircraft, and arranged to present the militaristic look military acquisition officials
are comfortable purchasing. Not only is the Scorpion expected to provide exceptional value
with its low purchase price and low operating cost but also in its multi-purpose, modular,
rapid re-configuration design. “The Scorpion’s internal payload bay provides critical
operational flexibility to quickly incorporate new payloads, scaling tactical systems
performance to meet operational capability needs. With its modular partitioning, loading,

36. 33
alignment and retention system, the payload bay can accommodate a variety of sensors, fuel,
and communications modules in the most appropriate capability mix to meet a diverse range
of mission performance profiles” (Textron Airland, 2013). Furthermore, its mission systems
are built on open standards, not proprietary technology, therefore allowing add-ons and
upgrades at minimal cost and effort. Scorpion hopes to fulfill roles such as border security,
maritime security, counter narcotics, irregular warfare support, humanitarian
assistance/disaster response, and aerospace control alert (Textron Airland, 2013).
THE TAKEAWAY
What these examples show is that the COTS acquisition model, even when employed
sparingly, is valid and effective. It enables low-risk contracts (yielding low initial costs which
remain fixed throughout a contract’s lifespan), on-time delivery of cost and mission effective
aircraft, and drastically shorter concept-to-delivery timelines. The examples also show that
opportunities for COTS procurement is fragmented in the sense that a wide-range of airframes
are being evaluated and purchased in low quantities to small fleets to fill niche capabilities.
While that will always be far better than the alternative of a developmental aircraft
procurement program, opportunity exists to reap additional costs savings and benefits. If the
COTS model is fully embraced by the DoD and an overall COTS procurement strategy is
devised and adopted, then increased commonality of base airframes can be established to
further cost savings. Mirroring the Southwest Airlines model detailed earlier, the DoD can
field sizeable fleets of common airframe platforms, ready to be rapidly reconfigured to
assume a vastly different role.
The examples also show the effect of Moore’s law and the drastic improvement in the size
and strength of modern military technology. Massive radar and sensor arrays, once requiring
dedicated wide-body airlifters, can now be packed into conformal fuselage attachments and
payload bays of crop dusters and light jets. It is rational to conclude that due to the decrease in
weight and space required by modern mission systems, advanced sensor and communications
capabilities can easily be paired with modern munitions and standoff weapons -a precision
guided munition, such as a cruise missile, launched at a distance of often hundreds of miles
from a target, in order to allow the delivery vehicle ample opportunity to evade defensive fire
(McGraw-Hill Dictionary of Scientific & Technical Terms, 2014)- to produce a lethal COTS-
based strike platform that does not require the advantage of stealth or the maneuverability of a
modern fighter. The DoD, having outsourced airframe design and development to industry,
will be able to focus its efforts on its core competency; the development of modular, standard
interface mission systems and munitions packages to further support and enable COTS
airframes as a delivery vehicle.

37. 34
8. UNMANNED AERIAL SYSTEMS (UAS): A FRESH START
The demand for Unmanned Aerial Systems (UAS), also known as Unmanned Aerial
Vehicles (UAV), or more commonly to the public as “drones”, exploded as a result of the wars
in Iraq and Afghanistan. Their ability to provide long-endurance ISR and precision strike
capability in the uncontested airspace over the two countries resulted in insatiable demand
generated by field commanders. While several of the armed services, the Air Force in particular,
were reluctant to divert funds and effort from their future-generation manned systems, DoD and
congressional pressure forced a surge in UAS procurement in the early 2000’s. Overall DoD
spending on UAS increased from $284 million in FY 2000 to $3.3 billion in FY 2010. Translated
into airframes, DoD inventory increased from 167 in 2002 to nearly 7,500 in 2010 (Gertler, U.S.
Unmanned Aerial System, 2012). As of July 1, 2013, that number has grown further to nearly
11,000 and represents a diverse inventory of unmanned craft ranging from the massive RQ-4
Global Hawk (35 in inventory) with its 116 foot wingspan, to the man-portable RQ-11 Raven
(7,332 in inventory) (Department of Defense, 2013).
Figure 21: “Inventory of DoD UAS” Source: (Department of Defense, 2013)

38. 35
The rise of the UAS presented a fresh slate for DoD acquisitions to plan and procure a fleet
of sustainable weapons systems. Thus far, the inventory consists of 13 dissimilar, proprietary
airframes, with little to no interchangeable systems or components, fragmented into narrowly
focused operational purposes. The most critical requirements for UAS, particularly early on,
were relatively simple and straightforward; largest possible payload, longest possible endurance,
highest possible altitude. Speed and survivability would be considered nice-to-haves, but not a
requirement. Despite this, the removal of a pilot in the airframe has somehow spawned a ground
up reinvention of aircraft, capable of exhibiting the most fundamental aerodynamic feats.
The current acquisition approach and its result is increasingly reminiscent of the boom in
manned aircraft production documented in the 1950s-1960s where, similarly, we had an
immature technology being rapidly fielded to combat a relevant threat (then the Cold War, now
the War on Terror). Not only were we producing peak numbers of airframes, but also an
increasingly diverse fleet of dissimilar airframes, with decade or less expected lifecycles,
specialized for a particular task. History is clearly repeating itself and our response should be
based off of the lessons learned from over 60 years of aircraft acquisition experience.
The FY2013-FY2038 Unmanned Systems Integrated Roadmap, published by the
Department of Defense, represents a concerted effort by the DoD to successfully acquire UAS
systems over the next two and a half decades. The report highlights the need for interoperability
and modularity, for reasons identical to those detailed in this paper:
Interoperable interfaces for enhanced modularity and cross-domain data sharing
present an opportunity to minimize future lifecycle costs, reduced force structure
requirements, and adapt rapidly to changing threats or new available
technologies. (Department of Defense, 2013)
DoD is adopting and exploiting open system design principles and architectures
to increase competition, foster reuse across systems, and increase
interoperability. This new acquisition model requires access to multivendor
solutions to enable rapid insertion of new technologies to counter emerging
threats, avoid technology obsolescence, and decrease time to field new
capabilities. For example, DoD is adopting an open business model to support
the implementation of an OA [open architecture] for UAS ground control
stations (GCSs) to drive greater acquisition. (Department of Defense, 2013)
Concurrently, subsystem modularity and interoperability of components are
essential to affordable improvements, maintenance and sustainment, and
increased capability. As payloads, sensors, software, and computing algorithms

39. 36
and devices are anticipated to evolve much faster than the vehicle platforms,
creating interoperable component/subsystem interfaces for enhanced modularity
represents an opportunity to minimize future lifecycle costs and adapt rapidly to
changing threats or new available technologies. Upgrading existing proprietary
components may be both expensive and logistically unfeasible because whole
platforms may need to be taken out of service and/or replaced. Such a closed
development approach has resulted in a number of unfavorable characteristics
that impede applications of technical progress and the adoption of new
capabilities. […] unmanned systems must be modular so the same or at least
similar components can be used in the same or different types of systems, e.g.,
plug-and-play use of different sensors on unmanned systems (the vehicle and its
supporting systems). (Department of Defense, 2013)
The question is whether the DoD will be actionable on its sound theoretical “roadmap” or
if UAS acquisitions will follow the charted course of manned systems. While the passages above
echo many of the desirable aspects of an effective aerial platform outlined in this paper, they
neglect to mention the key to obtaining those characteristics: COTS technology. The key to
enabling the execution of the UAS Roadmap is through the utilization of COTS technology, for
the same reasons detailed under Benefits of COTS, in this paper.
UAS represents the future of both civilian and military aviation. It is no longer a question
of “if” but rather “when” the transition will occur. The urgent needs identified in United States’
latest military engagements have no doubt accelerated this timetable as both the military and
industry’s attention and funding has been dedicated and diverted to mature UAS technology.
Both the military and aerospace industry has placed increasing pressure on the Federal Aviation
Administration (FAA) to legalize and regulate UAS operations in the National Aerospace
System (NAS). This would allow the simultaneous operation of manned and unmanned systems
in the skies of US airspace, a practice that is currently forbidden, restricting UAS to special use
military airspace. Once this occurs, increased commercial applications for UAS will boom and
the proliferation of UAS technology will generate an expansive marketplace and increased
competition for military UAS to be entirely COTS based.
9. CONCLUSION
The utilization of COTS technology provides the best opportunity for sustained, cost
effective, and operationally sound military aircraft procurement. Current and future conflicts will
no doubt require air operations in an increasingly dynamic environment, where adaptability and
flexibility will be essential to achieve sustained air superiority and support to the war fighter. Our

40. 37
current procurement system is badly broken and that fact is brought further forward as budget
constraints increase, as does the duration and complexity of our current and expected future
engagements. Public and Congressional tolerance for the astronomical costs associated with
modern aerial weapons system is rapidly waning and despite the promises of stricter controls and
more vigilant oversight of acquisition programs, improvement to the extent required is unlikely
to manifest itself.
This paper advocates drastic change in both the thinking and practices that dominate the
acquisition supply chain today. Ample evidence exists to disprove the rationality of the
conventional acquisition model. The size and scope of change needing to occur is seemingly
overwhelming, as is the bureaucracy that must be overcome, seemingly insurmountable; the
consequence of inaction, however, is truly dire. The DoD cannot possibly follow its current trend
of aircraft procurement practices and expect to be financially solvent or operationally effective in
the near or distant future.
The intent of this paper was not necessarily to engage in an examination of the employment
of airpower at a strategic or tactical level, but rather to outline and present sound and applicable
supply chain principles with real-world examples of products and technologies that could
foreseeably form the foundation of a new, albeit unorthodox, doctrine for air power. The intent
was if not to prove, provoke serious thought about the innovative solutions the open market can
provide the Department of Defense; solutions previously sourced from a select few privileged
firms.
The impetus for change, driven by our budget and blunders, combined with the advent of
UAS technology makes this the ideal time for transition. Acquisition decisions made today, as
our aging fleet demands recapitalization, will determine the cost and capabilities we carry with
us for decades to come. COTS technology can enable us to operate an efficient fleet of
innovative, flexible, highly adaptable, and cost-effective airframes in myriad roles. Whether they
are ultimately manned or unmanned, the principals remain unchanged, as do the benefits. COTS
based, payload-centric airframes, employing modular and interoperable mission systems, are
essential to control both initial and lifecycle costs, ensure technological relevance and
operational capability, and meet any adversary we encounter throughout the full spectrum of
warfare.

41. 38
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