This conclusion, however-that long-term leasing is less costly than purchase in acquiring equipment by the Federal Government—is disputed by, among others, the staff of the Joint Committee on Taxation, the Congressional Research Service and the Department of the Treasury. What effect will this dispute have on Air Force plans to replace its fleet of CT-39 aircraft? General SKANTZE. The dispute over the Navy's lease cost analysis centers on the methodology used by the Navy study in determining the total impact of leasing on the U.S. Treasury. Preliminary cost studies that did not include the total impact of leasing on the U.S. Treasury have been conducted by the Air Force on the proposed CT-39 replacement program. These studies indicate that leasing is economically beneficial for the program being considered. Since the issue of tax flow to the U.S. Treasury resulting from leasing has been raised, the Air Force has developed a cost analysis methodology that considers the total impact of leasing on the U.S. Government. This methodology was developed in conjunction with guidance issued by the Joint Committee on Taxation and the U.S. Treasury. Preliminary results of the revised Air Force cost analysis model continue to indicate that leasing is economically beneficial for the proposed CT-39 replacement program. The ongoing Navy cost analysis dispute is a separate issue and should not impact on the plans of the Air Force to replace its fleet of CT-39 aircraft. C-140B REPLACEMENT Senator NUNN. What is the Air Force plan for replacement of its C-140B aircraft? What is the time table for implementing this plan? Will this plan involve leasing and purchase? Why? General SKANTZE. A Request for Proposals was issued in October 1982. Responses received from three contractors in December 1982 are currently being evaluated. It is estimated that the winning contractor will be announced in June 1983, with contract award and delivery of replacement aircraft soon thereafter. The program includes the procurement of 11 replacement aircraft during the period fiscal year 1985 to fiscal year 1988 following the lease of three aircraft in fiscal year 1983 and fiscal year 1984. The purpose of the lease portion of the program is to provide replacement aircraft as soon as possible while permitting an orderly, scheduled procurement funding profile beginning in fiscal year 1985. LONG RANGE AIRLIFT MASTER PLAN Senator NUNN. Last year the Air Force informed us that their long range airlift master plan would be ready in the first quarter of fiscal year 1983. When will this plan be available for our review? General SKANTZE. The Military Airlift Command long range airlift plan will be submitted to the Air Staff in mid-April. This plan represents MAC's position and will receive further review to establish AF and DOD approved positions. Following Air Staff and DOD review the approved long range airlift plan will be available. C-17 R&D Senator NUNN. There has been some estimates from OSD of $3-4 billion for the development of the C-17. What is the Air Force estimate of the funding required for full scale engineering development for the C-17? General SKANTZE. The audited C-17 constant year 80 dollar "Most Probable Cost (MPC)" for the full scale engineering development program is $2.438 billion. This MPC estimate was performed during C-X source selection by an independent team of Aeronautical Systems Division comptroller personnel and is considered an independent cost estimate. This is consistent with the original program base year estimate of $2.3 billion for full scale development in fiscal year 1979 dollars. The current total estimated R&D cost (Appn 3600) is $3.9 billion in then year dollars. This amount includes the cost for building three test article aircraft that will be used during development. QUESTION SUBMITTED BY SENATOR GARY HART C-17 PROGRAM ESTIMATES Senator HART. General Skantze, would please provide the current Administration estimate of the five year R&D and procurement costs of the C-17? General SKANTZE. The funding profile for the C-17 submitted in the fiscal year 1984 President's Budget is as follows: This profile may change somewhat in the fiscal year 1985-fiscal year 1988 figures shown as a result of the full scale engineering decision that is presently being considered in our fiscal year 1985 budget deliberations. Senator COHEN. The subcommittee is adjourned. [Whereupon, at 3:10 p.m., the subcommittee adjourned, subject to the call of the Chair.] DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 1984 WEDNESDAY, APRIL 6, 1983 U.S. SENATE, SUBCOMMITTEE ON SEA POWER AND FORCE PROJECTION, COMMITTEE ON ARMED SERVICES, Washington, D.C. RESEARCH, WEAPONS, AND ASW AIRCRAFT The subcommittee met, in open session, at 10:05 a.m., in room SR-232A, Russell Senate Office Building, Senator William S. Cohen (chairman) presiding. Present: Senators Cohen, Wilson, and Nunn. Staff present: L. Wayne Arny III and Patrick L. Renehan, professional staff members; Mark B. Robinson, research assistant; and Kathleen L. McGuire, staff assistant. Also present: Jim Dykstra, assistant to Senator Cohen; Hank Steenstra, assistant to Senator Quayle; Mary Shields, assistant to Senator Stennis; Robert Nichols, assistant to Senator Jackson; and Bill Lind, assistant to Sentor Hart. OPENING STATEMENT BY SENATOR WILLIAM S. COHEN, CHAIRMAN Senator COHEN. The committee will come to order. Today we are examining programs in the areas of research, development, test, and evaluation; weapons procurement; and aircraft procurement that fall within the purview of the Sea Power and Force Projection Subcommittee. It is my pleasure to welcome Mr. Melvyn Paisley, Assistant Secretary of the Navy for Research, Engineering, and Systems; Vice Adm. Robert Monroe, Director of Navy Research, Development, Test, and Evaluation; Vice Adm. Dutch Schoultz, Deputy Chief of Naval Operations for Air Warfare; Rear Adm. John Nyquist, Director of Surface Combat Systems; Brig. Gen. Eugene Russell, the Deputy Chief of Staff for Research, Development and Systems; and Rear Adm. Steve Hostettler, Director of the Joint Cruise Missile Project Office. A strong relation has always existed between programs which are currently being procured and programs that are currently in research and development. This subcommittee has always had an abiding interest in R&D because the R&D account represents a considerable portion of the funds we spend on defense, and it is the (31.89) only way we can be sure that we are properly addressing the threat posed to our fleet and our interests by tomorrow's weapons. Indeed, this is why this subcommittee, as opposed to others like it in Congress, was structured to include oversight of both R&D and procurement. We attempt to view the Sea Power and Force Projection roles through a mission-oriented bias rather than just a budget-oriented bias. Without R&D, the weapons we procure presently would not be capable of meeting the threat of today, nor would we be confident that tomorrow's weapons would be capable of meeting the projected threat. I understand that Secretary Paisley will provide most of his comments for the record, and that most of our time today will be spent examining seven of the more important issues before us. These include: LAMPS helicopter procurement, both the Mark I and the Mark III. The SH-60F carrier variant helicopter. Tomahawk missile development and procurement. The Navy response to the threat of antiship missiles and the testing of antiship missile defenses. ALWT and Mark 48 ADCAP torpedo development funding and mine warfare. There are a number of cost, performance or rationale questions associated with each of these topics which we need to discuss. I am confident that other programs will be addressed as well during questioning. And then after a half hour move into a closed session so that we can address some questions that require a classified response. I anticipate Senator Nunn joining us at a later time. At that time he may have an opening statement. Pending that, Mr. Paisley, why don't you begin? STATEMENT OF MELVYN R. PAISLEY, ASSISTANT SECRETARY OF THE NAVY (RESEARCH, ENGINEERING AND SYSTEMS), ACCOMPANIED BY VICE ADM. ROBERT R. MONROE, U.S. NAVY, DIRECTOR (NAVY RESEARCH, DEVELOPMENT, TEST, AND EVALUATION); VICE ADM. R. F. SCHOULTZ, U.S. NAVY, DEPUTY CHIEF OF NAVAL OPERATIONS (AIR WARFARE); REAR ADM. J. W. NYQUIST, U.S. NAVY, DIRECTOR (SURFACE COMBAT SYSTEMS); BRIG. GEN. E. B. RUSSELL, U.S. MARINE CORPS, DEPUTY CHIEF OF STAFF (RESEARCH, DEVELOPMENT, AND SYSTEMS); REAR ADM. STEVEN HOSTETTLER, U.S. NAVY, DIRECTOR, JOINT CRUISE MISSILE PROJECT OFFICE, NAVAL SEA SYSTEMS COMMAND; GERALD A. CANN, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF THE NAVY (RESEARCH, ENGINEERING AND SYSTEMS); AND RICHARD METREY, DIRECTOR FOR SURFACE PROGRAMS, OFFICE OF THE ASSISTANT SECRETARY OF THE NAVY (RESEARCH, ENGINEERING AND SYSTEMS) Mr. PAISLEY. It is a pleasure to be here again, Mr. Chairman. I will make a brief statement about the programs we are going to talk about. I have about four witnesses who will talk on those pro grams in more detail and the whole thing will take about a half hour. We will keep that session unclassified. Last year I said I would like to continue doing here what I have done over at the House and that is to be as forthright as possible, giving you the answers to all questions while we are here whenever possible. In addition, wherever necessary, we will answer for the record, but we will attempt as much as possible to give you the answer now so that you will have the maximum time to use it. I will be talking about all the programs that you mentioned. We will have four different witnesses talk about those programs in four different groups. Admiral Schoultz and General Russell will be available for questions in that they do not cover specifically those programs themselves. So, all the witnesses will be available for discussion throughout the whole time period. LAMPS PROGRAM On the LAMPS program, the LAMPS fill a fundamental requirement of our surface combatants. It is the primary ASW localization and weapon delivery vehicle. This capability can really alter an engagement. So is is not a thing we treat lightly in terms of requirement. The initial concept has been shown to be very valuable in the deployment of LAMPS I and the LAMPS III brings a much increased capability to the fleet. I would like to say we will go into a lot more detail on that in the executive session. Now, in regard to the new submarine design I might say in my short 2 years in the Government I have been able to look at the different communities in the Navy and see how they organize to do different tasks. The submarine community is a very organized community. As far as the new submarine design goes they have pulled together all of the technical programs that are required to support the new submarine design. In addition to some of the programs, an example of which is SUBACS, they have laid out a development program that goes through three phases where that program winds up in the third phase being incorporated into the new submarine design. Along with this requirement comes a requirement to continually increase our capability in torpedoes. The Mark 48 ADCAP program will bring a torpedo to be used by the submarine that can address the threat out into the year 2000. The advanced light-weight torpedo brings a similar capability for air and surface launch out into the same time period that this threat develops. ASW HELICOPTER PROGRAM Another important ASW program of very high priority to the Navy is our ASW helicopter program, the SH-60F. Fundamentally what we are doing is taking the existing LAMPS III airframe and putting into that airframe an existing dipping sonar that will give us the capability to operate in the high noise environment that exists around the battle group. |