HOUSE COMMITTEE ON ARMED SERVICES

NINETY-FIRST CONGRESS, FIRST SESSION

L. MENDEL RIVERS, South Carolina, Chairman

JOHN R. BLANDFORD, Chief Counsel

FRANK M. SLATINSHEK, Assistant Chief Counsel
EARL J. MORGAN, Professional Staff Member
WILLIAM H. CоOK, Counsel

RALPH MARSHALL, Professional Staff Member
JOHN J. FORD, Professional Staff Member
GEORGE NORRIS, Counsel

JAMES F. SHUMATE, Jr., Counsel
MARY JO SOTTILE, Counsel

ONETA L. STOCK STILL, Executive Secretary

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1969

For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 Price $6.00

[H.A.S.C. No. 91-14]

(Part 2 of 2 parts)

HEARINGS ON MILITARY POSTURE AND LEGISLATION TO AUTHORIZE APPROPRIATIONS DURING THE FISCAL YEAR 1970 FOR PROCUREMENT OF AIRCRAFT, MISSILES, NAVAL VESSELS, AND TRACKED COMBAT VEHICLES, RESEARCH, DEVELOPMENT, TEST, AND EVALUATION FOR THE ARMED FORCES, AND TO PRESCRIBE THE AUTHORIZED STRENGTH OF THE RESERVE FORCES, AND FOR OTHER PURPOSES

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, D.C., Tuesday, May 20, 1969.

The committee met, pursuant to adjournment, at 10:09 a.m., in room 2118, Rayburn House Office Building, the Honorable L. Mendel Rivers, chairman, presiding.

The CHAIRMAN. Let the committee come to order.

Members of the committee, I have invited the Air Force to appear here today to give the committee detailed information on the alleged cost overruns for the C-5A aircraft program. Many charges and countercharges have been made about this program and now the Air Force will have the opportunity to put the record straight and give the committee all of the facts on this total package procurement program. This will include the technical problems encountered as well as the cost increases brought about by various factors.

I will ask that the Air Force witnesses be allowed to complete their statements before the members ask any questions.

I have also invited Mr. A. Ernest Fitzgerald and Col. Kenneth N. Beckman to come here today to answer questions which the various members may have on this subject. You will recall that these two gentlemen have been quoted in the press on various statements they have made before other committees.

Now, General McNickle, are you going to be in charge of the Air Force testimony?

General MCNICKLE. Yes, sir.

The CHAIRMAN. You may begin.

STATEMENT OF LT. GEN. MARVIN L. MCNICKLE, DEPUTY CHIEF OF STAFF FOR RESEARCH AND DEVELOPMENT, U.S. AIR FORCE Continued

General McNICKLE. Mr. Chairman, members of the committee, ladies and gentlemen, we are here today to discuss the C-5A aircraft.

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37-066-pt. 2

From all indications it will be a tremendous aircraft not unlike the C-130 and C-141 that Lockheed has built previously. I will devote just a minute to the contract before it is covered in detail. The contract covers a period of 8 years. Spares and support cover 5 additional years. This is a long period of time, and one with many price increases. If 4 years ago you had contracted for your Sunday paper on an 8-year contract, the comparable price increase would be 150 percent, in 4 years it has increased from 20 cents to 35 cents. If you could have made a contract with your butcher for 8 years' worth of T-bone steaks the increase would be 100 percent. One of our industrial giants whose business is predominantly commercial, but with a sizable defense business, has indicated they have a corporate policy to no longer bid on long-term fixed price contracts.

On price adjustments, the much discussed adjustments from run A to run B on the C-5A is not unlike a foursome in golf, making an adjustment after nine holes because of the way the uncertainties worked out after the first tee.

Next on cost estimates, there were many over the several years: (1) There were some by three different airframe contractors, each with two different engine contractors; (2) there were independent estimates by various cost agencies as well as Air Force estimates; (3) there were some made against various weights and capabilities; (4) there were some that added the 5 years of spares and support-others didn't; (5) there were Lockheed estimates, and (6) there were estimates based on different time periods at the end of R. & D., end of run A, end of run B, and completion of the contract.

On the use of estimates, we hope to explain how these were used; we will also explain the contract and how it works; and the cost projections. We hope that these estimates, when fully explained, will be used properly. One important point is that if one adds 5 years' worth of spares and operating costs to one estimate it is only reasonable to do the same thing with the other estimate in which a comparison is being made. In other words, let's make sure we are comparing really comparable estimates.

This has, unfortunately, not been done in the past.

One final point. Please keep in mind that many of these cost estimates were derived by accumulating costs from several tiers of contractors-hundreds-and each of them with his own separate accounting system, so that the aggregate estimates are definitely not scientific

answers.

The final figures will not be available until several years after completion of the last C-5A aircraft, and these will be gone over in detail by the Defense Contract Audit Agency.

General Jeffrey will now make a detailed statement.

The CHAIRMAN. General McNickle, I want to ask you categorically, is there a $2 billion-plus overrun on this airplane?

General MCNICKLE. There is not, Mr. Chairman, but if one adds spares that were not included in the original estimate, you can come up with the $2.2 billion increase.

The CHAIRMAN. Is that an overrun or not?

General MCNICKLE. If you use the same spare estimates, there is not a $2 billion overrun.

The CHAIRMAN. How did somebody get that figure of $2 billion?
General MCNICKLE. Sir, we would like to go into detail on just how
that number could be derived. That is included in the briefing.
The CHAIRMAN. All right, you go right ahead.

Mr. PRICE. Mr. Chairman.

What figure are you talking about when you are talking about spares?

General MCNICKLE. Mr. Price, may we go into detail on that?

Mr. PRICE. Yes. Since you did mention it I thought you ought to mention the figure at the same time.

The CHAIRMAN. Can you explain all of these as you go along?

Go right ahead. We are trying our best to put the record straight, if humanly possible.

TESTIMONY OF MAJ. GEN. THOMAS S. JEFFREY, JR., DIRECTOR OF
PRODUCTION AND PROGRAMING, DCS, R. & D.

General JEFFREY. Mr. Chairman, I am General Jeffrey. We promised the committee over here last week that we would provide you with a briefing that would hopefully enhance your understanding of some of the problems or provide you with some information that might be of value to you in understanding this very complicated problem. With the committee's indulgence I would like to try to do this, sir. May I have the first slide?

I would like to begin with a brief description of the airplane; some of its performance characteristics.

The CHAIRMAN. You gentlemen of the press, we can't do any better than this. I will be perfectly willing to accommodate you any way I can. I just don't know how I can do it. I would like for you gentlemen to get as much of this as you can-excuse me ladies and gentlemen of the press. If you will move over this way-I don't want you gentlemen to come in and be excluded. Why don't you move around, you have the gallery. See if you can help this force get more comfortable.

(At this point, discussion was had off the record.)

The CHAIRMAN. What about your presentation? Can you read yours?
General JEFFREY. I will do the best I can.

The CHAIRMAN. Let's get started.

General JEFFREY. I said I would like to describe briefly the airplane, some of its performance characteristics, status of the test program. I would like to discuss briefly the contract, its formulation. I would like to discuss the repricing formula. I would like to discuss the actual figures in the contract at the time that the contract was awarded. I would also like to cover our current estimates of the cost as compared to our original estimates. The estimate also of the position that we project or estimate that the Lockheed Co. will be in at the end of the program from a financial viewpoint.

DE A AA ST

I would also like to discuss the differences between our 1964 estimate and our current estimate on the program, and am hopeful to bring out points regarding the spares and so forth.

(Several VU-Graph pictures illustrating the configuration and performance capability of the C-5A are not reproducible. In lieu thereof the attached performance sheet is furnished.)

U.S. AIR FORCE/LOCKHEED C-5A

Lockheed-Georgia Company, under contract to the Air Force Systems Command, Areonautical Systems Division, is developing the new C-5A heavy airlifter. The primary mission of the C-5A is to provide a significant increase in Military Airlift Command's capability to airlift all types of combat and support forces. Basic requirements are for very high payload and cargo volume, intercontinental range, support area airfield operations, and air dropping of troops and equipment. Four General Electric turbofan engines developed specifically for the C-5A are mounted in individual pods beneath the wings. The general appearance of the C-5A, including wing sweep and T-tail, is similar to its successful predecessor, the C-141. The C-5A, however, incorporates many design advances such as the following:

High flotation landing gear for sustained operation at support area airfields A kneeling landing gear which permits lowering of the floor to truck-bed height at both the forward and aft cargo openings

A simple, rigid, symmetrical visor nose opens to expose the full width and height of the cargo compartment

Full width cargo openings and integral, full-width, non-tapering ramps and toe plates at both ends of the cargo compartment

A simplified flight engineer's panel integrated with a Malfunction Detection, Analysis and Recording (MADAR) subsystem which will decrease maintenance effort and increase operational availability

An upper deck troop compartment

Rate of climb at sea level, standard day at basic mission1 weight (feet per minute)

2,150

Takeoff distance over 50 feet at basic mission' weight (sea level, tropical day) (feet).

7,500

Landing distance over 50 feet with 100,000-pound payload at midpoint of 2,500 nm radius mission (sea level, tropical day, wet grass runway) (feet)_.

4,000

Design payload:

2.5 g. (pound)

220,000

2.25 g. (pound)

265, 000

Range with 220,000-pound payload (nm).

Range with 112,600-pound payload (maximum 2.5 g. takeoff weight) (nm)

3,050

Ferry range (nm).

C-5A Airplane Characteristics

5, 520 7,275

Maximum landing weight (9.0 f.p.s. sink rate) (pound)
Operating weight (pound)

1 Basic mission: 100,000-pound payload, 5,500 nm.

245.9 65. 1 222.7 6, 200

25

728, 000

764, 500

712,000

635, 850

323, 904