oversight

Strategic Missiles: Logistics Support for Advanced Cruise Missile Based on Outdated Plans

Published by the Government Accountability Office on 1990-09-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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National Security and
International ma     DiYision

B-240467
September 13,1990
The Honorable Les Aspin
Chairman, Committee on Armed Services
Houseof Representatives
Dear Mr. Chairman:
This report was prepared in responseto your request that we review the Advanced Cruise
Missile program. The report addressesthe need for logistics support to be basedupon current
program plans and recommendsthat the Air Force develop additional guidance for updating
such plans.
We are sending copies of this report to the Chairmen, SenateCommittee on Armed Services,
and Subcommitteeson Defense,House and SenateCommittees on Appropriations; the
Secretariesof Defenseand the Air Force; the Director, Office of Managementand Budget;
and other interested parties.
Pleasecontact me at (202) 276-4268 if you or your staff have any questions concerning this
report. The major contributors to this report are listed in appendix II.
Sincerely yours,




  .
*5+7
Director
Air Force Issues
                                                                                                        .
Fxecutive Summary


                   Over the next 5 years, the Air Force plans to deploy 1,461 Advanced
Purpose            Cruise Missiles. Logistics support is expected to cost $1.7 billion. To be
                   cost-effective, the required logistics support must be available at the
                   right time, not too early and not too late.

                   At the request of the Chairman, House Committee on Armed Services,
                   GAO reviewed the Air Force’s management of the Advanced Cruise Mis-
                   sile program. In this report on logistics support management, GAO'S pri-
                   mary objectives were to determine (1) if logistics support was being
                   provided effectively and in accordance with program plans and
                   (2) whether program problems existed that could increase logistics sup-
                   port costs.

                                                                                               -
                   The Advanced Cruise Missile is a subsonic, turbofan-powered missile
Background         that  will carry a nuclear warhead. The missile is to be carried by B-52H
                   and B-1B bombers. After a missile is released from the bomber, the mis-
                   sile’s engine ignites and its avionics equipment guides it to the target.
                   The missile is to enhance the long-term effectiveness of the bomber leg
                   of the strategic triad, and it is to have a capability of defeating projected
                   Soviet defenses through the 1990s and beyond. The missile uses stealth
                   (low observable) technologies to penetrate and evade enemy defenses
                   and has greater range and accuracy than the existing Air Launched
                   Cruise Missile. It is also to have increased operational roles and
                   improved chances of reaching its target.

                   Logistics support includes facilities and equipment for servicing the mis-
                   sile, trained maintenance personnel and flight crews, and adequate sup-
                   plies of parts. This support is provided based on program plans that
                   specify the number of missiles to be bought and the planned delivery
                   schedule.


                   The Air Force did not revise Advance Cruise Missile logistics plans when
Results in Brief   major program changes occurred. Setbacks in the missile’s development
                   and production resulted in significant program restructuring. Although
                   the Air Force updated its program plans, it did not have procedures to
                   implement these changes effectively for functional areas such as logis-
                   tics and facilities. As a result, the Air Force expended resources prema-
                   turely to acquire spares, maintenance and repair capability, and
                   facilities.




                   Page 2                           GAO/NSIAD-90-178   Advanced   Cruise Missile   L.ogbtice
 .
                             Emcutlve Summary




                             Logistics and support costs could increase because of marginal system
                             reliability and design and quality problems such as fuel leaks and acces-
                             sibility to subsystems. Air Force managers are working to overcome
                             these problems.

                             The Air Force has identified potential reductions in the number of mis-
                             siles to be bought. Depending on the number, logistics and support cost
                             savings of between $74 million and $991 million are possible if logistics
                             plans are promptly updated.



Principal Findings

Logistics Support Based on   The initial program plans provided for the first operational missile to be
Outdated Program Plans       delivered in late 1986. Test failures, production problems, and other
                             program changes resulted in slippage of the first operational missile
                             delivery until 1990. However, the Air Force continued to provide logis-
                             tics support using original delivery schedules because logistics program
                             plans were not officially changed. The Air Force did not change logistics
                             plans until after the Congress eliminated production funds for fiscal
                             year 1989. Even after the Congress eliminated production funds, over
                             1 year passed before the Air Force changed the logistics program plans.

                             Because logistics support was provided based on outdated data
                             (1) spares were purchased too early, and limited quantities are becoming
                             unusable as design changes are made and (2) about $30 million was
                             spent for Advance Cruise Missile facilities at an Air Force base that was
                             deleted from basing plans for the missile. In addition, the Air Force paid
                             $7.2 million for contractor repair services through 1989, even though no
                             operational missiles were repaired. Furthermore, Air Force personnel
                             trained to work on the missiles at K.I. Sawyer Air Force Base were reas-
                             signed or separated before working on an operational missile, which was
                             delivered about 3-l/2 years later than originally planned.


Guidance Needed for          In response to congressional and Department of Defense (DOD) initiatives
Revising Logistics Plans     for improving the defense acquisition process, the Air Force circulated a
                             draft regulation in March 1989, which provides that program plans are
              Y              to be updated annually or sooner if significant changes occur. System
                             program office and logistics managers said that the logistics program
                             plans had not been changed because the March 1989 draft regulation did


                             Page 3                          GAO/NSIAD-90-178   Advanced   Cruise Mbsile   Logistics
                          Executive   Summary




                          not provide specific guidance on when and how to change the plans.
                          Officials at Air Force headquarters confirmed that guidance to update
                          program plans did not exist for functional areas such as logistics and
                          facilities construction for either the Advance Cruise Missile or other pro-
                          grams. These officials said they planned to establish policy for func-
                          tional areas in Air Force Regulation 800-3 and procedures in Air Force
                          Pamphlet 800-4; however, those two documents have not been
                          developed.


Operational               According to Air Force estimates for a program of 1,461 missiles, initial
Maintainability May Be    logistics costs will be $424 million and follow-on costs will total $1.3
                          billion from 1990 through 2009. These estimates are based on achieving
Difficult and Costly      projected system reliability levels.

                          The Advance Cruise Missile has marginal system reliability and design
                          and quality problems, such as fuel leaks and limited accessibility to sub-
                          systems. In addition, logistics planners are faced with supporting a
                          system with nine different configurations. Unless these problems are
                          resolved, maintaining the missile in the field will be difficult and will
                          cost more than the Air Force estimates.

                          Initiatives are underway to reduce the number of different configura-
                          tions, ensure that sufficient quantities of spares are available, and
                          improve reliability and quality. For example, the Air Force plans to
                          spend $70 million over the next 3 years to identify and resolve design
                          problems. These initiatives, although costly, are intended to avoid
                          future increases in logistics support costs.


Program Options Provide   The Air Force has identified several options for reducing the number of
Opportunities to Reduce   missiles to be bought. In September 1989, for example, Strategic Air
A    1
c;oscs
                          Command officials advised GAO that the number of missiles could be
                          reduced from 1,461 to 1,200 because of revisions made to force struc-
                          ture plans. If the need for fewer missiles were reflected in logistics pro-
                          gram plans, spare parts purchases, equipment, and other logistics
                          support could be reduced about $74 million.

                          Another option considered in 1989 provided for reducing the total
                          number of missiles to 610. This would enable the Air Force to operate at
                          two bases rather than four and to reduce personnel, support equipment,
                          aircraft modifications, and spares costs by $991 million.



                          Page 4                           GAO/NSIAD-BO-178   Advanced   Cmise Mlmlle   Logistics
                  GAO  recommends that the Secretary of the Air Force ensure that logistics
Recommendation    support is based upon current data by developing procedures for
                  revising logistics plans.


                  In its comments on a draft of this report, DOD generally agreed with
Agency Comments   GAO'S  findings. DOD agreed that logistics support should be based on cur-
                  rent data and modified when program direction is changed. DOD did not
                  agree, however, that a new set of procedures was needed because
                  existing guidance included adequate instruction. GAO believes that the
                  experience with the logistics support for the Advance Cruise Missile
                  program indicates that additional guidance is necessary to ensure that
                  plans and expenditures for logistics support are consistent with current
                  program plans.




                  Page 5                          GAO/N[IIIADw)l78   Advanced   Cmiae Missile   Logistics
Executive Summary                                                                                       2

Chapter 1                                                                                               8
Introduction            Program History
                        Significance of Logistics
                                                                                                        8
                                                                                                       10
                        Objectives, Scope, and Methodology                                             11

Chapter 2                                                                                              12
Logistics Support       Not Updating Program Plans Results in Premature
                            Expenditures
                                                                                                       12
Based on Outdated       Procedures Needed to Avoid Unnecessary and Premature                           17
Program Plans               Expenditures
                        Program Changes Provide Opportunities to Reduce Costs                          18
                        Conclusions                                                                    20
                        Recommendation                                                                 20
                        Agency Comments and Our Evaluation                                             21

Chapter 3                                                                                              22
Operational             Logistics Cost Estimates
                        Reliability, Design, and Quality Problems Could Increase
                                                                                                       22
                                                                                                       23
Maintainability and          costs
Supportability May Be   Conclusion                                                                     26
Difficult and Costly    Agency Comments                                                                26


Appendixes              Appendix I: Comments From the Department of Defense                            28
                        Appendix II: Major Contributors to This Report                                 36

Tables                  Table 1.1: Acquisition Milestones
                        Table 2.1: Procurement Schedule Changes
                        Table 2.2: Purchases of Spares From November 1988
                            Through September 1989
                        Table 2.3: Spares That Must Be Modified                                        14
                        Table 2.4: K.I. Sawyer Personnel That Received Advanced                        16
                            Cruise Missile Training
                        Table 2.6: Potential Logistics Cost Reductions                                 19
                        Table 3.1: Initial Logistics Support Costs                                     22
                        Table 3.2: Cost to Maintain the Advanced Cruise Missile                        22




                        Page 6                         GAO/NSLAJHO-178   Advanced Cruise Missile Logietka
Abbreviations

          Air Force Logistics Command
ALC       Air Logistics Center
DOD       Department of Defense
GAO       General Accounting Office


Pqge 7                        GAO/NSIAD-BO-178   Advanced   Chlse   Mbdle   Log&tic~
Chapter 1

Introduction


                  The Air Force is developing the Advanced Cruise Missile to enhance the
                  long-term effectiveness of the bomber leg of the strategic triad and to
                  have a capability of defeating projected Soviet defenses through the
                  1990s and beyond. Compared to the existing Air Launched Cruise Mis-
                  sile, the Advanced Cruise Missile is to have greater accuracy and range,
                  allowing launch at extended distances from enemy borders. By using
                  stealth (low observable) technologies to penetrate and evade enemy
                  defenses, the Advanced Cruise Missile will have increased operational
                  roles and improved chances of reaching its target.

                  The Advanced Cruise Missile is a subsonic, turbofan-powered missile
                  that will carry a nuclear warhead. As of May 1990, the Air Force
                  planned to buy 1,461 Advanced Cruise Missiles, and total program
                  acquisition cost was estimated at $7 billion.

                  General Dynamics, Convair Division, is the prime contractor for the
                  Advanced Cruise Missile program. General Dynamics is responsible for
                  full-scale development, which includes designing and producing the mis-
                  siles, conducting system test flights, planning and integrating all logis-
                  tics tasks, identifying training requirements, and providing interim
                  contractor support until the Air Force can provide system maintenance.


                  The Advanced Cruise Missile began in 1982 as a highly classified pro-
Program History   gram. The development contract was awarded in April 1983 to General
                  Dynamics. The Department of Defense’s (DOD) policy on major weapon
                  system acquisition stresses the importance of minimizing the time to
                  develop, produce, and deploy major systems for use by operational
                  forces. On the basis of this policy, the perceived need for the missile,
                  and an assessment as to risk, the Air Force decided to develop and pro-
                  duce the missile concurrent1y.l

                  The Air Force plans to locate the Advanced Cruise Missiles at four Stra-
                  tegic Air Command bases. K.I. Sawyer Air Force Base, Michigan, has
                  been designated as the initial main operating base.

                  Since 1985, the Air Force has awarded four production contracts
                  totaling 360 missiles to General Dynamics. The Air Force also has
                  authorized long lead material and funding for a fifth lot of 100 missiles

                  ‘Concurrency is defined as the overlap in time between the development of a weapon system and its
                  production-production is started while development is still underway. In a nonconcurrent program,
                  development is usually completed before production begins.



                  Page 8                                    GAO/NSIAD-90-178     Advanced   Cruise Missile   Logistics
                                    Chapter 1
                                    Introduction




                                    to be procured in fiscal year 1990. The missile’s schedule slipped, and
                                    total program cost estimates increased significantly following develop-
                                    ment problems and unsuccessful test flights. Milestone dates have been
                                    revised from the original 1983 schedule, as shown in table 1.1.

Table 1.l: Acqulsltlon Milestones
                                                                                                                       Change   in
                                    Milestone                                       Baseline          Actual               months
                                    Contract award                                  Apr. 1983         Apr. 1983                     0
                                    critical design review                          May 1984          Mar. 1985                    10
                                    Pilot production                                June 1985         July 1985                     1
                                    Low-rate initial production decision            Oct. 1985         July 1986                     9
                                    Full-rate production decision                   Mar. 1986         Nov. 199@                    56
                                    belivery of first operational missile           Dec. 1986         June 1990                    42
                                    “This is an Air Force projected date.


                                    In November 1987, because of numerous schedule delays and quality
                                    problems affecting the program, the Air Force chose McDonnell Douglas
                                    Missile System Company as a second production source. General
                                    Dynamics will remain as the design agent (i.e., responsible for managing
                                    and controlling design changes to the missile). The Air Force will buy
                                    missiles from both companies in fiscal years 1990 and 1991, but begin-
                                    ning in fiscal year 1992, the two companies will compete for missile pro-
                                    duction, with the total quantity split between the two.

                                    The first missile-referred   to as preoperational because it did not meet
                                    contract specifications- was delivered to K.I. Sawyer Air Force Base on
                                    June 14, 1988. A total of 26 preoperational missiles was delivered to this
                                    base for use in validating operating procedures, providing on-the-job
                                    training, conducting ground testing, and repairing missiles. According to
                                    the Air Force, the missiles will be returned to General Dynamics in 1990
                                    to be reconfigured to the latest system design. Additional missiles are
                                    waiting to be reconfigured at General Dynamics.

                                    In November 1988, the House and Senate Committees on Appropriations
                                    prohibited the expenditure of fiscal year 1989 Advanced Cruise Missile
                                    production funds until the contractor could demonstrate additional suc-
                                    cessful test flights. By this time, missile deliveries were about 32 months
                                    behind the original schedule. In September 1989, the Secretary of
                                    Defense notified the Congress that the congressional requirement for
                                    successful flight tests had been met.




                                    Page 9                                  GAO/NSIALMO-178    Advanced   Cruise Missile   Logistics
                  Chapter 1
                  Mroduction




                  Logistical requirements include facilities and support equipment for ser-
Significance of   vicing the missile; maintenance planning for contractor and Air Force
Logistics         repair of parts; personnel; data management systems; training and
                  training support; computer resources support; packaging, handling,
                  storage, and transportation; and adequate supplies of parts. Providing
                  effective, efficient, and economical logistics support to a weapon system
                  is of major concern to DOD because logistics, in addition to being costly,
                  helps determine if a weapon system will be ready to perform its mission,

                  Since about 1980, DOD has placed increased emphasis on the importance
                  of logistics by establishing policies and procedures to improve readiness
                  and support. DOD policy states that the primary objectives of the acquisi-
                  tion process are improved readiness and sustainability and that
                  resources needed to achieve readiness will receive the same emphasis as
                  those required to achieve schedule and performance objectives while a
                  system progresses through development, testing, production, and
                  deployment.

                  Specific responsibility for logistics management exists within the pro-
                  gram management structure. The Air Force Systems Command is the
                  implementing command for the Advanced Cruise Missile program and
                  within the Command, the Aeronautical Systems Division is the lead divi-
                  sion Program management responsibility is assigned to the Advanced
                  Cruise Missile system program office located at Wright-Patterson Air
                  Force Base, Ohio. Logistics support resource acquisition, planning, pro-
                  gramming, budgeting, and allocation are the responsibility of the Deputy
                  Program Manager for Logistics, the Air Force Logistics Command (AFXC)
                  representative at the program office. The Oklahoma City Air Logistics
                  Center (ALC) is the system program manager for AFIX. The Air Force
                  Systems Command’s Contract Management Division is responsible,
                  through the resident Air Force Plant Representative Office, for produc-
                  tion contract administration functions.

                  The Strategic Air Command, as the user command for the Advanced
                  Cruise Missile, is an integral part of all program development. The Com-
                  mand continuously reevaluates the missile operational requirements
                  that it developed. It is responsible for planning and providing the base
                  level infrastructure needed for deploying the missile and for providing
                  organizational level maintenance, which includes inspecting, servicing,
                  and replacing parts. This type of maintenance will be done by the muni-
                  tions maintenance squadron at the Air Force base and will be performed
                  on the flight line or at the intermediate maintenance facility.



                  Page 10                         GAO/NSIADfW178   Advanced   Cruise Missile   Logistics
    .


                            Chapter   1
                            Introduction




                            The principal facility for the missile depot maintenance is the Ogden ALC
                            located at Hill Air Force Base, Utah. The Oklahoma City AU, located at
                            Tinker Air Force Base, Oklahoma, has the software and engine depot
                            maintenance facilities. Depot level maintenance involves major repairs
                            or a complete rebuild of parts, assemblies, subassemblies, and end items.


                            The Chairman, House Committee on Armed Services, asked us to review
Objectives, Scope,and       the Advanced Cruise Missile program. In this portion of the work
Methodology                 addressing logistics, we determined if (1) logistics support for the
                            Advanced Cruise Missile was being provided effectively and in accor-
                            dance with up-to-date program plans and (2) logistics support problems
                            existed that could result in operational problems and higher support
                            costs.

                            We interviewed Air Force officials and reviewed regulations, reports,
                            and other documents about logistics support for the program. Docu-
                            ments included plans and cost projections for contractor and Air Force
                            repair of parts, base and depot facilities, support equipment, mainte-
                            nance training, and technical orders. We obtained spare parts require-
                            ments computations on the large dollar value line replaceable units to
                            determine if the computations supported item management decisions
                            and precluded unnecessary purchases. We also reviewed Air Force
                            internal controls and inventoried selected Advanced Cruise Missile spare
                            parts to determine if the Air Force had adequate controls for accounting
                            and safeguarding spare parts.

                            We conducted our review at

                        . Headquarters, Department of the Air Force, Washington, D.C.;
                        l Headquarters, Strategic Air Command, Offutt Air Force Base, Nebraska;
                        . Advanced Cruise Missile System Program Office, Air Force Systems
                          Command, Aeronautical Systems Division, Wright-Patterson Air Force
                          Base, Ohio;
                        l Advanced Cruise Missile System Program Manager, Oklahoma City AIX=,
                          Tinker Air Force Base, Oklahoma; and
                        l K.I. Sawyer Air Force Base, Michigan.

                            We conducted our review between July 1989 and April 1990 in accor-
                            dance with generally accepted government audit standards. DOD'S com-
                            ments on this report are included as appendix I.




                            Page 11                        GAO/NSIAD-90-178   Advanced   Cruise Missile   Logistics
Chapter 2

hgistks Support Based on Outdated
Program Plans

                                          The Air Force has used outdated logistics program plans to provide
                                          logistics support for the Advanced Cruise Missile because it did not have
                                          adequate policies to ensure that logistics support was based on current
                                          data. As a result, spares were bought, operational training was initiated,
                                          and base construction occurred long before required. In some cases,
                                          these actions resulted in the premature expenditure of funds. In other
                                          cases, parts were bought that must be modified at an additional cost and
                                          facilities were constructed, which are not now required.

                                          As the program proceeds into full production, logistics support will need
                                          to be based on up-to-date plans. The Strategic Air Command’s current
                                          requirements for a lesser number of missiles have not been reflected in
                                          the program plans. Other options that have been considered would
                                          represent more significant cutbacks in the program and could preclude,
                                          if implemented in a timely manner, logistics expenditures of hundreds of
                                          millions of dollars. Procedures are needed to ensure that logistics sup-
                                          port is being provided based upon current program plans.


                                          The logistics program plan, prepared by the system program office, pro-
Not Updating Program                      vides logistics planners with the number of missiles that are expected to
Plans Results in                          be produced monthly. This plan is an important document since timely
Premature                                 and accurate logistics planning is determined according to the prescribed
                                          missile production. The initial schedule, developed in 1983, provided
Expenditures                              that 1,461 missiles were to be produced and delivered to the Air Force
                                          by fiscal year 1990. However, delivery of the first operational missile
                                          did not occur until June 1990, and production and delivery are not to be
                                          completed until fiscal year 1996. Table 2.1 shows changes in the
                                          Advanced Cruise Missile procurement schedule since the Air Force’s ini-
                                          tial 1983 plan.


Table 2.1: Procurement Schedule Changes
                                                        Number of missiles by fiscal year
Schedule     as of
__I--_- -.--..---_-_-.-..-            1985     1986   1987    1988    1989       1990     1991     1992      ““W;;               Total
Oct.
.-._   1983 --
   ---.---_        --                     10    200    400     400      400        51         0        0           0             1,461
Oct.   1987
__..-.._-_-------_           -~           10    100    150     500      400       301         0        0           0             1,461
Oct. 1988                                 10    100    150     100      150       150       500      301           0             1,461
Oct.1989                                  10    100    1.50    100        0       100       100      250         651             1,461




                                          Page 12                             GAO/NSl.AD-90-178   Advanced   Cruise Missile   Logbtics
                                      Chapter 2
                                      Logistics Support   Based on Outdated
                                      Program Plans




                                      According to Air Force officials, program changes after the logistics pro-
                                      gram plan was prepared in 1986 contributed to logistics support uncer-
                                      tainties and caused problems in providing timely and accurate spares,
                                      repair services, and facilities. This program plan was based on the 1983
                                      production schedule, even though the production schedule had slipped
                                      some by 1986. Despite numerous changes between 1986 and 1989, logis-
                                      tics planners continued to provide logistics support using the 1986 pro-
                                      gram schedule. The logistics plan was not revised until November 1989,
                                      about a year after the Congress eliminated fiscal year 1989 Advanced
                                      Cruise Missile production funds. As a result, resources were expended
                                      prematurely to acquire spares, maintenance and repair capability, and
                                      the facilities infrastructure.


Spares Purchased Early                Spare parts are bought according to when production missiles are to be
                                      delivered to the field. Because the Air Force used outdated program
                                      data, spares were purchased too early, and limited quantities are
                                      becoming unusable as system configuration changes are made. Table 2.2
                                      shows that the Air Force spent about $2 million for spare parts between
                                      November 1988 (when the House and Senate Appropriations Commit-
                                      tees prohibited expenditure of fiscal year 1989 funds for missiles) and
                                      September 1989. These purchases were based on a 1986 program
                                      schedule that was not updated to reflect program slippages that
                                      occurred after 1986.

Table 2.2: Purchases of Spares From
November 1988 Through September              Quarter ending
1989                                  Year              Month                                                     Amount ourchased
                                      1988
                                        . - ....~~~ ~_....~.December                                                               $25,218
                                      1989                 March                                                                   111,341
                                                           June      ..---__---                                                  1,061,185
                                                           September
                                                         _.~_.._~~~.
                                                                 ~-__-..-~-                                                      761,007
                                                          Total                                                              $1,958,751


                                      Slippages and reductions in the delivery schedule can affect spares
                                      buys. For example, the Air Force bought 17 sensors (Stock No. 1420-01-
                                      295-2649HD), which are used to monitor all software systems and pro-
                                      vide input to the guidance set, at a cost of $7,063,330. According to the
                                      Air Force’s February 1988 initial provisioning requirement computation,
                                      delivery of these 17 spares would coincide with delivery of 838 missiles.
                                      These spares were to be delivered to the Air Force by 1991, but, due to
                                      program delays, the 838th missile is not planned to be delivered until



                                      Page 13                                     GAO/NSLAD-90-178   Advanced   Cruise Missile   Logistics
                                          Chapter 2
                                          I~~glstics Support   Bawd   on oUt4lated
                                          ProgramPlane




                                           1994. Therefore, some of these spare sensors will be received 3 years
                                          before they are projected to be needed. In another example, the Air
                                          Force bought 27 spare guidance sets (Stock No. 1420-01-262-l 122HD),
                                          which are used to navigate the missiles to the designated targets, at a
                                          total cost of $6,374,700. According to the Air Force’s February 1988 ini-
                                          tial provisioning requirement computation, delivery of these 27 sets
                                          would coincide with delivery of 739 missiles. These spares were to be
                                          delivered to the Air Force in 1991, but, due to program delays, the 739th
                                          missile is not planned to be delivered until 1994. Therefore, some of
                                          these sets will be received 3 years before they are projected to be
                                          needed.

                                          Because the Air Force is still uncertain when the contractor will be able
                                          to deliver operational missiles, the number and value of spares the Air
                                          Force has bought too early cannot be documented. However, Air Force
                                          officials agreed that spare parts were bought too early.

                                          Purchasing parts earlier than necessary will increase inventory holding
                                          costs, lead to excessive inventories, and increase the probability of obso-
                                          lescence, especially in concurrent programs. Obsolescence results in
                                          additional costs to modify parts or to replace parts that cannot be modi-
                                          fied. For example, because of system design changes, three parts are
                                          now obsolete and must be modified to fit the newest missile configura-
                                          tion. The costs associated with modifying these three parts are shown in
                                          table 2.3.

Table 2.3: Spares That Must Be Modified
                                                                                                                  Total                 Coat
                                          Part                                             Quantity       initial cost             to modify
                                          Aft avionics unit                                        2          $81,290                $99,000
                                          Sensor                                                   2          830.980                100.000
                                          Guidance set                                             4          944,400               470,300
                                          Total                                                           $1,856,670               $609,300


                                          In addition, design changes are expected to make two forward avionics
                                          units valued at $99,000 and two umbilical assemblies valued at $73,360
                                          obsolete. These parts cannot be modified and may have to be thrown
                                          away.


Contractor Re’pair Services               Interim contractor support is intended to provide depot level repair
Purchased Early                           during the period before Air Force depot capability is established. This
                                          type of support consists of establishing a management infrastructure at


                                          Page 14                                    GAO/NSIADBO-178   Advanced   Cruise Missile    Log&tica
                            Chapter 2
                            Loglatlcs Support   Baaed on OuMated
                            ProgramPlans




                            the prime contractor and subcontractors; developing component repair
                            plans at each source of repair; identifying, ordering, and storing neces-
                            sary repair parts; developing systems/procedures to collect repair data;
                            and repairing parts. Interim contractor support is applicable to all
                            Advanced Cruise Missile system equipment, including support and test
                            equipment.

                            According to Air Force officials, an accepted rule is that the initial
                            development of an interim contractor support program begins 1 to 2
                            years before the delivery of the first operational missile to be supported
                            to ensure the support structure exists when needed. For the Advanced
                            Cruise Missile program, the Air Force procured an interim contractor
                            support capability in fiscal year 1986 to support missile deliveries then
                            scheduled for late fiscal year 1987. Since 1986, $7.2 million has been
                            spent for interim contractor support, although an operational missile
                            was not delivered until June 1990. AW officials said that when interim
                            contractor support began, the flight test program was showing excellent
                            progress and that this support was expected to be required to support
                            anticipated missile deliveries. After the flight test program experienced
                            a series of failures in 1988 and deliveries of operational missiles slipped,
                            only minimum contractor services were needed and few repairs were
                            required because operational missiles were not being supported.

                            Logistics managers told us that they had to expend resources to support
                            the planned delivery schedules to comply with the contract and the
                            logistics program plan. They said that following the program delays in
                            1988, they revised the interim contractor support contract to reduce
                            costs. Air Force officials stated that funds spent on this support were
                            not lost as the contract is now in place, repair parts are available, and
                            preoperational missiles and support equipment are being repaired as
                            failures occur. Similar benefits could have been achieved if support had
                            been provided baaed on a revised logistics plan, and the costs could have
                            been less than the $7.2 million spent on interim contract support over
                            the longer period.


Base Construction and       The Air Force did not adjust its military construction obligations and
Activation Occurred Early   base activation plans when program delays and changes occurred. In
                            addition to activating K.I. Sawyer Air Force Base as an Advanced Cruise
                            Missile base when originally planned, the Air Force expended military




                            Page 16                                GAO/NSIAD-90-178   Advanced   Cruise Missile   ~gistica
                                        chapter 2
                                        Logistics   snpport   Baaed on Outdated
                                        ProenunPll-




                                        construction funds prematurely at another Air Force base.* The con-
                                        struction at the second base, which primarily involves missile storage
                                        and maintenance facilities, has proven to be unnecessary because it is no
                                        longer to be used as an Advanced Cruise Missile base. Because the con-
                                        struction program plan was not updated so that base construction could
                                        be rescheduled, the Air Force spent over $30 million for military con-
                                        struction at a base where Advanced Cruise Missiles will not be deployed.
                                        According to DOD, the facilities remain an integral part of the strategic
                                        cruise missile force structure and, while initially planned for the
                                        Advanced Cruise Missile, they are being used without modification for
                                        the Air Launched Cruise Missile.

                                        The first operational Advanced Cruise Missile was delivered in June
                                        1990, about 3-l/2 years after the Air Force activated the first Advanced
                                        Cruise Missile base. One result of the early base activation was that Air
                                        Force personnel, after being trained and assigned to work on this missile
                                        program at K.I. Sawyer Air Force Base, either were reassigned or sepa-
                                        rated before the first missile delivery. Table 2.4 shows that 167 Air
                                        Force personnel stationed at K.I. Sawyer Air Force Base received
                                        Advanced Cruise Missile training from 1987 through 1989.

Table 2.4: K.I. Sawyer Personnel That
Received Advanced Crulre Mlrrlle        Job dercriptlon                                                    Number received training
fralnlng                                Missile system maintenance                                                                       43
                                        Ground equipment mechanic                                                                        19
                                        Svstem handlers                                                                                  33
                                        System loaders                                                                                   25
                                        Release                                                                                          18
                                        Munitions maintenance specialist                                                                 19
                                        ExrAosive ordnance disoosal                                                                      10
                                        Total                                                                                          167


                                        Air Force officials confirmed that trained personnel left for other duty
                                        stations or left the Air Force before working on an operational
                                        Advanced Cruise Missile but could not provide data on the number of
                                        such personnel. In addition, the Oklahoma City ALC placed one support
                                        person at K.I. Sawyer Air Force Base in July 1986,6 months before the
                                        original scheduled delivery of the first missile. In early 1988, the ALC
                                        requested that this position be terminated and that the individual be
                                        returned to Oklahoma City. The system program office did not agree,

                                        ‘The identity of this base is classified.



                                        Page 16                                     GAO/NSIAMO-178   Advanced   Cruise Missile   Logistics
    .


                       Chapter   2
                       Lorpstics Support   Bamd on Chatdhd
                       ProgramPlaml




                       and it told the ALCthat the program would soon be back on schedule.
                       The individual remained at this base until October 1988 when the ALC
                       unilaterally withdrew the position,

                       Air Force officials said that because program slippages were resulting in
                       less than optimum use of logistics resources, 26 preoperational missiles
                       were delivered to K.I. Sawyer Air Force Base. According to Air Force
                       officials, delivery of these missiles provided significant benefits in terms
                       of maintenance preparation, training, testing, and technical order vali-
                       dation and verification. K.I. Sawyer officials were able to provide profi-
                       ciency training to personnel, execute technical order validation and
                       verification, identify over 700 potential changes to procedures, and
                       submit over 200 service reports that identified shortcomings in con-
                       tractor workmanship and difficulties encountered in moving and
                       repairing the missiles. According to the Air Force, the delivered preoper-
                       ational missiles also provided opportunities to do extensive electronic
                       testing on the Advanced Cruise Missiles.


                       According to Air Force officials, they continued to acquire logistics sup-
Procedures Needed to   port for the missiles according to original plans because they were opti-
Avoid Unnecessary      mistic that recovery .initiatives would correct program problems. They
and Premature          said that because solutions were always thought to be forthcoming,
                       logistics support planning was based upon official schedules and con-
Expenditures           tracts that were outdated. More importantly, Air Force officials cited
                       the lack of adequate DOD and Air Force policy covering the appropriate
                       time to restructure logistics program plans as a major reason for contin-
                       uing to use outdated program data. Without such a policy, Air Force
                       officials believed they were compelled to provide logistics support in
                       accordance with official program schedules, even though the schedules
                       were outdated.

                       In response to congressional and DOD initiatives for improving the
                       defense acquisition process, the Air Force established the Acquisition
                       Executive System in 1988. The system is intended to enhance informa-
                       tion flow and accountability by requiring top management involvement
                       in acquiring ms,jor weapon systems. One element is the development of
                       an acquisition program plan that establishes cost, schedule, and per-
                       formance thresholds and is to serve as a contract among the program
                       manager, the Program Executive Officer, the Air Force Acquisition
                       Executive, and the Defense Acquisition Executive, reflecting agreements
                       on key program parameters and the resources that shall be allocated to
                       achieve the parameters.


                       Page 17                               GAG/NSIAD-90-178   Advanced   Cruise Missile   Logistics
                                                                                                                        -
                          Chapter 2
                          h&tiA~grt     Based on Out4-lated




                          In March 1989, the Air Force circulated a draft regulation requiring top
                          level program plans to be updated annually or sooner if significant pro-
                          gram changes occur. However, officials involved in the Advanced Cruise
                          Missile program told us that they had not received adequate guidance on
                          when or how to change logistics support plans. Officials at Air Force
                          headquarters confirmed that procedures to implement changes in func-
                          tional areas, such as logistics and facilities construction, had not been
                          developed. The officials stated that they planned to establish policy for
                          functional areas in Air Force Regulation 800-3 and procedures for func-
                          tional areas in Air Force Pamphlet 800-4. However, these two docu-
                          ments have not been developed.


                          The Air Force’s system program office plans to buy and logistically sup-
Program Changes           port 1,461 Advanced Cruise Missiles, even though the Strategic Air
Provide Opportunities     c ommand has reduced quantities required. The Strategic Air Command
to ReduceCosts            reduction is based on Air Force plans to modify fewer bombers to carry
                          Advanced Cruise Missiles than when Advanced Cruise Missiles’ procure-
                          ment quantities were established. When the Air Force decided to buy
                          1,461 Advanced Cruise Missiles in 1983, force structure plans assumed
                          B-62G and B-62H bombers would carry a mix of Air Launched Cruise
                          Missiles and Advanced Cruise Missiles until the early 1990s. Then
                          B-62Gs were to retire and their cruise missiles were to be transferred to
                          B-1Bs. However, the Air Force changed these plans and only B-62H
                          bombers are being modified to carry Advanced Cruise Missiles. Strategic
                          Air Command officials advised us that when spare missiles are included,
                          the Air Force’s total procurement requirement is 1,200 Advanced Cruise
                          Missiles.

                          The Air Force also has considered or is considering the following
                          reductions.

                        . A total procurement quantity of 1,093 was proposed in fiscal year 1989.
                          This quantity was later increased to 1,461 missiles without explanation
                          by the Office of the Secretary of Defense.
                        . A total procurement quantity of 610 missiles was proposed based on
                          (1) poor missile flight tests at that time and (2) the need for reduced
                          spending in the 1990 through 1992 time frame. This option involved
                          deploying the missiles at two bases rather than four. However, the Air
                          Force decided to continue the program at 1,461 missiles.
                        . A total procurement quantity of 1,000 is being considered for fiscal year
                          1991 based primarily on budgetary decisions.



                          Page 18                             GAO/NSLADQO-178   Advanced   Cruise Missile   Logistics
                                     Chapter 2
                                     lagistice Support     Based on Outdated
                                     ProgrnmPlans




                                     Reductions in quantities such as these would negate the need for some
                                     spares purchases, maintenance and repairs, and other support costs
                                     such as activating additional bases. On the basis of an estimated logis-
                                     tics and support cost of $1,707 million and retrofit and pylon modifica-
                                     tion costs of $108 million for 1,461 missiles, the Air Force could save
                                     between $74 million and $991 million with reduced quantities. (See table
                                     2.6.) These savings would be dependent on logistics and support plans
                                     being closely tied to revised program plans.

Table 2.& Potential Logistics Cost
Reductions                           Dollars in millions
                                                                                                         Estimated lo:oks         support

                                     Category                                                           1,200 missiles         510 missiles
                                     Initial spare@                                                                  $85                  $57
                                     Peculiar support equipmenta                                                     195                    99
                                     Common support eQuipmenta                                                        28                    16
                                     Retrofit Costa                                                                   26                    12
                                     Replenishment sparesb                                                           101                    43
                                     Depot level maintenanceC                                                        525                  210
                                     Base level maintenanceC                                                          50                    20
                                     Personnel costC                                                                 336                   134
                                     Operations and maintenance                                                      250                   100
                                     Pylon modificationd                                                              80                    68
                                     Other costs!                                                                     65                    65
                                     Total                                                                       $1,741                  $824
                                     Potential reduction                                                             $74                  $991
                                     aThese costs were computed by adding costs incurred through fiscal year 1989 to costs planned under
                                     each option for fiscal years 1990 to 1996.
                                     bThese costs were computed by prorating a percentage of the cost for the missiles to the number of
                                     missiles the Air Force would buy under each projection,
                                     ‘These costs were computed based on the number of squadrons to be located at each base. For 1,200
                                     missiles, five squadrons would be required at four bases, the same as the Air Force plans for 1,461
                                     missiles. For 510 missiles, only two squadrons would be required.

                                     dThe cost of modifying 200 pylons is $60.3 million. For 510 missiles, no additional pylon modifications
                                     would be required because the Air Force has already spent $68 million to modify 93 pylons, more than
                                     the number required for 510 missiles.

                                     eNo savings are projected for other costs (such as depot and base facilities) because either the costs
                                     have already been incurred or a reduction in the number of missiles would not substantially affect costs.


                                     Although aware of the Strategic Air Command’s requirements and other
                     Y               options for a lesser number of missiles, system program office and logis-
                                     tics managers were continuing efforts to buy and support 1,461 missiles



                                     Page 19                                      GAO/NSIAD-90-178 Advanced         Cruise Missile   Logistics
                 Chapter 2
                 Logbtice Support   Based on Outdated
                 ProgramPlana




                 because the program baseline had not been changed. These managers
                 said that the program plans had not been officially changed because Air
                 Force headquarters or other higher authority had not directed a pro-
                 gram change. In their comments on why a change had not been directed
                 in accordance with the Air Force’s March 1989 policy on program
                 changes, they said that the Air Force did not have procedures that pro-
                 vided program managers with guidance on what changes should be
                 made to logistics program plans and when these changes should be
                 made. Air Force officials further stated that because logistics support is
                 based on official logistics program plans, potentially unnecessary logis-
                 tics expenditures could occur until the plans are updated.


                 The Air Force needs to respond to major Advanced Cruise Missile pro-
Conclusions      gram changes to preclude potential procurement of unneeded parts and
                 other unnecessary expenditures for logistics support. While we recog-
                 nize the difficulties in fielding a new weapon system, such as the
                 Advanced Cruise Missile, we believe test results and program progress
                 can be measured and should be considered when planning deployment
                 and making logistics support decisions. Development difficulties in this
                 program resulted in a significant program change affecting the delivery
                 schedule for operational missiles. As a result of basing logistics support
                 on outdated plans, resources were expended prematurely to acquire
                 spares, maintenance and repair capability, and the facilities
                 infrastructure.

                 To help ensure that Air Force policy requiring an updated program plan
                 is effectively implemented, managers in this program should be pro-
                 vided adequate guidance for assessing what changes should be made to
                 logistics plans and when these changes should be made. In addition,
                 managers should be provided guidance that enables them to identify and
                 defer potentially unnecessary logistics expenditures until logistics plans
                 are updated. Furthermore, the need for adequate guidance to implement
                 the Air Force policy on updating program plans and identifying and
                 deferring potentially unnecessary logistics expenditures effectively
                 would not be limited to this program but would be applicable to other
                 programs.


                 We recommend that the Secretary of the Air Force ensure that logistics
Recommendation   support is based upon current data by developing procedures for
                 revising logistics plans that include guidance for assessing what changes
                 to the plans should be made and when such changes should occur.


                 Page 20                                GAO/NSIAMO-178   Advanced   Cruise Missile   Logistics
                      Chapter 2
                      Loglstlcs Support   Baaed on Outdated
                      ProgramPlana




                      In its comments on a draft of this report, DOD generally agreed with our
Agency Comments and   findings but said that (1) its decision to purchase spares during the
Our Evaluation        highly concurrent development and production program was prudent at
                      the time, and the spares were modified to correct technical problems as
                      necessary, (2) facilities constructed for the Advanced Cruise Missile are
                      being used, without modification, for the Air Launched Cruise Missile,
                      and (3) personnel trained to provide operational support to the
                      Advanced Cruise Missile were used to verify maintenance procedures
                      for the missile.

                      DOD  also commented that the official quantity of Advanced Cruise Mis-
                      siles to be acquired has not changed since the program’s inception,
                      According to DOD, all other quantities are based on exercises that occur
                      continually during the budget formulation process. However, DCD agreed
                      that, should it reduce the total number of missiles to be purchased, a
                      cost avoidance would occur. Our review indicated that the Air Force
                      plans to buy 1,46 1 missiles, but the Strategic Air Command’s current
                      requirements are for 1,200.

                      DOD  partially concurred with our recommendation. It agreed that logis-
                      tics support should be based on current data and modified when pro-
                      gram direction is changed. However, it stated that the Program
                      Management Directive process is in place to provide needed guidance to
                      the implementing commands. DOD did not agree that a new set of proce-
                      dures needs to be developed.

                      We believe that the Air Force’s experience with the logistics support for
                      the Advanced Cruise Missile program indicates that additional guidance
                      is necessary to ensure that plans and expenditures for such support are
                      consistent with current program plans.




                      Page 21                                 GAO/NSIAD-90-178   Advanced   Cruise. Missile   Logistlce
Operational Maintainability and Supportability
May Be Difficult and Costly

                                             The Air Force spends significant funds to maintain and support fielded
                                             weapon systems. Maintaining and supporting the Advanced Cruise Mis-
                                             sile will require trained personnel, repairs to components that fail, and
                                             adequate supplies of spare parts. The Air Force estimates that the total
                                             initial and continuing support cost for the currently programmed 1,461
                                             missiles will be $1.7 billion for the next 20 years. However, marginal
                                             system reliability, multiple configurations, and design and quality
                                             problems could make maintaining the missile in the field difficult and
                                             more costly than the Air Force estimates.


                                             According to the Air Force’s January 1990 estimate, initial logistics sup-
Logistics Cost                               port for 1,46 1 missiles will be $424.6 million, as shown in table 3.1.
Estimates
Table 3.1: Initial Logistics Support Costs
                                             Dollars in millions
                                             Category                                                                                       Amount
                                             Parts (initial spares)                                                                           $103.7
                                             Support equipment                                                                                 255.8
                                             Depot facilities                                                                                    3.1
                                             Base facilities                                                                                   62.0
                                             Total                                                                                           $424.6


                                             The Air Force estimates that operating and maintaining the 1,461 mis-
                                             siles in the field will cost $1.3 billion from 1990 through 2009. As shown
                                             by table 3.2, this includes replenishment spares, depot maintenance,
                                             contractor repair, and operation and maintenance costs.

Table 3.2: Cost to Maintain the Advanced
Cruise Missile                               Dollars in millions
                                             Category                                                                               Program cost
                                             Replenishment spares                                                                               $122
                                             Depot level maintenance                                                                            525a
                                             Base level maintenance                                                                              50
                                             Operations and maintenance                                                                         586b
                                             Total                                                                                           $1.283
                                             %cludes contractor and Air Force maintenance.
                                             bExcept for operations and maintenance cost, the Air Force provided the cost for a 20.year period. The
                                             operation and maintenance cost is based on Strategic Air Command cost estimates from 1990 through
                                             1995 and a constant 5-percent inflation rate through 2009.




                                             Page 22                                     GAO/NSWW178           Advanced    Cruise Missile   LogMica
                           chapter 8
                           Operatlotd     Maintainability   and
                           Supportability   May Be Difficult    and Coetly




                           According to Air Force officials, these estimates should include all nec-
                           essary costs. However, as experience is obtained, some additional costs
                           may be necessary. For example, officials noted that the cost to repair
                           circuit cards could cause logistics costs to increase by $20 million.
                           Because circuit card repair was not a part of the original repair contract
                           with General Dynamics, the Air Force requested a cost proposal. When
                           General Dynamics responded with a $119 million proposal, the Air
                           Force began identifying ways to reduce this amount, including using
                           repair facilities at air logistics centers. Air Force officials said they will
                           still require some services from General Dynamics, but they anticipate
                           such services will cost much less than the proposed amount.


                           Higher than expected maintenance and repair costs and multiple con-
Reliability, Design,       figurations could increase Air Force logistics cost estimates. Moreover,
and Quality Problems       spares costs will increase if component reliability levels are not met. Ini-
Could Incrkse Costs        tiatives are underway to reduce the number of different configurations,
                           ensure that sufficient quantities of spares are available, and improve
                           reliability and quality. However, these initiatives are also costly. For
                           example, the Air Force plans to spend $70 million to identify and
                           resolve design problems. In addition, according to Air Force officials, if
                           some of the major components, such as the sensor or avionics units, do
                           not meet the required reliability levels, the Air Force will have to buy
                           additional spares. Furthermore, if problems such as reliability
                           shortfalls, fuel leaks, and limited accessibility to subsystems are not
                           resolved, maintaining the missiles will be more costly and will present
                           difficulties for both logistics planners and maintenance personnel.


System Reliability Below   Currently, both the test flight and subsystem reliability levels are below
                           the Air Force’s reliability goals for the missile and pose significant con-
Goal                       cerns for the Air Force and General Dynamics. (Because these goals and
                           levels are classified, these numbers are not identified in this report.)
                           According to Air Force officials, flight test reliability is marginal, but
                           they anticipate the flight reliability level will gradually increase and
                           meet the flight test reliability goals.

                           Air Force officials said that subsystem level reliability, like flight relia-
                           bility, also is currently marginal. On the basis of predicted component
                           failure rates, a DOD model predicts the current mission success frequency
                           is below the required reliability levels. The sensor, guidance set, forward
                           and aft avionics units, actuators, altimeter, and deployment system pre-
                           sent significant reliability concerns for the missile system.


                           Page 23                                       GAO/NSLAD-90-178   Advanced   Cruise Missile   Logistica
                             Chapter 2
                             Operational    Maintainability    and
                             Supportability   May Be. Difficult    and Costly




                             The Air Force is taking actions that will improve subsystem level relia-
                             bility and that will make meeting the reliability specification possible.
                             Through enhanced environmental stress screening and improved quality
                             assurance procedures, the Air Force hopes to improve reliability of the
                             sensor and guidance set. Enhanced environmental stress screening
                             involves testing the subsystems before and after they are placed on the
                             system. The Air Force is modifying the forward and aft avionics units
                             and is improving manufacturing of the actuators to help their reliability.


Fuel Leaks Not Resolved      Advanced Cruise Missile fuel leaks are a major concern to the Air Force.
                             Of 26 preoperational missiles delivered to K.I. Sawyer Air Force Base,
                             10 have developed fuel leaks in varying degrees of severity (7 missiles
                             were returned to the contractor and 3 were repaired on-site).

                             System technical data make no provision for any allowable fuel leakage.
                             Because the missiles undergo normal electrical testing, Air Force docu-
                             ments note that undetected fuel leaks could create a potential for an
                             explosion and that continued fuel leakage could preclude nuclear certifi-
                             cation. Thus, because of its concern about the safety, design, and quality
                             implications of missile fuel leaks, the Strategic Air Command asked the
                             Aeronautical System Division to provide a safety assessment of con-
                             tinued ground testing, maintenance, and handling of the preoperational
                             missiles and the status of the contractor’s efforts to correct the fuel leak
                             problem. Also, the Strategic Air Command directed that missiles at K.I.
                             Sawyer Air Force Base be isolated and placed in storage igloos apart
                             from other weapons.

                             According to Air Force officials, the current fuel leak problem centers
                             around pinholes in the fuel bladder and is not so much a performance
                             issue as it is a safety issue. The fuel bladder does not contain any fuel,
                             but it is used to force fuel to the engine. As the missiles are transported,
                             the constant movement of the fuel tends to cause pinholes in the fuel
                             bladder. When this happens, fuel leaks out the air vents, posing a poten-
                             tial hazardous situation for maintenance personnel. The missile system
                             program office is working with the prime contractor to resolve this
                             problem.


Maintenance ficcessibility   According to Strategic Air Command officials, field maintenance accessi-
                             bility to some of the subsystems requires excessive connects and discon-
                             nects. For example, the guidance set, sensor, and air cycle cooling



                             Page 24                                        GAO/NSIAD!M-178   Advanced   Cruise Missile   Logistics
     .


                          Chapter 3
                          Operntlond     Maintainability   and
                          Supportability   May Be Difficult    and Cmtly




                          system are all connected together. To replace one of the systems, main-
                          tenance personnel must unhook all three. As a result, maintenance and
                          downtime for the missile increase and the possibility for damage to the
                          subsystems also increases.

                          Another example identified by the Strategic Air Command as a mainte-
                          nance accessibility problem relates to the aft avionics unit. Before main-
                          tenance personnel can access the unit, they must first remove some of
                          the radar absorbing material on the skin panel. Once accessed, the unit
                          can be replaced rather quickly. However, the problem is the time it takes
                          the radar absorbing material coating to dry as maintenance personnel
                          must replace the coating around the skin panel. Thus, increased down-
                          time is not caused by the actual replacement of the unit but by waiting
                          for the coating to dry.


Multiple Configurations   Logistics planners for the Advanced Cruise Missile are faced with spares
                          support and maintenance on a system with multiple configurations. Mul-
                          tiple configurations arise as problems that were not identified during
                          development surface during production. As a result of the problems,
                          refinements or improvements are made to the system’s design, and these
                          improvements are incorporated into production missiles at some point.
                          Missiles before that point are in one configuration and those after that
                          are in another configuration. This requires that spares be on hand and
                          be in the right design for each missile configuration.

                          The Air Force is reducing the number of missile configurations. The pro-
                          cess involves the first 110 missiles and is being done in two phases. The
                          first phase involves reducing the number of configurations from nine to
                          six and making hardware changes to the missiles. This phase is sched-
                          uled to begin in August 1990, at no cost to the government. The second
                          phase will begin after the hardware changes are made and will reduce
                          the number of configurations from six to three. According to an Air
                          Force official, this phase involves changes to the engineering drawings
                          and paperwork and will cost an estimated $180,000. In addition, the Air
                          Force is also studying the feasibility of reducing the number of configu-
                          rations to two.

                          According to an Air Force official, one of the lessons they learned from
                          prior missile programs and are trying to avoid on this program is the
                          logistics problems associated with having several configurations. For
                          example, the ground launch cruise missile had 150 configurations,
                          which created logistics support problems for logistics planners. With


                          Page 25                                      GAO/NSJAD-!IO-178   Advanced   Cruise Missile   Logistics
                  Chapter 2
                  Operational    Maintainabty      and
                  Supportability   May Be Difficult    and Costly




                  this many configurations, logistics support becomes extremely difficult
                  because more spares are needed to support the various configurations.

                  The Air Force has contracted with McDonnell Douglas Missile Systems
                  Company as a second source of production for this program. The Air
                  Force expects McDonnell Douglas, which began qualification efforts in
                  May 1988, will be qualified as a second source by July 1990. A second
                  source could affect not only the design of the Advanced Cruise Missile
                  but also the spares, configuration control, and logistics support.

                  As of June 16,19&g, McDonnell Douglas had submitted 672 data/service
                  requests to the Air Force or General Dynamics. In addition, McDonnell
                  Douglas has submitted or intends to submit 97 engineering change pro-
                  posals and 196 engineering change requests to the Air Force. According
                  to Air Force officials, General Dynamics will remain the sole design
                  agent for this missile system and, in their opinion, a second source will
                  not affect or increase the number of different missile configurations.


                  Operational maintainability and supportability will be difficult and
Conclusion        more costly than projected unless the Air Force overcomes reliability
                  shortfalls, maintenance accessibility on several subsystem components,
                  and multiple configuration designs. The Air Force recognizes these
                  problems and has implemented several initiatives, including reducing
                  the number of missile configuration designs and establishing quality
                  control actions.


                       commented that the Advanced Cruise Missile flight test reliability
Agency Comments   DOD
                  compares favorably to that of other cruise missiles at the same period of
                  development. DOD said that while the missile is not on the postulated
                  reliability growth curve, all of the problems that occurred during flight
                  tests are understood and have been corrected. According to DOD, a
                  bladder comprised of material similar to the one used in the B-62
                  bombers has undergone qualification testing and has solved the fuel leak
                  problem.




                  Page 28                                       GAO/NSIAD-go-178   Advanced   Cruise Missile   LogistIcs~
Page 27   GAO/NSIAIMO-178   Advanced   Cndse Mhwile   Loghtics
Appendix I

Comments From the Department of Defense -



                                    ASSISTANT    SECRETARY         OF DEFENSE
                                         WASHINGTON.    D.C.   20301-8000




             Mr. Frank C. Conahan
             Assistant  Comptroller General
             National Security and International
               Affairs  Division
             United States General Accounting Office
             Washington, D.C. 20548
             Dear Mr. Conahan:
                  This is the Department of Defense (DOD) response to the General
             Accounting Office (GAO) Draft Report, "STRATEGICMISSILES: Logistics
             Support for Advanced Cruise Missile Based on Outdated Plans," dated
             June 7, 1990 (GAOCode 392508/OSD Case 8372). The Department gener-
             ally concurs with three of the findings and the recommendation;
             however, the DOD does not concur with Finding D.
                    The GAO finding regarding opportunities      to reduce costs is based
             on the assumption that the quantity of Advanced Cruise Missiles to be
             purchased has changed from the existing      plans.    The original     plan and
             all subsequent plans have retained the same purchase quantity.
             Regarding findings and the recommendation which specify the need for
             specific   guidance for revising program planning,       these plans already
             exist in a Headquarters Air Force Operating Instruction.            Inclusion
             of another set of duplicative    regulations    would not aid the acquisi-
             tion process.
                   The detailed DOD comments on the report findings and recommenda-
             tion are provided in the enclosure.   The Department appreciates the
             opportunity  to comment on the draft report.

                                                       Si erely,
                                                         x

                                                       David/.         Berteau
                                                       Principal        Deputy

             Enclosure




                   Page 28                             GAO/NSLAMO-178 Advanced Cruise Missile Logbtic~
         .


                                     Appendix I
                                     Commenta From the Department       of Deferwe




                                                 GAODRAFTREPORT            -DATED     JUNE 7,     1990
                                                        (GAOCODE392508) OSD CASE 0372
                              "STRATEGIC    MISSIIaS:      ILJGISTICS      SUPPORT FOR ADVAXED            CRUISN MISSILE
                                                          EASEDONODTDATEDPLANS"



                                                                    *****

                                                                    FINDINGS

                          0       FINDING   9:   Backaround:     The M-d              Cs                    Rsa
                                  Sianificant      Louistics      SUP~O%. The GAO reported that the
                                  air-launch      Advanced Cruise Missile is being developed by the Air
                                  Force to enhance the long-term effectiveness                of the bomber leg
                                  of the strategic        triad,    with a capability     of defeating projected
                                  Soviet defenses through the 1990s. According to the GAO, the
                                  Advanced Cruise Missile is a subsonic, turbofan-powered                   missile
                                  that will carry a nuclear warhead. The GAO also reported that
                                  logistical      requirements for the Advanced Cruise Missile include
                                  facilities      and support equipment for servicing            the missile;
                                  maintenance planning for contractor              and Air Force repair of
                                  parts; manpower and personnel; data management systems; training
                                  and training      support; computer resources support; packing,
                                  handling,     storage, and transportation;           and adequate supplies of
                                  parts.      The GAOemphasized that effective,            efficient,   and
                                  economical logistics           support helps determine whether a weapon
                                  system will be ready to perform its mission.                  The GAOpointed
                                  out that the DODpolicy on logistics               states that primary objec-
                                  tives of the acquisition           process are improved readiness and
                                  sustainability,        and that resources needed to achieve readiness
                                  will receive the same emphasis as those required to achieve
                                  schedule and performance objectives,              while a system progresses
                                  through development, testing,            production,    and deployment.
Now on pp. 2,8, and IO.            (p. 2, pp. E-ll/Draft          Report)

                                  DODRESPONSE; Concur. The Advanced Cruise Missile                            will       provide
                                  significant deterrence well into the next century.




                                                                                                         Enclosure




                                     Page 29                                    GAO/NSIAKMM-179    A&vanced     Cruire    MisslIe   LogMica
                                      Appendix I
                                      Comments From the Department    of Defense




                             0   FINPTNO:m                    Su-rt       Based    on   ~+xiated     Pr~=aa
                                 m.         The GAO found that the Air Force has used outdated
                                 program plans to provide logistics              support for the Advanced
                                 Cruise Missile.         According to the GAO, the initial               program
                                 plan provided for the first          operational      missile      to be
                                  delivered    in late 1986. The GAO found, however, that test
                                  failures,    production problems, and other program changes
                                 resulted in slippage of the first             operational       missile
                                 delivery     until 1990. The GAO found that the Air Force
                                 continued to provide logistics             support using the original
                                 delivery     schedules, because program plans were not offi-
                                 cially     changed. The GAOnoted the Air Force did not change
                                 program plans until after the Congress eliminated production
                                 funds for FY 1989. Additionally,              the GAO observed that,
                                 even after the Congress eliminated production funds, over
                                 one year passed before the Air Force changed the program
                                 plan.      The GAO also reported that, because logistics                   support
                                 was provided based on outdated data, (1) spares were pur-
                                 chased too early, and limited quantities               are becoming
                                 unusable as design changes are made, and (2) about $30
                                 million     was spent for Advanced Cruise Missile facilities                   at
                                 an Air Force base that has been deleted from the basing
                                 plans for the missile.          The GAOalso pointed out that the
                                 Air Force paid $7.2 million          for contractor       repair services
                                 through 1989, even though no operational               missiles       were
                                 repaired.      The GAO further reported that Air Force person-
                                 nel, trained to work on the advanced cruise missiles at K.I.
                                 Sawyer Air Force Base, were reassigned or separated before
                                 working on an operational         missile,     which will be delivered
                                 about 3-l/2 years later than originally              planned.         The GAO
                                 concluded that, as a result of basing logistics                    support on
                                 four year old plans, resources were expended prematurely to
                                 acquire spares, maintenance and repair capability,                      and the
Now on pp. 3-4 and 12-l 7.       facilities     infrastructure.       (pp. 2-4, pp. 14-21,
                                 pp. 25-26/GAO Draft Report)
                                 pOD RESPOm        Partially    Concur. The Department does not
                                 agree that the Air Force has used outdated program plans.
                                 The Air Force formally updated program plans (Program
                                 Management Directives)      to the acquiring commands on
                                 April 13, 1987; October 8, 1987; June 28, 1988; October 21,
                                 1988; and April 3, 1989. The decision to purchase spares
                                 during the highly concurrent development and production
                                 program was prudent at the time.       When unforeseen technical
                                 problems occurred, those spares were modified, as needed, to
                                 meet the present configuration.




                                      Page 30                                 GAO/NSIAD-90478      Advanced   Craise Missile   Logistics
           Appendix I
           Commenta J?rom the Department   of Defenee




        The $30 million      spent on facilities      construction remains an
        integral  part of the strategic         cruise missile force struc-
        ture.    While initially    planned for the Advanced Cruise
        Missile,  the facilities     are being used, without modifica-
        tion, for the Air Launched Cruise Missile force structure--
        these facilities      are common cruise missile facilities       that
        can support the Advanced Cruise Missile or the Air Launched
        Cruise Missile.
        The personnel who received the Advanced Cruise Missile
        training   were already providing      operational     support to the
        existing   strategic    force structure,    independent of the
        Advanced Cruise Missile.       In anticipation       of Advanced
        Cruise Missile deliveries,       personnel received additional
        training   in areas that were Advanced Cruise Missile spe-
        cific.   None of the personnel were trained or intended for
        use exclusively      on the Advanced Cruise Missile system.
        However, these personnel, while not supporting operational
        Advanced Cruise Missiles in the force structure,             did con-
        tribute  to the total system capability.            By using their
        training   on pre-operational     missiles,    they verified    mainte-
        nance procedures and noted deficiencies           that would other-
        wise have had to be corrected when the system is deployed.
    0   -INO     C: sues                 Provide Oorxortunities  To Reduce
        N.      The GAO reported that the Air Force system program
        office plans to buy and logistically        support 1,461 Advanced
        Cruise Missiles,    even though the Strategic Air Commandhas
        reduced the quantities     required,   and the Air Force has consid-
        ered other possible reductions in the quantities        of missiles to
        be bought.    According to the GAO, the Air Force has changed
        plans and now only the B-52H bombers are being modified to
        carry Advanced Cruise Missiles.        The GAO reported that, as a
        result,  when spares and operational      test missiles are included,
        the total procurement is 1,200 Advanced Cruise Missiles.           The
        GAOnoted that the Air Force also considered:
              B total orocurement ouantitv of 1.093.   The GAO stated
              that this quantity was recommended by the Air Force in
              FY 1989, but was subsequently increased back to 1,461
              missiles, without explanation by the Office of the Secre-
              tary of Defense.
              A total orocurement cfuantitv of 510 missiles.     According
              to the GAO, this quantity was based on (1) poor Advanced
              Cruise Missile flight   tests at that time, and (2) the need
              for reduced spending in the 1990 through 1992 time frame.
Y
              The GAOpointed out that this consideration     involved




           Page 31                                 GAO/NSIAD-90-178   Advanced   Cruise Missile   Logistics
                                                                                                                           .
                                 Appendix I
                                 Chnmenta From the Department   of Defense




                                    deploying the missile at two, rather than four bases. The
                                    GAO observed that this option was considered for FY 1990,
                                    however, the Air Force decided to continue the program at
                                    1,461 missiles.

                                    B total procurement uuantitv of l.OOQ. The GAO stated
                                    that, according to Air Force officials,  a total quantity
                                    of 1,000 missiles is being considered for FY 1991, based
                                    primarily  on budgetary decisions.
                               The GAO concluded that reductions in quantities,    such as
                               described above, would negate the need for more spares pur-
                               chases, maintenance and repairs,   and other support costs, such
                               as activating  additional bases. The GAO also concluded that
                               savings of between $47           and $991 million  are possible
                               with reduced quantities.    The GAOnoted that these savings
                               would be dependent on logistics   and support plans being
Now   onpp. 4and 18-20.        closely tied to revised program plans.     (p. 4, pp. 22-23/GAO
                               Draft Report)

                              POD =SPmSE, . Partially      Concur. The Department disagrees
                              that the total procurement quantity         for the Advanced Cruise
                              Missile has been changed. The program baseline quantity has
                              not changed since the inception of the program; the Presi-
                              dent's Budget and Presidential      direction    have always been to
                              procure 1,461 Advanced Cruise Missiles.          All the other num-
                              bers, including   the 1,200 quantity,      are option possibilities
                              resulting   from discussions that continually         occur among the
                              Office of the Secretary of Defense, the Air Staff, and the
                              major commands during formulation       of each year's budget.       The
                              DOD continually   reviews the acquisition       strategy of the pro-
                              grams it manages. The Air Force cannot, and should not, react
                              at the implementing command level to those many force struc-
                              ture exercises.     After review at the highest levels within the
                              Department of Defense, 1,461 has remained the requirement in
                              each of the President's     Budgets since the program began. The
                              Department, however, agrees that, should the DOD reduce the
                              total number of items to be purchased, logistics           planning
                              should be changed to avoid unnecessary costs.
                          0   FINDING      D. . Gu idance
                                                   Needed  For Revisina  Proaram    Plar@.  The GAO
                              reported that, in response to congressional      and DOD initia-
                              tives for improving the defense acquisition      process, the Air
                              Force issued a policy in March 1989, which provides that
                              program plans are to be updated annually or sooner, if signif-
                              icant changes occur.    The GAOpointed out that, according to
                              Air Force officials  at the program office and 1OgiStiCS        manag-
                              ers, the program plans had not been changed, because the Air




                                 Page 32                               GAO/NSLAD-90-178   Advanced   Cruise Missile   Logistics
          .

    .
                                 Appendix I
                                 CmnmentaFromthe Department of Defeme




                            Force has no guidance on what changes should be made to pro-
                            gram plans and when these changes should be made. The GAO
                            pointed out that officials  at Air Force headquarters confirmed
                            that guidance to implement the policy on updating program
                            plans does not exist for the advanced cruise missile  or for
                            other programs.
                            The GAO concluded that, even though Air Force policy exists
                            that directs that cost, schedule, and performance be updated
                            at least annually,    the Air Force continues to base logistics
                            support upon plans that do not reflect         current requirements
                            for a lesser number of missiles.        The GAO suggested that, to
                            help ensure that Air Force policy requiring           an updated program
                            plan is effectively     implemented, managers in the Advanced
                            Cruise Missile program should be provided adequate guidance
                            for assessing what changes should be made to program plans and
                            when these changes should be made. The GAO added that manag-
                            ers should be provided guidance that enables them to identify
                            and defer potentially     unnecessary logistics       expenditures,
                            until program plans are updated.        Finally,    the GAO stated its
                            belief that the need for adequate guidance to effectively
                            implement the Air Force policy on updating program plans and
                            identifying   and deferring potentially       unnecessary logistics
                            expenditures   would not be limited to the Advanced Cruise
                            Missile program, but would be applicable         to other programs.
Nowon pp. 3-4, 17-18, and    (pp. 4-5, pp. 21-22, pp. 25-26/GAO Draft Report)
20
                            &WDRESPONSE: Non-concur.      The Department disagrees (1) that
                            specific   guidance does exist to revise program planning as
                            baseline changes happen, and (2) that the baseline quantity
                            for the Advanced Cruise Missile did, in fact, change. Guid-
                            ance for updating program plans exists in Headquarters Air
                            Force Operating Instruction    800-2, dated March 1985. As
                            stated in the DOD response to Finding C, after review of Air
                            Force Program Objective Memorandum alternatives       at the highest
                            levels within the Department of Defense, 1,461 has remained
                            the requirement in each of the President's      Budgets since the
                            program began. If subsequently,      a formal baseline change is
                            directed in the FY 1992 President's     Budget, the Program Man-
                            agement  Directive  process is in place to provide guidance to
                            the implementing commands. Regarding the need for issuing
                            guidance due to changes in requirements,     the Air Force has
                            updated program plans (see the DOD response to Finding B).
                            The Department is currently  working to improve the acquisition
                            process as a result of the Defense Management Review. As a
                            part of this effort all acquisition  regulations/procedures    are




                                 Page aa                           GAO/NSIAD9O-178 Advanced Cruise Missile Logistics
                            Appendix I
                            Comments From the Department   of Defense




                          being reviewed with the objective of improving and streamlin-
                          ing the acquisition management and oversight procedures.

                      0   pJjJ.DING&: Qmrational           Maintainabilitv   And SyrPoowitv          $@y
                                   ficult    And Costly.     The GAO reported that, according to
                          Air Force estimates for a program of 1,461 missiles,               initial
                          logistics       costs will be about $424 million       and follow-on costs
                          will total about $1.3 billion            from 1990 through 2009. The GAO
                          cautioned that these estimates are based on achieving projected
                          system reliability        levels.

                          The GAO reported, however, that the Advanced Cruise Missile
                          has marginal system reliability,       and design and quality prob-
                          lems, such as fuel leaks, limited accessibility        to subsystems,
                          and multiple   configurations.      The GAOpointed out that, unless
                          these problems are resolved, maintaining        the Advanced Cruise
                          Missile in the field will be difficult       and could cost more
                          than the Air Force estimates.        The GAO observed that initia-
                          tives are underway to reduce the number of different         configu-
                          rations,   ensure spares availability,     and improve reliability
                          and quality.     The GAO stated that although the initiatives        are
                          costly, they are intended to avoid future increases in logis-
                          tics support costs.

                          The GAO concluded that operational            maintainability       and sup-
                          portability      will be difficult       and more costly than projected,
                          unless the Air Force overcomes reliability              shortfalls,     mainte-
                          nance accessibility         on several subsystem components, and
                          multiple      configuration     designs.    The GAOnoted that the Air
                          Force recognizes these problems and implemented several initi-
                          atives,     including     reducing the number of missile configuration
                          designs and implementing quality control actions.                   (P. 5,
Nowon pp.4and22-26.       pp. 21-33/GAO Draft Report)
                          pOD RESPONSE:      Partially     Concur. The DOD does not agree that
                          the Advanced Cruise Missile does not have "marginal"            system
                          reliability     and design and quality problems.       The Advanced
                          Cruise Missile flight        test reliability  compares favorably to
                          that of other cruise missiles at the same period of develop-
                          ment. While the Advanced Cruise Missile is not on the postu-
                          lated reliability      growth curve, all of the problems which have
                          occurred during the flight         tests are understood and have been
                          corrected.      The Air Force has been directed,      within the
                          Defense Acquisition       Board process, to identify     when the
                          Advanced Cruise Missile will meet its mature reliability
                          requirements.      The mature reliability     value for the system has
                          not changed since the program inception.




                            Page a4                                GAO/NSLAD90-178   Advanced   Cruise Missile   Logkstics
          .
      c




                            Cvmmente From the Department   of Defense




                           The fuel leak problem has been fixed.     Qualification  testing
                           of a B-52 derivative   fuel bladder has been completed and these
                           bladders are installed    in all missiles delivered to the
                           Strategic Air Command.
                           All except one subsystem meets the baseline accessibility
                           requirement.    The attention    to the accessibility  of subsystems
                           shows the Air Force's significant       concern for maintainability.
                           An indicator  of maintainability      is Mean Time To Repair.      Mean
                           Time To Repair for the system has been measured under actual
                           conditions,  using production hardware, and with trained opera-
                           tional personnel, and the measured values are better than the
                           requirement.
                           As the GAOnoted,       the multiple          configurations      are being
                           reduced.




                                                      RNCX3WWDATION
                       0   m:                 The GAO recommended that the Secretary of the
                           Air Force ensure that logistics   support is based upon current
                           data, by developing procedures for revising program plans that
                           include guidance for assessing what changes to the plans
                           should be made and when such changes should occur.     (P. 5,
Now on pp. 5 and 20.       p. 26/GAO Draft Report)
                           DODRESPONSE; Partially     Concur. The Department concurs that
                           the Secretary of the Air Force should ensure that logistics
                           support is based upon current data.      The support plans will be
                           modified when program direction    is changed by program deci-
                           sions and/or the President's    Budget. The Department does not
                           agree that a new set of procedures needs to be developed, in
                           as much as this recommendation is already implemented within
                           the existing  guidance for weapon systems acquisition     (Head-
                           quarters Air Force Operating Instruction     800-Z) .




                            Page 36                                GAO/NSIAD90-178       Advanced   Cruise Missile   Logistics
Appendix II                                                                                             cr
Major Contributors to This Report


                        Norman J. Rabkin, Associate Director
National Security and   David Childress, Assistant Director
International Affairs
Division,
Washington, D.C.

                        Roger L. Tomlinson, Evaluator-in-Charge
Kansas City Regional    Gary L. Nelson, Site Senior
Office                  Bonnie S. Carter, Evaluator
                        Robert W. Jones,Evaluator




(392502)                Page 36                       GAO/NSIAD!W-178   Advanced   Cruise Missile   Logistics
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