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AVIATION AFFORDABILITY STUDY

February 19, 2008

William F. Stranges, AIR-00A1 Donald P. Allen, AIR-4.2.1.4

PURPOSE

· DASN SHIPS COMPLETED SHIPBUILDING AFFORDABILITY STUDY DURING 3 WEEK PERIOD IN OCTOBER

­ BASIC APPROACH WAS TO TAKE THE APPROVED FORCE STRUCTURE AND A TOP LINE BUDGET NUMBER AND CONSTRUCT AN AFFORDABLE ACQUISITION PROFILE

·

APN CEB

­ PROPOSED APPROACH MITIGATED BOW-WAVE ­ UNIT PRICE ASSUMPTIONS FOR LOWER PRODUCTION PROFILES NEED ACQUISITION REVIEW

·

CNO REQUESTED DASN (AIR) COMPLETE AN AVIATION AFFORDABILITY STUDY SIMILAR TO SHIPBUILDING

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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APN INVESTMENT HISTORY

INVESTMENT HISTORY

TRENDS AND INDICATIONS

FY05 $B

$20 $20

·

SIGNIFICANT IMPACT ON APN DURING "PROCUREMENT HOLIDAY" ­ EXACERBATED BY CANCELLATION OF A12 AND P-7 PROGRAMS DELAYS IN V-22, HUEY, COBRA AND JSF CONTRIBUTE TO ACCUMULATED REPLACEMENT "BACKLOG" SHIFT FROM H-60 REMAN TO REPLACEMENT DELAYED RECAPITALIZATION OF ASW HELO

$15

TOTAL INVESTMENT (APN + R&D)

$15

­

AVG APN + R&D

$10

$10.6B

$10

$7.4B

$5

AVG APN

­

$5

APN 1-4 TOTAL

R&D TOTAL $0 1982 1987

$0 1992 1997 2002 2007

·

· AVERAGE ANNUAL INVESTMENT IN NEW AIRCRAFT PROCUREMENT FROM 1982 TO 2011 WILL BE:

­ $7.4B APN 1-4 ­ R&D PLUS APN 1-4 WILL AVERAGE $10.6B

REFLECTED TODAY IN ACCUMULATED BOW-WAVE WITH NEW-PROCUREMENTS REQUIRED ACROSS SEVERAL TYPES OF AIRCRAFT HISTORICAL INVESTMENT DATA DOES NOT PROVIDE A RELIABLE METHODOLOGY BOTTOM-LINE WILL BE TO IDENTIFY THE "RIGHT" LEVEL OF SUSTAINABLE RESOURCES FOR NAVAL AVIATION

·

·

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

3

PROGRAM OF RECORD

APN 1- 4 ONLY (TY$B)

$20

AVERAGE OF POR IS $11.1 FY05$B POR

T-6 (JPATS) VTUAV (FIRE SCOUT)

$9.3B (50% ESL GOAL INFLATED)

$18

C-40

$16

MH-60S

BAMS

$14

ACS P-8A (MMA)

$12 $B

COD FOLLOW-ON

$10

KC-130J E-2C/D EA-18G T-45C F/A-18E/F UH-1Y MV-22 AH-1Z VH-71 MH-60R

VOD (MH-53X) HLR JUCAS

$8

$6

$4

JSF

$2

$0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 FISCAL YEAR

FUNDAMENTALLY, PAST DECISIONS HAVE REDUCED CURRENT FLEXIBILITY

­ AGING INVENTORIES CAN NO LONGER BE RELIED UPON TO FILL SHORTFALLS IN REQUIREMENTS

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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REPRICED APN CEB

APN 1-4 ONLY (TY$B)

POR

$20

ORIGINAL APN CEB PROFILE

$18

REPRICED APN CEB AVERAGE $10.1B INFLATED

$16

KC-130J T-6 (JPATS) BAMS COD FOLLOW-ON

$14

MH-60S

$12 $B

P-8A (MMA) VTUAV (FIRE SCOUT) HLR

$10

$8

T-45C

EA-18G F/A-18E/F UH-1Y

MH-60R MV-22 AH-1Z E-2C/D VH-71 JUCAS

$6

$4

JSF

$2

$9.3B (50% ESL GOAL INFLATED)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$0 2007 FISCAL YEAR

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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CHARACTERIZING THE EXCURSIONS

· EXCURSION 1: ZERO GROWTH ($7.4B)

­ APN CONSTRAINED HISTORICAL AVERAGE ­ CAIV REQUIREMENTS AND PROGRAMS TO FIT $7.4B (APN 1-4) · REFLECTS OPERATIONAL IMPACTS RELATIVE TO POR . . . VERTICAL / HORIZONTAL CUTS

·

EXCURSION 2: FISCALLY CONSTRAINED TO REPRICED APN CEB ($10.1B)

­ CAIV REQUIREMENTS AND PROGRAMS TO FIT REPRICED APN AFFORDABILITY CEB (APN 1-4) · REFLECTS OPERATIONAL IMPACT RELATIVE TO APN CEB BASELINE . . . HORIZONTAL CUTS

·

EXCURSION 3: ADDRESSES OPERATIONAL IMPACT AREAS

­ PROPOSED CHANGES TO MITIGATE OPERATIONAL IMPACTS OF EXCURSION 2

·

EXCURSION 4: ACQUISITION ASSESSMENT

­ PROCURE AIRCRAFT MORE EFFICIENTLY TO ALLEVIATE BOW-WAVE

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 1 CHANGES TO POR

· CHANGES TO POR TO ACHIEVE $7.4B HISTORICAL AVERAGE

­ TACAIR:

· · · CUT 5 CVW, 15 VFA, 9 VMFA, 5 VAQ, 5 VAW, 5 HS SQDNS, AND 5 VRC DETS JUCAS IOC DELAYED 2 YEARS STOVL TRANSITION < 1 SQDN / YR, CUT PROCUREMENT OBJECTIVE FROM 420 TO 330 (24 TO 15 SQDNS), DELAY FOC 2 YRS (2023 TO 2025)

­ MPRA:

· · · P-8A IOC DELAYED 2 YRS, POR REDUCED FROM 108 TO 76, BUY 8 PER YEAR BAMS: REDUCE ORBITS FROM 5 TO 2.5 ORBITS ACS: DIVEST NAVY AIRBORNE SIGINT

­ ROTARY:

· · · REDUCE MH-60S AND MH-60R FOR FULL COMPLEMENT TO SUPPORT 5 CVWS MV-22 TRANSITION LESS THAN 1 SQDN / YR, NEVER REACHES FOC WITH APPROPRIATE PIPELINE HLR: SLIP IOC 5 YEARS (2015 TO 2020)

­ CARGO: DIVEST NAVY LIFT

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 1

APN 1-4 ONLY (TY$B)

$20

POR

$18 $16

REPRICED APN CEB AVERAGE $10.1B INFLATED

$14

$12 $B

VTUAV (FIRE SCOUT) COD FOLLOW-ON

$10

T-6 (JPATS) BAMS KC-130J T-45C MH-60S MH-60R

$8

P-8A (MMA) HLR MV-22 AH-1Z

$6

UH-1Y

$4

EA-18G

E-2C/D

VH-71 JSF

JUCAS

$2

$7.4B HISTORICAL AVERAGE (INFLATED)

2013 2014 2015 2016 2017 2018 2019 2020

$0 2007 2008 2009 2010 2011 2012 FISCAL YEAR

DETAIL

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 1 OPERATIONAL IMPACTS

· SEVERE IMPACT TO WARFIGHTING CAPABILITY

­ TACAIR: UNABLE TO MEET PRESENCE AND SURGE REQUIREMENTS ­ MPRA: UNABLE TO ESTABLISH SEA BASE AND DOES NOT MEET ARRIVAL TIMELINE, OR SUPPORT FRP ­ ROTARY: ALLOWS SUPPORT FOR REDUCED CVWS BUT DOES NOT SUPPORT ESG / LCS OR ANY INDEPENDENT OPERATIONS ­ CARGO: NO ORGANIC LIFT CAPABILITY

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 2 CHANGES TO APN CEB

· TACAIR:

­ ­ ­ ­ 10 CVWS; IRCA APPLIED INCREASED EA-18G PMAA FROM APN CEB (+1) MAINTAINED POR (460) FOR F/A-18 E/F VICE 436 REDUCED STOVL PROCUREMENT OBJECTIVE TO 403 (20 SQDNS PER MATS) AND RAMP RATE (CUTS 38 USMC STOVL FY07-13)

·

MPRA:

­ P-8A DELAYED 1 YEAR; VICE 2 YEARS; PROCURE 10 PER YEAR ­ BAMS PROGRAM OF RECORD ­ SUSTAIN EP-3 AND RECAPITALIZE STARTING IN FY15

·

ROTARY:

­ MH-60R: PROCUREMENT OBJECTIVE 268, PROCURE AT 24 PER YEAR (WITHOUT MH-60X VARIANT) ­ MH-60S: PROCUREMENT OBJECTIVE 216 AND PROCURE AT 18 PER YEAR

·

CARGO:

­ DELAY C-40 TRANSITION; SUSTAIN C-9 10

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

EXCURSION 2

APN 1- 4 ONLY (TY$B)

$20

POR

$18

ORIGINAL APN CEB PROFILE

$10.1B REPRICED APN CEB AVERAGE

$16

T-6 (JPATS)

$14

C-40 BAMS ACS COD FOLLOW-ON

$12

MH-60S

$B

P-8A (MMA)

VTUAV (FIRE SCOUT) VOD

$10

MH-60R KC-130J UH-1Y E-2C/D EA-18G F/A-18E/F VH-71

$8

T-45C

MV-22 AH-1Z HLR JUCAS

$6

$4

JSF

$2

$0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 FISCAL YEAR

EXCURSION 2 AVERAGE IS $10.0 FY05$B

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

DETAIL

11

EXCURSION 2 OPERATIONAL IMPACTS

· ADOPTS APN AFFORDABILITY CEB PLAN AS THE BASELINE BUT DEVIATES FORCE STRUCTURE TO MITIGATE OPERATIONAL IMPACT, IRCA APPLIED TO CVW AIRCRAFT

­ TACAIR: SIGNIFICANT RISK TO MEET PRESENCE AND CURRENT OPLAN ­ MPRA: ALLOWS FOR MCO CAPABILITY AND SUPPORTS ARRIVAL TIMELINE AND FRP ­ ROTARY: ALLOWS SUPPORT FOR REDUCED CVWS BUT DOES NOT SUPPORT ESG / LCS OR ANY INDEPENDENT OPERATIONS ­ CARGO: SUSTAIN CURRENT ORGANIC LIFT CAPABILITY

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

12

EXCURSION 3 CHANGES TO EXC 2

· TACAIR:

­ F/A-18 E/FS, EA-18G PROCUREMENT OBJECTIVE MAINTAINS POR TO SUPPORT 10 CVWS TO MEET 2020 OBJECTIVE ­ IRCA APPLIED ACROSS ALL T/M/S ­ USMC JSF REMAINS POR 403 PER MARINE AVIATION TRANSITION STRATEGY

·

MPRA:

­ MAINTAIN POR FY13 IOC TO ALLOW FOR MCO SEA BASING CAPABILITY ­ PROCUREMENT OBJECTIVE INCREASED FROM 76 TO 96 · SUPPORTS ASUW MISSION ­ SUSTAIN EP-3 AND RECAPITALIZE STARTING IN FY15

·

ROTARY:

­ MH-60R PROCUREMENT OBJECTIVE 268 AND PROCURE AT POR THROUGH CSG TRANSITION THEN AT 24 PER YEAR ­ MH-60S PROCUREMENT OBJECTIVE 277 AT 18 PER YEAR; IRCA APPLIED ­ MV-22: CAP PROCUREMENT AT 30 PER YEAR; PROCUREMENT OBJECTIVE 367 FOR ATTRITION

·

CARGO: POR QUANTITY ­ ACCELERATED PROCUREMENT

13

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

EXCURSION 3

APN 1-4 ONLY (TY$B)

$20 $18

POR

$10.1B REPRICED APN CEB AVERAGE

$16 C-40 $14 T-6 (JPATS)

VTUAV (FIRE SCOUT) ACS COD FOLLOW-ON MH-60R UH-1Y MV-22 AH-1Z VH-71 VOD HLR JUCAS

BAMS MH-60S P-8A (MMA)

$12 $B $10 $8 KC-130J T-45C E-2C/D EA-18G $6 $4 JSF $2 $0 2007 F/A-18E/F

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

FISCAL YEAR

EXCURSION 3 AVERAGE IS $10.7 FY05$B

DETAIL

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 3 OPERATIONAL IMPACTS

· N78 / USMC PERSPECTIVE TO MITIGATE EXCURSION 2 OPERATIONAL IMPACTS, IRCA APPLIED TO CVW AIRCRAFT

­ TACAIR: ABILITY TO MEET PRESENCE AND MCO REQUIREMENTS DEPENDENT ON LEGACY SUSTAINMENT MITIGATING ACTIONS ­ MPRA: ALLOWS FOR MCO CAPABILITY AND SUPPORTS ARRIVAL TIMELINE ­ ROTARY: ALLOWS SUPPORT FOR CVWS, ESG, LCS AND ANY INDEPENDENT OPERATIONS ­ CARGO: SUSTAIN CURRENT ORGANIC LIFT CAPABILITY

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 3

APN 1-4 ONLY (TY$B)

$20 $18

POR

$10.1B REPRICED APN CEB AVERAGE

$16 C-40 $14 T-6 (JPATS)

VTUAV (FIRE SCOUT) ACS COD FOLLOW-ON MH-60R UH-1Y MV-22 AH-1Z VH-71 VOD HLR JUCAS

BAMS MH-60S P-8A (MMA)

$12 $B $10 $8 KC-130J T-45C E-2C/D EA-18G $6 $4 JSF $2 $0 2007 F/A-18E/F

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

FISCAL YEAR

EXCURSION 3 AVERAGE IS $10.7 FY05$B

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 4A ADJUSTMENTS TO EXC 3

· TACAIR

­ MITIGATE OVERLAP OF JSF AND F/A-18E/F AND EA-18G PROCUREMENT

· ACCELERATE F/A-18E/F AND EA-18G (LAST BUY YEAR FY10 VICE FY13) · SLIP JSF CV TO THE RIGHT 1 YEAR (FY10 VICE FY09) · HOLD JSF STOVL & CV PRODUCTION @ 10 A/C PER YEAR DURING OVERLAP PERIOD (FY08, FY09, FY10)

·

ROTARY

­ CUT MV-22 QUANTITY BY 7 AIRCRAFT (275 VICE 282) ­ ACCELERATE MH-60S (LAST BUY YEAR FY15 VICE FY16) ­ INTEGRATE HLR AND VOD BUY PROFILES

· SLIP ADDITIONAL 23 HLR AIRCRAFT INTO FY21(10+10) AND FY22 (13) TO ACCOMMODATE 23 VOD AIRCRAFT WITHIN FY14-FY20 TIMEFRAME

·

MPRA

­ MMA

· SLIP MMA TO THE RIGHT 1 YEAR (FY11 VICE FY10) · 1 YEAR PRODUCTION STRETCH (LAST BUY YEAR FY20 VICE FY18) · SKEW PRODUCTION PROFILE TO THE RIGHT

·

TRAINER / CARGO

­ C-40

· SLIP BUY TO THE RIGHT, FROM FY-08 THRU 10 TO FY-14 THRU 16

­ COD-FOLLOW-ON

· PULL BUY TO THE LEFT, FROM FY-18 THRU 21 TO FY-14 THRU 17

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 4A

APN 1-4 ONLY (TY$B)

$20

POR

$18

EXCURSION 3 BASELINE

$10.5B (FY05$ INFLATED) ANNUAL PROCUREMENT

$16 $14 T-6 (JPATS)

VTUAV (FIRE SCOUT) BAMS

COD FOLLOW-ON ACS P-8A (MMA) VOD HLR JUCAS AH-1Z VH-71

$12 $B KC-130J $10 $8 T-45C MH-60S MH-60R MV-22 UH-1Y $6 $4 E-2C/D EA-18G F/A-18E/F $2 JSF $0 2007 2008 2009 2010 2011 2012 2013 2014

2015

2016

2017

2018

2019

2020

FISCAL YEAR

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 4A OBSERVATIONS

· MANAGING THE PROCUREMENT BUDGET AT THE PORTFOLIO LEVEL IS A ZERO SUM GAME

­ CAN INDUCE BOTH EFFICIENCIES AND INEFFICIENCIES AT THE T/M/S LEVEL

·

THE ABILITY TO STAGGER PROGRAMS IS LIMITED

­ MULTIPLE PROGRAMS HAVE COMPLETED DEVELOPMENT AND ARE POSTURED FOR PRODUCTION WITHIN FYDP ­ EXCURSION 4A BUDGETARY CAP NOT SUFFICIENT DURING THE FYDP TO CAPITALIZE ON THE MAJORITY OF PROCUREMENT EFFICIENCIES ­ CAN NOT MOVE TO WHITE SPACE UNDER THE CURVE WITHOUT INTRODUCING PRODUCTION RATE INEFFICIENCIES (I.E. HIGHER

UNIT RECURRING FLYAWAY)

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

19

EXCURSION 4B

· ACQUISITION PERSPECTIVE TO PROCURE AIRCRAFT MORE EFFICIENTLY TO ALLEVIATE BOW-WAVE GROUND RULES

­ MANAGE APN 1-4 AT THE PORTFOLIO LEVEL VICE T/M/S ­ EXCURSION 3 POINT OF DEPARTURE ­ CONSTRAIN TO ANNUAL PROCUREMENT

· CONSTRAINED TO $11.5B (FY05$) FY05 IN POM 08 FYDP AND $10.5B (FY05$) FY14 TO FY20

·

­ NO CHANGE TO FY07 ­ ALLOWED TO BUY ADDITIONAL QUANTITIES OF AIRCRAFT ONCE EXCURSION 3 REQUIREMENT IS MET ­ OPERATIONAL IMPLICATIONS NOT CONSIDERED

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 4B ADJUSTMENTS TO EXC 3

­ TACAIR

· MITIGATE OVERLAP OF JSF AND F/A-18E/F AND EA-18G PROCUREMENT

­ ACCELERATE F/A-18E/F AND EA-18G (LAST BUY YEAR FY10 VICE FY13) ­ SLIP JSF CV TO THE RIGHT 1 YEAR (FY10 VICE FY09) ­ JSF STOVL & CV PRODUCTION PROFILE OF 8, 9, 9 DURING OVERLAP PERIOD (FY08, FY09, FY10) ­ SMOOTH JSF STOVL & CV BUY PROFILE OVER ENTIRE PROGRAM, NEW PROFILE ALLOWS FOR THE PURCHASE OF 15 ADDITIONAL AIRCRAFT THRU FY20

­ ROTARY

· ACCELERATE ROTARY AIRCRAFT BUYS

­ AH-1Z: 5 YEAR ACCELERATION (LAST BUY YEAR FY13 VICE FY18) ­ UH-1Y: 1 YEAR ACCELERATION (LAST BUY YEAR FY11 VICE FY12) ­ MV-22: 2 YEAR ACCELERATION (LAST BUY YEAR FY15 VICE FY17) ­ MH-60S: 1 YEAR ACCELERATION (LAST BUY YEAR FY15 VICE FY16)

· MAINTAINED INTEGRATED LEVEL PRODUCTION PROFILES FOR AIRCRAFT BUILT AT THE SAME PRODUCTION FACILITY

­ AH-1Z / UH-1Y, MH-60R/MH-60S AND HLR / VOD

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

21

EXCURSION 4B ADJUSTMENTS TO EXC 3

­ MPRA

· MMA

­ MAINTAIN FY10 PRODUCTION START, HOWEVER REDUCE QUANTITY BY 2 AIRCRAFT ( 4 VICE 6) ­ 1 YEAR PRODUCTION STRETCH (LAST BUY YEAR FY19 VICE FY18), HOWEVER NEW PROFILE ALLOWS FOR THE PURCHASE OF 12 ADDITIONAL AIRCRAFT

­ TRAINER / CARGO

· C-40

­ 3 YEAR PRODUCTION STRETCH (FY-08 THRU 13 VICE FY-08 THRU 10)

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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EXCURSION 4B

APN 1-4 ONLY (TY$B)

$11.5B (FY05$ INFLATED) ANNUAL PROCUREMENT

$20 $18

EXCURSION 3 BASELINE POR

$10.5B (FY05$ INFLATED) ANNUAL PROCUREMENT

$16 $14 T-6 (JPATS)

COD FOLLOW-ON C-40 VTUAV (FIRE SCOUT) BAMS ACS

$12 $B $10 $8

KC-130J T-45C MH-60S MV-22 UH-1Y VH-71 E-2C/D EA-18G MH-60R P-8A (MMA) VOD HLR JUCAS AH-1Z

$6 $4

F/A-18E/F $2 JSF $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FISCAL YEAR

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

23

EXCURSION 4B OBSERVATIONS

· INCREASING AVERAGE ANNUAL PROCUREMENT BY $1B ACROSS FYDP BUYS BACK EXCURSION 3 WARFIGHTING CAPABILITY

­ INCREASED PROCUREMENT EFFICIENCY PERMITS INCREASED QUANTITY ­ 15 JSFs AND 12 MMAs ADDITIONAL AIRCRAFT THROUGH 2020

· · ·

ELIMINATES PROCUREMENT BOW-WAVE HOWEVER REQUIRES ~$3B INCREASE IN APN 1-4 IN FY08 ALLOWS FOR PRODUCTION LINE EFFICIENCIES ON MULTIPLE T/M/Ss AVIATION PORTFOLIO MANAGEMENT APPROACH THAT OFFERS TRADE SPACE

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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APN AFFORDABILITY COMPARISON

3,000

BILLIONS OF FY05 DOLLARS 2007-2020

2,654

$155.4

2,412

1,742

2,391

2,579

2,522

2,606

TOTAL AIRCRAFT

$180

$160 $149.4 TRAINER / $148.8 CARGO QTY 294

2,500 333 $141.5 345 2,000 AIRCRAFT QUANTITY 262 $101.6 264 1,500 270 1,086 1,000 1,011 712 1,056 313 315 297 $139.4

294

315

$143.2

$140

333 333

345

MPRA QTY $120 WPN SYS COST FY05$B

$100

ROTARY QTY $80 1,121 1,091 1,121 $60

$40 500 890 824 496 725 831 783 846 TACAIR QTY $20

0 POR REPRICED APN CEB EXCURSION 1 EXCURSION 2 EXCURSION 3 EXCURSION 4A EXCURSION 4B

$0

TOTAL PROCUREMENT COST (FY05$B) 2007-2020

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

25

SUMMARY OF UNIT COSTS

$120.0

$100.0

AVERAGE WPN SYS COST FY05$M

$80.0

Wtd. Ave. Unit Cost

$60.0

$40.0

$20.0

$0.0 POR APN CEB TACAIR Avg. Exc. 1 ROTARY Avg. Exc. 2 MPRA Avg. Exc. 3 TRAINER / CARGO Avg. Exc. 4a TOTAL Avg. Exc. 4b

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

26

INCREMENTAL COSTS OF SUSTAINMENT

$20

IMPACT OF O&S AND SUSTAINMENT COSTS ON EXCURSION 2

$18

$16

POR EXCURSION 2

$14

$12

$10

DELTA O&S AND SUSTAINMENT COST - P-3C, CH-46, SH-60, HH-60 ONLY

$8

$6

$4

$2

$0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

27

PROGRAM OF RECORD INVENTORY PROFILE

TMS AV-8B FA-18B FA-18D FA-18A/C JSF FA-18E/F EA-6B EA-18G E-2C E-2D J-UCAS VH-3/60 V-XX H-1W/N H-1Y/Z Medium Lift Helo MV-22B CH-53E H-53HLR H-60B/F/H MH-60R MH-60S P-3C MMA EP-3E ACS BAMSUAS FIRESCOUT KC-130F/R KC-130J C-9 C-40A C-20A C-37B T-34C T-39G/N T-6A T-45 C-2A Cod Follow-on 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Cargo/Trainer

MPRA

Rotary

TACAIR

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

28

FLEET WEIGHTED AVERAGE ESTIMATED SERVICE LIFE

EXCURSION 2

120%

EXCURSION 3

120% 100%

100%

80%

Train/Cargo 71.8%

TACAIR ESL % MPRA ESL %

80%

Train/Cargo 72.8%

TACAIR ESL % MPRA ESL %

60%

Helicopters ESL % Training/Cargo ESL %

60%

Helicopters ESL % TACAIR 51.8% Training/Cargo ESL % Average ESL % 100% ESL 50% ESL

40%

TACAIR 49.3% MPRA 49.9% Helo 32.5%

Average ESL %

40%

100% ESL 50% ESL

Helo 31.6%

20%

20%

Overall WTD AVE48.8% = 51.8%

0%

10 11 12 13 09 14 18 15 17 FY FY FY FY FY FY FY FY FY FY FY 19 FY FY FY 20 08 07 16

WTD AVE =Overall 51.8% 48.8%

0%

07

08

09

10

12

13

14

15

16

17

18

19 FY

FY

FY

FY

FY

FY

FY

FY

EXCURSION 4A

120% 120%

EXCURSION 4B

100% 100%

80%

Train/Cargo 71.5%

TACAIR ESL % MPRA ESL % 80% TACAIR ESL % Train/Cargo 71.7% MPRA ESL % 60% Helicopters ESL % Training/Cargo ESL % Average ESL % 100% ESL 50% ESL

60% TACAIR 52.5% MPRA 49.9%

Helicopters ESL % Training/Cargo ESL % Average ESL % 100% ESL Helo 32.9% 50% ESL 20% Overall 50.0% WTD AVE = 50.0% 0%

11 07 08 09 10 12 13 14 15 16 17 18 19 FY FY FY FY FY FY FY FY FY FY FY FY FY FY 20 11 07 08 09 10 12 13 14 15 16 17 18 19 FY FY FY FY FY FY FY FY FY FY FY FY FY FY 20

40%

40%

TACAIR 50.8% MPRA 49.9% Helo 34.4%

20%

WTD AVE = 50.3%

0%

Overall 50.3%

FY

FY

FY

FY

FY

FY

20

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SUMMARY

· · CURRENT INVENTORY ESL APPROACHES 80% REFLECTED TODAY IN ACCUMULATED BOW-WAVE WITH NEW-PROCUREMENTS REQUIRED ACROSS SEVERAL TYPES OF AIRCRAFT HISTORICAL INVESTMENT DATA DOES NOT PROVIDE A RELIABLE METHODOLOGY FOR FUTURE INVESTMENT ­ MULTIPLE PROGRAMS HAVE COMPLETED DEVELOPMENT AND ARE POSTURED FOR PRODUCTION WITHIN FYDP · AVIATION PORTFOLIO MANAGEMENT APPROACH OFFERS TRADE SPACE

­ SUGGESTS AVIATION BUDGET TOP LINE ­ REQUIRES ~$3B INCREASE IN APN 1-4 OVER CURRENT LEVELS ­ ALLOWS FOR PRODUCTION LINE EFFICIENCIES ON MULTIPLE T/M/Ss WITH TRADE SPACE

BRIEF DATE: 19 February 2008 FILE NAME: DOCAS(DASN AIR AFFORDABILITY 2 MAR) V1.5.ppt

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