DoD puts numbers to C-5 upgrade cost increase

The estimated cost of re-engining and upgrading US Air Force Lockheed C-5 airlifters has increased almost 55% to $17.5 billion, according to the Pentagon’s latest Selected Acquisition Reports (SAR), a quarterly report to Congress that makes depressing reading for taxpayers hoping for value from their defence dollar.

The latest SAR, which documents the performance of 94 procurements totalling almost $1.7 trillion, also reveals the estimated cost of the US Army’s Bell ARH-70A Armed Reconnaissance Helicopter programme has increased almost 19% to just over $1 billion. The good news, of sorts, is they are the only programmes to experience such big increases this time round.

This SAR is likely to be controversial, as Lockheed Martin disagrees with the DoD’s cost estimate and the USAF makes no secret that it wants Congress to lift its ban on retiring the oldest C-5s so it can buy more Boeing C-17s (or A380s?).

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With unseemly eagerness, the US Air Force has been anticipating a vaulting leap in the cost of the C-5 Reliability Enhancement and Re-engining Programme (RERP). Back in February, USAF leaders predicted a “Nunn-McCurdy breach” for the C-5 upgrade. That’s usually a bad thing – because it means costs have escalated so much the DoD has to recertify to Congress that the programme is really worth the money.

In the case of RERP, a Nunn-McCurdy breach is just what the USAF needed in its battle to convince Congress that it would make more sense to buy new C-17s than upgrade the older C-5As – the very aircraft Congress won’t let it retire because they are operated by the Air National Guard and Air Force Reserve. So there it is in the latest SAR – a “critical” Nunn-McCurdy breach for the C-5 RERP.

The USAF says programme costs have increased almost $6.2 billion because of “a revised program estimate based on an analysis of prime contractor production proposal data, system development and demonstration (SDD) actuals, and commercial pricing data”. So far, Lockheed has stuck adamantly to the original estimate of $11.3 billion to upgrade 111 C-5s, offering to sign a fixed-price contract to complete the programme within the budget.

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