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Letter


Regarding the Air Force’s Common Vertical Lift Support Program (CVLSP).
An Open Letter to the Honorable Daniel Inouye and the Honorable Thad Cochran:

August 25, 2011

The Honorable Daniel Inouye, Chairman
The Honorable Thad Cochran, Ranking Member
Subcommittee on Defense, Committee on Appropriations
United States Senate
Room S128, The Capitol
Washington, DC 20510

Dear Chairman Inouye, Ranking Member Cochran, and Members of the Committee:

In coming weeks, Members of Congress will confront many urgent matters, including deliberations of the Joint Select Committee on Deficit Reduction and unresolved appropriations for the upcoming fiscal year. As you and your colleagues assume a key role in these issues, the 362,000-member National Taxpayers Union (NTU) urges you to maximize every possible opportunity for exercising prudent oversight in systems procurement. One such opportunity we wish to bring to the Committee’s attention relates to the Air Force’s Common Vertical Lift Support Program (CVLSP).

As you may know, since its founding in 1969 NTU and its members have been involved in a plethora of discussions over defense purchasing policies, including in recent times the KC-45A program, the F-35 alternate engine, and the Medium Extended Air Defense System. In all of these cases, our sole motivation has been to advocate on behalf of obtaining the best possible value to servicepeople and taxpayers. NTU believes that a vigorous CVLSP competition among multiple bidders, under realistically defined mission requirements, will deliver this value. 

CVLSP was originally conceived to replace UH-1N aircraft, which are now performing non-combat tasks primarily within the continental United States. Their duties include security at Air Force missile fields and transport of priority personnel. Given such parameters, we were surprised to learn of reports this spring that the service was considering invoking the Economy Act to conduct single-source procurement. The system purchased under this arrangement would be a variant of the UH-60 platform, thousands of which are currently in U.S. and international service. However, after four decades of engaging in military funding issues, often involving NTU staff members with previous experience in the procurement field, we believe that applying the Economy Act to CVLSP is neither justifiable nor proper.

For one, although the need for CVLSP has been described as urgent, numerous alternatives are available for near-term modification and purchase. Several firms, including Bell (with the UH-1Y), EADS North America (Eurocopter) and AgustaWestland, offer robust aircraft that have been proven in a variety of commercial, military, and security missions under challenging conditions. Their features – including range, power-to-weight ratio, environmental footprint, flight handling, defensive systems, and all-weather performance – deserve a formal comparative evaluation, if for no other reason than to more precisely focus the ongoing deliberations on how to deliver the most capable system to the Air Force.

In addition, there are serious concerns that exercising the Economy Act could deprive taxpayers of considerable savings (by one firm’s estimate, $2.75 billion or more over the life of the contract). Not surprisingly, each company (including Sikorsky, which would manufacture the sole-source option), claims that its system provides significant dividends for taxpayers. Yet, it is precisely the “discovery process” afforded by competitive bidding that will allow these contentions to be systematically tested. One area of concern, for example, centers around the Maintenance, Repair, and Overhaul (MRO) costs associated with CVLSP. As Dr. Daniel Goure of the Lexington Institute wrote earlier this year:

Aircraft are complex systems that are difficult and relatively expensive to maintain. Anything that reduces the costs of MRO is important. Yet, the Air Force only competes a small fraction of its MRO work, particularly in the area of parts, subsystems, and assemblies. Moreover, experience shows that major savings can be achieved when parts can be repaired rather than replaced with new ones. The Air Force needs to rethink its approach to contracting as well as its MRO practices.

Proponents of selecting the UH-60 for CVLSP through sole-sourcing might argue that MRO costs would be lower under this alternative than others, owing to the familiarity of Air Force technicians with the airframe and the existence of a longstanding supply chain for the platform. Yet, this is not necessarily the case. For instance, other bidders may have a great deal of institutional expertise in providing safe repair procedures for parts, as well as maintenance protocols for commercial clients that are more cost-efficient while still meeting strict government certification requirements. These are not mere academic concerns, as a report last year on “common ground” deficit reduction ideas co-authored by NTU and the U.S. Public Interest Research Group made clear. The study noted:

Given the hundreds of billions of dollars that flow through the contracting process, it is unsurprising that vast improvements can be made to their efficiency. First, we recommend ending orders for obsolete parts and supplies in the Army, Navy, Air Force, and Defense Logistics Agency. According to the Government Accountability Office, these agencies waste billions purchasing items that go unused or were never required in the first place. In some cases, the agencies purchase 50 percent more parts than necessary. Streamlining this process would save more than $184 billion over five years without materially impacting national security.

Moreover, other life-cycle cost considerations may not favor the sole-sourcing route. At least one model that could be considered under CVLSP might require just one aircrew member in the cockpit – which could be of significant benefit in keeping training and personnel costs manageable. Also, owing to its size the UH-60 could need larger hangar space compared to several of the other CVLSP options, which could be billeted in existing UH-1N facilities. These military construction costs must likewise be accounted for in any fair analysis. By far the best way to ensure such an investigation takes place is through an open bidding process.

Finally, NTU believes that CVLSP could help to strengthen the case for more competitive procurement policies across systems as well as services. One persistent problem NTU has encountered among defense expenditures is “mission creep by design,” whereby an initial requirement is retooled through the input of numerous parties to become fulfillable only through a limited number of platforms (sometimes just one). This can stifle creative solutions – among them adaptations of off-the-shelf commercial designs – that could answer to the services’ purposes more nimbly and cost-effectively. Competitively bidding CVLSP, guided by an RFP that is “rightsized” to the mission rather than a preconceived system, could prompt desperately-needed reforms to the way the military purchases its needs.

In March, General Shackelford told the Tactical Air and Land Forces Subcommittee of the House Armed Services Committee that he expected the Air Force “will go towards a competitive strategy” for CVLSP. This was an extremely encouraging development, followed by some others in the months leading up to today. You can help to ensure that a competitive strategy does indeed take hold for this and other programs as you craft requirements in appropriations legislation and as you advise your colleagues on other panels.

In the current fiscal environment, it is more imperative than ever before to heed the advice from Joint Chiefs Chairman Admiral Mullen and “steward every dollar that we have.” CVLSP presents an ideal occasion to do so, and NTU stands ready to assist you in reaching this goal.  

Sincerely,

Pete Sepp
Executive Vice President