Military Aircraft: Observations on DOD's Aerial Refueling Aircraft Acquisition Options
Abstract
In our opinion, the assumptions used by DOD to develop its analysis of acquisition options generally appear to be reasonable, and the computations of the cost and savings estimates associated with these options appear to be accurate based on the current terms and conditions of the negotiated lease. We do believe, however, that the costs and savings numbers could be further refined under the options involving purchase. For example, Air Force officials indicated that The Boeing Company would pay the cost to underwrite the issuance of the bonds needed for financing in the original lease option. However, they could not definitively say whether the underwriting costs were included in the $131 million price for each aircraft. Because fewer bonds, if any, would be issued under the options involving purchase, the costs should be lower and the savings higher. With the exception of the fifth optionChairman Warners suggestion of leasing 25 aircraft, followed by a purchase of the remaining 75 aircraft at deliveryDOD did not significantly deviate from the costs, schedules, and support provisions contained in its July 10, 2003 report to the Committee and the Congress. Air Force officials stated that their analysis of options complied with the Chairmans request and that analyses outside the proposed leases terms and provisions would be academic exercises that might not be representative of the final negotiated prices. These officials also stated that changes from the proposed contract would require new negotiations and new review and approval actions, and consequently would lead to additional delays.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 14, 2003
- Accession Number
- AD1106072
Entities
People
- ;charles W. Perdue
- Ann M. Dubois
- Brian J. Lepore
- Jennifer K. Echard
- Joseph J. Faley
- Kenneth E. Patton
- Kenneth W. Newell
- Madhav S. Panwar
- Tim F. Stone
Organizations
- United States Government Accountability Office