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C-17 Aircraft: RM&A Evaluation Less Demanding Than Initially Planned (Letter Report, 07/26/96, GAO/NSIAD-96-126).

Pursuant to a congressional request, GAO reviewed the Air Force's
reliability, maintainability, and availability (RM&A) evaluation of the
C-17 aircraft, focusing on: (1) RM&A planning, preparation, execution,
and results; and (2) whether the evaluation demonstrated the aircraft's
wartime surge rate.

GAO found that: (1) the Air Force reported that the C-17 aircraft met or
exceeded 10 of the 11 contract requirements during its RM&A evaluation,
but the evaluation was less demanding than originally planned; (2)
although the revised RM&A evaluation plan increased total flying hours,
the number of sorties, and average wartime sortie duration, it decreased
the ratio of sorties to flying hours, which weakened the application of
RM&A measurement criteria and lessened the stress on the aircraft; (3)
the RM&A evaluation also had fewer airdrops and austere airfield
landings than originally planned, and the aircraft flew cargo loads that
averaged less than one-half the weight projected in contract
specifications; (4) 3 years of operational testing show that the
aircraft generally met RM&A requirements with the exception of those
related to built-in-test parameters; (5) the RM&A evaluation was not a
statistically valid test for determining C-17 fleet wartime utilization
rates because the test's duration was too short; and (6) the incentive
fee should have been reduced, since the aircraft could not perform the
formation personnel airdrop mission under operational conditions, or the
aeromedical evacuation mission.

--------------------------- Indexing Terms -----------------------------

     TITLE:  C-17 Aircraft: RM&A Evaluation Less Demanding Than 
             Initially Planned
      DATE:  07/26/96
   SUBJECT:  Product performance evaluation
             Military aircraft
             Military airlift operations
             Cost plus award fee contracts
             Contract specifications
             Air Force procurement
             Contractor payments
             Defense capabilities
IDENTIFIER:  C-17 Aircraft
             DOD Mobility Requirements Study
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================================================================ COVER

Report to the Honorable
Norman D.  Dicks, House of Representatives

July 1996



C-17 Aircraft


=============================================================== ABBREV

  DOD - Department of Defense
  RM&A - reliability, maintainability, and availability

=============================================================== LETTER


July 26, 1996

The Honorable Norman D.  Dicks
House of Representatives

Dear Mr.  Dicks: 

In response to your request, we reviewed the Air Force's reliability,
maintainability, and availability (RM&A) evaluation of the C-17
airlifter.  Specifically, we reviewed the planning and preparation
for the evaluation, monitored its execution, and assessed the results
reported by the Air Force.  In addition, as you requested, we
obtained information on the extent that the evaluation would
demonstrate the C-17's wartime surge rate. 

------------------------------------------------------------ Letter :1

The C-17 military transport, which is being produced for the Air
Force by the McDonnell Douglas Corporation, is designed to airlift
substantial payloads over long ranges without refueling.  The Air
Force intends the C-17 to be its core airlifter and the cornerstone
of its future airlift force.  The Congress had appropriated about
$20.7 billion and authorized the acquisition of 40 aircraft, through
fiscal year 1996, for the C-17 program.  The $20.7 billion includes
$5.9 billion for research and development,
$14.6 billion for procurement, and $170 million for military
construction.  The Congress has also authorized the Department of
Defense (DOD) to enter into a multiyear contract for the acquisition
of the remaining
80 aircraft of the 120 aircraft C-17 program.  As of July 3, 1996, 27
aircraft have been delivered. 

The C-17 development contract required the Air Force to conduct a
30-day evaluation of the aircraft's compliance with RM&A
specifications.  The evaluation was also used to determine how much
of a $12-million incentive fee the contractor was entitled to for
meeting those specifications.  In October 1992, the Air Force
developed a draft RM&A evaluation plan that was closely tailored to
the contract specifications.  The plan was revised during 1994 and
issued in July 1994. 

The 30-day RM&A evaluation was conducted between July 7 and August 5,
1995.  It consisted of a 23-day peacetime segment and a 7-day wartime
segment.  Aircraft operations, using 12 aircraft, were conducted at
6 U.S.  airfields and 1 overseas base.  Table 1 shows the number of
missions, sorties,\1 and flight hours flown during the evaluation. 

                                Table 1
                  Missions, Sorties, and Flight Hours

Segment                       Days    Missions     Sorties       hours
--------------------------  ------  ----------  ----------  ----------
Peacetime                       23         173         334       1,192
Wartime                          7          61         179       1,067
Total                           30         234         513       2,259
Missions included logistics (transporting equipment, personnel, and
supplies); joint operations (training with equipment and personnel
from the Army); and peacetime aircrew training.  The wartime
logistics missions were designed to simulate long-range movement of
equipment, personnel, and supplies to forward operating bases or
small austere airfields.  Peacetime and wartime missions included
aerial refueling; equipment and personnel airdrops; formation flying;
low-level operations; and operations into small, austere airfields. 
The wartime missions ranged from 12.5 to
26 hours, while the peacetime missions ranged from 2 to 20.5 hours. 

By the end of the evaluation, the C-17 fleet had logged about 13,000
total operational flying hours since initial squadron operations
began in 1993.  The RM&A evaluation represents about 2 percent of the
100,000 flying hours needed to meet aircraft fleet maturity. 

\1 During the RM&A evaluation, a sortie began with the takeoff of the
aircraft and ended when the aircraft returned to the ground and
either (1) stopped its engines; (2) remained on the ground for over 5
minutes (except for direct delivery and tactical proficiency
sorties); or (3) changed aircrews. 

------------------------------------------------------------ Letter :2

The Air Force reported that the C-17 met or exceeded 10 of the 11
contract specification requirements during its RM&A evaluation. 
However, the evaluation, which was based on the revised plan
developed in 1994, was less demanding than the one called for in the
draft 1992 plan.  The reduced rigor stemmed primarily from changes in
the number of aircraft sorties, average sortie length, and total
flying hours.  These changes altered the proportional mix of sorties
to flying hours that had been developed based on contract
specifications.  The altered mix of sorties to flying hours weakened
the link between the RM&A evaluation results and the measurement
criteria, which were based on more demanding test profiles.  The RM&A
evaluation was also less demanding because it had fewer airdrops and
landings at small austere airfields than originally planned and flew
cargo loads that were significantly lighter than projected in the
contract specifications. 

A less demanding RM&A evaluation might have masked reliability and
maintainability problems and made the evaluation a less reliable
source of information for the C-17 full-rate production decision. 
However, the results of the Air Force's 3 years of operational
testing, although less impressive than the results of the RM&A
evaluation, also show the aircraft generally met RM&A requirements
with the exception of those related to built-in-test parameters. 

The RM&A evaluation was not a statistically valid test for
determining C-17 fleet wartime utilization rates.  Fleet utilization
rates refer to the number of hours per aircraft that a fleet of
airplanes are in the air on a given day.  The evaluation did not
demonstrate or prove what a mature C-17 fleet would do during 45 days
of wartime surge operations.  It simply demonstrated that a high
utilization rate could be achieved over a 48-hour period. 

Finally, in awarding the incentive fee, the Air Force credited the
C-17 aircraft with meeting the full mission capable rate goal. 
However, during the RM&A evaluation, the aircraft was restricted from
performing formation personnel airdrop under operationally
representative conditions and was rated not functionally effective
for aeromedical evacuation.  As a result, the $5.91-million incentive
fee was $750,000 higher than justified. 

------------------------------------------------------------ Letter :3

The C-17 met or exceeded 10 of the 11 RM&A evaluation contract
specification requirements.  (See app.  I.) However, the RM&A
evaluation was less demanding than originally called for in the
contract specifications and the 1992 draft RM&A plan.  The RM&A
evaluation, based on the 1994 revised plan, decreased the ratio of
sorties to total flying hours.  The decrease weakened the link
between the evaluation as executed and the RM&A measurement criteria. 
In addition, the evaluation was less demanding because the number of
airdrops and landings on small austere airfields was decreased and
lighter average cargo loads than called for in the contract
specifications were carried. 

---------------------------------------------------------- Letter :3.1

The 1992 draft RM&A evaluation plan was based on 25 C-17 mission
profiles representing the aircraft's projected peacetime and wartime
usage over a 30,000-hour airframe life included in the development
contract.  In developing its 1992 draft plan, the Air Force conducted
extensive analyses and reviews to ensure that the plan adhered to the
contractual requirements. 

In January 1994, as part of the settlement related to the C-17
development program between DOD and the contractor, DOD directed the
Air Force and the contractor to revise the C-17 RM&A evaluation plan
to make it more operationally realistic.  That is, to more
realistically mirror the planned use of the aircraft.  In addition,
because of reliability problems with the C-17, the scheduled November
1995 Defense Acquisition Board was to consider the evaluation results
when it decided whether to continue the C-17 program beyond 40
aircraft.  As part of the 1994 revisions, the Air Mobility Command
changed the mission profiles used in the October 1992 draft plan
because they did not represent complete and comprehensive missions. 
Command officials were also concerned that the 1992 draft plan would
not demonstrate the aircraft's wartime surge utilization rates
included in the C-17 Operational Requirements Document. 

In July 1994, the Air Force issued the revised RM&A evaluation plan. 
The plan included a wartime scenario representative of a major
regional contingency, additional sorties to simulate complete
missions, and additional flying hours to increase the aircraft's
utilization rate. 

The revised mission profiles in the final RM&A plan increased the
total number of flying hours, number of aircraft sorties, and average
wartime sortie duration, but did not maintain the proportional mix of
sorties to flying hours that was based on contract specifications. 
The impact of these changes was longer duration wartime sorties and a
reduced ratio of sorties to flying hours, resulting in less stress on
the RM&A aircraft than originally planned.  Longer missions with
fewer cycles,\2 such as strategic intertheater missions, place less
stress on an aircraft and will result in longer aircraft life.  The
1992 draft evaluation plan provided for 1,725 total flying hours. 
The RM&A evaluation increased the level to 2,259 flying hours, an
increase of 31 percent over the draft plan.  The total number of
sorties flown increased 12 percent, but the average sortie time
increased 17 percent.  Peacetime sorties increased 34 percent, from
248 to 334, but the number of wartime sorties decreased 15 percent,
from 211 to 179.  Although the change in the duration of the average
peacetime sortie was negligible, the average wartime sortie increased
by 50 percent, from 3.99 to 5.97 hours.  (See app.  II.)

Because the average wartime sortie significantly increased, the
number of sorties in relation to the number of flying hours was less
than planned in the 1992 draft RM&A evaluation plan.  We estimate
that if the average duration of peacetime and wartime aircraft
sorties had not changed, the Air Force would have needed to fly 90
additional sorties.  This represents a 15-percent increase in the
number of sorties necessary to maintain the proportional mix of
flying hours to aircraft sorties identified in the 1992 draft
evaluation plan.  (See app.  III.)

\2 An aircraft cycle is defined as the operation of an aircraft from
engine start to engine stop. 

---------------------------------------------------------- Letter :3.2

The ratio of flying hours to sorties specified in the contract and
1992 draft plan mission profiles was based on the profiles used in
the development of selected RM&A measurement criteria.  In addition
to reducing the stress on the RM&A aircraft, changes to the original
mission profiles weakened the link between the RM&A evaluation
scenarios and the assessment criteria developed using the original

The Air Force used the C-17 lifetime mission profiles in the contract
specifications to develop the test profiles in the 1992 draft of the
RM&A evaluation plan.  These lifetime mission profiles were also used
to develop a number of the C-17 RM&A growth curve parameters,\3 such
as mission completion success probability, full mission capable rate,
and partial mission capable rate.  The RM&A growth curves, based on
total C-17 fleet flying hours, are the criteria used to measure the
C-17 RM&A results. 

A 1981 report by the contractor noted that the operational profiles
flown during the RM&A evaluation must be the same as the profiles
used to develop the growth curves.  Since the original mission
profiles were used as a basis for developing RM&A growth curve
criteria, a revision in the profiles required a corresponding
adjustment in the respective growth curves.  The failure to make such
an adjustment affected the use of the growth curves as RM&A
measurement criteria. 

\3 Growth curves represent the expected behavior of the fleet for
selected RM&A parameters at a particular point in the maturity of the
aircraft.  Appendix I contains a listing of all RM&A evaluation
measurement parameters. 

---------------------------------------------------------- Letter :3.3

The total number of airdrops and austere airfield landings
accomplished in the RM&A evaluation were less than called for in the
1992 draft plan, thus causing less stress and wear on the C-17
aircraft and its subsystems. 

  -- The total number of airdrops was reduced from 189 to 158, a
     16-percent reduction.  Wartime airdrops were decreased by 92
     percent, from 50 to 4.  Air Force officials stated that they
     significantly decreased the number of wartime airdrops because
     the 1992 Mobility Requirements Study and the 1995 Mobility
     Requirements Study Bottom-Up Review Update did not include
     airdrop as a requirement for a major regional contingency
     warfighting scenario. 

  -- The number of C-17 small, austere airfield landings was 16
     percent less than called for in the 1992 draft plan--138 instead
     of 164.  According to Air Mobility Command officials, they
     reduced the number of landings from 164 to 148 because they did
     not believe the additional landings were needed to determine the
     RM&A evaluation impact and an additional
     10 planned landings were not accomplished due to mechanical or
     environmental problems. 

---------------------------------------------------------- Letter :3.4

Although the type of cargo\4 carried during the RM&A evaluation was
realistic, the average weight of the loads was less than half that
projected in the mission profiles in the contract specifications.  As
a result, the aircraft and its subsystems experienced less stress and
wear during the evaluation. 

Based on the mission profiles in the contract specifications, the
average cargo weight per mission over the lifetime of the C-17
aircraft is 48,649 pounds.  However, the aircraft only carried an
average cargo weight of approximately 23,000 pounds during the RM&A
evaluation.  In addition, the actual average cargo weight carried
during landings on small austere airfields was nearly 2.5 times less
than the average cargo loads projected in the contract specifications
(about 18,600 rather than 45,000 pounds).  We are currently reviewing
the C-17's performance in Bosnia.  This work should provide greater
insights into aircraft performance when carrying heavier loads. 

\4 RM&A evaluation cargo included oversized and outsized equipment,
such as 5-ton trucks, Bradley fighting vehicles, and tanks as well as
palletized bulk cargo. 

------------------------------------------------------------ Letter :4

One reason for revising the 1992 draft RM&A evaluation plan was to
demonstrate the wartime surge utilization rate included in the C-17
Operational Requirements Document--that is, operate 15.2 flying hours
a day per aircraft for 45 days.  Aircraft utilization rate goals were
met and slightly exceeded during the RM&A evaluation.  However, the
evaluation was not intended to provide a statistically valid basis
for predicting the C-17's ability to meet its wartime surge rate.  It
did not demonstrate what a mature C-17 fleet would do during 45 days
of wartime surge operations.  The evaluation simply demonstrated that
high utilization rates could be achieved over a 48-hour period. 

The actual peacetime utilization rate was 4.3 hours per aircraft. 
The wartime sustained rate was 12.7 hours, with wartime surge rates
of 16.6 and 17.1 hours demonstrated during two 24-hour periods. 
According to DOD and Air Force officials, it would not be
economically feasible to conduct more realistic tests because of the
large amount of flying hours and resources required. 

Moreover, while utilization rates are used as one basis for budgeting
for logistics resources and mission planning, a higher utilization
rate does not necessarily mean that one aircraft is a better
airlifter than another.  Simply stated, utilization rate is the
number of hours, per aircraft, that a fleet of airplanes is in the
air on a given day.  More time in the air yields higher utilization
rates, more time spent on the ground yields lower utilization rates. 
The rate is a function of the total airlift system that includes,
among other things, aircraft, personnel, airfields, logistics
resources, and concepts of operation.  All these factors influence
the attainment of a utilization rate objective, and most have little
or nothing to do with an aircraft's inherent capability.  For
example, utilization rates can be increased by longer mission flying
times, slower airspeeds, aircrew augmentation, and ramp space
availability.  Conversely, a faster aircraft flying the same distance
will have a lower utilization rate. 

------------------------------------------------------------ Letter :5

The Air Force awarded the C-17 contractor $5.91 million of the
maximum $12-million incentive fee.  However, our review showed that
amount was $750,000 more than justified under the contract.  The
amount should have been reduced because the C-17 aircraft were not
full mission capable during the evaluation.  (See app.  IV for our
calculation of the appropriate incentive fee.)

---------------------------------------------------------- Letter :5.1

According to the C-17 development contract, the RM&A incentive fee
was to be based on the degree that the contractor met each of 11
individual RM&A parameter goals.  That is, to receive the total
$12-million payment, the contractor had to achieve the goals for each
of the 11 parameters.  If any parameter was not met, the payment was
reduced by the amount for that parameter and half of the amounts for
the remaining parameters.  The contractor was awarded only $5.91
million because the C-17 did not meet the requirement for the
built-in-test false indication parameter. 

In awarding the $5.91-million fee, the Air Force gave the contractor
credit for meeting the full mission capable goal.  In our opinion,
none of the aircraft should have been considered full mission capable
during the evaluation.  First, the Air Force, based on the results of
developmental testing, had restricted the aircraft from executing the
formation personnel airdrop mission under operational conditions for
safety reasons.  This mission was a requirement identified in C-17
operational documents.  The restriction on formation personnel
airdrop existed because turbulence caused by the aircraft can cause
injuries to paratroopers.  As a result, the aircraft are not
permitted to fly in sufficiently close formation to airdrop the
required number of personnel under operationally representative
conditions as required by the contract specification. 

Second, the aircraft were not considered effective for the
aeromedical evacuation mission, which was not completely tested
during the RM&A evaluation.  The aircraft were reconfigured to
demonstrate this capability, but not all the systems that would be
needed to accomplish the mission were used.  Initial operational test
and evaluation testing, which included the information developed
during the RM&A evaluation, identified a number of problems that
prevented the aircraft from being considered able to perform the
aeromedical evacuation mission.  For example, the emergency oxygen
supply to patient litters was defective.  As a result, the Army has
classified the aircraft as not functionally effective for aeromedical

------------------------------------------------------------ Letter :6

We recommend that the Secretary of Defense direct the Secretary of
the Air Force to initiate action to recover the $750,000 in incentive
fee overpayment from the contractor. 

------------------------------------------------------------ Letter :7

In commenting on a draft of this report, DOD partially concurred with
our findings but did not concur with our recommendation.  DOD stated
that the 1994 plan was actually more extensive and more operationally
representative than the draft 1992 plan because it increased the
total flying hours, the number of sorties, wartime sortie duration,
aerial refueling, and formation flying missions.  However, DOD
acknowledged that the 1994 plan reflected (1) a 30-percent reduction
in the number of airdrop sorties, (2) a 10-percent reduction in the
number of small austere airfield landings, and (3) more than a
50-percent reduction in the average cargo loads carried during the
evaluation compared to the 1992 draft plan.  DOD indicated that the
1992 draft plan should not be used as a benchmark, rather the
contract specification, including the 1994 Settlement Agreement
between DOD and the contractor, should have been used.  Further, DOD
stated that not adjusting the growth curves to account for the
changes made in the plan would have had only minimal impact on the
results of the evaluation. 

We did not use the 1992 draft plan as a benchmark.  Rather, we
pointed out that scenarios in the 1992 draft plan and the growth
curves, which are the criteria used to measure the success of the
evaluation, were both based on the same factors from the contract
specification.  The 1994 plan changed the scenarios being flown in
the evaluation to make it more operationally realistic and to more
closely resemble a major regional contingency.  However, the growth
curves were not adjusted.  DOD provided no documentation to support
its assertion that adjusting the growth curves would have had only
minimal impact.  Moreover, the C-17 contractor has stressed that the
profiles flown during the evaluation must be the same as those used
to develop the growth curves. 

DOD acknowledged that the limited wartime surge activities during the
RM&A evaluation did not provide a statistical basis for predicting
the C-17's ability to meet its wartime surge rate.  DOD said we
questioned the value of utilization rates in this report, even though
in a prior report we had indicated that utilization rates were a
useful statistic when comparing aircraft.  Our point in the prior
report was that the value of comparing utilization rates was
undermined when DOD artificially constrained the utilization rate of
one aircraft while using the planned wartime surge utilization rate
for another.  However, to assure that our position in this report is
clear, we have modified the text dealing with utilization rates. 

DOD disagreed with our recommendation to seek reimbursement of
$750,000 from the contractor, asserting that the aircraft was
properly considered full mission capable as long as all the equipment
required for the mission was available and operative.  The contract
specification defines full mission capable as the aircraft being
capable of performing all of its design missions.  Since it could not
perform the formation personnel airdrop and aeromedical evacuation
missions, we believe that the aircraft was incorrectly listed as full
mission capable.  The aircraft is restricted from performing the
formation personnel airdrop mission for safety reasons.  While the
aircraft were reconfigured to perform the aeromedical evacuation
mission, some of the equipment was not tested to ensure it was
operating as needed to enable the aircraft to perform the mission. 
Further, the aircraft was classified as not functionally effective
for aeromedical evacuation as a result of initial operational test
and evaluation testing because of a number of problems, including
equipment problems. 

We, therefore, continue to believe that the aircraft should not have
been considered as full mission capable and the contractor should not
have been paid the incentive award fee of $750,000 for meeting the
full mission capable objective. 

------------------------------------------------------------ Letter :8

To determine the overall performance of the C-17 during the
evaluation, we monitored the conduct and coordination of the RM&A
evaluation from the 437th Airlift Wing, Charleston Air Force Base,
South Carolina.  This included the daily RM&A evaluation activities
of the exercise as well as related data collection and documentation
activities.  We also flew on selected C-17 missions and observed
ground operations at C-17 operating bases, including North Auxiliary
Airfield, South Carolina; Pope Air Force Base, North Carolina; and
forward operating bases at Barstow-Daggett Municipal Airport,
California, and Bicycle Lake Army Airfield, California. 

To determine the validity of the test design, mission mix, and
operational realism of the exercise, we analyzed the RM&A evaluation
plan.  Specifically, we reviewed its purpose, structure, preparation,
and execution as well as the results of the evaluation.  We also
interviewed officials from the 14th Airlift Squadron; the 17th
Airlift Squadron; the 437th Airlift Wing; the 315th Reserve Airlift
Wing; Air Mobility Command Headquarters; the C-17 System Program
Office; C-17 Site Activation Task Force; San Antonio Air Logistics
Center; Air Force Operational Test and Evaluation Center; Air Force
Office of Operational Test and Evaluation; Headquarters U.S.  Air
Force; U.S.  Army Test and Evaluation Command; U.S.  Army Test and
Experimentation Command; Institute for Defense Analysis; and
McDonnell Douglas, the C-17 contractor. 

We conducted our review from June 1995 to March 1996 in accordance
with generally accepted government auditing standards. 

---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Armed Services; the
Subcommittee on Defense, Senate Committee on Appropriations; the
House Committee on National Security; the Subcommittee on National
Security, House Committee on Appropriations; the Secretaries of
Defense and the Air Force; and the Director of the Office of
Management and Budget.  We will also provide copies to other
interested parties as requested. 

If you or your staff have any questions concerning this report,
please contact me on (202) 512-4841.  The major contributors to this
report are listed in appendix VI. 

Sincerely yours,

Louis J.  Rodrigues
Director, Defense Acquisition Issues

=========================================================== Appendix I

r     Good     Requirement      Result     Met     Requirement      Result     Met
--  ------  --------------  ----------  ------  --------------  ----------  ------
MC                    80.7        90.6     Yes            80.8        86.0     Yes
FM                    72.9        85.1     Yes            73.0        75.9     Yes
MC                    85.8        97.8     Yes            85.0        92.0     Yes
MT                     1.3         3.4     Yes             1.3         2.0     Yes
MT                     0.6         1.6     Yes             0.6         0.9     Yes
MT                     2.2         7.5     Yes             2.0         6.3     Yes
MM                    28.4         4.3     Yes            28.9         5.4     Yes
MM                     8.2         2.7     Yes             8.2         3.0     Yes
BI                    95.0        98.6     Yes
BI                    90.0        95.2     Yes
BI                     5.0        59.9      No

MC Mission capable (capable to perform at least one mission)
FMC Full mission capable (capable to perform all missions)
MCSP Mission completion success probability (complete mission
objectives without
experiencing failure or performance degradation due to equipment
MTBM(i) Mean time between maintenance-inherent (mean flight hours
between unscheduled,
on-equipment, inherent maintenance actions)
MTBM(c) Mean time between maintenance-corrective (mean flight hours
unscheduled corrective actions)
MTBR Mean time between removal (mean flying hours between removal of
any repairable
MMH/FH Maintenance man hours per flying hour (total maintenance hours
expended for each
flight hour)
MMT Mean man hours to repair (the mean maintenance man hours required
to complete
a corrective maintenance action)
BIT-D Built-in-test fault detection (percentage of occurrences in
which BIT correctly
detects a malfunction)
BIT-I Built-in-test fault isolation (percentage of occurrences in
which BIT correctly isolates
a detected malfunction to the failed equipment item)
BIT-FI Built-in-test false fault indication (percentage of
occurrences in which BIT indicated
a malfunction when none existed)

========================================================== Appendix II

                       Revised  Original
                          plan      plan
                         (July  (October
              Actual     1994)     1992)    Number   Percent    Number   Percent
----------  --------  --------  --------  --------  --------  --------  --------
Flying hours
Peacetime      1,191     1,123       884       239        27       307        35
Wartime        1,068     1,029       841       188        22       227        27
Total          2,259     2,152     1,725       427        25       534        31

Peacetime        334       331       248        83        33        86        35
Wartime          179       175       211      (36)      (17)      (32)      (15)
Total            513       506       459        47        10        54        12

Average sortie time (hours)
Peacetime       3.57      3.39      3.56    (0.16)      (05)      0.02        01
Wartime         5.97      5.88      3.99      1.89        47      1.98        50
Total           4.40      4.25      3.76      0.49        13      0.64        17

========================================================= Appendix III

                         Peacetime         Wartime               Total
----------------------  ----------  ----------------------  ==========
Flight hours original          884           841                 1,725
 plan October 1992
Increase from original         307           227                   534
 to actual
Actual hours flown           1,191          1,068                2,259

Actual hours divided by
Original planned              3.56           3.99
 average aircraft
 sortie time

Estimated number of            335           268                   603
 aircraft sorties
Actual number of               334           179                   513
 aircraft sorties
Estimated shortage of            1            89                    90
 aircraft sorties
Percent shortfall                0            33                    15

========================================================== Appendix IV

                         (Dollars in millions)

                                       Maximum      Amount         GAO
Parameter                                  fee   awarded\a  assessment
----------------------------------  ----------  ----------  ----------
MC rate                                 $1.500      $0.750      $0.750
FMC rate                                 1.500       0.750         0\b
MCSP                                     1.350       0.675       0.675
MTBM (I)                                 0.900       0.450       0.450
MTBM (C)                                 0.900       0.450       0.450
MTBR                                     1.350       0.675       0.675
MMH/FH                                   1.800       0.900       0.900
MMTR                                     1.800       0.900       0.900
BIT-D                                    0.360       0.180       0.180
BIT-I                                    0.360       0.180       0.180
BIT-FI                                   0.180           0           0
Total                                  $12.000      $5.910      $5.160
Overpayment \b                                                  $0.750
\a The contractor failed to pass the requirement for built-in-test
false indication and, therefore, received no award for this parameter
and only half the maximum fee for the other parameters, according to
the terms of the contract. 

\b The contractor did not pass the FMC parameter because none of the
test aircraft were full mission capable; therefore, the contractor
should not have received the $750,000 incentive fee. 

(See figure in printed edition.)Appendix V
========================================================== Appendix IV

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

========================================================== Appendix VI


Thomas J.  Denomme
John P.  Swain


Noel J.  Lance
Dorian R.  Dunbar
Larry J.  Bridges

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