long-term basis. The latter mechanism is most popular because the requisite initial investment is not included on the balance sheet as a single item but is spread out over the time during which the items will be used in the form of annual payments that can be appropriately budgeted for. However, long-term leases are seldom used by federal government departments and agencies because Congress is reluctant to approve financial arrangements that would restrict the appropriation prerogative of future congresses (CRS, 2003). However, Congress has overridden this precedent in cases where there are overwhelming benefits. Once such case is Defense Energy Support Center (DESC) long-term contracts for the supply of electrical power to military bases, whereby the government has been allowed to contract for electrical power for as long as 40 to 50 years to allow the amortization of new, more efficient power plants.

The current economic and geopolitical situation provides ample justification for the increased use of innovative acquisition, financing, and support mechanisms. The price of oil is forecast to continue to be at or near record highs, swelling the fraction of the DoD budget that is for the purchase of fuel and limiting the funding available for much needed improvements to the military facilities and equipment. Most of the oil that is consumed by the United States comes from locations that are both outside the United States and politically unstable, posing a risk to the U.S. economy and to national security. This economic and security risk is exacerbated by the fact that U.S. refining capacity and oil pipelines are both limited and geographically concentrated and therefore vulnerable to terrorist attacks. Some consequences of this situation were exemplified by the sharp increase in the price of fuel following the devastation of Hurricane Katrina. It is also important to note that more and more refined petroleum products are being imported, with the rate increasing as rapidly as the total amount of oil that is imported, because no refinery has been built in the United States since 1975. The result is that increasing amounts of foreign oil are shipped to foreign refineries before being shipped here, making U.S. energy sources all the more vulnerable.

The mechanisms presented in this section are designed to reduce oil consumption by providing innovative ways to acquire, finance, and support the increasing engine improvements or changes.

OVERVIEW OF OPTIONS

The committee identified 10 options for the acquisition, financing, and support of engine improvements and changes. Each option was categorized as an acquisition, financing, and/or support mechanism. The options then were partitioned into three further groups:

  • In Group 1 are the options the committee believes the Air Force should adopt right away.

  • In Group 2 are the options that the committee believes the Air Force should aggressively evaluate to determine their true utility.

  • In Group 3 are the options that have traditionally not been implemented because they contravene U.S. government acquisition, financing, and support rules; they are included for completeness because they are mechanisms that would be used in the commercial sector.

The details of each option are provided below, along with a discussion of its benefits and its implementation challenges.

OPTIONS IN GROUP 1

The committee believes the Air Force should adopt the options in Group 1, summarized in Table 9-1, right away. Of the four options in this group, the committee finds that the first (maintain commercial derivative engines to Federal Aviation Administration (FAA) standards) and the second (fully compete



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