sense for platforms such as the KC-135, which could be operated part-time by a leasing company as cargo aircraft. By entering into a sale-and-leaseback arrangement with a short-term or cancelable lease, the Air Force would be able to recover value from an asset that it would otherwise place in a boneyard.

Overall, the committee determined that sale-and-leaseback arrangements that use short-term leases could represent a fair and viable means of financing a re-engining program and that, of the options considered, they have the best potential to benefit the Air Force because they can enable up-front realization, in cash, of the benefits of re-engining without requiring any up-front or recurring spending. As such, it considered such arrangements a necessary part of a complete discussion of available options. However, the approach is also the most exotic of those considered and would be the most likely to face significant cultural resistance.

Recommendation 9-3. The Air Force should analyze the following options in greater depth to determine their feasibility: (1) sale-and-leaseback on a long-term basis and (2) sale-and-leaseback on a short-term basis.

REFERENCES

CRS (Congressional Research Service). 2003. The Air Force KC-767 Lease Proposal: Key Issues for Congress. Washington, D.C.: Library of Congress. Available online at http://www.globalsecurity.org/military/library/report/crs/rl32056.pdf. Last accessed on January 22, 2007.

FR (Federal Register). 1999. Executive Order 13123—Greening the Government Through Efficient Energy Management. Washington, D.C.: Office of the Federal Environmental Executive. June 8. Available online at http://www.ofee.gov/eo/ eo13123.pdf. Last accessed on January 22, 2007.

Gorton, G., and N. Souleles, 2005. Special-purpose vehicles and securitization, NBER Working Papers 11190. Cambridge, Mass.: National Bureau of Economic Research, Inc.,



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