CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE The Cost of Replacing Today’s Army Aviation Fleet MAY 2019 Notes The years referred to in this report are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. All costs are expressed in 2018 dollars. For the years before 2018, costs are adjusted for inflation with the gross domestic product price index from the Bureau of Economic Analysis. Costs for years after 2018 are adjusted for inflation with the Congressional Budget Office’s projection of that index. On the cover: The drawing depicts, from top to bottom, an H-47 Chinook, an H-60 Black Hawk, and an AH-64 Apache. www.cbo.gov/publication/55180 Contents Summary 1 The Cost of Replacing Today’s Fleet 1 How CBO Made Its Projections 4 Future Vertical Lift Aircraft 5 Projected Procurement Schedules and Costs 6 Age of Fleets 6 Uncertainties 6 Uncertainty About the Future Vertical Lift Program 7 Uncertainty About Chinook Modernization 8 Appendix: Composition of the Army’s Current Fleet and CBO’s Estimate of Replacement Costs 11 List of Tables and Figures 15 About This Document 16 The Cost of Replacing Today’s Army Aviation Fleet Summary Aircraft (FARA) for improved armed reconnaissance The U.S. Army has about 4,300 piloted aircraft, most capabilities. The FLRAA is expected to replace of which are helicopters (also known as rotary-wing today’s Black Hawk helicopters, and the FARA may aircraft). Three large, high-value fleets—the H-60 Black eventually replace today’s Apaches when they are Hawks, AH-64 Apaches, and H-47 Chinooks—account retired. for most of the helicopters, and their eventual replace- ment dominates the Army’s future procurement costs. In • Uncertainty. CBO’s estimates are subject to several this report, the Congressional Budget Office estimates sources of uncertainty. The characteristics of the two the costs of replacing those helicopters and the Army’s FVL aircraft have not been finalized, and technical other aircraft through 2050 if the service implemented challenges could change schedules, characteristics, or its current plans and, for aircraft with no announced costs. Additionally, the Army has recently indicated replacement plans, if they were replaced when they that it may substantially change or cancel plans to reached the end of their typical service life.1 modernize the CH-47F Chinook helicopters that are included in CBO’s projection. • Replacement Costs. CBO projects that the annual cost of replacing the aircraft in the Army’s current The Cost of Replacing Today’s Fleet fleet would decline during the 2020s, from about According to data the Army provided to CBO, as of $4 billion in 2018 to about $1.5 billion in 2027. April 15, 2018, the Army’s aviation fleet consisted of It would then rise to a peak of about $4.7 billion 21 different types of aircraft, including the following: in 2032 before drifting downward between 2035 and 2045. Because the Army made considerable • 2,279 Sikorsky H-60 Black Hawk helicopters, most investments in aircraft between 2007 and 2016, of which are utility transports; relatively few aircraft are near the end of their service life, reducing the number of aircraft to be replaced • 744 Boeing AH-64 Apache heavy attack helicopters, during the 2020s. which are also used for armed reconnaissance missions; • Methods. CBO’s projections are based on publicly articulated procurement plans for some aircraft • 423 Boeing H-47 Chinook heavy-lift cargo and, for aircraft without such plans, on their typical helicopters; retirement age; the projections do not take into account the costs of development, operations and • 411 Airbus UH-72 Lakota light utility helicopters; maintenance, modifications, or personnel associated and with aircraft. • 92 Beechcraft C-12 Huron fixed-wing passenger • Future Vertical Lift Plans. The Army’s Future Vertical turboprop airplanes (plus an additional Lift (FVL) program is developing new technologies 30 RC-12 reconnaissance airplanes).2 to include in aircraft in the late 2020s to early 2030s: the Future Long-Range Assault Aircraft (FLRAA) for transport and the Future Attack Reconnaissance 2. The H-60 Black Hawks include EH-60, HH-60, MH-60, and UH-60 helicopters. The H-47 Chinooks include both CH-47 and MH-47 helicopters. For more details on the Army’s force 1. CBO undertook a similar analysis of Air Force aircraft. See structure, see Congressional Budget Office, The U.S. Military’s Congressional Budget Office, The Cost of Replacing Today’s Air Force Structure: A Primer (July 2016), Chapter 2, www.cbo.gov/ Force Fleet (December 2018), www.cbo.gov/publication/54657. publication/51535. 2 THE COST OF REPLACING TODAY’S ARMY AVIATION FLEET MAY 2019 Figure 1 . Age and Replacement Cost of the Army’s Fleet, 2018 Number of Aircraft 1,200 1,000 800 Many of the Army’s aircraft have been acquired or remanufactured 600 within the past 10 years. 400 200 0 0−4 5−9 10−14 15−19 20−24 25−29 30−34 35−39 40−44 45−49 Replacement Cost Billions of 2018 Dollars 50 Those fairly new or recently 40 remanufactured aircraft are in the cohorts with the highest 30 replacement costs. 20 10 0 0−4 5−9 10−14 15−19 20−24 25−29 30−34 35−39 40−44 45−49 Entered service Aircraft Age in 2018 (Years) Entered service in 2018 in 1969 Source: Congressional Budget Office, using data from the U.S. Army. Age is measured in years since acquisition or remanufacture. The figure does not include data for MQ-1C Gray Eagles because ages for those aircraft were not available. Although those aircraft range widely in age, many Army appendix). For example, the December 2017 CH-47F aircraft are fairly new, having been acquired or remanu- Modernized Cargo Helicopter (CH-47F Block II) factured within the past 10 years (see the upper panel in Selected Acquisition Report (SAR) indicated an average Figure 1).3 procurement unit cost of $28 million in 2017 dollars, or about $29 million in 2018 dollars. Assigning each of CBO assigned each type of aircraft in the current the Army’s 423 H-47 Chinooks that average replacement Army fleet an estimated replacement unit cost and cost resulted in an estimated overall fleet-replacement then projected the total replacement cost for each cost of $12.2 billion.4 Not surprisingly, the Army’s aircraft type by multiplying the per-aircraft replace- largest fleets—the H-60 Black Hawks, AH-64 Apaches, ment cost by the number of aircraft in that fleet (see the and H-47 Chinooks—had the highest total replace- ment costs. The aircraft with the highest replacement 3. The Army often remanufactures helicopters, rebuilding the aircraft using the original metallic chassis. The Army assigns new tail numbers to remanufactured helicopters, so they appear in 4. That technique does not imply that Chinook aircraft in the the data CBO analyzed as new aircraft. CBO cannot tell whether current fleet are worth $29 million today. Rather, replacing a given helicopter is new or remanufactured, so aircraft age is today’s (Block I) Chinooks with Block IIs would have an average measured from either acquisition or remanufacture date. procurement unit cost of that amount. MAY 2019 THE COST OF REPLACING TODAY’S ARMY AVIATION FLEET 3 Figure 2 . The Army’s Budgets for Procuring Aircraft, 2000–2018 Billions of 2018 Dollars 9 Average Budget for Procuring Aircraft, 6 2010–2018 The Army’s budgets for procuring Average Budget for Procuring Aircraft, Budget for Procuring Aircraft aircraft increased markedly 2000–2009 starting in 2007. 3 0 2000 2003 2006 2009 2012 2015 2018 Source: Congressional Budget Office, using data from the U.S. Army. costs tend to be the newest ones (see the lower panel in aircraft over the 2010–2018 period but similar to the Figure 1). average budget over the 2000–2009 period. The Army’s total annual budget for procuring aircraft The $4.7 billion peak in 2032 is composed of fund- increased markedly starting in 2007 (see Figure 2). ing for the FARA ($1.4 billion), which would initially Measured in 2018 dollars, that budget was $1.9 billion augment the Army’s current armed reconnaissance in 2000 but rose to a peak of $8.3 billion in 2011. The capabilities and possibly replace the AH-64 Apache budget declined in most years after 2011, falling to later; the FLRAA ($1.3 billion), which would replace $4.1 billion in 2018. Aircraft procurement represented the H-60 Black Hawk; projected replacement of the about 15 percent of the Army’s total procurement budget fixed-wing MQ-1C Gray Eagle ($1.0 billion); and over the 2000–2018 period; ground vehicles such as modernization of the CH-47 Chinook ($0.7 billion) tanks and trucks accounted for the largest portion of the (see Figure 4).5 Apache procurement would end in 2025 Army’s total procurement budget over that period. The before FARA procurement began in 2028, but procure- procurement budget for aircraft has generally been less ment of Black Hawks (ending in 2035) and FLRAAs than 3 percent of the Army’s overall budget, much of (beginning in 2030) would overlap. which goes to military and civilian personnel costs. Although CBO’s projections address changes in the CBO projects that the costs of replacing the aircraft in Army’s fleet through 2050, the agency formed no the Army’s current fleet would decline in most years judgment about whether the aircraft procurements in its through the 2020s, dropping to about $1.5 billion in analysis are necessary or appropriate.