Lockheed Martin offers Air Force fixed-price proposal for C-5s

In an effort to save the C-5 Galaxy air lifters from the chopping block, Lockheed Martin on Thursday offered the Air Force a so-called firm fixed price contract for overhauling 108 airplanes.

Trying to dispel the Air Force’s and Congress’s notion that the C-5 modernization program would cost close to $15 billion, Lockheed Martin proposed a “reliability enhancement and re-engineering” plan that would fund the 108 aircraft at an average price of $82.9 million, adjusted for inflation. With the added cost of Air Force overhead and support functions, the service would be looking at a total of  $11.6 billion — a savings of around $3.4 billion.

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Lockheed is mounting a campaign to try and save its turf, which is now endangered by the push by the Air Force and Congress to buy more of rival Boeing’s C-17 aircraft.

According to Lockheed Martin, the company’s offer would not require the Air Force to commit to modifying all C-5s, but it gives the service the option to analyze its strategic airlift fleet mix.

In its version of the defense authorization bill, the House lifted restrictions in retiring the C-5s and allowed the Air Force to gradually deactivate C-5s beginning in 2009. Rep. Phil Gingrey (R-Ga.), whose district includes Lockheed’s Marietta plant, failed in his effort to prevent the Air Force from retiring its older C-5s but succeeded in requiring an independent cost analysis of the savings generated by retiring the C-5s instead of upgrading them.

The Senate is marking up its version of the defense authorization bill next week. Sen. Saxby Chambliss (R-Ga.) is a strong supporter of Lockheed programs. But some senators, including Daniel Inouye (D-Hawaii), the chairman of the Appropriations defense subcommittee, have expressed their intention of buying more C-17s.

Air Force officials said in the past that they would like to remove up to 30 of the most beaten-up C-5 planes to free up money to buy more C-17s and continue modernizing the rest of the C-5s.

Reacting to the 2008 defense budget request, which did not ask for more C-17s, Boeing announced that it would have to begin shutting down production on the program, which affects thousands of jobs across most states, threatening a myriad of parochial interests in Congress. For 2008 alone, Congress added $2.4 billion for 10 additional C-17s.