About this Publication This work was conducted by the Institute for Defense Analyses (IDA) under contract DASW01-04-C-0003, BE-7-3306, "Total Force Cost Methodology," for the Office of the Assistant Secretary of Defense for Reserve Affairs. The views, opinions, and findings should not be construed as representing the official position of either the Department of Defense or the sponsoring organization. Acknowledgments Thank you to John R. Brinkerhoff, Brian G. Gladstone, and Tzee-Nan K. Lo for performing technical review of this document.
Executive SummaryThe Department of Defense (DoD) endured a series of sharp fuel price changes between 2005 and 2011, which resulted in a net $27 billion unbudgeted fuel requirement. Because most fuel used by the Department is used for operational purposes, the Office of the Secretary of Defense (OSD) is concerned that an unbudgeted fuel requirement may negatively impact operations and that this in turn may negatively impact readiness. In general, readiness refers to a Service's ability to produce units qualified and able to perform tasks and missions in time for emergent contingencies.While fuel purchases represent only about 2.5 percent of the Department's budget, there is large variation among the Services. In Fiscal Year (FY) 2012, the year following the period we studied, fuel accounted for almost 16 percent of Air Force Operations and Maintenance (O&M) expenditures but only 4 percent of the Army's O&M and 1 percent of the Marine Corps' O&M. Also, since 2004, the rate of increase in the fraction of the O&M budget that is attributable to energy costs has accelerated, implying that as energy prices have increased, exposure to price risk has increased relative to other expenditures.This research effort explored both qualitatively and quantitatively whether fuel price changes leading to an unfunded fuel requirement have affected readiness in the past, and whether they could again in the future. The qualitative component involved a series of interviews with the Services and review of doctrine and budgetary documents. This allowed the research team to develop a more nuanced view of how fuel price changes are handled.The processes by which fuel is programmed for, budgeted for, acquired, and distributed shape the ways in which readiness can be affected by changes in price. The following list describes the basic Department-wide process:• The Office of Management & Budget (OMB) projects the market price of crude oil.• The Office of the Secretary of Defense (OSD) uses the OMB projection to project the price of refined petroleum products, and publishes official fuel rates.• The Department sets requirements for refined petroleum products to support warfighter needs.iii• DoD components program for fuel by multiplying their requirement by the OSD rate. 1• All fuel programming is wrapped up into a budget submitted to the president. The final programmed price is referred to as the President's Price.• The DoD budget contains only enough funds to pay for programmed requirements at the budgeted price.• Defense Logistics Agency (DLA) procures fuel on the world market to resell to the Services.• The Defense Working Capital Fund (DWCF) finances fuel and uses available cash balances to attempt to stabilize customer prices relative to budgeted prices.(DLA charges all DoD customers anywhere in the world the same price per gallon.)• When unable to stabilize the price at the budget price using cash balances, DLA adjusts the price charged to the Services.• A DLA price increase results in an unbudgeted fuel requirement for the Services.T...
This paper presents four short analyses performed by the Institute for Defense Analyses (IDA) for the National Commission on the Structure of the Air Force, which was established by the National Defense Authorization Act for Fiscal Year 2013. Each analysis addresses an issue raised by the Commission staff regarding possible changes to the use of Air Reserve Component (ARC) forces that could enhance the overall efficiency of the Air Force. Detailed papers on each issue follow this executive summary. Below we have the issues and a very brief summary of our analysis. What are the feasibility and cost implications of maintaining desired ARC strength levels with an ARC that is expected to be voluntarily activated one-sixth of the time? We found that moving to a one-sixth activation policy would reduce accessions to some extent-not everyone prefers more activation-but those who joined would be more likely to remain in the force. Therefore, we believe strength targets would be met. What are the cost implications of having a more Reserve-intensive F-16 force? We examined alternative ways to provide the same number of aircraft available for deployed rotations. We found in general that a more Reserve-intensive F-16 force offered the same deployment capability for roughly the same cost as a more Activeintensive force but offered greater strategic reserve. What are the cost and availability implications of placing some Security Force assets in the ARC? We found that, over a considerable range of assumptions, a more ARC-intensive security force could meet potential deployment requirements and provide greater surge capability at a lower cost than a more Active-intensive security force. What are the cost implications of using more ARC pilots to provide initial pilot training? We found that increased reliance on the ARC to provide instructor pilots can potentially save about $1.3 million per instructor billet (annually) in the short run and $2.8 million per instructor billet in the long run, because of the reduced requirement for training new Active Duty fighter pilots and the reduced requirement for retraining Active instructor pilots returning to operational billets on fighter platforms.
Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.