The C-23s are twenty years old, and efforts to get a replacement, especially a larger and more numerous replacement, have always run into air force opposition. After all, the air force has 500, 75 ton, C-130s. But in Iraq, the army C-23s have proved invaluable in getting priority army cargos where they are needed. Despite all the air force C-130s there, the army has to wait up to five days to get a C-130. The air force has the final word on what their C-130s carry, and thats why the army wants some of its own transports.
So the army is asking for up to $4 billion to buy 128 replacement aircraft. The new transport would be a militarized version of an existing transport (CN-235, C-295 and C-27J are most often mentioned.) What all these aircraft have in common is greater capacity (about half the C-130s 20 ton load), and the ability to fly higher than the C-23s 20,000 foot maximum altitude (which prevents it from being used in Afghanistan).
The army knows if it doesnt go for it now, especially in light of how successful the C-23 has been in Iraq, it will never have as good a chance in the future.
The U.S. Army is using its current priority in Pentagon budgeting (because of the army doing most of the fighting in Iraq and Afghanistan) to get several billion dollars, and no opposition from the air force, to buy a new fixed wing transport. According to an agreement with the air force over half a century ago, the army is restricted in how many (very few) fixed wing aircraft it can have. Currently the Army National Guard is allowed to operate 44 two engine (propeller) C-23 aircraft. This is a freight version of the British Shorts 330 passenger airliner. The 12 ton C-23 can carry up to 3.5 tons of cargo, or up to 30 troops.