Tactical Aircraft

Plans by the Air Force to restructure the F-22 fighter program rely on optimistic assumptions about future production costs, and it is doubtful whether the Air Force can actually save $13 billion through various cost-cutting initiatives, such as more aggressively managing subcontracts, reducing warranty costs, achieving manufacturing efficiencies, and securing foreign military sales. Initial program schedules and cost estimates for weapons systems have historically been optimistic and have rarely been achieved. The F-22 is not an exception. This report discusses the (1) estimated cost to restructure the F-22 program and the viability of cost-reduction initiatives, (2) planned timing for realizing benefits from these initiatives, and (3) criteria for approving initiation and continuation of production.

GAO noted that: (1) GAO's reviews of various weapon system acquisitions have shown that initial program schedules and cost estimates have historically been optimistic and have not often been achieved; (2) the F-22 program is not an exception; (3) further, GAO believes the February 1997 restructuring plan reflects revised cost goals that may be optimistic because: (a) the planned reductions in F-22 production unit costs are greater than those experienced by prior fighter programs; and (b) actions intended to reduce production costs have not been fully defined and validated; (4) GAO's comparison of the projected reduction in F-22 production unit costs with the historical unit costs of the F-15, F-16, and F-18 programs indicates that the F-22 reductions exceed those that have been achieved on these other programs; (5) also, to achieve the overall cost avoidance projected by the Joint Estimate Team, the unit cost of full-rate aircraft must be reduced by 54 percent from the unit cost of the low-rate initial production (LRIP) aircraft instead of by 27.9 percent, as projected before the program restructure; (6) an aspect of cost reduction that has been previously reviewed and should continue to be considered is the potential savings from reducing F-22 performance requirements; (7) Joint Estimate Team members told GAO that, although they considered performance reductions in the study as a means of reducing costs, and that potential reductions had been considered in at least a dozen past reviews, no performance reductions were made as a result of their study; (8) the cost reduction initiatives are not planned to achieve significant net savings until F-22 full-rate production, now planned to begin in fiscal year (FY) 2004; (9) the F-22 cost estimate developed by the Joint Estimate Team and endorsed by the Air Force recognizes unit cost increases of 40 percent in F-22 LRIP aircraft through FY 2003; (10) the program exit criteria that were required before awarding each lot of LRIP aircraft and the first full-rate production contract have been revised as part of the program restructuring; and (11) although aircraft performance parameters are reported in the Selected Acquisition Report and other Air Force and Department of Defense reports, GAO believes specific aircraft performance parameters should be included in the exit criteria for each low-rate initial production lot to: (a) maintain visibility of aircraft performance as production rates are accelerated; and (b) ensure that adequate progress is being made to fully demonstrate the aircraft's capabilities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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