Joint Strike Fighter
Progress Made and Challenges Remain Gao ID: GAO-07-360 March 15, 2007The Joint Strike Fighter (JSF) program--a multinational acquisition program for the Air Force, Navy, Marine Corps, and eight cooperative international partners--is the Department of Defense's (DOD) most expensive aircraft acquisition program. DOD currently estimates it will spend $623 billion to develop, procure, and operate and support the JSF fleet. The JSF aircraft, which includes a variant design for each of the services, represents 90 percent of the remaining planned investment for DOD's major tactical aircraft programs. In fiscal year 2004, the JSF program was rebaselined to address technical challenges, cost increases, and schedule overruns. This report--the third mandated by Congress--describes the program's progress in meeting cost, schedule, and performance goals since rebaselining and identifies various challenges the program will likely face in meeting these goals in the future.
The JSF program has delivered and flown the first development aircraft. However, cost and schedule goals established in the fiscal year 2004 rebaselined program have not been met. Total JSF program acquisition costs (through 2027) have increased by $31.6 billion and now DOD will pay 12 percent more per aircraft than expected in 2004. The program has also experienced delays in several key events, including the start of the flight test program, delivery of the first production representative development aircraft, and testing of critical missions systems. Delays in the delivery of initial development aircraft were driven by incomplete engineering drawings, changes in design, manufacturing inefficiencies, and parts shortages. Despite these delays, the program still plans to complete development in 2013, compressing the amount of time available for flight testing and development activities. Also, the program projects it will meet all but one key performance requirement--line of sight communications--that is currently dependent on other capabilities being developed outside the JSF program. Accurately predicting JSF costs and schedule and ensuring sufficient funding will likely be key challenges facing the program in the future. JSF continues to pursue a risky acquisition strategy that concurrently develops and produces aircraft. While some concurrency may be beneficial to efficiently transition from development to production, the degree of overlap is significant on this program. Any changes in design and manufacturing that require modifications to delivered aircraft or to tooling and manufacturing processes would result in increased costs and delays in getting capabilities to the warfighter. Low-rate initial production will begin this year with almost the entire 7-year flight test program remaining to confirm the aircraft design. Confidence that investment decisions will deliver expected capability within cost and schedule goals increases as testing proves the JSF will work as expected. The JSF program also faces funding uncertainties as it will demand unprecedented funding over the next 2 decades--more than $12.6 billion a year on average through 2027.
RecommendationsOur 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.
Director: Team: Phone:GAO-07-360, Joint Strike Fighter: Progress Made and Challenges Remain
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
March 2007:
Joint Strike Fighter:
Progress Made and Challenges Remain:
GAO-07-360:
GAO Highlights:
Highlights of GAO-07-360, a report to congressional committees
Why GAO Did This Study:
The Joint Strike Fighter (JSF) program”a multinational acquisition
program for the Air Force, Navy, Marine Corps, and eight cooperative
international partners”is the Department of Defense‘s (DOD) most
expensive aircraft acquisition program. DOD currently estimates it will
spend $623 billion to develop, procure, and operate and support the JSF
fleet. The JSF aircraft, which includes a variant design for each of
the services, represents 90 percent of the remaining planned investment
for DOD‘s major tactical aircraft programs. In fiscal year 2004, the
JSF program was rebaselined to address technical challenges, cost
increases, and schedule overruns.
This report”the third mandated by Congress”describes the program‘s
progress in meeting cost, schedule, and performance goals since
rebaselining and identifies various challenges the program will likely
face in meeting these goals in the future.
What GAO Found:
The JSF program has delivered and flown the first development aircraft.
However, cost and schedule goals established in the fiscal year 2004
rebaselined program have not been met. Total JSF program acquisition
costs (through 2027) have increased by $31.6 billion and now DOD will
pay 12 percent more per aircraft than expected in 2004. The program has
also experienced delays in several key events, including the start of
the flight test program, delivery of the first production
representative development aircraft, and testing of critical missions
systems. Delays in the delivery of initial development aircraft were
driven by incomplete engineering drawings, changes in design,
manufacturing inefficiencies, and parts shortages. Despite these
delays, the program still plans to complete development in 2013,
compressing the amount of time available for flight testing and
development activities. Also, the program projects it will meet all but
one key performance requirement”line of sight communications---that is
currently dependent on other capabilities being developed outside the
JSF program.
Accurately predicting JSF costs and schedule and ensuring sufficient
funding will likely be key challenges facing the program in the future.
JSF continues to pursue a risky acquisition strategy that concurrently
develops and produces aircraft. While some concurrency may be
beneficial to efficiently transition from development to production,
the degree of overlap is significant on this program. Any changes in
design and manufacturing that require modifications to delivered
aircraft or to tooling and manufacturing processes would result in
increased costs and delays in getting capabilities to the warfighter.
Low-rate initial production will begin this year with almost the entire
7-year flight test program remaining to confirm the aircraft design.
Confidence that investment decisions will deliver expected capability
within cost and schedule goals increases as testing proves the JSF will
work as expected. The JSF program also faces funding uncertainties as
it will demand unprecedented funding over the next 2 decades”more than
$12.6 billion a year on average through 2027.
Figure: Overlap of Production Investments and Testing:
[See PDF for Image]
Source: DOD data, as of February 2007; GAO analysis and presentation.
[End of figure]
What GAO Recommends:
GAO is recommending that DOD limit annual production quantities to no
more than 24 aircraft per year until each variant‘s basic flying
qualities have been demonstrated in flight testing now scheduled in the
2010 time frame. DOD non-concurred, believing its current strategy
provides a balance of technical risk, financial constraints, and
operational needs.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-360].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Michael J. Sullivan at
(202) 512-4841 or sullivanm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Program Cost Estimates Have Increased Significantly and Critical
Milestones Have Been Delayed Since the JSF Was Rebaselined:
Challenges Remain in Executing the Balance of the JSF Program:
Conclusions:
Recommendation for Executive Action:
Agency Comments and our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Tables:
Table 1: Changes in JSF Program Purchase Quantities and Costs:
Table 2: JSF Cost Estimate Changes since the Rebaseline:
Table 3: JSF Program Estimates for Achieving Key Performance
Parameters:
Table 4: Comparison between F-22A and Joint Strike Fighter Development
Programs:
Figures:
Figure 1: First JSF Development Aircraft in Flight:
Figure 2: Changes in JSF Scheduled Events since the Replan:
Figure 3: Manufacturing Efficiency of First Test Aircraft as of
November 2006:
Figure 4: Major Areas of JSF Flight Testing to Be Completed:
Figure 5: Notional Illustration Showing the Different Paths That JSF
Development Can Take:
Figure 6: JSF Program's Annual Funding Requirements:
Abbreviations:
CAIG: Cost Analysis and Improvement Group:
DCMA: Defense Contract Management Agency:
DOD: Department of Defense:
JSF: Joint Strike Fighter:
United States Government Accountability Office:
Washington, DC 20548:
March 15, 2007:
Congressional Committees:
The Joint Strike Fighter (JSF) is the Department of Defense's (DOD)
most expensive aircraft acquisition program. The JSF aircraft design
includes three variants to be used by the Air Force, Navy, Marine
Corps, and eight cooperative international partners. JSF is a central
part of DOD's overall recapitalization strategy for its tactical
aircraft fleet, representing 90 percent of the remaining planned
investment for its major tactical aircraft programs. DOD currently
estimates it will spend $276 billion to develop and procure about 2,443
aircraft and related support equipment by 2027 and an additional $347
billion to operate and support these aircraft once they have been
fielded.
The Ronald W. Reagan National Defense Authorization Act for Fiscal Year
2005 (P.L. 108-375) requires GAO to review the JSF program annually for
5 years.[Footnote 1] In the past 2 years, we issued reports identifying
opportunities for the program to reduce risks and improve the chance
for more successful outcomes. We recommended DOD pursue an acquisition
strategy consistent with best practices and DOD policy preferences
regarding evolutionary and knowledge-based acquisitions including
deferring production investments until the aircraft have been proven to
work in flight testing.[Footnote 2] DOD has taken no direct actions in
response to these recommendations and has stated that its current
acquisition approach fulfills the intent of DOD policy and further
limits on production are unnecessary. In 2006 Congress reduced the
number of production aircraft to be funded in fiscal year 2007 and the
number of aircraft to receive advanced procurement funds for aircraft
to be procured in fiscal year 2008.
This report assesses the progress of the JSF program since it was
rebaselined in fiscal year 2004 to add resources needed to address
technical problems. Specifically, we (1) determined the JSF program's
progress in meeting cost, schedule, and performance goals; and (2)
identified the challenges and risk the program will face in meeting
these goals in the future. We performed our work from June of 2006 to
March of 2007 in accordance with generally accepted government auditing
standards. For more information on our scope and methodology, see
appendix I.
The Act also requires us to certify whether we had access to sufficient
information to make informed judgments on the matters contained in our
report. We were provided sufficient information to measure the
program's progress in meeting its goals based on cost data provided in
April 2006 as well as the challenges that remain for the program. At
the time of our review, DOD was still preparing its new cost estimate
to be included in the program's Selected Acquisition Report dated
December 31, 2006, expected to be delivered to the Congress by April
2007. Because the new cost estimate for the JSF program will not be
available until after this report is issued we are unable to make
informed judgments on those estimated costs. It should be noted that
after our 2006 report was issued on March 15, 2006, DOD released its
December 2005 Selected Acquisition Report, which showed an increase of
over $19 billion in estimated JSF program costs.
Results in Brief:
The JSF program has delivered and flown the first development aircraft
and has started manufacturing additional development aircraft for the
test program. JSF program costs have increased by $31.6 billion since
the program was rebaselined in fiscal year 2004. As a result, DOD will
pay more per aircraft than was expected when the program was
rebaselined. The program has also experienced delays in the start of
the flight test program but has not changed the dates for completing
development reducing the amount of time available for flight testing
and development activities. Late design drawings, changes in design and
manufacturing processes, and late subsystem deliveries caused delays
that prevented timely manufacturing and delivery of development
aircraft. The program currently projects that the JSF will meet all but
one of its key performance requirements--ability to fully interoperate
with other platforms. These performance projections are based largely
on engineering analysis, modeling, and laboratory testing and not on
flight testing.
The degree of concurrency between development and production in the JSF
program's acquisition strategy still includes significant risks for
cost and schedule overruns or late delivery of promised capabilities to
the warfighter. For example, at the time of the low-rate initial
production decision, one aircraft will have flown, less than 1 percent
of the test program will have been completed, and none of the three
variants will have a production representative prototype built. It will
not be until about 2012 that a fully capable, integrated JSF is
scheduled to begin flight testing. A 7-year flight test program that
includes over 11,000 hours of testing just began in December 2006.
Therefore, almost all of critical flight testing remains to confirm
that the aircraft will indeed deliver the required performance.
Manufacturing and technical problems can delay the completion of a
flight test program, increase the number of flight test hours needed to
verify that the system will work as intended, and affect when
capabilities are delivered to the warfighter. The program also faces
uncertainties with the amount of funding that will be available to
support the program's plan. The program will demand unprecedented
amounts of annual funds over the next 2 decades--more than $12.6
billion a year on average. Other DOD review and oversight organizations
have expressed similar concerns over the level of risk in the program
that will challenge the completion within estimated cost and schedule.
To improve chances of a successful outcome, we are recommending that
the Secretary of Defense limit annual production quantities to no more
than 24 aircraft per year, the current manufacturing capacity, until
each variant's basic flying qualities have been demonstrated in flight
testing now scheduled in the 2010 time frame.
DOD non-concurred with our recommendation stating that the current JSF
acquisition strategy provides an effective balance of technical risk,
financial constraints, and operational needs of the services. However,
we believe DOD's actions to reduce aircraft quantities in the fiscal
year 2008 President's Budget are in line with our recommendation to
limit production to current manufacturing capacity until each variant's
flying qualities have been demonstrated in flight testing. In the 2008
budget, DOD reduced the number of production aircraft it plans to buy
during the flight test program by about 35 percent as compared to its
previous plan for the JSF. Under this new plan DOD does not
substantially increase its buy quantities of production aircraft until
2011. We continue to believe that limiting production quantities until
the design is demonstrated would reduce the overlap in production and
development while still allowing the efficient transition from
development to production. It would also make cost and schedule more
predictable and lessen the risk to DOD's production investment.
Background:
JSF is a joint, multinational acquisition program for the Air Force,
Navy, Marine Corps, and eight cooperative international partners. The
program began in November 1996 with a 5-year competition between
Lockheed Martin and Boeing to determine the most capable and affordable
preliminary aircraft design. Lockheed Martin won the competition, and
the program entered system development and demonstration in October
2001.
The program's objective is to develop and deploy a technically superior
and affordable fleet of aircraft that support the warfighter in
performing a wide range of missions in a variety of theaters. The
single-seat, single-engine aircraft is being designed to be self-
sufficient or part of a multisystem and multiservice operation, and to
rapidly transition between air-to-surface and air-to-air missions while
still airborne. To achieve its mission, JSF will incorporate low
observable technologies, defensive avionics, advanced onboard and
offboard sensor fusion, internal and external weapons, and advanced
prognostic maintenance capability. According to DOD, these technologies
represent a quantum leap over legacy tactical aircraft capabilities. At
the same time, the JSF aircraft design includes three variants: a
conventional take-off and landing variant for the Air Force; an
aircraft carrier-suitable variant for the Navy; and a short take-off
and vertical landing variant for the Marine Corps and the United
Kingdom. JSF is intended to replace a substantial number of aging
fighter and attack aircraft in DOD's current inventory.
In 2003 the JSF program system integration efforts and a preliminary
design review revealed significant airframe weight problems that
affected the aircraft's ability to meet key performance requirements.
Software development and integration also posed a significant
development challenge. The program's inability to meet its ambitious
goals resulted in the Department's failing to deliver on the business
case that justified initial investment in JSF. As a result, purchase
quantities have been reduced, total program costs have increased, and
delivery of the initial aircraft has been delayed. These changes have
effectively reduced DOD's buying power for its investment as it will
now be buying fewer aircraft for a greater financial investment. It is
too late for the program to meet these initial promises. To its credit,
in fiscal year 2004, DOD rebaselined the program extending development
by 18 months and adding resources to address problems discovered during
systems integration and the preliminary design review. Program
officials also delayed the critical design reviews, first flights of
development aircraft, and the low-rate initial production decision to
allow more time to mitigate design risk and gather more knowledge
before continuing to make major investments. Table 1 shows the
evolution of cost and delivery estimates from the start of the program
up to the latest official program information as of December 2005.
Table 1: Changes in JSF Program Purchase Quantities and Costs:
Expected Quantities.
Development quantities;
November 1996 (program start): 10;
October 2001 (system development start): 14;
December 2003[A](Rebaseline): 14;
December 2005[A[(Latest available data): 15.
Procurement quantities (U.S. only);
November 1996 (program start): 2,978;
October 2001 (system development start): 2,852;
December 2003[A](Rebaseline): 2,443;
December 2005[A](Latest available data): 2,443.
Total Quantities;
November 1996 (program start): 2,988;
October 2001 (system development start): 2,866;
December 2003[A](Rebaseline): 2,457;
December 2005[A](Latest available data): 2,458.
Cost Estimates (Then Year $ in billions).
Development;
November 1996 (program start): $24.8;
October 2001 (system development start): $34.4;
December 2003[A](Rebaseline): $44.8;
December 2005[A](Latest available data): $44.5.
Procurement;
November 1996 (program start): Not available;
October 2001 (system development start): 196.6;
December 2003[A](Rebaseline): 199.8;
December 2005[A](Latest available data): 231.7.
Other;
November 1996 (program start): Not available;
October 2001 (system development start): 2.0;
December 2003[A](Rebaseline): 0.2;
December 2005[A](Latest available data): 0.2.
Total Program Acquisition;
November 1996 (program start): Not available;
October 2001 (system development start): $233.0;
December 2003[A](Rebaseline): $244.8;
December 2005[A](Latest available data): $276.5[B].
Unit Cost Estimates (Then Year $ in millions).
Program acquisition;
November 1996 (program start): Not available;
October 2001 (system development start): $81;
December 2003[A](Rebaseline): $100;
December 2005[A](Latest available data): $112.
Average procurement;
November 1996 (program start): Not available;
October 2001 (system development start): 69;
December 2003[A](Rebaseline): 82;
December 2005[A](Latest available data): 95.
Estimated Delivery Dates.
First operational aircraft delivery;
November 1996 (program start): 2007;
October 2001 (system development start): 2008;
December 2003[A](Rebaseline): 2009;
December 2005[A](Latest available data): 2009.
Initial operational capability;
November 1996 (program start): 2010;
October 2001 (system development start): 2010-2012;
December 2003[A](Rebaseline): 2012-2013;
December 2005[A](Latest available data): 2012-2015[C].
Source: GAO analysis of DOD data.
[A] The Selected Acquisition Reports are dated December 2003 and 2005
but are not officially released until March or April of the following
year.
[B] Numbers may not add due to rounding.
[C] Recent program and President's budget information indicates that
initial operational capability for the Navy's carrier variant has been
rescheduled from the second quarter of 2013 to the first quarter of
2015.
[End of table]
Program Cost Estimates Have Increased Significantly and Critical
Milestones Have Been Delayed Since the JSF Was Rebaselined:
Since establishing a new program baseline in fiscal year 2004, JSF
program costs have risen and key events have been delayed. JSF program
costs have increased by $31.6 billion since the program's decision to
rebaseline in fiscal year 2004. This includes a $19.8 billion increase
in costs since our report last year in March 2006. The program has
experienced delays in several key events including delays in the start
of the flight test program, manufacturing and delivery of the first
development aircraft, and delays in the testing of critical missions
systems. These delays reduce the amount of time available for
completing flight testing and development activities. The program
projects that it will meet its key performance requirements except for
one dealing with the warfighter's ability to fully interoperate with
other platforms. Projections are based largely on engineering analysis,
modeling, and laboratory testing, and a 7-year test program to
demonstrate performance just started in December 2006.
Total Program Cost Estimates Have Increased:
JSF program cost estimates have increased by $31.6 billion since the
program's decision to rebaseline in fiscal year 2004. During this
period, estimates in some cost areas grew by $48 billion but were
offset by $16.4 billion due to quantity changes and the proposed
termination of an alternate engine program. According to the program,
the cost estimate is still mostly based on cost estimating
relationships--like cost per pound--not actual costs and, therefore, is
subject to change as the program captures the actual costs to
manufacture the aircraft. Also, the official program estimate is based
on the program's December 31, 2005, Selected Acquisition Report
delivered to Congress in April 2006. We could not review the most
recent estimated costs of the JSF program. This information is being
used by the Office of the Secretary of Defense in preparing its fiscal
year 2008 budget request as well as for the program's Selected
Acquisition Report dated December 31, 2006, expected to be delivered to
the Congress in early April 2007. Although the most recent estimates
were not available for this review, we expect that, unless program
content is changed, future cost estimates will be higher based on the
history of similar acquisition programs and the risks that remain in
the program. Table 2 shows the changes to the program's costs since the
rebaseline in fiscal year 2004.
Table 2: JSF Cost Estimate Changes since the Rebaseline:
(Then-year dollars in billions).
December 2003 estimated costs;
Research, development, test and evaluation: $44.8;
Procurement: $199.8;
Total: $244.6[A].
Cost growth;
Research, development, test and evaluation: 1.8;
Procurement: 46.2;
Total: 48.0.
Cost reductions;
Research, development, test and evaluation: (2.1);
Procurement: (14.3);
Total: (16.4).
Elimination of alternate engine program;
Research, development, test and evaluation: (2.1);
Procurement: (5.1);
Total: (7.2).
Benefits from including partner quantities;
Research, development, test and evaluation: --;
Procurement: (9.2);
Total: (9.2).
December 2005 estimated costs;
Research, development, test and evaluation: $44.5;
Procurement: $231.7;
Total: $276.2[A].
Dollar change; Research, development, test and evaluation: $(0.3);
Procurement: $31.9;
Total: $31.6.
Percent change;
Research, development, test and evaluation: (0.6);
Procurement: 16;
Total: 13.
Source: GAO analysis of DOD data.
[A] Does not include estimated military construction costs.
[End of table]
Since our last report, the program estimated a $19.8 billion net
increase in its total program costs. The majority of the cost growth,
over 95 percent, was for procurement. According to the program office,
several factors led to an increase in the procurement cost estimate.
The most significant increases include:
* $10.3 billion--result of design and manufacturing changes to large
bulkheads in the wing section of the aircraft, need for 6 times more
aluminum and almost 4 times more titanium than originally estimated. At
the same time, titanium costs almost doubled.
* $3.5 billion--result of reduced manufacturing efficiency because of
plans to build a certain number of wings at a new subcontractor.
* $5.5 billion--result of changing the business relationship of the
prime and two major subcontractors.
* $4.4 billion--result of projected higher support costs.
* $14.7 billion--result of changing assumptions for estimating labor
rates and inflation.
The increases in procurement costs were offset by two main factors.
First, the cost estimate reflects production efficiency benefits of
$9.2 billion from producing 508 international partner aircraft that
were not included in previous estimates. Secondly, the program reduced
procurement costs by $5.1 billion as a result of the proposed
elimination of the alternate engine program. According to the program
office, it expected savings from manufacturing efficiencies by having
one engine contractor producing a larger quantity of engines. Program
officials stated that they have had difficulty quantifying cost savings
that might accrue from competing engine buys between contractors. For
now Congress has reinstated the alternate engine program and has
required further analysis from DOD and others on the costs of the
program.[Footnote 3]
The program also reported that development costs decreased by $1.2
billion. The reduction in development costs was due almost entirely to
the removal of the remaining estimated costs to complete the alternate
engine's development. Again, Congress has since reinstated funding for
the alternate engine program.
The net effect of the JSF program cost increases is that DOD will pay
more per aircraft than expected when the program was rebaselined. The
average procurement unit costs have increased from $82 million to
almost $95 million and the program acquisition unit costs has increased
from $100 million to over $112 million.
Delays in Key Program Events Have Compressed the Development Schedule:
Since the JSF program was rebaselined, it has experienced delays in
several key development activities but without corresponding changes to
the end of development. Holding firm to these dates forces the program
to find ways to complete development activities in less time,
especially if problems are discovered in the remaining 6 years of
development. The program office is evaluating different ways to reduce
the risk of this compression by being more efficient in its flight test
activities. The first JSF flight was scheduled for August 2006 but did
not occur until mid December 2006--about 4 months later than expected.
According to the program office, the first flight was successful but
was shortened because of a problem with instrumentation on the
aircraft. Although the first aircraft will be able to demonstrate some
performance--limited flying qualities, propulsion, and vehicle
subsystems--it is not a production representative aircraft with fully
functioning critical mission systems or the design changes from the
rebaselined program that reduced airframe weight.
Figure 1: First JSF Development Aircraft in Flight:
[See PDF for image]
Source: JSF program office.
[End of figure]
The first flight of a production representative aircraft has been
delayed 8 months to May 2008. This aircraft will be a short take-off
and vertical landing variant and will incorporate the design changes
from the rebaselined program. According to the latest program
information, the first fully integrated, capable JSF is scheduled to
begin testing in the early 2012 time frame, a delay of several months.
The first flight of a JSF with limited mission capability has been
delayed 9 months. The estimate for first flight of a production
representative conventional take-off variant has been delayed 11 months
to January 2009 and the first flight of a carrier variant has been
delayed by as much as 4 months to May 2009.
The flying test bed, also critical to reducing risk in the flight test
program, has been delayed about 14 months to late 2007. This aircraft
is a modified Boeing 737 that will be equipped with the sensors and
mission system software and hardware. The test bed will allow the
program to test aircraft mission systems such as target tracking and
detection, electronic warfare, and communications. Figure 2 shows
schedule delays and the compression in the development schedule.
Figure 2: Changes in JSF Scheduled Events since the Replan:
[See PDF for image]
Source: DOD (2007 data); GAO (analysis and presentation).
[End of figure]
Design and Manufacturing of Development Aircraft Has Been a Major
Source of Delay:
The program has completed manufacturing of its first development
aircraft and manufacturing data indicates that the program did not meet
its planned labor hour goals. Manufacturing data on subsequent
development aircraft that have begun manufacturing indicate these
aircraft are not currently meeting their planned manufacturing
efficiencies either. According to contractor data as of November 2006,
the first development aircraft had required 35 percent or 65,113 more
labor hours than expected. The program encountered most of the
inefficiencies in the mate and delivery phase and with the fabrication
of the center fuselage and wing. Figure 3 shows the planned hours
versus the actual hours needed for completing the first test aircraft.
Figure 3: Manufacturing Efficiency of First Test Aircraft as of
November 2006:
[See PDF for image]
Source: Lockheed Martin (data); GAO (analysis).
[End of figure]
When the first aircraft began manufacturing, the program had released
about 20 percent of the engineering drawings needed for building the
aircraft. This led to a backlog of drawings, negatively impacting the
availability of parts needed for efficient manufacturing operations. To
compensate for delays and parts shortages for production, components of
the aircraft were manufactured out of sequence and at different
manufacturing workstations than planned. For example, the wing section
was mated to the center fuselage before work on the wing was completed.
The wing was only 46 percent complete and still required more than
18,500 hours of work. Because this remaining work was completed at a
different workstation than was planned, contractor officials stated
that major tooling--such as a stand that supports the wing structure
upright to allow workers to install wiring and other parts--was not
available for use. As a result, workers were required to lie on the
ground or bend under or over the wing structure to complete the wing
assembly, significantly increasing the number of hours needed to
complete this effort. According to Defense Contract Management Agency,
out-of-station work performed on the wing required an additional 46
percent more hours than planned. Late delivery of parts and late
qualification of subsystems were the major drivers to the mate and
delivery inefficiencies, more than doubling the hours needed to
complete this activity.
Lockheed Martin, the prime contractor, appears to be focused on
developing an efficient and effective manufacturing process for the
JSF, but it is still very early in that process. The development
aircraft now in manufacturing are not currently meeting their planned
efficiencies. As with the first test aircraft, the program does not
expect to manufacture the development aircraft in the planned
manufacturing sequence. The program expects to move some wing
fabrication activities to final assembly and do both fabrication and
final assembly concurrently. Early development aircraft are already
experiencing inefficiencies and delays. As of December 2006, wing
manufacturing data for one of these aircraft shows the program had
completed less than 50 percent of the activities expected at this time
while requiring 41 percent more hours than planned. According to the
contractor and program officials, these inefficiencies are largely due
to late delivery of the wing bulkheads because of a change in their
manufacturing process. The Defense Contract Management Agency has rated
manufacturing as high risk, stating that the primary cause of risk is
the late delivery of parts to properly support the manufacturing work
flow. It projects further delays to schedule, increased costs, and
subsequent out-of-sequence work.
An early indicator of design stability is the completion of design
drawings at the critical design review. In February 2006, the program
held its critical design review for production representative
conventional and short take-off and vertical landing aircraft.[Footnote
4] At that time, the program had completed 47 percent of the short take-
off aircraft design and 3 percent of the conventional aircraft design.
Our previous best practices work suggests that completion of 90 percent
of a product's engineering drawings provides tangible evidence that the
design is stable. As with the first aircraft, the program has
experienced late releases of engineering drawings, which has delayed
the delivery of critical parts from suppliers to manufacturing for the
building of the initial aircraft. For example, based on program data as
of October 2006, more than one-third of the drawings needed to complete
these two variants are expected to be released late to manufacturing.
Although the first aircraft encountered manufacturing inefficiencies,
the JSF Program and the contractor have pointed to some successes in
this initial manufacturing effort. For example, they have stated the
mate of the major sections of the aircraft was more efficient than in
past aircraft programs because of the state-of-the-art tools used to
design the aircraft and develop the manufacturing process. Likewise,
they have indicated that they have experienced fewer defects in this
first aircraft than experienced on legacy aircraft.
We would agree that the contractor has made progress in demonstrating
the use of several large tools and fabrication processes in building
the first test aircraft. However, a key factor in developing an
efficient and effective manufacturing process is a mature aircraft
design. Major design modifications can cause substantial and costly
changes in the manufacturing process. For example, since the first
aircraft entered production, the manufacturing process has had to be
altered due to redesigning required to resolve weight and performance
problems. According to Defense Contract Management Agency officials,
some tools already bought and in place were either no longer useful or
being used less efficiently. New tools had to be procured and the
manufacturing process had to change. The Defense Contract Management
Agency noted that these additional tooling costs were about $156
million. Contractor officials stated that the current manufacturing
capacity is sufficient to produce about 24 aircraft per year. Given
that only one aircraft has been built and essentially all of the flight
and static and durability testing remains to be done there is still
significant risk that the JSF design for each of the three variants
will incur more changes as more design knowledge is gained.
The JSF Program Projects Key Performance Parameters Will Be Met Based
on Modeling and Simulations:
Currently, the JSF program estimates that by the time the development
program ends the aircraft design will meet all but one of its key
performance parameters. The performance estimates to date are based on
engineering analyses, computer models, and laboratory tests. Key
performance parameters are defined as the minimum attributes or
characteristics considered most essential for an effective military
capability--for the JSF there are eight parameters. The program office
estimates that seven of the eight key performance parameters are being
met. The aircraft is currently not meeting its full interoperability
performance parameter due to a requirement for beyond-line-of-sight
communications. Meeting the full interoperability required is currently
dependent on other capabilities being developed outside the JSF
program. Most ground and flight tests will have to be completed before
all the key performance estimates are confirmed. At this time, the
program has completed less than 1 percent of the flight test program
and no structural or durability tests have been started. According to
the program's test and evaluation master plan, the key performance
parameters will be verified during testing from 2010 to 2013. Table 3
shows the program's estimate for each key performance parameter.
Table 3: JSF Program Estimates for Achieving Key Performance
Parameters:
Key performance parameter: Combat radius;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: CV Recovery;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: STOVL Performance;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: Interoperability;
Status: Meeting: [Empty];
Status: Not meeting: Check;
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: Radio frequency signature;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: Mission reliability;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: Sortie Generation Rate;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Key performance parameter: Logistics footprint;
Status: Meeting: Check;
Status: Not meeting: [Empty];
Confirmed through flight testing: Yes: [Empty];
Confirmed through flight testing: No: Check.
Source: GAO analysis of JSF program office data.
[End of table]
Challenges Remain in Executing the Balance of the JSF Program:
The JSF program's acquisition strategy includes significant challenges
to achieve projected cost and schedule goals. The program has begun
procurement but not yet demonstrated that the aircraft design is
mature, can be manufactured efficiently, and delivered on time. The
flight test program has just begun, and there is always risk of
problems surfacing and causing further delays. The degree of
concurrency between development and production in the JSF program's
acquisition strategy still includes significant risks for cost and
schedule overruns or late delivery of promised capabilities to the
warfighter. The program also faces uncertainties with the amount of
funding that will be available to support the program's plan. Other DOD
review and oversight organizations have also expressed concern over the
level of risk in the program and the resulting costs that will be
incurred to complete this acquisition program.
Challenges to Complete Flight Testing:
The program has planned a 7-year flight test program that includes over
11,000 hours of testing and over 6,000 flights. This is 75 percent more
than the F-22A's flight test program and more than double the F/A-18E/
F testing efforts. As of this report, the flight test program was only
beginning with essentially all critical flight testing remaining to
confirm that the aircraft will indeed deliver the required performance.
Figure 4 shows the planned flight tests by major test categories.
Figure 4: Major Areas of JSF Flight Testing to Be Completed:
[See PDF for image]
Source: Lockheed Martin (data); GAO (analysis).
[End of figure]
The JSF variants possess significant similarities--all designed to have
low observable airframe characteristics, fly at supersonic speeds,
shoot air-to-air missiles, and drop bombs on target--but each variant
has unique performance goals to support the services' different
operational concepts and environments. Test officials acknowledge that
each variant will require separate flight testing to demonstrate that
it will fly as intended. About two-thirds of the flight tests are
planned for demonstrating the performance of each aircraft design. The
other one-third of the flight tests are expected to confirm shipboard
operations, mission systems, survivability, and armament.
Manufacturing and technical problems can delay the completion of a
flight test program, increase the number of flight test hours needed to
verify that the system will work as intended, and affect scheduled
delivery to the warfighter. Under the current testing schedule, the JSF
program plans to manufacture and deliver 15 flight test aircraft and 7
ground test articles in 5 years--an aggressive schedule when compared
with other programs with fewer variables. For example, the F-22A
program took almost 8 years to manufacture and deliver nine flight test
aircraft and two ground test articles of a single aircraft design. When
the B-2 program began flight testing in July 1989, it estimated that
the flight test program would last approximately 4.5 years and require
about 3,600 flight test hours. When the test program ended in 1997, the
flight test hours had grown to 5,000 hours, or by 40 percent, over an 8-
year period. Program officials cited several causes, including
difficulties in manufacturing test aircraft and correcting deficiencies
from problems discovered during testing. The F-22A encountered similar
delays increasing a planned 4-year flight test program to about 8
years, affecting the program's ability to conduct operational testing
and move into production on schedule. As discussed earlier, current JSF
schedules are already showing that delivery of early test aircraft will
be later than the planned delivery date.
The flight test program will also hinge on the delivering aircraft with
the expected capabilities. JSF's expected capabilities are largely
dependent on software that supports vehicle and mission systems. The
program plans to develop over 22 million lines of code--more than 6
times the lines of code needed for the F-22A--in five blocks. The first
block is nearly complete and the last block is scheduled for completion
in late 2011. The program has completed less than 40 percent of the
software needed for the system's full functionality. Most of the
completed software is designed to operate the aircraft's flying
capabilities, while much of the remaining software development includes
software needed for mission capability, including weapons integration
and the fusion of information from onboard sensors and sources off the
aircraft. Past programs have encountered difficulties in developing
software, which delayed flight test schedules. JSF program officials
acknowledged that the software effort will become particularly
challenging during 2007 and 2008 when all five software blocks will be
in development at the same time.
Challenges Created by Continued Concurrent Development and Production:
The concurrency between development and production in DOD's acquisition
strategy for JSF did not substantially change as a result of the
program's rebaseline in fiscal year 2004. Therefore, the program is
entering low-rate initial production without demonstrating through
flight testing that (1) the aircraft's flying qualities function within
the parameters of the flight envelope--that is, the set limits for
altitude, speed, and angles of attack; (2) the aircraft design is
reliable; or (3) a fully integrated and capable aircraft system can
perform as intended. Starting production before ensuring design
maturity through flight testing significantly increases the risk
because of the of costly design changes that will push the program over
budget and behind schedule. Failure to capture key design knowledge
before producing aircraft in quantity can lead to problems that
eventually cascade and become magnified through the product development
and production phases. Figure 5 is a notional illustration showing the
impacts that can result from a highly concurrent acquisition strategy
to one with less concurrency and that captures key design and
manufacturing data before production begins.
Figure 5: Notional Illustration Showing the Different Paths That JSF
Development Can Take:
[See PDF for image]
Source: GAO.
[End of figure]
While some concurrency may be beneficial to efficiently transition from
the development stage of a program to production, the JSF is currently
planned to be significantly more concurrent than the F-22A program that
failed to deliver the warfighting capability on time and at predicted
costs. Table 4 provides a more detailed comparison between the JSF and
F-22A development programs and the accomplishments and requirements
before starting production in each program.
Table 4: Comparison between F-22A and Joint Strike Fighter Development
Programs:
Flight test program accomplished.
Flight test hours;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Approximately 1,300;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: Approximately 30;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2008.
Percent of flight test hours;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: 20 percent;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: Less than 1 percent;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2009.
Number of flight test aircraft delivered;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: 6 of 9;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: 1 of 15;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2009.
Months of flight testing;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: 48;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: 3;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2010.
Key test events accomplished.
Initiated fatigue testing;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Yes;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: No;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2008.
Initiated separation of weapons testing;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Yes;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: No;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2009.
Initiated radar cross section testing;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Yes;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: No;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2009.
Full scale static testing;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Yes;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: No;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2009.
First flight of fully integrated aircraft;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: F-22A: Yes;
Status of Flight Test Programs at the Start of Low Rate Initial
Production: Joint Strike Fighter: No;
Point When Joint Strike Fighter Will Match Similar F-22A
Accomplishments: 2012.
Source: GAO analysis of DOD data.
[End of table]
As a result of the risk associated with highly concurrent development
and production, the JSF program plans to place initial production
orders on cost reimbursement contracts. Cost reimbursement contracts
provide for payment of allowable incurred costs, to the extent
prescribed in the contract. Such contracts are used when costs cannot
be estimated with sufficient accuracy to use any type of fixed price
contract. Cost reimbursement contracts place a substantial risk on the
buyer--in this case DOD--because the contractor's responsibility for
the cost risks of performance has been minimized or reduced. As
knowledge is gained over time, the program office intended to shift the
contract type to one where more cost risk is placed on the contractor.
However, DOD materials supporting the President's fiscal year 2008
budget show that all low rate production orders will be placed on cost
reimbursement contracts.
Unprecedented Funding Requirements Could Challenge Program Execution:
To execute its current plan, the JSF program must obtain unprecedented
levels of annual funding--on average over $12.6 billion annually in
acquisition funds over the next 2 decades. Regardless of likely
increases in program costs, the sizeable continued investment in JSF--
estimated at roughly $252 billion over 20 years--must be viewed within
the context of the fiscal imbalance facing the nation within the next
10 years. The JSF program will have to compete with many other large
defense programs, such as the Army's Future Combat System and the
Missile Defense Agency's ballistic missile defense system, for funding
during this same time frame. There are also important competing
priorities external to DOD's budget. Fully funding specific programs or
activities will undoubtedly create shortfalls in others.
Funding challenges will be even greater if the program fails to achieve
current cost and schedule estimates for the revised program baseline.
The consequences of an even modest cost increase or schedule delay on a
program this size is dramatic. For example, since the program
rebaseline in fiscal year 2004, the estimated annual funding
requirements have increased every year from 2012 to 2027 by at least $1
billion and in some cases by $3 to $7 billion. These funding increases
would be enough to fund several major programs' activities. Figure 6
shows growth in estimated annual funding requirements from December
2003 to December 2005.
Figure 6: JSF Program's Annual Funding Requirements:
[See PDF for image]
Source: GAO analysis of DOD data.
[End of figure]
Due to affordability pressures, DOD is beginning to reduce procurement
budgets and annual quantities. The just-released fiscal year 2008
defense budget shows declining procurement quantities for the first
years of production. To meet future constrained acquisition budgets,
Air Force and Navy officials and planning documents suggest a decrease
in maximum annual buy quantities from 160 shown in the current program
of record to about 115 per year, a 28 percent decrease. While this will
reduce annual funding requirements, it will also stretch the
procurement program at least 7 years to 2034, assuming buy quantities
are deferred rather than eliminated.
DOD Organizations Have Raised Concerns about Program Risks and
Estimated Costs:
DOD's military service operational test organizations, the Cost
Analysis and Improvement Group (CAIG), and the Defense Contract
Management Agency (DCMA) have expressed concerns over the level of risk
and estimated costs of the program. These oversight and testing
organizations highlight some of the program risks and the challenges
the JSF program must overcome to avoid further slips in schedule and
more cost growth.
A February 2006 operational assessment of the JSF program by Air Force,
Navy and United Kingdom operational test officials noted several areas
of risk. According to the test report, several of these issues, if not
adequately addressed, are likely to pose substantial or severe
operational impact to the JSF's mission capabilities. Key concerns
raised in the report include the following:
* Software development and testing schedules are success-oriented and
have little margin to accommodate delays.
* Developmental flight test schedule provides little capability to
respond to unforeseen problems and still meet scheduled start of
operational testing. This threatens to slip operational testing and
initial operational capability.
* Predicted maintenance times for propulsion system support, integrated
combat turn, and gun removal and installation do not meet requirements.
* Design requirements to preserve volume, power, and cooling for future
growth are in jeopardy and will limit capability to meet future
requirements.
* Certain technical challenges in the aircraft or its subsystem design
that could impact operational capability.
In a follow-up discussion on the report, test officials stated that
these concerns were still current and they had not been informed by the
program office of planned actions to address them. The December 2006
Annual Report of DOD's Director, Operational Test and Evaluation
recommended that the JSF program follow up on these issues.
The CAIG has expressed concerns about the reality of estimated program
costs. Its preliminary cost estimate in 2005 was substantially higher
than the program office estimate. The CAIG cited costs associated with
mission systems, system test, engines, and commonality as drivers in
the difference between its estimate and that of the program office.
According to discussions in 2006 with CAIG officials, they still have
concerns and continue to expect program costs to be much higher than
the program office's current estimate. The CAIG is not required to
submit its next formal independent cost estimate until the preparations
for Milestone C, which for the JSF program is full-rate production. For
major defense acquisition programs, this milestone generally should
occur before low-rate initial production. Milestone C is scheduled for
late 2013.
DCMA's concerns focus on the prime contractor's ability to achieve its
cost and schedule estimates. DCMA, responsible for monitoring the prime
contractor's development and procurement activities, found that delays
in aircraft deliveries and critical technical review milestones put at
risk the contractor's ability to meet the current schedule. DCMA also
identified manufacturing operations as a high-risk area highlighting
issues with parts delivery, raw material availability, and
subcontractor performance. Finally, it raised concerns with contractor
cost growth stating that the contractor has shown continuing and steady
increases since development started, even after the contract's target
price was increased by $6 billion as part of the program's rebaseline.
As of November 2006, DCMA projects that the contractor's current
estimated development costs will increase by about $1 billion.
Conclusions:
The JSF is entering its 6th year of a 12-year development program and
is also entering production. The development team has achieved first
flight and has overcome major design problems found earlier in
development. In addition, the department counts on this aircraft to
bear the brunt of its recapitalization plans. Therefore, we believe the
program is critical to the department's future plans and is viable,
given progress made to date. However, the current acquisition strategy
still reflects very significant risk that both development and
procurement costs will increase and aircraft will take longer to
deliver to the warfighter than currently planned. Even as the JSF
program enters the mid point of its development, it continues to
encounter significant cost overruns and schedule delays because the
program has continued to move forward into procurement before it has
knowledge that the aircraft's design and manufacturing processes are
stable. Although some of the additional costs were predictable, other
costs, especially those resulting from rework, represent waste the
Department can ill afford.
Flight testing began just a few months before the decision to begin low-
rate initial production. The challenges and risks facing the program
are only expected to increase as the program begins to ramp up its
production capabilities while completing design integration, software
design, and testing. DOD's approval to enter low-rate initial
production this year committed the program to this high risk strategy.
If the program is unable to mitigate risks, its only options will be to
reduce program requirements or delay when the program achieves initial
operational capability. We see two ways this risk can be reduced: (1)
reducing the number of aircraft for procurement before testing
demonstrates their performance capabilities, thereby reducing the
potential for costly changes to the aircraft and manufacturing
processes or (2) reexamining the required capabilities for initial
variants with an eye toward bringing them up to higher capability in
the future.
Last year Congress reduced funding for the first two low-rate
production lots of aircraft thereby slowing the ramp up of production.
This was a positive first step in lowering risk during the early years
of testing. However, a significant amount of ground and flight tests
remains over the next 6 years. All three variants need to demonstrate
their flight performance. The carrier variant will be the last of the
three variants to be delivered to the flight test program. It is now
scheduled to start flight testing in May 2009 and has nearly 900 flight
tests planned to demonstrate its flight performance. If the program
executes its plan for a steep ramp up in production before proving the
basic flying qualities of each aircraft variant, the likelihood of
costly changes to its significant investment in production will remain
high.
Recommendation for Executive Action:
To improve chances of a successful outcome, we are recommending that
the Secretary of Defense limit annual low-rate initial production
quantities to no more than 24 aircraft per year, the current
manufacturing capacity, until each variant's basic flying qualities
have been demonstrated in flight testing now scheduled in the 2010 time
frame.
Agency Comments and our Evaluation:
DOD provided us with written comments on a draft of this report. The
comments appear in appendix II.
DOD non-concurred with our recommendation stating that the current JSF
acquisition strategy provides an effective balance of technical risk,
financial constraints, and operational needs of the services. However,
we believe DOD's actions to reduce aircraft quantities in the fiscal
year 2008 President's Budget are in line with our recommendation to
limit production to current manufacturing capacity until each variant's
flying qualities have been demonstrated in flight testing. In the 2008
budget, DOD reduced the number of production aircraft it plans to buy
during the flight test program by about 35 percent as compared to its
previous plan for the JSF. Under this new plan DOD does not
substantially increase its buy quantities of production aircraft until
2011. We continue to believe that limiting production quantities until
the design is demonstrated would reduce the overlap in production and
development while still allowing the efficient transition from
development to production. It would also make cost and schedule more
predictable and lessen the risk to DOD's production investment. The JSF
program is still only in its sixth year of a 12-year development
program with significant challenges remaining such as completing the
design, software development, and flight testing. As such, there is
continued risk that testing will not go as planned and demonstrating
the aircraft's capability could be delayed beyond the current plan.
Therefore, we maintain our recommendation and will continue to monitor
the progress in the test program and the resulting dynamics between
development and production.
We are sending copies of this report to the Secretary of Defense; the
Secretaries of the Air Force, Army, and Navy; and the Director of the
Office of Management and Budget. We will also provide copies to others
on request. In addition, the report will be made available at no charge
on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4841. Contact points for our offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. Other staff making key contributions to this
report were Michael Hazard, Assistant Director; Lily Chin; Matthew Lea;
Gary Middleton; Daniel Novillo; Karen Sloan; Brian Smith, Adam
Vodraska; and Joe Zamoyta.
Signed by:
Michael J. Sullivan:
Director:
Acquisition and Sourcing Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine the status of the Joint Strike Fighter (JSF) program's
cost, schedule, and performance, we compared current program estimates
against estimates established after the program rebaselined in fiscal
year 2004. Current official program cost estimates are based on the
program's December 31, 2005, Selected Acquisition Report to Congress.
At the time of our review, the Office of the Secretary of Defense was
still preparing its new cost estimate to be included in the program's
Selected Acquisition Report dated December 31, 2006, expected to be
delivered to the Congress in April 2007. Because the new official cost
estimate for the JSF program will not be available until after this
report is issued we are unable to make informed judgments on those
estimated costs. It should be noted that after our 2006 report was
issued on March 15, 2006, DOD released its December 2005 Selected
Acquisition Report, which showed an increase of over $19 billion in
total estimated JSF program costs.
We identified changes in the program's cost, schedule, and performance
since the program rebaseline and analyzed relevant information to
determine the primary causes of those changes. We reviewed JSF
management reports, acquisition plans, test plans, risk assessments,
cost reports, independent program assessments, and program status
briefings. We interviewed officials from the DOD acquisition program
management office and prime contractor to gain their perspectives on
the performance of the program.
To identify the challenges the program will face in the future, we
compared the programs plans and results to date with future plans to
complete development. We analyzed design and manufacturing data from
the program office and the prime contractor to evaluate performance and
trends. We reviewed program risk reports, earned value management data,
and manufacturing data to identify uncertainties and risks to
completing the program within the new targets established by the
program rebaseline. We analyzed test program and software data to
understand the readiness and availability of development aircraft for
the test program. We also obtained information on past DOD programs
from Selected Acquisition Reports and prior work conducted by GAO over
the past two decades. We interviewed officials and reviewed reports
from several DOD independent oversight organizations to gain their
perspectives on risk in the program.
To assess the likely impacts of concurrently developing and
manufacturing JSF aircraft we compared the program's plans and results
to date against best practice standards for applying knowledge to
support major program investment decisions. The best practice standards
are based on a GAO body of work that encompasses 10 years and visits to
over 25 major commercial companies. Our work has shown that valuable
lessons can be learned from the commercial sector and can be applied to
the development of weapons systems. We identified gaps in product
knowledge at the production decision, reasons for these gaps, and the
risks to the program. We also examined the F-22A program's acquisition
approach. We interviewed officials from the DOD acquisition program
management office and prime contractor to gain their perspectives on
program risks and their approaches to managing risks.
In performing our work, we obtained information and interviewed
officials from the JSF Joint Program Office, Arlington, Virginia; F-22A
Program Office, Wright-Patterson Air Force Base, Ohio; Lockheed Martin
Aeronautics, Fort Worth, Texas; Defense Contract Management Agency,
Fort Worth, Texas; and offices of the Director, Operational Test and
Evaluation, and Acquisition, Technology and Logistics, Program Analysis
and Evaluation-Cost Analysis Improvement Group, which are part of the
Office of Secretary of Defense in Washington, D.C. We performed our
work from June of 2006 to March of 2007 in accordance with generally
accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
3000 Defense Pentagon:
Washington, DC 20301-3000:
Acquisition, Technology And Logistics:
Mar 5 2007:
Mr. Michael J. Sullivan:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N. W.
Washington, D.C. 20548:
Dear Mr. Sullivan:
This is the Department of Defense response to the Government
Accountability Office (GAO) draft report 07-360, "Joint Strike Fighter:
Progress Made and Challenges Remain," dated January 26, 2007 (GAO Code
120570). The Department non-concurs with the report recommendation, but
appreciates the GAO's highlighting of both program successes and
challenges. Details of the non-concurrence are contained in the
enclosure.
The Department values the opportunity to comment on the draft report
and looks forward to continued discussions on the program with the GAO.
Sincerely,
Signed by:
David G. Ahern:
Director:
Portfolio Systems Acquisition:
Enclosure:
As stated:
GAO Draft Report - Dated January 26, 2007 GAO-07-360:
"Joint Strike Fighter-Progress Made and Challenges Remain"
Department Of Defense Comments To The Recommendation:
Recommendation: To improve chances for a successful outcome, the GAO
recommends the Secretary of Defense limit annual production quantities
to no more than 24 aircraft per year, the current manufacturing
capability, until each variant's basic flying qualities have been
demonstrated in flight testing now scheduled in the 2010 timeframe.
DOD Response: Non-concur. The current F-35 acquisition strategy
provides the most effective balance of technical risk, financial
constraints and the Services' operational needs. Fiscal constraints
have driven the DoD's decision to reduce near-term quantities in the
FY08 President's Budget. However, the program will continue to ramp up
production rate, tooling, and support activities to meet operational
needs. The program has an acceptable level of concurrency and an
appropriate acquisition strategy. Eight international partners have
also recently reasserted their confidence in the F-35 acquisition
strategy by signing the Production, Sustainment and Follow-on
Development Memorandum of Understanding (MOU).
The Department believes that a major manufacturing or design flaw,
requiring extensive delay of the program, is unlikely. Furthermore,
that risk is more than offset by the certainty of higher unit costs
which the Department would incur if it accepted a lower ramp rate. The
Department would also need to further extend legacy fleets past their
current service life expectancies, including higher operating costs
which would consume funds currently targeted for recapitalization/
modernization efforts. Allied Services committed to this program and
would be similarly impacted. The Department believes that restricting F-
35 annual production quantities as recommended by the GAO would further
increase F-35 procurement costs, outpacing any potential retrofit costs
to correct any future design deficiencies.
Modern experience with both commercial and military aircraft supports
the Department's position. The F-35 employs extensive use of modern
digital design and development tools, ground test laboratories,
modeling and simulation techniques and flying test beds to accelerate
design maturation and burn-down development risk far ahead of flight
test. The Department's confidence has been reinforced with the design,
manufacturing, and flight test performance of the first F-35 flight
test aircraft. Numerous other indicators from this aircraft--for
example, actual weight within 1% of predicted, no fuel leaks during
ground tests (unprecedented), high level of quality in manufacturing
and assembly, and a high frequency of flight tests thus far--further
increase Department confidence. The program is supported by thorough
insight by the engineering expertise of the Navy and Air Force, and
further reinforced by the outstanding data correlation between initial
flight test results and modeling and simulation predictions. Similar
experiences have been seen in the commercial sector, where both the
Boeing 777 and 787 had virtual "roll-outs" and successfully adopted
concurrent development and production strategies.
The FY08 President's Budget Request proposes near-term reductions in
the quantities of F-35s to be procured over the next five years, due to
shortfalls in outyear Service funding (FY12 and FYI 3) and procurement
and developmental cost growth in the program. A significant portion of
the procurement cost growth cited by GAO is due to inflation factors,
aggregate aerospace company financial performance, and the worldwide
precious metals commodities market aspects that the F-35 program could
not accurately project. The Department continues to monitor program
performance and incentivize the contractor to keep unit costs in check.
The Department will continue to hold annual Defense Acquisition Boards
with stringent exit criteria before committing to further procurement
investments.
The Department agrees with several other concerns that the GAO
identifies:
* The planned flight test activity does not yet fit within the
development schedule. The program has undertaken an intensive review of
its verification strategy in order to reduce the number of flight tests
without sacrificing the level of fidelity needed to verify performance.
* Software and integration is a challenge in 2007 and 2008. The
Department will closely track software productivity and frequently
revisit its assumptions about how many lines of code it can execute
with the dollars and schedule remaining. Warfighter representatives are
heavily involved in making the difficult trades, which will be critical
to produce the most capable aircraft within these constraints.
* Executing the remaining design tasks within the planned labor profile
to meet the planned manufacturing dates will also be a challenge. The
program has recently completed extensive productivity improvement plans
and developed more efficient manufacturing and design processes. These
will be watched closely in 2007 to ensure development costs do not
spiral upwards.
The Department is pleased that the GAO recognized the F-35 program's
progress. Specifically, the report appropriately assesses the F-35
program's performance from its current baseline. The report recognizes
some of the many steps the program office and contractor have taken to
be responsive to problems to date. Finally, it acknowledges that some
program concurrency is helpful in making the transition from
development to production, and that the program is viable given
progress to-date.
[End of section]
(120570)
FOOTNOTES
[1] Section 213 of the Act requires us to assess the extent to which
the system development and demonstration program is currently meeting
cost, schedule, and performance goals; the likelihood that the program
will be completed within estimated costs; and the program's current
acquisition plan leading to production.
[2] GAO, Joint Strike Fighter: DOD Plans to Enter Production before
Testing Demonstrates Acceptable Performance, GAO-06-356 (Washington
D.C.: Mar. 15, 2006) and Tactical Aircraft: Opportunity to Reduce Risks
in the Joint Strike Fighter Program with Different Acquisition
Strategy, GAO-05-271 (Washington D.C.: Mar. 15, 2005).
[3] In section 211 of the John Warner National Defense Authorization
Act for Fiscal Year 2007 (P.L. 109-364), Congress required independent
cost analyses of the alternate engine program by March 15, 2007, from
the DOD Cost Analysis Improvement Group, a Federally Funded Research
and Development Center selected by DOD, as well as GAO.
[4] Critical design review for the carrier variant has been rescheduled
from late 2006 to spring 2007. According to program officials, this
delay will allow the program to mature the design of the variant.
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