Joint Strike Fighter
Additional Costs and Delays Risk Not Meeting Warfighter Requirements on Time Gao ID: GAO-10-382 March 19, 2010The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), is the Department of Defense's (DOD) most costly and ambitious aircraft acquisition, seeking to simultaneously develop and field three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The JSF is critical for recapitalizing tactical air forces and will require a long-term commitment to very large annual funding outlays. The current estimated investment is $323 billion to develop and procure 2,457 aircraft. As required by law, this report discusses (1) program cost, schedule, and performance; (2) manufacturing results; and (3) test plans and progress. GAO's work includes interviews, cost data, test plans, production measures, and analyses by defense and contractor officials.
The JSF program continues to struggle with increased costs and slowed progress--negative outcomes that were foreseeable as events have unfolded over several years. Total estimated acquisition costs have increased $46 billion and development extended 2 more years, compared to the program baseline approved in 2007. DOD leadership is now taking some positive steps which, if effectively implemented, should improve outcomes and provide more realistic cost and schedule estimates. Officials increased time and funding for system development, added 4 aircraft to the flight test program, and reduced near-term procurement quantities. Restructuring is not finished and further cost growth and schedule extensions are likely. The program is at risk for not delivering aircraft quantities and capabilities on time. Dates for achieving initial operational capabilities may have to be extended or some requirements deferred to future upgrades. Aircraft unit costs will likely exceed the thresholds established by the statutory provision commonly referred to as Nunn-McCurdy and may require DOD to certify the need for the JSF to Congress. Program setbacks in costs, deliveries, and performance directly affect modernization plans and retirement schedules of the legacy aircraft the JSF is slated to replace. Manufacturing JSF test aircraft continues to take more time, money, and effort than budgeted. By December 2009, only 4 of 13 test aircraft had been delivered and labor hours to build the aircraft had increased more than 50 percent above earlier estimates. Late deliveries hamper the development flight test program and affect work on production aircraft, even as plans proceed to significantly ramp-up annual procurement rates. Some improvement is noted, but continuing manufacturing inefficiencies, parts problems, and engineering technical changes indicate that design and production processes may lack the maturity needed to efficiently produce aircraft at planned rates. The independent manufacturing review team determined that the planned production ramp rate was unachievable absent significant improvements. Although restructuring actions should help, there is still substantial overlap of development, test, and production activities while DOD continues to invest in large quantities of production aircraft before variant designs are proven and performance verified. Slowed by late aircraft deliveries, technical problems, and low productivity, the flight test program only completed 10 percent of the sorties planned during 2009. Other technical challenges include (1) relying on an extensive but largely unproven and unaccredited network of ground test laboratories and simulation models to evaluate system performance; (2) developing and integrating very large and complex software requirements; and (3) maturing several critical technologies essential to meet operational performance and logistical support requirements. Collectively, testing and technical challenges will likely add more costs and time to development, affecting delivery of warfighter requirements and hampering start up of pilot and maintainer training and initial operational testing.
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-10-382, Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting Warfighter Requirements on Time
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
March 2010:
Joint Strike Fighter:
Additional Costs and Delays Risk Not Meeting Warfighter Requirements
on Time:
GAO-10-382:
GAO Highlights:
Highlights of GAO-10-382, a report to congressional committees.
Why GAO Did This Study:
The F-35 Lightning II, also known as the Joint Strike Fighter (JSF),
is the Department of Defense‘s (DOD) most costly and ambitious
aircraft acquisition, seeking to simultaneously develop and field
three aircraft variants for the Air Force, Navy, Marine Corps, and
eight international partners. The JSF is critical for recapitalizing
tactical air forces and will require a long-term commitment to very
large annual funding outlays. The current estimated investment is $323
billion to develop and procure 2,457 aircraft. As required by law,
this report discusses (1) program cost, schedule, and performance; (2)
manufacturing results; and (3) test plans and progress. GAO‘s work
includes interviews, cost data, test plans, production measures, and
analyses by defense and contractor officials.
What GAO Found:
The JSF program continues to struggle with increased costs and slowed
progress”negative outcomes that were foreseeable as events have
unfolded over several years. Total estimated acquisition costs have
increased $46 billion and development extended 2 more years, compared
to the program baseline approved in 2007. DOD leadership is now taking
some positive steps which, if effectively implemented, should improve
outcomes and provide more realistic cost and schedule estimates.
Officials increased time and funding for system development, added 4
aircraft to the flight test program, and reduced near-term procurement
quantities. Restructuring is not finished and further cost growth and
schedule extensions are likely. The program is at risk for not
delivering aircraft quantities and capabilities on time. Dates for
achieving initial operational capabilities may have to be extended or
some requirements deferred to future upgrades. Aircraft unit costs
will likely exceed the thresholds established by the statutory
provision commonly referred to as Nunn-McCurdy and may require DOD to
certify the need for the JSF to Congress. Program setbacks in costs,
deliveries, and performance directly affect modernization plans and
retirement schedules of the legacy aircraft the JSF is slated to
replace.
Manufacturing JSF test aircraft continues to take more time, money,
and effort than budgeted. By December 2009, only 4 of 13 test aircraft
had been delivered and labor hours to build the aircraft had increased
more than 50 percent above earlier estimates. Late deliveries hamper
the development flight test program and affect work on production
aircraft, even as plans proceed to significantly ramp-up annual
procurement rates. Some improvement is noted, but continuing
manufacturing inefficiencies, parts problems, and engineering
technical changes indicate that design and production processes may
lack the maturity needed to efficiently produce aircraft at planned
rates. The independent manufacturing review team determined that the
planned production ramp rate was unachievable absent significant
improvements.
Although restructuring actions should help, there is still substantial
overlap of development, test, and production activities while DOD
continues to invest in large quantities of production aircraft before
variant designs are proven and performance verified. Slowed by late
aircraft deliveries, technical problems, and low productivity, the
flight test program only completed 10 percent of the sorties planned
during 2009. Other technical challenges include (1) relying on an
extensive but largely unproven and unaccredited network of ground test
laboratories and simulation models to evaluate system performance; (2)
developing and integrating very large and complex software
requirements; and (3) maturing several critical technologies essential
to meet operational performance and logistical support requirements.
Collectively, testing and technical challenges will likely add more
costs and time to development, affecting delivery of warfighter
requirements and hampering start up of pilot and maintainer training
and initial operational testing.
What GAO Recommends:
GAO recommends that DOD (1) make a new, comprehensive, and independent
assessment of the costs and schedule to complete the program,
including military construction, JSF-related expenses in other
budgets, and life-cycle costs; and (2) reassess warfighter
requirements and, if necessary, defer some capabilities to future
increments. GAO also suggests that Congress consider requiring DOD to
establish a management tool to help Congress better measure the program‘
s progress in maturing the weapon system in a variety of areas to
include cost estimating, testing, and manufacturing.
View [hyperlink, http://www.gao.gov/products/GAO-10-382] or key
components. For more information, contact Michael J. Sullivan at (202)
512-4841or sullivanm@gao.gov.
[End of section]
Contents:
Letter:
Background:
Cost Increases and Schedule Delays Increase Risk of Not Delivering
Capabilities to the Warfighter on Time:
Manufacturing and Engineering Challenges Continue to Slow Aircraft
Deliveries and Hold the Production Schedule at Risk:
Little Progress in Development Testing While Program Continues to Face
Technical Challenges:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Changes in Reported JSF Program Costs, Quantities, and
Deliveries:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Estimated Cost and Schedule for System Development:
Table 2: Total Projected Procurement Funding Requirements:
Table 3: Changes in Major Milestones:
Table 4: Initial Operational Capability Requirements:
Table 5: Procurement and Manufacturing Plans as of February 2010:
Table 6: Progress in Meeting Planned Development and Test Activities:
Table 7: Changes in Reported JSF Program Costs, Quantities, and
Deliveries:
Figures:
Figure 1: JSF Labor Hours for Manufacturing Test Aircraft:
Figure 2: Wing Station Labor Hours:
Figure 3: Mate and Delivery Labor Hours:
Figure 4: Growth in the Number of Engineering Design Drawings:
Figure 5: Breakdown of Verification Venues:
Figure 6: Software Increments:
Figure 7: JSF Procurement Investments and Progress of Flight Testing:
Abbreviations:
CAPE: Cost Assessment and Program Evaluation:
CTOL: conventional takeoff and landing:
DOD: Department of Defense:
JSF: Joint Strike Fighter:
OSD: Office of the Secretary of Defense:
STOVL: short takeoff and vertical landing:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 19, 2010:
Congressional Committees:
The F-35 Lightning II, also known as the Joint Strike Fighter (JSF),
is the Department of Defense's (DOD) most costly and ambitious
aircraft acquisition, seeking to simultaneously develop and field
three aircraft variants for the Air Force, Navy, Marine Corps, and
eight international partners. The JSF is critical to our nation's
plans for recapitalizing the tactical air forces and will require a
long-term commitment to very large annual funding outlays. The total
U.S. investment is now estimated at $323 billion to develop and
acquire 2,457 aircraft.
We have reported on JSF issues for a number of years. We have
expressed our concerns about the substantial overlap of development,
test, and production activities and resulting cost increases and
schedule delays. We have also identified opportunities for the program
to reduce risks and improve chances for more successful outcomes. Our
recommendations have included adopting a more evolutionary, knowledge-
based acquisition strategy and limiting investment in production
aircraft until each variant demonstrates required capabilities in
flight tests. Our March 2009 report was the fifth and final annual
report under a congressional mandate.[Footnote 1] In that report, we
noted the government's increased financial risk from development cost
increases, additional delays in manufacturing and testing schedules,
and plans to increase procurement in advance of testing. We
recommended that DOD report to Congress its plans for mitigating risks
and transitioning from cost-reimbursement procurement contracts to
fixed-price contracts, and that DOD ensure the prime contractor
performs detailed schedule risk analyses to provide important insight
into use of reserve funds and manufacturing progress.[Footnote 2]
Our work for this report began under a request from the Chairman and
Ranking Member of the House Armed Services Air and Land Subcommittee.
Subsequently, we received a new mandate in the National Defense
Authorization Act for Fiscal Year 2010 to annually review the JSF
program through 2015.[Footnote 3] This report thus satisfies the
original request as well as the first year of the new mandate. In this
report, we (1) determine the JSF program's progress in meeting cost,
schedule, and performance goals; (2) assess plans and results in
manufacturing; and (3) evaluate plans, progress, and risks with
testing plans and related technical challenges.
To conduct this work, we tracked and compared current cost and
schedule estimates with those of prior years, identified changes, and
determined causes. We obtained program status reports, manufacturing
data, and test planning documents. We conducted our own analyses of
the information. We discussed results to date and future plans to
complete JSF development and move further into procurement with DOD,
JSF, and contractor officials. We conducted this performance audit
from May 2009 to February 2010 in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
Background:
The F-35 JSF program is a joint, multinational acquisition to develop
and field an affordable, highly common family of stealthy, next-
generation strike fighter aircraft for the United States Air Force,
Marine Corps, Navy, and eight international partners. The JSF is a
single-seat, single-engine aircraft incorporating low-observable
(stealth) technologies, defensive avionics, advanced sensor fusion,
[Footnote 4] internal and external weapons, and advanced prognostic
maintenance capability. There are three variants. The conventional
takeoff and landing (CTOL) variant will primarily be an air-to-ground
replacement for the Air Force's F-16 Falcon and the A-10 Warthog
aircraft, and will complement the F-22A Raptor. The short takeoff and
vertical landing (STOVL) variant will be a multi-role strike fighter
to replace the Marine Corps' F/A-18C/D Hornet and AV-8B Harrier
aircraft. The carrier-suitable variant (CV) will provide the Navy a
multi-role, stealthy strike aircraft to complement the F/A-18E/F Super
Hornet.
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. Pratt & Whitney is the primary engine
manufacturer, while General Electric has been funded to develop a
potential second source for the engine. DOD officials adopted a
"single step" acquisition strategy to develop and acquire full combat
capabilities on an aggressive schedule with significant risk
associated with concurrently developing, testing, and producing
aircraft. In 2004, DOD extended the program schedule to address
airframe weight problems discovered during systems integration and
design review. DOD rebaselined the program extending development,
adding resources, and delaying deliveries. This caused a breach of the
significant cost growth threshold, commonly referred to as a Nunn-
McCurdy breach.[Footnote 5] Cost and schedule changes since then
resulted in another rebaselining in 2007, the current acquisition
program baseline.
DOD plans to buy a total of 2,457 JSFs and allies are expected to
procure a minimum of 730 CTOL and STOVL aircraft. Because of the
program's sheer size and the numbers of aircraft it will replace, the
JSF is the linchpin of DOD's long-term plan to modernize tactical air
forces. It is DOD's most costly acquisition program and its longest in
duration--total acquisition cost is currently estimated at $323
billion with procurement lasting through 2035. The JSF is also DOD's
largest cooperative program. Our international partners are providing
about $4.8 billion toward development, and foreign firms are part of
the industrial base producing aircraft. DOD's funding requirements for
the JSF assume economic benefits from these foreign purchases in
reducing unit costs for U.S. aircraft.
In our March 2009 report,[Footnote 6] we noted that more money and
time would be needed to complete development. At that time,
development costs were projected to increase between $2.4 billion and
$7.4 billion and the schedule extended from 1 to 3 years according to
two estimates, one by the JSF program office and one by a joint team
of Office of Secretary of Defense (OSD), Air Force, and Navy
officials. We reported that manufacturing inefficiencies and parts
shortages continued to delay the delivery of development test aircraft
and would make it difficult for the program to meet its production
schedule. In addition, we reported that DOD plans to further
accelerate procurement and invest heavily in production aircraft
despite a nascent flight test program that was very risky.[Footnote 7]
The risk is reflected by the continued use of cost reimbursement
contracts for low-rate production quantities, a contract type that
places most of the cost risk on the buyer, which in this case is DOD.
DOD concurred with, but has not yet implemented, our two
recommendations to report on its plans for mitigating the risks of
using cost-reimbursement procurement contracts for low-rate production
and transitioning to fixed-price contracting, and to ensure that the
prime contractor performs detailed schedule risk analyses to provide
important insight into use of reserve funds and manufacturing progress.
Because of continuing cost and schedule problems, the Secretary of
Defense directed a comprehensive restructuring of the JSF program in
February 2010 acquisition decision memorandum. The restructuring was
the culmination of an extensive department-wide review of the JSF
program directed by OSD in 2009. In addition to input from
contractors, the joint program office, and various defense offices,
the review considered the findings and recommendations from three
independent work groups chartered to assess the program: the Joint
Estimating Team (JET) evaluated program execution and resource
requirements, the Independent Manufacturing Review Team (IMRT)
assessed contractor capabilities and plans for ramping-up and
sustaining production at maximum rates, and the Joint Assessment Team
(JAT) reviewed F135 engine costs and affordability projections. Among
other actions, the restructuring (1) increased funding for the JSF
development and procurement programs to the revised JET estimates over
the next 5 years; (2) extended development flight testing by 13 months
and moved the full rate production decision to April 2016; (3) added 4
aircraft to support the development test program (one new test jet and
use of three production jets); (4) expanded software integration
capabilities; (5) reduced near-term procurement quantities; (6)
directed the program office and military services to determine the
potential impacts of the restructuring on initial operational
capabilities; and (7) directed the Air Force and Navy to revise the
development and low rate production contracts and fee structures to
reward improved cost and schedule performance and to move to fixed-
price incentive fee structures as soon as possible. The Under
Secretary of Defense for Acquisition, Technology and Logistics stated
that the department-wide review would continue and cited 2010 will be
a critical year for assessing progress on the new plans and expected
delivery of test aircraft, completing of hundreds of test flights, and
meeting other key milestones.
Cost Increases and Schedule Delays Increase Risk of Not Delivering
Capabilities to the Warfighter on Time:
In ordering the restructure, DOD leadership is recognizing the
relatively poor cost and schedule outcomes that we and others have
previously reported. The restructuring added time and money to the
development effort and decreased near-term procurement quantities to
help pay the bill. Recent independent assessments projected much
higher costs for development and procurement and more testing time
needed to ensure that the design and performance of each variant meets
requirements and is operationally suitable. Cost increases and further
delays pose a substantial risk that the program will not be able to
deliver the quantities and capabilities in the time required by the
warfighters. It is likely that either the dates for achieving initial
operational capabilities must be delayed or the military services will
have to accept less initial capability and defer some requirements to
a future upgrade program. Furthermore, higher costs and lesser
quantities will likely result in unit cost increases exceeding the
thresholds established by the statutory provision commonly referred to
as Nunn-McCurdy and may require DOD to certify the need for the
program to Congress.
Recent Estimates Project Significant Cost Increases and Delays to
Complete Development:
Several recent defense assessments and our work identified significant
cost growth and further schedule delays for completing JSF system
development. As a result, DOD restructured the program and added
additional time and funding to complete development. The re-estimated
effort funded in the fiscal year 2011 budget submission has increased
development funding by $4.5 billion and extended the time needed to
complete development by 2 ½ years, compared to the current approved
baseline. Table 1 compares the new budget data with the original
baseline in 2001, the approved baseline in 2007, and the program's
interim estimate dated December 2008. The interim estimate had earlier
added $1.4 billion to the fiscal year 2010 request to pay for cost
overruns on the airframe and engine contracts, technical scope
increases, and additional funding to mitigate risk.
Table 1: Estimated Cost and Schedule for System Development:
Total development costs:
October 2001 original baseline: $34.4 billion;
March 2007 approved baseline: $44.8 billion;
December 2008 program estimate: $46.2 billion;
Fiscal year 2011 budget request: $49.3 billion.
Date to complete development:
October 2001 original baseline: April 2012;
March 2007 approved baseline: October 2013;
December 2008 program estimate: October 2014;
Fiscal year 2011 budget request: April 2016.
Source: GAO analysis of DOD data.
[End of table]
According to defense officials, the new budget reflects the findings
of the JET.[Footnote 8] Consistent with its previous 2008 study, the
JET projected higher development costs and greater schedule delays
compared to the internal program estimates reported to Congress. Among
other factors, the JET projected (1) more engineering staff needed for
longer periods of time to complete development, evaluate test results,
and correct deficiencies; (2) greater growth in software requirements
and complexity; (3) longer manufacturing times; and (4) considerably
more time and effort needed in development testing.
Additional cost increases and more time to complete development are
possible. The preliminary estimate by the JET projected as much as a
30-month extension in the schedule for completing development flight
tests, more than the 13-month extension ordered in the restructuring.
Defense officials acknowledge that the revised schedule for completing
development, testing, and supporting the full-rate production
milestone is still aggressive. Also, the 2011 budget estimate does not
include costs beyond 2010 for the alternate (or second) engine
program. Should that program go forward, an estimated $1.6 billion may
be needed to complete development in 2016.
We further note that the prime aircraft contractor is spending
management reserves[Footnote 9] faster than budgeted, likely creating
a need for additional funding. The prime contractor has continually
struggled to maintain management reserves at a prudent level. As we
previously reported,[Footnote 10] DOD in late 2007 decided to
replenish the contractor's depleted reserve with funding provided in
part by the elimination of two test aircraft. Since that time,
continuing engineering changes, inefficient manufacturing flow,
software development challenges, and other factors have again depleted
reserves. The prime contractor's management reserve balance declined
by over $900 million from August 2008 to November 2009. As of August
2008, the contractor had over $1 billion in its management reserve
fund and as of November 2009 had only about $100 million. The prime
contractor now estimates it will need an additional $600 million, at a
minimum, to adequately resource its reserves needed to complete
development.
Engine Manufacturers Encountering Cost and Schedule Growth:
Engine cost growth and development delays are also contributing
substantially to overall program costs. The F135 primary engine
development effort--a separate contract from the airframe development
effort--is now estimated to cost about $7.3 billion, a 50 percent
increase over the original contract award. This includes an $800
million contract cost overrun in 2008. Engine development cost
increases primarily resulted from higher costs for labor and
materials, supplier problems, and the rework needed to correct
deficiencies with an engine blade during redesign. Engine test
problems have also slowed development.
The alternate engine program to develop a second engine source--the
F136--is also encountering cost and schedule challenges. The
government has invested about $2.9 billion in development through
fiscal year 2010. The JET estimates about $1.6 billion would be needed
to complete F136 development in 2016. Contractor officials told us
that funding stability, engine affordability, and testing issues are
key concerns.
The alternate engine program has been an area of contention between
DOD and Congress. Congress has directed DOD to develop a second source
for the JSF engine to induce competition and to reduce future
operational risks by ensuring that the failure of one type of engine
would not ground all F-35 fleets. DOD does not think the risks are
worth the extra costs to maintain a second source and has removed
funding from the JSF program line the last four years through fiscal
year 2010. Each year, Congress has subsequently provided funding for
engine development efforts to continue. We have previously testified
[Footnote 11] on our assessment that, based on past defense
competitions (including a fighter engine competition started in the
1980s between these same manufacturers) and making certain assumptions
about relative quantities purchased from each, competition could be
expected to yield enough savings to offset the additional investments
required to sustain a second source. Prior studies also indicate a
number of nonfinancial benefits from competition, including better
performance, increased reliability, and improved contractor
responsiveness.
Projected Procurement Cost Increases May Trigger a Nunn-McCurdy Cost
Breach:
As part of the ongoing restructuring, DOD revised procurement plans,
reducing purchases by 122 aircraft over the next 5 years, and moving
these purchases to future years. On the basis of the revised plans,
the fiscal year 2011 budget data projects total procurement funding
requirements of $273.3 billion. This new estimate is $41.6 billion (18
percent) more than the current approved baseline. This increase raises
the expected average price for each aircraft to $112 million compared
to $95 million in the current baseline approved in March 2007. Table 2
compares the 2011 budget submission with the original and approved
program baselines and the December 2008 program interim estimate.
Table 2: Total Projected Procurement Funding Requirements:
Procurement funding requirements:
October 2001 original baseline: $196.6 billion;
March 2007 approved baseline: $231.7 billion;
December 2008 program estimate: $255.0 billion;
Fiscal year 2011 budget request: $273.3 billion.
Procurement quantity:
October 2001 original baseline: 2,852;
March 2007 approved baseline: 2,443;
December 2008 program estimate: 2,441;
Fiscal year 2011 budget request: 2,443.
Average procurement unit cost:
October 2001 original baseline: $69 million;
March 2007 approved baseline: $95 million;
December 2008 program estimate: $104 million;
Fiscal year 2011 budget request: $112 million.
Source: GAO analysis of DOD data.
Note: The December 2008 estimate recognizes the two aircraft deleted
by Congress in the 2009 budget. However, officials plan to reinsert
these two aircraft in later years to restore the full complement of
2,443 aircraft.
[End of table]
While aircraft affordability has been an issue for several years and
the largest driver behind procurement costs, engine affordability has
become a growing concern of late. Program officials earlier added $1.2
billion more to DOD's 2010 procurement budget request from the
previous year's estimate to pay for higher than expected engine costs,
tooling, and other items. For the fiscal year 2009 buy, the negotiated
unit price for the STOVL engine and lift fan increased by $5.8
million, 21 percent higher than the budget estimate ($33.4 million
from $27.6 million). The negotiated unit price for the CTOL engine
increased by $5.2 million, 42 percent higher than budgeted ($17.7
million from $12.5 million). The F135 engine contractor has
acknowledged the affordability risks and is taking steps designed to
reduce engine unit costs. The JAT review identified cost drivers and
opportunities to reduce cost. Officials concluded that engine
contractor improvement plans were credible but challenging, and would
require additional investment by the contractor for cost reduction
initiatives.
The JET review and an adjunct analysis by the Naval Air Systems
Command indicate that procurement costs could increase still further
from the total projected in the 2011 budget. For the budget
projection, cost estimators used the JET data through fiscal year 2015
and then applied current program office assumptions on manufacturing
span times and expected learning curves[Footnote 12] to estimate total
procurement funding requirements through completion of acquisition in
2035. A JET official said these program office assumptions were overly
optimistic and that the JET analysis suggests a more moderate gain in
learning over time as well as longer manufacturing span times and
other assumptions. This official said the DOD analysts are continuing
to study out-year costs. NAVAIR's October 2009 cost assessment
estimated total procurement costs of $314 billion--$41 billion more
than the 2011 budget submission, an increase of about 15 percent with
a corresponding increase in unit costs. Because NAVAIR's assessment
was based on the production profile before the changes made by the
restructuring, it is not directly comparable to the budget estimate,
but we agree with its underlying basis. NAVAIR officials projected
higher future procurement costs due to continuing manufacturing
challenges and significant future retrofit requirements among other
factors. They expected parts shortages and engineering changes to
continue to affect production, especially as procurement quantities
increase. Officials also factored in assumed costs for retrofitting
fielded aircraft as design and performance problems are discovered
during testing.
As shown in table 2 above, the new budget estimate would increase
aircraft average unit costs to $112 million, an increase of $17
million (18 percent) over the 2007 baseline estimate and $43 million
(62 percent) more than the original baseline. Naval Air Systems
Command (NAVAIR) data projects greater increases. Increased costs are
expected to result in the JSF program exceeding unit cost growth
thresholds established by the statutory provision commonly referred to
as Nunn-McCurdy.[Footnote 13] Until restructuring is complete and a
new comprehensive procurement cost estimate is finalized (and
expressed in constant-year dollars), we do not know whether unit cost
increases will breach the "critical" or "significant" cost growth
threshold.[Footnote 14] Breaches of either cost growth threshold
require reporting to the Congress, and a critical breach would also
require DOD to justify the continued need for the JSF program to
Congress.
Achieving Warfighter Requirements on Time Is at Risk:
JSF cost increases and schedule delays increase the risk that the
program will not be able to meet warfighter requirements regarding
capability and quantities on time. Overall program performance in 2009
did not meet expectations and the schedule for completing key
milestones and development activities continued to slip from prior
years. Table 3 shows the extension in time from successive estimates
for meeting key program milestones to ensure that the design and
performance of the three JSF variants meet warfighter capability
requirements and are suitable for military operations.
Table 3: Changes in Major Milestones:
Major Milestones: Development Testing Complete;
Program of record December 2007: October 2012;
Program of record December 2008: October 2013;
Restructure February 2010: March 2015.
Major Milestones: Initial Operational Test and Evaluation Complete;
Program of record December 2007: October 2013;
Program of record December 2008: October 2014;
Restructure February 2010: January 2016.
Major Milestones: System Development and Demonstration Phase Complete;
Program of record December 2007: October 2013;
Program of record December 2008: October 2014;
Restructure February 2010: April 2016.
Major Milestones: Full Rate Production Decision;
Program of record December 2007: October 2013;
Program of record December 2008: October 2014;
Restructure February 2010: April 2016.
Source: GAO analysis of DOD data.
[End of table]
Despite the steady deterioration in meeting major schedule events, the
military services have not revised their milestones for achieving
initial operational capability. Historically, initial operational
capability dates are critical milestones when the warfighter requires
a new system to be operational and available in quantity for wartime
use based on future threats and force structure projections. Table 4
summarizes the current initial operational capability requirements for
the services. The Marine Corps requires operational STOVL aircraft
with initial warfighting capabilities, basic weapons, and moderate
mission system capabilities by March 2012. The Air Force and Navy
require operational squadrons with full warfighting capabilities and
mission functionality by March 2013 and March 2015, respectively.
However, these goals were set several years ago when system
development and testing was expected to be substantially completed by
now. Key milestone dates for developing and testing aircraft have
slipped about 3 years from the times expected when the current program
baseline was established.
Table 4: Initial Operational Capability Requirements:
Service: Marine Corps;
Variant: STOVL;
Quantities: 30;
Date required: March 2012;
Capability: Interim warfighting capabilities. Some functionality for
close air support, moving targets, electronic attack, and air
interdiction. Ability to fuse information from other JSFs and
increased logistics support with advanced prognostics capabilities.
Qualification of some bombs and missiles.
Service: Air Force;
Variant: CTOL;
Quantities: 51;
Date required: March 2013;
Capability: Full warfighting capability. Warfighters' desired
capability. Concludes avionics development, including ability to fuse
information from other platforms or sensors for increased situational
awareness. Suppression and destruction of enemy air defenses and deep
strike capabilities and qualification of additional weapons.
Service: Navy;
Variant: Carrier Variant;
Quantities: 28;
Date required: March 2015;
Capability: Full warfighting capability. Warfighters' desired
capability. Concludes avionics development, including ability to fuse
information from other platforms or sensors for increased situational
awareness. Suppression and destruction of enemy air defenses and deep
strike capabilities and qualification of additional weapons.
Source: GAO analysis of DOD data.
[End of table]
The Under Secretary of Defense for Acquisition, Technology and
Logistics' February 2010 restructuring acquisition decision memorandum
directs the JSF program office to determine potential impacts of the
restructured program on the schedule for achieving initial operational
capabilities. At the time this report was published, we understood
that the Air Force and Navy are expected to extend initial operational
capability dates, while the Marine Corps still plans initial
operational capability in 2012.
Continuing delays in development testing, finding and fixing
deficiencies, maturing software, and full mission integration efforts
will likely impede proving out required capabilities. In its October
2009 risk assessment, NAVAIR reported that the program's ability to
deliver Marine Corps and Navy requirements at the initial operational
capability dates within the current cost and schedule parameters is
not achievable given the technical risks, system immaturity, lack of
demonstrated system integration, and lack of progress in the test
plan. NAVAIR also noted that pilot training cannot be expanded without
the full complement of development test aircraft still to be
delivered. In addition, the Director of Operational Test and
Evaluation (DOT&E) is now predicting initial operational testing of
the full warfighting capability by mid-2016, but only if additional
flight test aircraft are added, software is delivered on time, and a
strenuous pace of testing is maintained. DOT&E reported that the
mission capability of the initial production aircraft is unclear,
creating planning problems for the services that depend on those
aircraft to meet initial operational capabilities. These actions,
coupled with plans to reduce procurement in the near term and to
utilize some production aircraft in testing, could impinge on
concurrent efforts to begin training pilots and maintainers and could
significantly overlap operational testing. These efforts are important
to stand up the first operating units and ensure warfighter
capabilities are met. If delays continue, the services may have to
reduce, defer, or revise operational requirements and pursue fall-back
plans to span capability gaps until JSF full warfighting capabilities
are available.
A key tenet of the JSF program from inception--to deliver an
affordable, highly common fifth generation aircraft that could be
acquired by the warfighters in large numbers--is also at increased
risk. The program office currently estimates total life-cycle costs
for operating, sustaining, and maintaining JSF fleets at $764 billion,
substantially higher than earlier estimates. The cost per flying hour
of the CTOL variant is projected to be higher than the F-16, one of
the Air Force aircraft it is slated to replace. NAVAIR officials
recently projected total life-cycle costs even higher, at more than $1
trillion. Service officials are concerned whether future budgets will
be able to afford the higher costs expected. Compared to the up-front
costs of developing and procuring aircraft, the long-term costs for
operating, maintaining, and sustaining JSF fleets over an aircraft's
useful life represent the much larger portion of total ownership
costs. Escalating life-cycle costs represent major future funding
requirements that could significantly affect how many aircraft we and
our allies can afford to buy.
Because the JSF is the linchpin of our plans to recapitalize tactical
aircraft, delays and affordability concerns about the JSF directly
affect funding needs and retirement plans for the legacy aircraft it
is slated to replace. Legacy systems must be sustained and kept
operationally relevant until JSFs replace them. If JSF quantities are
reduced or deliveries slip into future years, billions of dollars more
in as yet unbudgeted funding may be required to sustain, modernize,
and extend the life of legacy aircraft. Both the Departments of the
Air Force and Navy have cited looming shortfalls in the tactical
aircraft inventory based on last year's JSF plans and legacy
retirements; further delays would exacerbate calculated shortfalls.
JSF concerns are especially troublesome for the Marine Corps, which
has based its entire future strike force structure on acquiring a
capable STOVL in large quantities. Uncertainty about JSF costs and
deliveries makes it challenging for all the services to effectively
plan and efficiently implement modernization efforts and retirement
schedules. During our ongoing work on tactical aircraft
recapitalization for the House Armed Services Committee, service
officials and legacy aircraft managers indicated that they are largely
in a reactive mode to unfolding JSF events and may have to put forward
unfunded contingency plans to modernize and extend the life of some
legacy aircraft.
Manufacturing and Engineering Challenges Continue to Slow Aircraft
Deliveries and Hold the Production Schedule at Risk:
Manufacturing JSF test aircraft continues to take more time, money,
and effort than budgeted, delaying development tests and affecting the
prospects for the significant ramp-up in annual production rates
planned. While some improvement is noted, continuing manufacturing
inefficiencies, parts problems, and engineering technical changes
indicate that design and production processes may lack the maturity
needed to efficiently produce aircraft at planned rates. This is
confirmed by the recent results of intensive studies conducted by the
IMRT and the JET that resulted in the reduction of near-term
procurement quantities.
Manufacturing Test Aircraft Continues to Take Longer and Cost More
Than Planned:
The JSF program is still recovering from earlier problems--extensive
design changes, late parts deliveries, and inefficient manufacturing
practices--that continue to delay aircraft deliveries. The prime
contractor has restructured the manufacturing schedule three times
since 2007 and a fourth revision is under way. Each revision has
lengthened the time to deliver aircraft to the test program. As of
December 2009, the contractor had delivered only 4 of 13 development
test aircraft, 2 CTOL aircraft (including the original non-production
representative model) and 2 STOVL aircraft. Delivery of the first CV
test aircraft is now expected in March 2010. Contractor and program
officials now expect to complete delivery of all test aircraft at the
end of 2010. Prior plans had expected delivery of almost all aircraft
by 2009.
The total labor hours budgeted to produce the test aircraft have
steadily increased over time, suggesting the need to mature production
processes and improve supply chain performance. In the aggregate, the
2009 revised schedule estimates total labor hours at 3.2 million,
exceeding the 2007 schedule estimate by more than 1 million hours, a
54 percent increase.
Expected improvements in labor productivity did not occur to the
degree expected. Figure 1 shows that the 2007 schedule assumed a steep
drop in labor hours as more units were produced, manufacturing
processes matured, and worker knowledge increased. The expected
increase in efficiency due to learning is typical of manufacturing
programs and is important to JSF achieving its future procurement rate
as planned while keeping costs in line. The current 2009 schedule,
informed by actual performance, demonstrates that some learning is
occurring, but to a lesser degree than projected by the 2007 schedule.
Higher than expected labor costs for the manufacturing of test
aircraft increases the risk that future procurement costs for building
operational aircraft may also be higher than budgeted. This, in
addition to other program problems, may result in reduced buying power
where the services may not be able to purchase the number of aircraft
currently planned.
Figure 1: JSF Labor Hours for Manufacturing Test Aircraft:
[Refer to PDF for image: multiple line graph]
Aircraft: BF-1;
2007 budget, labor hours: 342,647;
2009 estimated actual hours: 341,296.
Aircraft: BF-2;
2007 budget, labor hours: 233,319;
2009 estimated actual hours: 331,238.
Aircraft: BF-3;
2007 budget, labor hours: 179,892;
2009 estimated actual hours: 292,318.
Aircraft: BF-4;
2007 budget, labor hours: 155,420;
2009 estimated actual hours: 296,165.
Aircraft: AF-1;
2007 budget, labor hours: 187,781;
2009 estimated actual hours: 288,772.
Aircraft: AF-2;
2007 budget, labor hours: 145,607;
2009 estimated actual hours: 259,655.
Aircraft: AF-3;
2007 budget, labor hours: 130,955;
2009 estimated actual hours: 264,973.
Aircraft: CF-1;
2007 budget, labor hours: 239,351;
2009 estimated actual hours: 274,391.
Aircraft: CF-2;
2007 budget, labor hours: 125,602;
2009 estimated actual hours: 228,672.
Aircraft: CF-3v
2007 budget, labor hours: 118,153;
2009 estimated actual hours: 200,933.
Aircraft: BF-5;
2007 budget, labor hours: 102,505;
2009 estimated actual hours: 203,701.
Aircraft: AF-4;
2007 budget, labor hours: 91,218;
2009 estimated actual hours: 178,723.
Source: GAO analysis of DOD data.
BF= Short take-off and vertical landing aircraft for the Marine Corps.
AF= Conventional take-off and landing aircraft for the Air Force.
CF= Carrier variant for the Navy.
Source: GAO analysis of DOD data.
[End of figure]
As we reported last year,[Footnote 15] labor hour performance in two
major cost areas--wing assembly and the mate and delivery stations--
have been particularly troublesome. According to officials, the prime
contractor is taking steps to improve both areas, but only modest
improvement has been demonstrated to date. Figure 2 shows the actual
number of labor hours required to complete wing assembly on the first
five production-representative test aircraft. The total actual hours
are more than twice that predicted in the 2007 manufacturing schedule
for the same aircraft.
Figure 2: Wing Station Labor Hours:
[Refer to PDF for image: multiple line graph]
Wing: BF-1;
2009 actual labor hours for vehicles that have completed assembly:
105,066;
2007 budget labor hours: 70,612.
Wing: BF-2;
2009 actual labor hours for vehicles that have completed assembly:
110,208;
2007 budget labor hours: 55,280.
Wing: BF-3;
2009 actual labor hours for vehicles that have completed assembly:
109,198;
2007 budget labor hours: 42,892.
Wing: BF-4;
2009 actual labor hours for vehicles that have completed assembly:
113,013;
2007 budget labor hours: 40,205.
Wing: AF-1;
2009 actual labor hours for vehicles that have completed assembly:
106,375;
2007 budget labor hours: 48,925.
Wing: AF-2;
2007 budget labor hours: 39,735.
Wing: AF-3;
2007 budget labor hours: 36,711.
Wing: CF-1;
2007 budget labor hours: 49,288.
Wing: CF-2;
2007 budget labor hours: 28,605.
Wing: CF-3;
2007 budget labor hours: 23,694.
Wing: BF-5;
2007 budget labor hours: 16,617.
Wing: AF-4;
2007 budget labor hours: 17,084.
Source: GAO analysis of DOD data.
[End of figure]
Similarly, figure 3 shows that the actual time required for completing
the mate and delivery phase for the first five test aircraft was 49
percent higher than predicted in 2007.
Figure 3: Mate and Delivery Labor Hours:
[Refer to PDF for image: multiple line graph]
Aircraft: BF-1;
2009 actual labor hours for vehicles that have completed assembly:
75,834;
2007 budget labor hours: 69,683.
Aircraft: BF-2;
2009 actual labor hours for vehicles that have completed assembly:
66,074;
2007 budget labor hours: 52,372.
Aircraft: BF-3;
2009 actual labor hours for vehicles that have completed assembly:
63,348;
2007 budget labor hours: 35,245.
Aircraft: BF-4;
2009 actual labor hours for vehicles that have completed assembly:
57,846;
2007 budget labor hours: 26,260.
Aircraft: AF-1;
2009 actual labor hours for vehicles that have completed assembly:
47,037;
2007 budget labor hours: 24,493.
Aircraft: AF-2;
2007 budget labor hours: 18,210.
Aircraft: AF-3;
2007 budget labor hours: 16,972.
Aircraft: CF-1;
2007 budget labor hours: 18,419.
Aircraft: CF-2;
2007 budget labor hours: 16,275.
Aircraft: CF-3;
2007 budget labor hours: 20,900.
Aircraft: BF-5;
2007 budget labor hours: 14,214.
Aircraft: AF-4;
2007 budget labor hours: 9,735.
Source: GAO analysis of DOD data.
[End of figure]
One of the prime reasons for increased labor hours is the continued
prevalence of out-of-station work. This is work not finished at its
designated station that needs to be carried forward and completed at a
different station down the production line.[Footnote 16] Out-of-
station work is highly inefficient, increasing labor hours, causing
delays, and possibly resulting in quality problems, according to
program officials. The amount of out-of-station work has been
decreasing and officials hope it will be fully corrected by the end of
2010.
Program officials noted that major contributors to out-of-station
workload have been parts shortages caused by design changes and an
immature supplier base. In some cases, design changes from the prime
contractor necessitated subcontractors to adjust their manufacturing
processes to new designs resulting in late parts deliveries. In other
cases, some subcontractors have been slower than expected in
developing their capacity to manufacture and deliver both routine and
complex parts on time. According to prime contract officials, efforts
are under way to address parts problems and supplier performance. In
particular, the contractor has (1) increased its oversight of key
subcontractors that are having problems, (2) secured long-term raw
material purchase price agreements for the prime and key
subcontractors, and (3) improved internal production capabilities.
Recent evidence suggests mixed results. Officials from the Defense
Contract Management Agency (DCMA) noted that while late parts
deliveries continue, the response time to deliver the parts has
improved. The scrap, rework, and repair rate--a good indicator of
parts quality--has improved. Program office and prime contractor
officials state that the effects from previous design changes and
parts shortages are lessening, but will persist over the near term.
Officials also noted that JSF quality performance compares favorably
with prior acquisitions at similar stages of development, including
the F-16 and F-22A. Nonetheless, supplier costs are expected to make
up a substantial share of total expenses as the program moves further
into production.
The F135 engine contractor has experienced manufacturing challenges
similar to those of the aircraft contractor, including part shortages,
late deliveries, subcontractor management issues, and test failures.
Engine redesigns and manufacturing problems caused slips in engine
deliveries, according to program officials. Officials note that these
late engine deliveries have not yet critically affected the delivery
of test aircraft because airframe production lagged even further
behind. However, the prime contractor has been forced to perform out-
of-station engine installations and other workarounds as a result of
engine issues. As of January 2010, 17 of 18 F135 development flight
test engines have been delivered, 7 of which have flown.
Future Design Changes May Drive Additional Costs:
Continuing changes and additions to engineering drawings may cause
further manufacturing delays and increased cost. Although the program
did not achieve this at the time of the critical design reviews,
officials are reporting that 100 percent of expected engineering
drawings have now been released for each of the three variants, a
level typically associated with a stable design.[Footnote 17] However,
despite being well beyond the design reviews for each variant, the
total number of engineering drawings continues to grow due to design
changes and other revisions to drawings (see figure 4). Contractor
officials estimated in 2007 that change traffic--additions and
revisions to drawings--would decline to less than 200 per month by the
end of fiscal year 2009; however, current change traffic is
considerably higher, averaging about 500 changes per month. While many
recent drawing additions and revisions are classified as minor in
nature, acquisition programs typically encounter higher and more
substantive design changes as a result of discovery and rework during
development testing. With most of development testing for JSF still
ahead, the risk and impact from required design changes are
significant. Future changes may require alterations to the production
process; changes to the supply base; increases in the amount of on-and
out-of-station work required on aircraft in production; and require
costly retrofitting of aircraft already produced and fielded.
Figure 4: Growth in the Number of Engineering Design Drawings:
[Refer to PDF for image: vertical bar graph]
Year: 2007;
Expected design drawings: 41,171.
Year: 2008;
Expected design drawings: 48,899.
Year: 2009;
Expected design drawings: 53,297.
Source: GAO analysis of DOD data.
[End of figure]
Critical Work Ahead to Fix Problems as Annual Production Rates
Increase:
Given the ongoing engineering and manufacturing challenges, the
program will have difficulty meeting its current procurement plans. To
the point, the IMRT reported that the prime contractor would need to
address a large number of conditions in order to achieve its planned
full-rate production ramp-up. These conditions focused on, among other
things, improving management of the supply chain, engineering changes,
part shortages, tooling, unit costs, schedule, and risk mitigation. In
addition, the JET recommended that the program reduce its near-term
production quantities given the design complexities of the three
variants and the concurrent production of both development and
production aircraft. As result, DOD slowed down production by delaying
the procurement of 122 aircraft between 2011 and 2015. Table 5
illustrates the current procurement plans for the United States and
the international partners.
Table 5: Procurement and Manufacturing Plans as of February 2010:
Buy year: 2011; Delivery year: 2013;
Air Force-CTOL: 23;
Navy-CV: 7;
Marine Corps-STOVL: 13;
International partners: 0;
Total: 43.
Buy year: 2012; Delivery year: 2014;
Air Force-CTOL: 24;
Navy-CV: 7;
Marine Corps-STOVL: 14;
International partners: 8;
Total: 53.
Buy year: 2013; Delivery year: 2015;
Air Force-CTOL: 33;
Navy-CV: 13;
Marine Corps-STOVL: 25;
International partners: 33;
Total: 104.
Buy year: 2014; Delivery year: 2016;
Air Force-CTOL: 53;
Navy-CV: 15;
Marine Corps-STOVL: 22;
International partners: 67;
Total: 157.
Buy year: 2015; Delivery year: 2017;
Air Force-CTOL: 70;
Navy-CV: 19;
Marine Corps-STOVL: 24;
International partners: 94.
Total: 207.
Source: GAO analysis of DOD data.
[End of table]
Even after decreasing near-term quantities, the annual procurement
rate is still expected to ramp up rapidly, increasing from 43 to 207
during the 5-year period 2011 through 2015. Total procurement during
this period is 564 aircraft: 362 for the United States and 202 for the
international partners. If the improvements recommended by the IMRT
are not implemented, there is greater risk that the prime contractor
will not be able to produce planes according to plan, and a backlog of
aircraft on order but waiting to be produced will develop.
As we reported last year, the JSF program is procuring a substantial
number of production aircraft using cost-reimbursement contracts which
place most of the risk on the buyer (DOD), with the government
potentially paying more than budgeted should labor, material, or other
incurred costs be more than expected when the contract was signed.
According to the Federal Acquisition Regulation, cost reimbursement
contracts are suitable for use only when uncertainties involved in
contract performance do not permit costs to be estimated with
sufficient accuracy to use any type of fixed-price contract.[Footnote
18] While the use of cost reimbursement contracts is permissible for
buying initial low-rate procurement quantities, continued use further
into production indicates acknowledgment by DOD and the contractor
that knowledge on JSF design, production processes, and costs for
labor and material is not yet sufficiently mature and that pricing
information is not exact enough for the contractor to assume the risk
under a fixed-price contract.
We are encouraged by the Secretary's statement in the February 2010
restructuring acquisition decision memorandum that future aircraft and
engine production contracts should move to fixed-price incentive fee
structures as soon as possible. According to DOD, the restructuring
further established critical business measures to monitor in 2010,
including the possible negotiation of a fixed-price low-rate
production contract for the 2010 lot buy and completion of a cost
study to inform a fixed price for the 2011 lot buy.
Little Progress in Development Testing While Program Continues to Face
Technical Challenges:
Steadily lengthening schedules to complete key system development
efforts further exacerbates the already extreme overlap among
development, test, and production activities. Late deliveries of
development test aircraft and less productivity than planned have
slowed development flight testing and resulted in the program missing
important milestones. The restructuring directive to add four aircraft
to supplement the development flight test program, if implemented,
should significantly increase test capacity and lessen concurrency
with operational testing, but officials agree that flight plans are
still aggressive. Other technical challenges abound, including (1)
relying on an extensive but largely unproven and unaccredited network
of ground test laboratories and simulation models to evaluate system
performance, (2) continuing challenges in developing and integrating
very large and complex software requirements essential to JSF
capabilities, and (3) maturing several technologies that are essential
to meet operational performance and logistical support requirements.
Collectively, these testing and developmental challenges can be
expected to lead to additional delays and increased program costs,
while hampering delivery of warfighter requirements, the planned start-
up of initial operational testing, and pilot and maintainer training.
While technical problems and some delays are to be expected in any
major defense acquisition, the JSF is especially challenged because of
its size, scope, and complexity and exerts a correspondingly larger
impact on future defense budgets and force structure. While all this
is still before the program, DOD continues to push ahead and invest in
large quantities of aircraft before variant designs are proven and
system performance verified.
Development Flight Testing Is Behind Schedule and Entering Its Most
Stressing Years:
For several years, DOD and the contractors have made annual
adjustments to the schedules for key system development activities,
each time lengthening the time needed to complete work. Flowing more
work to the future further compresses the time available for verifying
design and performance and for finding and fixing problems in advance
of investing in new aircraft in time to meet capability requirement
dates established by the warfighters. Table 6 summarizes recent delays
to key JSF test activities and related development events. In
particular, it shows the rippling effects from manufacturing delays
and diminished test assets on the program's ability to meet
development flight plans.
Table 6: Progress in Meeting Planned Development and Test Activities:
Development activity: Manufacturing: Flight test aircraft delivered by
2010;
2007 Plan: 14 aircraft;
2008 Plan: 13 aircraft;
2009 Plan[A]: 4 aircraft.
Development activity: Testing activities: Complete Development Testing;
2007 Plan: October 2012;
2008 Plan: October 2013;
2009 Plan[A]: March 2015.
Development activity: Testing activities: Flight tests expected by
September 2009;
2007 Plan: 700;
2008 Plan: 310;
2009 Plan[A]: 120.
Development activity: Testing activities: Flight test hours expected
(by September 2009);
2007 Plan: 1431;
2008 Plan: 532;
2009 Plan[A]: 160.
Development activity: Testing events: STOVL vertical landing;
2007 Plan: First Quarter 2009;
2008 Plan: Third Quarter 2009;
2009 Plan[A]: Second Quarter 2010 [A].
Development activity: Testing events: First CTOL (optimized) flight
test;
2007 Plan: January 2009;
2008 Plan: May 2009;
2009 Plan[A]: October 2009.
Development activity: Testing events: First CV flight test;
2007 Plan: May 2009;
2008 Plan: October 2009;
2009 Plan[A]: January 2010 [A].
Development activity: Testing events: First mission system aircraft
flight test;
2007 Plan: January 2009;
2008 Plan: March 2009;
2009 Plan[A]: January 2010 [A].
Development activity: Testing events: Start of Block 1 flight tests
(basic warfighting capability);
2007 Plan: Third quarter 2009;
2008 Plan: Fourth quarter 2009;
2009 Plan[A]: Third quarter 2010.
Development activity: Engine deliveries: Engine initial service
release (CTOL/CV);
2007 Plan: Second quarter 2008;
2008 Plan: Fourth quarter 2008;
2009 Plan[A]: Fourth quarter 2009.
Development activity: Engine deliveries: Engine initial service
release (STOVL);
2007 Plan: Fourth quarter 2008;
2008 Plan: First quarter 2009;
2009 Plan[A]: Third quarter 2010.
Development activity: Software Integration: Development and
integration of software providing full warfighting capability;
2007 Plan: 2012;
2008 Plan: 2013;
2009 Plan[A]: 2015.
Source: GAO analysis of DOD data.
[A] Not achieved as of January 2010.
[End of table]
The JSF development flight test program currently has few assets
available, has not been as productive as expected, and has missed key
test events. By the end of December 2009, only 4 of the planned 13
flight test aircraft had been delivered. Overall, only about 3 percent
of total planned flight tests had been completed by the end of 2009.
According to the 2007 test plan, 13 percent were to be completed at
this time. Productivity during 2009 remained low as only 10 percent of
the planned test flights were accomplished, according to DOT&E.
Important test events, including the first flight demonstrating full-
STOVL characteristics, the first flight of the carrier variant, and
initial demonstration of basic warfighting capabilities, have not yet
occurred and each has been delayed more than 1 year compared to the
schedule in 2007. Our analysis of DOD schedule data determined that
the test fleet averaged 13 month delays from initial projections in
actual or planned first flights. Program officials noted that some of
the recent flight test delays are the result of decisions to hold
aircraft at the manufacturing location until manufacturing is
completed so that aircraft delivered to the developmental test
locations better meet requirements and are fully prepared for testing.
Program officials expect to aggressively step up the program's flight
testing over the next couple of years. The restructuring directive to
add four aircraft to supplement the development flight test program,
if implemented, should significantly increase test capacity.
Accordingly, DOD officials reduced the JET's projection of a 30-month
extension needed for flight testing to a 13-month extension. DOD
officials agreed that the new plan reduces risk and is more achievable
given the additional aircraft but is still challenging. The new plan
has little schedule margin for error and will still be under pressure
to accommodate the inevitable discovery of issues and retests that
occur over the course of every flight test program. We further note
that the new test aircraft to be ordered, a carrier variant, will not
be available until mid-2013. In addition, an operational test official
said the program may have insufficient logistical support to sustain
the increased number of test sorties per day.
Most Simulation Labs Are Not Yet Accredited and Progress in Reducing
Program Risks Is Unclear:
The JSF test program relies much more heavily than previous weapon
systems on its modeling and simulation labs to verify aircraft and
subsystem performance. As figure 5 depicts, the program plans to
verify 83 percent of JSF capabilities (as measured by individual test
points) in its ground labs, the flying test bed, and through desk
studies, and only 17 percent through flight testing. Contractor
officials believe this breakdown by venues is misleading. If instead
quantified by the venue where the final sign-off of requirements is
expected to occur, the program plans to complete 55 percent in off-
aircraft venues and 45 percent in flight tests. By either method, the
reliance on ground labs and simulations is substantial. Program and
contractor officials believe that the up-front investment of $5
billion in the simulation labs will allow for early risk reduction,
reduce the need for additional flight testing, control costs, and meet
key milestones of the program's aggressive test plan.
Figure 5: Breakdown of Verification Venues:
[Refer to PDF for image: pie-chart]
Simulation labs: 59%;
Subject matter analysis: 19%;
Flight testing: 17%;
Flying test bed: 5%.
Source: GAO analysis of DOD data.
[End of figure]
The JSF program's simulation labs appear more prolific, integrated,
and capable than the labs used in past aircraft programs; the program
utilizes 18 labs for development testing compared to 9 for the F-22A,
7 for the F-18, and 5 for the F-16. According to program officials,
the greater number of labs allows engineers to work simultaneously on
different development blocks, reducing bottlenecks that may occur in
testing. In contrast, engineers for the F-18 and F-22A programs had to
interrupt or shut down work on one development block while they made
corrections to another block. Also, key JSF simulation labs are co-
located at the Lockheed Martin plant in Fort Worth, Texas, whereas the
F-22A program utilized three locations and two different companies.
The co-location of labs should facilitate more seamless integration
for more realistic subsystem tests. Further, the JSF utilizes the
first fully integrated airborne test bed for mission system testing.
According to program officials, the test bed's design is geospatially
proportionate to an actual F-35 aircraft, enhancing its ability to
accurately verify aircraft performance.
Despite the extensive network of simulation labs, their ability to
substitute for flight testing is unproven and their progress in
reducing program risk is difficult to assess. Lab use did increase
substantially in 2009; mission systems lab use, for example, increased
81 percent from 2008. According to program officials, early flight
test results have tended to corroborate lab results. However, most
labs and models have yet to be accredited, a lengthy and involved
technical evaluation to ensure fidelity of results. Labs and models
must be fully accredited prior to using them to verify JSF
requirements. The prime contractor identified 11 physical labs and 23
models and simulations needing accreditation. At the time of our
review, no physical labs and only two models were accredited. Although
officials told us that current requirements verification plans are on
track, it is difficult to assess performance until more labs and
models are accredited and more flight testing is done to corroborate
fidelity of results. Accordingly, although the contractor seems to be
utilizing its labs well, the true measure of progress will be when all
these venues are accredited and officials are completing the test plan
by successfully verifying required capabilities. To date, only 62 of
2,879 capabilities have been verified through labs, flight tests, or
both.
Delays in accreditation add substantial risk to future software block
completion and defect discovery later in the program and could lead to
more flight testing, which is generally more expensive. Moreover, it
is unclear how the ongoing delays in flight testing will affect the
accreditation process. Validating that the models accurately reflect
aircraft performance is crucial to the accreditation process. In this
way, model validation relies to a certain extent on the progress of
flight testing. As such, continued delays to flight testing increase
the risk that simulation labs may not be accredited when expected.
Software Development and Other Technical Risks Increase the Likelihood
of Further Testing Delays and Cost Increases:
While technical challenges are part of any major defense acquisition,
the JSF program has particularly daunting tasks ahead. The JSF
software development effort is one of the largest and most complex in
DOD history, essential to providing capabilities for sensor fusion,
weapons and fire control, diagnostics, and propulsion. The program
estimates that the systems will require 11.6 million effective
software lines of code.[Footnote 19] By comparison, the F/A-18/E/F has
only 1.1 million and the F-22A has 2.2 million lines of code on board.
Progress on software is noted by several measures. Currently, JSF
engineers have written about three-fourths of the total lines of
aircraft code expected and about 40 percent of the written code has
been integrated and tested. This is typically the most challenging
phase of software development. The program, however, also continues
moving some capabilities to future blocks in order to keep on
schedule. This adds pressure and costs to future efforts and increases
the probability of defects being realized later in the program.
Software is developed, integrated, and released in five increments
(see figure 6). The first increment, needed to enable basic aircraft
flying characteristics, is the only one completed. All other software
increments are behind schedule. Mission system software, in
particular, is behind schedule, poses significant integration
challenges, and its progress is difficult to assess.[Footnote 20]
Further delays may affect the already delayed first mission system
flight test. Naval Air Systems Command officials predict further
delays in providing software capability to flight tests due to
competing scarce resources from upcoming blocks to complete or rework
current blocks. The joint estimating team projects more time and
effort will be needed to complete the fifth software increment, the
development and integration of software for achieving full warfighting
capability. Team officials project 2015 for completing this work, 2
years later than currently reported by the program office. They also
believe that the most complex and troublesome work is still ahead,
that dedicated resources to complete software development and
integration are inadequate, and that the contractor will not be able
to write code as fast and productively as earlier releases. The joint
team also predicts that software requirements will continue to grow.
Recent prior acquisitions have experienced 30 to 100 percent growth in
software requirements over time, whereas the JSF program office
current estimate assumed no growth. We note that JSF software has
grown 40 percent since the preliminary design review and 13 percent
since the critical design review over initial program estimates. Given
the resource shortages and the complexity of the work ahead, DOD
directed the program to expand software integration capabilities by
adding an additional software integration line as part of the recent
restructuring. If properly resourced, the extra line should
significantly increase throughput.
Figure 6: Software Increments:
[Refer to PDF for image: illustration]
Incremental development process:
Block 0.1:
Flight essential:
* Supports basic flight performance;
* Navigation;
* SDD aircraft only.
Block 0.5:
Mission systems infrastructure:
* Initial sensors & weapons;
* Preliminary logistics;
* Mission systems displays.
Block 1.0:
Initial warfighter capability:
* Initial data fusion;
* Initial logistics support;
* Enhanced sensors;
* Data security.
Block 2.0:
USMC IOC:
* Final data fusion;
* Enhanced logistics support;
* Data links;
* Weapons addition;
* Advanced warfighting capability.
Block 3.0:
Full warfighting capability:
* Final data links;
* Weapons addition;
* Final logistics;
* Enhanced training;
* Maintenance aids.
Source: GAO analysis of DOD data.
[End of figure]
In addition to ongoing software challenges, the program continues to
address several technical issues. We spoke with several defense
organizations, as well as the JSF program office and contractors, who
identified technical hardware and software challenges that could have
significant operational impacts if not resolved. Several challenges
cited by more than one office and considered critical to meeting
requirements include the following:
* Design changes to carrier variant. The carrier variant requires
significant design modifications to the keel web, a key structural
joint to enable catapult takeoffs. Proposed design changes are still
being reviewed and cost and schedule impacts are unknown at this time.
Design modifications will be needed for any test aircraft planned for
carrier suitability testing. It is not clear at this point which
aircraft are expected to receive design modifications on the
manufacturing line and which will be modified after their first
flight. Nonetheless, completing the design modifications will likely
result in carrier suitability test delays of at least 4 months,
according to an official from DOT&E.
* JSF engine. The program continues to address significant technical
and design challenges with the F135 engine. The STOVL engine's lift
fan has required design changes in response to damages incurred during
testing which will limit flight test efficiency and will likely
require additional modifications, time, and resources. In addition,
other key engine components, such as the turbine blades, electric de-
icing system, and dual vane fuel pump, have required reengineering
after failing initial tests.
* Logistics support. The advanced integrated support system aims to
improve and streamline aircraft logistics and maintenance functions in
order to reduce life-cycle costs. NAVAIR reported that the software to
support the system's communication with legacy information systems is
currently not planned and may affect interoperability. In addition,
the Air Force Operational Test and Evaluation Center (AFOTEC) reported
that the current integrated support system for the JSF prohibits
operating two detachments from one squadron simultaneously. This
limitation will severely affect current operating practices. The JSF
program has proposed interim solutions, but full support system
deployability will not be available by the Marine Corp's and Air
Force's initial operational capability dates.
* Helmet Mounted Display. Critical to information integration and
situational awareness, issues with the helmet mounted display continue
to impact system effectiveness and air system integration. These
include night operations, system latency for information displayed,
weapon systems aiming and accuracy, and laser eye protection. These
shortfalls may lead to workarounds or omissions during flight tests,
according to NAVAIR. Further, the lack of a production helmet mounted
display configuration at this time could result in a major system
redesign or change in concept of operations.
* Damage to flight deck and runways. The F-35 engine and integrated
power package exhaust may cause excessive damage to the flight deck
environment and runway surfaces that may result in operating limits or
drive costly upgrades and repairs of JSF basing options. The program
office and DOD are still evaluating the problem and plan to conduct
further studies when full-scale models or actual aircraft are
available. In addition, the Defense Advanced Research Projects Agency
is soliciting research proposals in the area of thermal management
systems for aircraft landing decks.
* Thermal management. Heat build-up and exhaust impedes the aircraft's
ability to conduct missions in hot environments. The program has made
design changes to address this issue, but those changes are not
expected to go into effect until the third low-rate procurement lot
and are likely to affect operational testing. The development of a
fuel pump to mitigate excessive heat is not expected to fully achieve
requirements. As a result, the program has instituted restrictions on
how the aircraft can be used. These restrictions will limit flight
test efficiency and may not be feasible for operational deployment.
While DOD officials acknowledge that the program continues to address
technical risks, they note that discovering and working through
technical problems are to be expected in any development program
especially a program as complex as JSF. They further note that the
Department has not uncovered any technology or manufacturing issues as
a result of the restructuring that would prevent the aircraft from
meeting requirements.
Significant Investments in Aircraft Are Planned Before Flight Testing
Is Completed:
Although officials recently reduced near-term procurement plans and
added test aircraft, DOD is still planning significant investments in
procuring large quantities of JSF aircraft before flight testing
proves they will perform as required. The intent of development flight
testing is to discover and fix design and performance deficiencies
during development when it is cheaper to do so than discovering
problems and shortfalls during follow-on operational testing and after
initial fielding. Purchasing aircraft before testing successfully
demonstrates that the designs are mature and that the weapon system
will work as intended increases the likelihood and impact of design,
manufacturing, and requirements changes resulting in subsequent cost
growth, schedule delays, and performance shortfalls. Systems already
built and fielded may require substantial modifications, driving
further costs. Figure 7 shows DOD's planned investment in dollars and
aircraft prior to the completion of development flight testing. DOD
has already bought 28 production aircraft through fiscal year 2009.
Under the current plan, DOD may procure as many as 307 aircraft at a
total estimated cost of $58.2 billion before development flight
testing is completed.
Figure 7: JSF Procurement Investments and Progress of Flight Testing:
[Refer to PDF for image: illustrated table]
Cumulative procurement:
2007: $0.9 billion;
2008: $3.6 billion;
2009: $7.1 billion;
2010: $14.4 billion;
2011: $23.6 billion;
2012: $33.2 billion;
2013: $45.2 billion;
2014: $58.2 billion;
2015: $72.4 billion.
Cumulative aircraft procured:
2007: 2;
2008: 14;
2009: 28;
2010: 58;
2011: 101;
2012: 146;
2013: 217;
2014: 307;
2015: 420.
Development flight testing schedule: 2007 through 2015; ongoing.
Source: GAO analysis of DOD data.
[End of figure]
We have reported on several occasions about the risks of procuring
aircraft before testing demonstrates the design is mature, costs are
well understood, and manufacturing activities can support the ramp up
in production.[Footnote 21] The JSF program has entered production and
has laid out an investment schedule that significantly increases
procurement rates by 163 percent from fiscal year 2011 to 2015.
However, at the same time, it has not been successful in meeting
demonstration goals and testing schedules to support increases in
production investments, placing billions of dollars at risk as it
develops and produces aircraft concurrently. As the JSF program
development and test program slips, it further increases the chances
that costly design changes will surface in the later years of flight
testing.
The risk of further concurrency could be managed if the program
outlines a plan that illustrates what minimum conditions should be met
before increases in investments are made. Such a plan would allow
decision makers to gauge a program's progress and to determine whether
a program has demonstrated a sufficient amount of knowledge that would
justify such an increase in investment levels. To date, the JSF
program has not outlined such a plan. Also, given the several changes
to schedules, test program, and procurement profiles, and continued
program uncertainty, it has been difficult to baseline the program and
measure its progress.
Congress had similar concerns about the concurrency planned for the
advanced technology bomber B-2 program, and the planned investment in
procurement aircraft prior to fully testing the aircraft. Congress
enacted legislation requiring DOD to establish an initiative for
maintaining discipline in cost, contractor performance, and management
within the program. The initiative was required to include creation of
a management plan under which decisions to commit to specified levels
of production are linked to progress in meeting specified program
milestones, including testing milestones. The initiative was also
required to include creation of a "full performance matrix," a tool
used by DOD to identify minimum conditions that would be met before
making annual procurements. The full performance matrix laid out over
time how different capabilities for the B-2 would be demonstrated in
relationship to procurement decisions. Such a tool helps provide
visibility for decision makers into a program's progress in ensuring
the maturity of the weapon system based on expected, demonstrated
knowledge compared to a baseline plan thus allowing for more informed
investment decisions, and better managed risks inherit in a highly
concurrent development and production program.
Conclusions:
The JSF is DOD's largest and most complex acquisition program and the
linchpin of the United States and its allies' long-term plans to
modernize tactical air forces. It will require exceptional levels of
funding for a sustained period through 2034, competing against other
defense and nondefense priorities for the federal discretionary
dollar. As such, it is critical to maintain affordability while moving
forward, prudently balancing program, technical, and funding risks
with the achievement of warfighter performance requirements. Risks are
manifold--mounting cost and schedule pressures; complex, extensive,
and unproven software requirements; and a nascent, very aggressive
test program that continues to experience significant delays. Since
our last report, development costs have again increased and the
schedule for completing development and operational testing has been
extended. Further acquisition cost increases and delays are expected.
Impacts on production are uncertain, but increased manufacturing labor
hours and late deliveries of development aircraft indicate that
learning curve efficiencies are not meeting expectations and will
likely result in higher future procurement unit prices than those
currently reported to Congress. Given all these challenges, moving
forward with the current plan for ramping up production does not seem
prudent.
JSF cost increases, schedule delays, and continuing technical problems
also increase the risk that the program will not be able to deliver
the aircraft quantities and capabilities in the time required by the
warfighter. Because of the significance that JSF is expected to have
on the overall composition of the future tactical aircraft fleet, the
services' ability to meet their initial operational capability
requirements and to acquire JSFs in quantity should have a high degree
of confidence so that DOD can effectively plan its overall tactical
aircraft force structure strategy. DOD leadership is now taking some
positive steps that, if effectively implemented, should improve
outcomes and provide more realistic cost and schedule estimates.
Nonetheless, there is still substantial overlap of development, test,
and production activities while DOD continues to push ahead and invest
in large quantities of production aircraft before variant designs are
proven and system performance verified. As we have recommended in the
past, adopting a more evolutionary, incremental strategy that delivers
proven and operationally suitable capabilities when available, but
acknowledges that more time is needed to deliver the full
capabilities, would increase the likelihood of success in providing
timely and affordable capability to the warfighter. Credible cost and
schedule estimates are critical because they allow DOD management to
make sound trade-off decisions against competing demands and allow
Congress to perform oversight and to hold DOD accountable. While the
independent cost estimate completed by the Joint Estimating Team is a
very good start, it by design focused only on the near term. Until a
complete and comprehensive cost estimate that provides cost through
completion of procurement and includes a more complete estimate of
military construction funding requirements is formally adopted as the
new program of record, JSF program costs will remain unclear. Tying
annual investments more directly to demonstrated progress in
developing, testing, and manufacturing aircraft would be a prudent
fiscal measure.
Recommendations for Executive Action:
Given the continuing changes in JSF program plans and future risks
going forward and to provide DOD leaders and Congress with accurate
and timely data for making decisions and appropriating funds, we
recommend that the Secretary of Defense direct appropriate offices
within DOD to expeditiously complete a full, independent,
comprehensive cost and schedule estimate for the JSF acquisition
program through completion and that this new estimate be established
as the official program of record for planning, budgeting, and
congressional reporting purposes. This effort should build upon the
work already accomplished by the Joint Estimating Team, the
Independent Manufacturing Review Team, the Joint Assessment Team, and
NAVAIR. In addition to development and procurement costs, this effort
should also include (1) a robust estimate of military construction
costs, (2) identification of JSF-related costs not funded in the JSF
program but which are needed to properly base and operate service
fleets on the ground and at sea, and (3) a comprehensive evaluation of
projected operating and support costs and the implications of higher
JSF operating costs compared to legacy aircraft on future defense
budgets and force structure.
We also recommend that the Secretary of Defense direct that the
military services, with Joint Staff and combatant command
participation, conduct a detailed review of each service's initial
operational capabilities requirement to determine the minimum
warfighter needs (both capabilities and capacity) and reasonable,
realistic time frames for achieving the requirement. In conducting
this review, the military services should consider trading off desired
capabilities in order to more rapidly field JSF aircraft with an
initial set of usable capabilities to reduce risks of a future
tactical aircraft "gap" created by delays in fielding the JSF.
Capabilities that are not needed to meet more immediate warfighter
needs should be deferred to a future development increment. If options
are not available for deferring capabilities to future increments, DOD
needs to extend its IOC dates to better align operating plans with
more realistic, higher confidence development and production
schedules. In addition, because of remaining JSF development risks and
uncertainties--including potential for future delays and possible
reductions in JSF quantities--contingency plans for legacy aircraft
need to be developed so that a properly resourced strategy is in place
to fill the capability and capacity gaps until the JSF can replace the
legacy aircraft. Completing this review before finalizing its ongoing
program restructure would ensure that the program's acquisition
strategy is in sync with and supports revisions to services' IOC
requirements. The Secretary of Defense should report the results of
this review to the congressional defense committees.
Matter for Congressional Consideration:
In addition to the recommendations for the Secretary above, Congress
may wish to consider requiring DOD to provide a JSF "system maturity
matrix" as a tool that could help Congress better measure the
program's progress in maturing the weapon system. The matrix should
provide criteria and conditions for comparing documented results to
expected progressive levels of demonstrated weapon system maturity in
relationship to planned increases in future procurement quantities.
This matrix should explain how increasing levels of demonstrated,
quantifiable knowledge about the weapon system maturity at annual
procurement decision points justify a ramp up of procurement
quantities, and corresponding increasing funding needs, leading up to
full-rate procurement. Key areas of the matrix and potential criteria
could include:
* manufacturing maturity (including on-time deliveries, manufacturing
process control, quality rates, and labor efficiency rates);
* engineering maturity (design traffic and design changes);
* performance and testing progress (test points, hours and flights
accomplished, capabilities demonstrated, key performance parameters,
and attributes demonstrated);
* mission effectiveness and system reliability (operational
effectiveness and reliability growth);
* cost estimate fidelity; and:
* training, fielding, and deployment status.
Agency Comments and Our Evaluation:
DOD provided written comments on a draft of this report. The
Department concurred with our two new recommendations. Its comments
are included in appendix 3. DOD also provided some technical comments
that we incorporated in the final report.
Our draft report included a third recommendation, reiterated from our
2009 report, concerning plans to transition to fixed-price procurement
contracts. In the interim since we submitted the draft for comment,
the Department announced its significant restructuring plans,
including directions to transition to fixed-price procurement
contracts, perhaps as soon as this year, and prescribed other changes
to contracting strategy and provisions. In written comments, the
Department partially concurred with our recommendation, stating that
they were addressing this topic with the prime contractors, had
discussed specific plans with all four defense committees, and will
continue to update them on the progress. Accordingly, the Department
believes its actions meet the intent of this recommendation, both in
this report and in our prior report. We agree and deleted it in the
final report. Furthermore, we added more details on elements of the
restructuring as it impacted several sections of the report.
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. The report also is available at no
charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4841 or sullivanm@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Staff members making key
contributions to this report are listed in appendix IV.
Signed by:
Michael J. Sullivan:
Director Acquisition and Sourcing Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Howard P. McKeon:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Norm Dicks:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine the Joint Strike Fighter (JSF) program's progress in
meeting cost, schedule, and performance goals, we received briefings
by program and contractor officials and reviewed financial management
reports, budget documents, annual Selected Acquisition Reports,
monthly status reports, performance indicators, and other data. We
compared reported progress with the program of record and previous
years' data, identified changes in cost and schedule, and obtained
officials' reasons for these changes. We interviewed officials from
the JSF program, contractors, and the Department of Defense (DOD) to
obtain their views on progress, ongoing concerns and actions taken to
address them, and future plans to complete JSF development and
accelerate procurement.
At the time of our review, the most recent Selected Acquisition Report
available was a limited report from December 31, 2008. The most recent
full Selected Acquisition Report was from December 31, 2007. 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, 2009, which will be delivered to Congress in April
2010. Additionally, at the time of our review the JSF program was in
the process of developing a new test schedule. We received a draft of
the new schedule; however, since it had not yet been approved we
continued to use the program of record in our assessment.
In assessing program cost estimates, we compared the official program
cost estimate in the 2008 Selected Acquisition Report to estimates
developed by the JSF program, Defense Contract Management Agency
(DCMA) reports, and independent reviews from the Joint Estimating Team
(JET), Naval Air Systems Command (NAVAIR), and the Independent
Manufacturing Review Team (IMRT) for fiscal years 2010 through 2017.
Because the fiscal year 2011 budget had not been submitted to Congress
at the time of the draft report, some of the report's findings are
based on preliminary cost projections that existed at the time of our
review rather than the official program of record. We interviewed
members of NAVAIR, DOD Cost Analysis and Program Evaluation Office
(CAPE),[Footnote 22]and DCMA to understand their methodology, data,
and approach in developing their independent cost estimates. To assess
the validity and the reliability of contractors' cost estimates, we
reviewed audit reports prepared by DCMA and conducted independent
analysis of contractor cost performance reports.
To assess the program's plans and risk in manufacturing and its
capacity to accelerate production between fiscal years 2010 and 2015,
we analyzed manufacturing cost and work performance data to assess
progress against plans. We compared budgeted program labor hours to
actual labor hours, identified growth trends, and noted differences
between future labor requirements and current plans to release
engineering staff. We reviewed data and briefings provided by the
program, DCMA, and the JET to assess supplier performance and ability
to support accelerated production between fiscal years 2010 and 2015.
We also determined reasons for manufacturing delays, discussed program
and contractor plans to improve, and projected the impact on
development and operational tests. We also reviewed the program's
schedule estimates and compared them with relevant best
practices[Footnote 23] to determine the extent to which they reflect
key estimating practices that are fundamental to having a reliable
schedule. In doing so, we interviewed program officials to discuss
their creation of the program's current schedule and interviewed
officials from NAVAIR to understand their approach and to obtain
results of their independent schedule risk analysis.
To assess plans, progress, and risks in test activities, we examined
program documents and interviewed DOD, program office, and contractor
officials about current test plans and progress. To assess progress
towards test plans, we compared the number of flight tests conducted
as of December 2009 to the original test plan established in 2006. We
also reviewed documents and interviewed prime contractors about flight
testing, the integrated airborne test bed, and ground testing. To
assess the ground labs and test bed, we interviewed officials from the
Office of the Secretary of Defense, and toured the testing labs at the
Lockheed Martin facilities in Fort Worth, Texas. We also reviewed
independent assessments conducted by the JET and NAVAIR to obtain
their perspective on the program's progress in test activities.
In performing our work, we obtained information and interviewed
officials from the JSF Joint Program Office, Arlington, Virginia;
Naval Air Systems Command, Patuxent River, Maryland; Defense Contract
Management Agency, Fort Worth, Texas; Lockheed Martin Aeronautics,
Fort Worth, Texas; Defense Contract Management Agency, East Hartford,
Connecticut; Pratt & Whitney, East Hartford, Connecticut; Defense
Contract Management Agency, Cincinnati, Ohio; and General Electric
Rolls-Royce, Cincinnati, Ohio. We also met with and obtained data from
the following offices of the Secretary of Defense in Washington, D.C.:
Director, Operational Test and Evaluation; Cost Analysis and Program
Evaluation Office; and Systems and Software Engineering. We assessed
the reliability of DOD and JSF contractor data by (1) performing
electronic testing of required data elements, (2) reviewing existing
information about the data, and (3) interviewing agency officials
knowledgeable about the data. We determined that the data were
sufficiently reliable for the purposes of this report. We conducted
this performance audit from June 2009 to February 2010 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II Changes in Reported JSF Program Costs, Quantities, and
Deliveries:
Table 7 shows the evolution of DOD's official estimated cost,
quantity, and deliveries from the initiation of system development in
October 2001 to the fiscal year 2011 budget request submitted to
Congress in February 2010. It depicts quantities reduced in the last
major program restructure in 2004, the impacts of increased costs on
unit prices, and the slip in delivering initial operational capability
to the warfighter.
Table 7: Changes in Reported JSF Program Costs, Quantities, and
Deliveries:
Expected quantities:
Development quantities;
October 2001 (system development start): 14;
December 2003 (2004 Replan): 14;
March 2007 (approved baseline): 15;
Fiscal year 2011 budget request: 14.
Procurement quantities (U.S. only);
October 2001 (system development start): 2,852;
December 2003 (2004 Replan): 2,443;
March 2007 (approved baseline): 2,443;
Fiscal year 2011 budget request: 2,443.
Total quantities;
October 2001 (system development start): 2,866;
December 2003 (2004 Replan): 2,457;
March 2007 (approved baseline): 2,458;
Fiscal year 2011 budget request: 2,457.
Cost estimates (then-year dollars in billions):
Development;
October 2001 (system development start): $34.4 billion;
December 2003 (2004 Replan): $44.8 billion;
March 2007 (approved baseline): $44.8 billion;
Fiscal year 2011 budget request: $49.3 billion.
Procurement;
October 2001 (system development start): $196.6 billion;
December 2003 (2004 Replan): $199.8 billion;
March 2007 (approved baseline): $231.7 billion;
Fiscal year 2011 budget request: $273.3 billion.
Total program acquisition (see note);
October 2001 (system development start): $231.0 billion;
December 2003 (2004 Replan): $244.6 billion;
March 2007 (approved baseline): $276.5 billion;
Fiscal year 2011 budget request: $322.6 billion.
Unit cost estimates (then-year dollars in millions):
Program acquisition;
October 2001 (system development start): $81 million;
December 2003 (2004 Replan): $100 million;
March 2007 (approved baseline): $113 million;
Fiscal year 2011 budget request: $131 million.
Average procurement;
October 2001 (system development start): $69 million;
December 2003 (2004 Replan): $82 million;
March 2007 (approved baseline): $95 million;
Fiscal year 2011 budget request: $112 million.
Estimated delivery dates:
First operational aircraft delivery;
October 2001 (system development start): 2008;
December 2003 (2004 Replan): 2009;
March 2007 (approved baseline): 2010;
Fiscal year 2011 budget request: 2010.
Initial operational capability;
October 2001 (system development start): 2010-2012;
December 2003 (2004 Replan): 2012-2013;
March 2007 (approved baseline): 2012-2015;
Fiscal year 2011 budget request: 2012-2015.
Source: GAO analysis of DOD data.
Note: Military construction cost s, typically part of total program
acquisition costs, are not included in this table. Construction costs
associated with the JSF program are incomplete and have been
inconsistently portrayed at various stages.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
Acquisition, Technology And Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
March 18, 2010:
Mr. Michael Sullivan:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Sullivan:
This is the Department of Defense (DoD) response to the GAO draft
report 10382, "Joint Strike Fighter: Additional Costs and Delays Risk
Not Delivering Warfighter Requirements on Time" dated February 12,
2010, (GAO Code 120822). Detailed comments on the report
recommendations are enclosed.
The DoD concurs with recommendations one and two and partially concurs
with recommendation three. The rationale for our position is included
in the enclosure.
We appreciate the opportunity to comment on the draft report. My point
of contact for this effort is Col Mike Schmidt, 703-697-3619,
Michael.schmidt@osd.mil.
Sincerely,
Signed by:
David G. Ahern:
Director:
Portfolio Systems Acquisition:
Enclosure: As stated:
[End of letter]
Enclosure:
GAO Draft Report Dated February 12, 2010:
GAO-10-382 (GAO Code 120822):
"Joint Strike Fighter: Additional Costs And Delays Risk Not Meeting
Warfighter Requirements On Time"
Department Of Defense Comments To The GAO Recommendations:
The Department recognizes and appreciates the GAO's effort to update
their initial draft report to more accurately account for program
changes made over the last few months. However, the reporting of some
technical and programmatic issues highlighted in the report is
unbalanced in terms of the risks going forward.
The Department remains committed to the F-35 program and its Partners.
The FY 2011 President's Budget (PB) request reflects the DoD's
commitment to the F-35 program as the backbone of the future tactical
aircraft inventory for the Air Force, Navy, and Marine Corps, as well
as our international partners.
A constructive tension exists within the Department regarding
estimates of F-35 cost. Over the last four years the Department's Cost
Analysis Improvement Group (CMG) and the more recent JSF Joint
Estimate Teams (JET) have consistently predicted it will cost more and
take longer to finish the F-35 development program than the JSF
Program Office and contractor project. The CMG and JET also predicted
the production aircraft will cost more, significantly influenced by
assumptions on the benefits of commonality and other production
factors. Last year, the Department added $476 million to the FY 2010
RDT&E budget request in accordance with the JET's recommendation, with
the intent to re-visit the funding requirement for subsequent years
based on program performance.
In 2009 program performance did not meet expectations, and the
Department chose to accept and fund to the updated JET estimate in the
FY 2011 budget request and related Future Years Defense Plan (FYDP).
Despite many important accomplishments, the program is experiencing
challenges as it transitions from development to production. Although
the challenges are not unusual for this phase of a major acquisition
program, the Department is especially disappointed by the contractor's
failure to deliver flight test aircraft during the past year as
scheduled. The late deliveries will significantly delay the flight
test schedule, which was a major factor in the Department's decision
to fund the program to the JET estimate in the FY11 budget submission.
While the Department wants more realism in program estimates, we
refuse to accept the cost and operational consequences of a longer
development program without doing everything possible to minimize
them. The Department is adding another carrier variant aircraft to
SDD, adding a software integration line, and borrowing three LRIP
aircraft for development flight test to help reduce the 30 months of
additional JET-projected schedule requirements to 13 months. The
Department also added $2.8B RDT&E through the FYDP to fully fund to
the JET development estimate for this restructured program.
The Department has not uncovered any technology or manufacturing show-
stoppers, and did not de-scope performance requirements during this re-
structure process. The Department will continue to evaluate
opportunities to reduce risk and reduce the time required to field
this vital weapon system.
The contractors have made it clear they intend to meet previous
commitments and complete SDD sooner and cheaper than the Department
projects, and the Department will incentivize them to do so. The
remaining award fee tied to the existing Cost Plus Award Fee contract
will be withheld. The remaining fee pool on the SDD Air System prime
contract ($614M) will be converted to a performance incentive
construct. The new fee construct will establish a balanced and
objective incentive structure based on the contractor's performance in
attaining cost targets and milestone schedule events.
The Department reduced near-term expected procurement quantities to
ensure that the budget and ramp rate adequately account for production
risk. In March 2009 the Department chartered an Independent
Manufacturing Review Team (IMRT) to assess the adequacy of current
program plans to achieve the planned production ramp-up and sustain
the predicted maximum production rates. In fall 2009, the IMRT made 20
time-phased recommendations some of which, they conclude, must be
accomplished in order to achieve the ramp rates required to meet full-
rate production goals. They also proposed more achievable ramp rates,
which address some identified production program risks yet fully
exercise the production system. The revised ramp reflected in the FY
2011 budget submission provides a more realistic production profile,
and results from the following: transfer of procurement funding to
development to mitigate risk; delay of planned Partner aircraft
procurements; higher unit costs; and IMRT recommended limitations on
the annual production rate.
Due to F135 propulsion system projected cost growth, the USD(AT&L)
chartered a F135 Joint Assessment Team (JAT) to analyze and address
F135 cost and affordability. The JAT concluded that the cost growth
projections are to a significant degree reversible, there is good
confidence that with investment in affordability AND a commitment by
the contractor, Pratt and Whitney can realistically achieve their cost
goals.
The contractors remain committed to delivering production aircraft and
engines at costs in line with previous commitments. We intend to work
with the Congress to buy more aircraft within the F-35 budget if the
contractors perform at lower cost than the JET predicts.
Recommendation 1: The GAO recommends that the Secretary of Defense
direct appropriate offices within the Department to expeditiously
complete a full, independent, comprehensive cost and schedule estimate
for the Joint Strike Fighter (JSF) acquisition program through
completion and that this new estimate be established as the official
program of record for planning, budgeting, and congressional reporting
purposes. This effort should build upon the work already accomplished
by the Joint Estimating Team, the Independent Manufacturing Review
Team, the Joint Assessment Team, and the NAVAIR. In addition to
development and procurement costs, this effort should also include (a)
a robust estimate of military construction costs; (b) identification
of JSF-related costs not funded in the JSF program but which are
needed to properly base and operate service fleets on the ground and
on the sea; and (c) a comprehensive evaluation of projected operating
and support costs and the implications of higher JSF operating costs
compared to legacy aircraft on future defense budgets and force
structure. (See page 28/GAO Draft Report.)
DoD Response: Concur. The Department will continue to build on the
previous work summarized in the above introduction, and the USD(AT&L)
will continue to lead a Department-wide review of the JSF program. As
part of that review, the Director, Capabilities Assessment and Program
Evaluation plans to conduct an Independent Cost Estimate which will
include estimates in the areas described in the recommendation.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct that the military services, with Joint Staff and combatant
command participation, conduct a detailed review of each service's
initial operational capabilities requirement to determine the minimum
warfighter needs (both capabilities and capacity) and reasonable,
realistic timeframes for achieving the requirement. In conducting this
review, the military services should consider trading off desired
capabilities in order to more rapidly field JSF aircraft with an
initial set of usable capabilities to reduce risks of a future
tactical aircraft "gap" created by delays in fielding the JSF.
Capabilities that are not needed to meet more immediate warfighter
needs should be deferred to a future development increment. If options
are not available for deferring capabilities to future increments, DoD
needs to extend its initial operation capability (IOC) dates to better
align operating plans with more realistic, higher confidence
development and production schedules. In addition, because of
remaining JSF development risks and uncertainties”including potential
for future delays and possible reductions in JSF quantities”
contingency plans for legacy aircraft need to be developed so that a
properly resourced strategy is in place to fill the capability and
capacity gaps until the JSF can replace the legacy aircraft.
Completing this review before finalizing its ongoing program
restructure would ensure that the program's acquisition strategy is in
sync with and supports revisions to Services IOC requirements. The
Secretary of Defense should report the results of this review to the
congressional defense subcommittees. (See page 28/GAO Draft Report.)
DoD Response: Concur. In February 2010, the Joint Requirements
Oversight Council (JROC) received a status brief from the JSF Program
Office and discussed Initial Operational Capability (IOC) requirements
with the Service representatives. The determination of IOC is
ultimately a Service responsibility. The JSF Program Office will
assist the Services' assessment of potential impacts of the re-
structure on their respective IOC plans. The Department will continue
to balance existing and future operational requirements against legacy
capabilities within a constrained budget. The Department will keep
congressional defense committees informed on the progress.
Recommendation 3: The GAO is reiterating their recommendation in GAO-
09303 that the Secretary of Defense direct that the Under Secretary of
Defense for Acquisition, Technology, and Logistics report to the
congressional defense committees on (a) an explanation of the cost and
other risks associated with a cost-reimbursable contract as compared
to a fixed-price contract for JSF's future low-rate production
quantities; (b) the program's strategy for managing and mitigating
risks associated with the use of cost contracts; and (c) plans for
transitioning to fixed-price contracts for production to include time
frames and criteria. (See page 28/GAO Draft Report.)
DoD Response: Partially concur. The Department's use of cost
reimbursement contracts for the early Low Rate Initial Production lots
provides the best balance of cost and risk. The Department has always
planned to transition to fixed-price type contracts when the risk is
reduced, costs have been lowered (via learning, production efficiency
improvements, and affordability investments), and sufficient data is
available for realistic pricing. The Department plans to move to fixed
price incentive type contracts as soon as possible and earlier than
expected. The Department is currently addressing this topic with the
JSF prime contractors. Department officials have recently discussed
more specific contracting plans with professional staff members from
all four defense committees and will continue to update them on the
progress. The Department believes this meets the intent of both this
recommendation and the recommendation in GAO-09-303.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Michael Sullivan (202) 512 4841 or sullivanm@gao.gov:
Acknowledgments:
In addition to the contact name above, the following staff members
made key contributions to this report: Bruce Fairbairn, Assistant
Director; Ridge Bowman; Charlie Shivers; David Adams; Lindsay Taylor;
W. Kendal Roberts; Matt Lea, Karen Richey; Jason Lee; and Greg
Campbell.
[End of section]
Related GAO Products:
Joint Strike Fighter: Significant Challenges Remain as DOD
Restructures Program. [hyperlink,
http://www.gao.gov/products/GAO-10-520T]. Washington, D.C.: May 11,
2010:
Joint Strike Fighter: Strong Risk Management Essential as Program
Enters Most Challenging Phase. [hyperlink,
http://www.gao.gov/products/GAO-09-711T]. Washington, D.C.: May 20,
2009.
Defense Acquisitions: Assessments of Selected Weapon Programs.
[hyperlink, http://www.gao.gov/products/GAO-09-326SP]. Washington,
D.C.: March 30, 2009.
Joint Strike Fighter: Accelerating Procurement before Completing
Development Increases the Government's Financial Risk. [hyperlink,
http://www.gao.gov/products/GAO-09-303]. Washington D.C.: March 12,
2009.
Defense Acquisitions: Better Weapon Program Outcomes Require
Discipline, Accountability, and Fundamental Changes in the Acquisition
Environment. [hyperlink, http://www.gao.gov/products/GAO-08-782T].
Washington, D.C.: June 3, 2008.
Defense Acquisitions: Assessments of Selected Weapon Programs.
[hyperlink, http://www.gao.gov/products/GAO-08-467SP]. Washington,
D.C.: March 31, 2008.
Joint Strike Fighter: Impact of Recent Decisions on Program Risks.
[hyperlink, http://www.gao.gov/products/GAO-08-569T]. Washington,
D.C.: March 11, 2008.
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.
[hyperlink, http://www.gao.gov/products/GAO-08-388]. Washington, D.C.:
March 11, 2008.
Tactical Aircraft: DOD Needs a Joint and Integrated Investment
Strategy. [hyperlink, http://www.gao.gov/products/GAO-07-415].
Washington, D.C.: April 2, 2007.
Defense Acquisitions: Assessments of Selected Weapon Programs.
[hyperlink, http://www.gao.gov/products/GAO-07-406SP]. Washington,
D.C.: March 30, 2007.
Defense Acquisitions: Analysis of Costs for the Joint Strike Fighter
Engine Program. [hyperlink, http://www.gao.gov/products/GAO-07-656T].
Washington, D.C.: March 22, 2007.
Joint Strike Fighter: Progress Made and Challenges Remain. [hyperlink,
http://www.gao.gov/products/GAO-07-360]. Washington, D.C.: March 15,
2007.
Tactical Aircraft: DOD's Cancellation of the Joint Strike Fighter
Alternate Engine Program Was Not Based on a Comprehensive Analysis.
[hyperlink, http://www.gao.gov/products/GAO-06-717R]. Washington,
D.C.: May 22, 2006.
Defense Acquisitions: Major Weapon Systems Continue to Experience Cost
and Schedule Problems under DOD's Revised Policy. [hyperlink,
http://www.gao.gov/products/GAO-06-368]. Washington, D.C.: April 14,
2006.
Washington, D.C.: April 13, 2006. Defense Acquisitions: Actions Needed
to Get Better Results on Weapons Systems Investments. [hyperlink,
http://www.gao.gov/products/GAO-06-585T]. Washington, D.C.: April 5,
2006.
Tactical Aircraft: Recapitalization Goals Are Not Supported by
Knowledge-Based F-22A and JSF Business Cases. [hyperlink,
http://www.gao.gov/products/GAO-06-487T]. Washington, D.C.: March 16,
2006.
Joint Strike Fighter: DOD Plans to Enter Production before Testing
Demonstrates Acceptable Performance. [hyperlink,
http://www.gao.gov/products/GAO-06-356]. Washington, D.C.: March 15,
2006.
Joint Strike Fighter: Management of the Technology Transfer Process.
[hyperlink, http://www.gao.gov/products/GAO-06-364]. Washington, D.C.:
March 14, 2006.
Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications
for Tactical Aircraft Modernization. [hyperlink,
http://www.gao.gov/products/GAO-05-519T]. Washington, D.C: April 6,
2005.
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike
Fighter Program with Different Acquisition Strategy. [hyperlink,
http://www.gao.gov/products/GAO-05-271]. Washington, D.C.: March 15,
2005.
[End of section]
Footnotes:
[1] Ronald W. Reagan National Defense Authorization Act for Fiscal
Year 2005, Pub. L. No. 108-375, § 213 (2004).
[2] Previous reports under the 2005 mandate are GAO, Joint Strike
Fighter: Accelerating Procurement before Completing Development
Increases the Government's Financial Risk, [hyperlink,
http://www.gao.gov/products/GAO-09-303] (Washington, D.C.: Mar. 12,
2009); Joint Strike Fighter: Recent Decisions by DOD Add to Program
Risks, [hyperlink, http://www.gao.gov/products/GAO-08-388]
(Washington, D.C.: Mar. 11, 2008); Joint Strike Fighter: Progress Made
and Challenges Remain, [hyperlink,
http://www.gao.gov/products/GAO-07-360[ (Washington, D.C.: Mar. 15,
2007); Joint Strike Fighter: DOD Plans to Enter Production before
Testing Demonstrates Acceptable Performance, [hyperlink,
http://www.gao.gov/products/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,
[hyperlink, http://www.gao.gov/products/GAO-05-271[ (Washington, D.C.:
Mar. 15, 2005).
[3] National Defense Authorization Act for Fiscal Year 2010, Pub. L.
No. 111-84 § 244 (2009).
[4] Sensor fusion is the ability to take information from both
multiple onboard and offboard aircraft sensors and display the
information in an easy-to-use format for the single pilot.
[5] 10 U.S.C. § 2433 establishes the requirement for DOD to perform
unit cost reports on major defense acquisition programs or designated
major defense subprograms. Two measures are tacked: procurement unit
cost (total funds programmed for procurement divided by the total
number of fully configured items to be procured) and program
acquisition unit cost (total cost of development, procurement, and
system-specific military construction divided by the number of fully
configured end items to be procured). To eliminate the effects of
inflation, costs are expressed in constant base year dollars. If a
program exceeds specified cost growth thresholds specified in the law,
a Nunn-McCurdy breach, DOD is required to report to Congress. In
certain circumstance, DOD is required to reassess the program and
submit a certification to Congress in order to continue the program,
in accordance with 10 U.S.C. § 2433a.
[6] [hyperlink, http://www.gao.gov/products/GAO-09-303].
[7] Subsequent to the report, DOD cut back on its plans to accelerate
procurement, but still expects to significantly invest in procurement
prior to completing system development and flight testing.
[8] In July 2009, OSD tasked its Cost Assessment and Program
Evaluation (CAPE) office to lead an update of its 2008 cost estimate
and analysis to reflect actual F-35 performance to date. This included
assessing the overall executability of the JSF development program and
resource requirements. The F-35 joint estimating team was composed of
CAPE, Air Force, and Navy cost and subject-matter experts.
[9] Management reserve funds are a pool of money set aside to handle
unanticipated changes and other risks encountered as a development
program proceeds. Prudent defense programs typically strive to
maintain a management reserve of from 5 to 10 percent of the estimated
funding requirements to complete contracted work. At development
start, the JSF program budgeted reserves at 10 percent of contract
value and expected to draw on them at about the same rate as contract
work was executed.
[10] [hyperlink, http://www.gao.gov/products/GAO-08-388].
[11] GAO, Joint Strike Fighter: Strong Risk Management Essential as
Program Enters Most Challenging Phase, [hyperlink,
http://www.gao.gov/products/GAO-09-711T] (Washington, D.C.: May, 20
2009) is our most recent testimony on engine issues.
[12] Learning curves are mathematical projections that account for the
effects of learning--the expectation that time and cost for building a
new system decreases over time as production processes mature over
time and workers become more productive through experience.
[13] 10 U.S.C. § 2433 establishes the requirement for DOD to prepare
unit cost reports on major defense acquisition programs or designated
major defense subprograms. Two measures are tracked: procurement unit
cost (total funds programmed for procurement divided by the total
number of fully configured items to be procured) and program
acquisition unit cost (total cost of development, procurement, and
system-specific military construction divided by the number of fully
configured end items to be procured). To eliminate the effects of
inflation, costs are expressed in constant base year dollars. If a
program exceeds cost growth thresholds specified in the law, this is
known as a Nunn-McCurdy breach and DOD is required to report the
breach to Congress.
[14] 10 U.S.C. § 2433.
[15] [hyperlink, http://www.gao.gov/products/GAO-09-303].
[16] An efficient production line establishes an orderly flow of work
as a product moves from workstation to workstation and on to final
assembly. Out-of-station work, sometimes referred to as traveled work,
refers to completing unfinished work on major components, for example,
the wings, after they have left the wing workstation and moved down
the production line to another station, such as mate and final
assembly.
[17] A best practice is to achieve design stability at the system-
level critical design review, usually held midway through system
development. Completion of at least 90 percent of engineering drawings
at this point provides tangible evidence that the product's design is
stable, and a prototype demonstration shows that the design is capable
of meeting performance requirements.
[18] Federal Acquisition Regulation § 16.301-2.
[19] The program estimates it will have 11.6 million effective
software lines of code (ESLOC). ESLOC measures the effective size of
reused and adapted code, and is adjusted to its equivalent size in new
lines of code. This is not a deliverable product. The program will
have over 18 million software lines of code (SLOC), which is a measure
of the total raw size of software.
[20] Mission systems are critical to realizing increased warfighter
capability in combat effectiveness through next-generation sensors
with fused information from on-board and off-board systems (i.e.,
Electronic Warfare, Communication Navigation Identification, Electro-
Optical Target System, Electro-Optical Distributed Aperture System,
Radar, and Data Links).
[21] [hyperlink, http://www.gao.gov/products/GAO-09-303],
[hyperlink, http://www.gao.gov/products/GAO-08-388],
[hyperlink, http://www.gao.gov/products/GAO-07-360], and
[hyperlink, http://www.gao.gov/products/GAO-06-356].
[22] The CAPE serves as the principal advisory body to the milestone
decision authority on all matters concerning an acquisition program's
life-cycle cost, and is given general responsibilities for
establishing DOD policy guidance on a number of matters relating to
cost estimating. The independent CAPE cost estimate is designed to
assess the program office estimate and ensure realistic cost estimates
are considered.
[23] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[End of section]
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