	F-35 Program Performance Improved in 2012

The F-35 program made progress in 2012 on several fronts. The F-35 program achieved 7 of its 10  primary objectives in 2012. The F-35 development flight test program also substantially met 2012  expectations with some revisions to original plans. Progress Made in Addressing Key Technical Risks

In 2012, the F-35 program also made considerable progress in  addressing four areas of technical risk that if left unaddressed could  substantially degrade the F-35’s capabilities and mission effectiveness. 3. The program is testing some  redesigned structures and planning other modifications. Manufacturing Process Metrics Improved

Key manufacturing metrics and discussions with defense and contracting  officials indicate that F-35 manufacturing and supply processes improved  during 2012. While initial F-35 production overran target costs and  delivered aircraft late, the latest data through the end of 2012 shows labor  hours decreasing and deliveries accelerating. F-35 Program Still Faces Risks

Ensuring that the F-35 is affordable and can be bought in the quantities  and time frames required by the warfighter will be of paramount concern  to the Congress, U.S. military and international partners. As we recently  reported, the acquisition funding requirements for the United States alone  are currently expected to average $12.6 billion per year through 2037,  and the projected costs of operating and sustaining the F-35 fleet, once  fielded, have been deemed unaffordable by DOD officials. In addition, the  program faces challenges with software development and continues to  incur substantial costs for rework to fix deficiencies discovered during  testing. As testing continues additional changes to design and  manufacturing processes will likely be required, while production rates  continue to increase. While most of the aircraft’s software code has been developed, a  substantial amount of integration and test work remain before the  program can demonstrate full warfighting capability. As indicated in table 1, DOD continues to incur financial  risk from its plan to procure 289 aircraft for $57.8 billion before completing  development flight testing. DOD Actions On GAO Recommendations Have Varied, but F-35 Restructuring Was A Positive Step

We have reported on F-35 issues for over a decade and have found that  the magnitude and persistence of the program’s cost and schedule  problems can be largely traced to (1) decisions at key junctures made  without adequate product knowledge; and (2) a highly concurrent  acquisition strategy that significantly overlapped development, testing,  and manufacturing activities. DOD has implemented our recommendations to varying degrees. Although  DOD disagreed with our recommendation at the time, it has since  restructured the F-35 program and, among other things, deferred the  production of hundreds of aircraft into the future, thus addressing the  intent of our recommendation and reducing program risk. Ensuring overall affordability will be a challenge as more  austere budgets are looming. length aircraft unit cost Key program event $55.2 Billion 18 years

The program established a  new acquisition program  baseline and approved the  continuation of system  development, increasing costs  for development and  procurements and extending  the period of planned  procurements by 2 years. GAO-13-309. GAO-10-382. Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike Fighter  Program with Different Acquisition Strategy.
Why GAO Did This Study

The F-35 Lightning II, the Joint Strike Fighter, is DODs most costly and ambitious aircraft acquisition. The program is developing and fielding three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The F-35 is critical to long-term recapitalization plans as it is intended to replace hundreds of existing aircraft. This will require a long-term sustained funding commitment. Total U.S. investment is nearing $400 billion to develop and procure 2,457 aircraft through 2037. Fifty-two aircraft have been delivered through 2012. The F-35 program has been extensively restructured over the last 3 years to address prior cost, schedule, and performance problems. DOD approved a new acquisition program baseline in March 2012.
This testimony is largely based on GAOs recently released report, G AO-13-309. This testimony discusses (1) progress the F-35 program made in 2012, and (2) major risks that program faces going forward. GAOs work included analyses of a wide range of program documents and interviews with defense and contractor officials.

What GAO Found

The new F-35 acquisition baseline reflects positive restructuring actions taken by the Department of Defense (DOD) since 2010, including more time and funding for development and deferred procurement of more than 400 aircraft to future years. Overall, the program progressed on several fronts during 2012 to further improve the current outlook. The program achieved 7 of 10 key management objectives and made substantial progress on one other. Objectives on aircraft deliveries and a corrective management plan were not met. The F-35 development test program substantially met expectations with some revisions to flight test plans and made considerable progress addressing key technical risks. Software management practices and some output measures improved, although deliveries to test continued to lag behind plans. Manufacturing and supply processes also improved--indicators such as factory throughput, labor efficiency, and quality measures were positive. While initial F-35 production overran target costs and delivered aircraft late, the latest data shows labor hours decreasing and deliveries accelerating.
Going forward, the F-35 program still faces considerable challenges and risks. Ensuring that the F-35 is affordable and can be bought in the quantities and time required by the warfighter will be a paramount concern to the Congress, DOD, and international partners. With more austere budgets looming, F-35 acquisition funding requirements average $12.6 billion annually through 2037 (see below). Once fielded, the projected costs of sustaining the F-35 fleet have been deemed unaffordable by DOD officials; efforts to reduce these costs are underway. Software integration and test will be challenging as many complex tasks remain to enable full warfighting capability. The program is also incurring substantial costs for rework-currently projected at $1.7 billion over 10 years of production-to fix problems discovered during testing. With about two-thirds of development testing still to go, additional changes to design and manufacturing are likely. As a result, the program continues to incur financial risk from its plan to procure 289 aircraft for $57.8 billion before completing development flight testing.

What GAO Recommends

GAOs prior reviews of the F-35 made numerous recommendations to help reduce risk and improve outcomes. DOD has implemented those recommendations to varying degrees.