The program is currently in year 3 of  an estimated 11-year development phase. Buy American Act and Specialty Metals Requirements Apply but Will Have Little Effect on JSF Subcontracting Decisions

The Buy American Act and Preference for Domestic Specialty Metals  clause implementing Berry Amendment provisions apply to the  government’s purchase of manufactured end products for the JSF  program. Currently, only one JSF prime contractor—Pratt & Whitney— will deliver manufactured end products to the government in this phase of  the program. Although the Buy American Act will apply to manufactured end products  delivered to DOD during the JSF program, its restrictions will have little  impact on the selection of suppliers because of DOD’s use of the law’s  public interest exception. This exception allows the head of an agency to  determine that applying the domestic preference restrictions would be  inconsistent with the public interest. DOD has determined that countries  that sign reciprocal procurement agreements with the department to  promote defense cooperation and open up defense markets qualify for this  exception. The Preference for Domestic Specialty Metals clause applies to articles  delivered by Lockheed Martin, Pratt & Whitney, and General Electric  under JSF contracts. This restriction  must also be included in any subcontract awarded for the program. Similar to the Buy American Act, the Specialty Metals clause contains a  provision related to “qualifying country” suppliers. 1.) The gathering of these data, which most of the contractors have made  available to the JSF Program Office and DCMA, has increased the breadth  of knowledge available to DOD and the program office on the JSF supplier  base. JSF Program Office Maintains Subcontract Information on Specific Areas of Interest

While the JSF Program Office maintains more information on  subcontractors than required by acquisition regulations, this information  does not provide the program with a complete picture of the supplier  base. The JSF Program Office collects and maintains data on subcontract  awards for specific areas of interest—international suppliers and  U.S. small businesses. Finally, the JSF Program Office maintains limited information  on the companies responsible for supplying critical technologies. The JSF Program Office’s information on the suppliers of key or  critical technologies is based on lists that the prime contractors compile  as part of the program protection strategy. The lists do not  provide visibility into the lower-tier subcontracts that have been issued for  developing or supplying these technologies. Conclusions

The JSF program has the potential to significantly impact the U.S. defense  industrial base. Therefore, contracts awarded now will likely affect the  future shape of the defense industrial base. Agency Comments and Our Evaluation

We provided DOD a draft of this report for review. DOD provided only  technical comments, which we incorporated as appropriate.
Why GAO Did This Study

As the Department of Defense's (DOD) most expensive aircraft program, and its largest international program, the Joint Strike Fighter (JSF) has the potential to significantly affect the worldwide defense industrial base. As currently planned, it will cost an estimated $245 billion for DOD to develop and procure about 2,400 JSF aircraft and related support equipment by 2027. In addition, the program expects international sales of 2,000 to 3,500 aircraft. If the JSF comes to dominate the market for tactical aircraft as DOD expects, companies that are not part of the program could see their tactical aircraft business decline. Although full rate production of the JSF is not projected to start until 2013, contracts awarded at this point in the program will provide the basis for future awards. GAO was asked to determine the limits on and extent of foreign involvement in the JSF supplier base. To do this, GAO (1) determined how the Buy American Act and the Preference for Domestic Specialty Metals clause apply to the JSF development phase and the extent of foreign subcontracting on the program and (2) identified the data available to the JSF Program Office to manage its supplier base, including information on suppliers of critical technologies. DOD provided technical comments on a draft of this report, which GAO incorporated as appropriate.

What GAO Found

The Buy American Act and Preference for Domestic Specialty Metals clause implementing Berry Amendment provisions apply to the government's purchase of manufactured end products for the JSF program. Currently, only one of the three JSF prime contractors is under contract to deliver manufactured end products to the government in this phase of the program. The Buy American Act will apply to manufactured end products delivered to DOD during subsequent phases, but it will have little impact on the selection of suppliers because of DOD's use of the law's public interest exception. DOD, using this exception, has determined that it would be inconsistent with the public interest to apply domestic preference restrictions to countries that have signed reciprocal procurement agreements with the department. All of the JSF partners have signed such agreements. DOD must also apply the Preference for Domestic Specialty Metals clause to articles delivered under JSF contracts. All three prime contractors have indicated that they will meet these Specialty Metals requirements. While the JSF Program Office maintains more information on subcontractors than required by acquisition regulations, this information does not provide the program with a complete picture of the supplier base. The program office collects data on subcontract awards for international suppliers and U.S. small businesses. In addition, it maintains lists of the companies responsible for developing key or critical technologies. However, the lists do not provide visibility into the lower-tier subcontracts that have been issued for developing or supplying these technologies.