In February 1997, the Under Secretary of Defense for Acquisition and Technology approved the Air Force’s proposed plan to restructure the F-22 program based on the results of the JET’s review. We have not reviewed the basis for the revised savings estimates that are now being devised by the team. The planned reductions in F-22 production unit costs are greater than achieved on prior fighter programs, and the initiatives to reduce the production costs are not fully developed. The planned reductions in F-22 production unit costs are greater than have been experienced by prior fighter programs. Our comparison of the planned reductions in F-22 production unit costs with the historical unit costs of the F-15, F-16, and F-18 programs indicates that the projected reduction in the unit cost of the F-22 exceeds the reductions that have been achieved on these other programs. Reducing Aircraft Performance

Although JET members told us they considered performance reductions in their study as a means of reducing costs, no such reductions were made. Benefits of Initiatives Are Not Planned to Be Realized Until After Fiscal Year 2003

The restructuring plan recognized substantial cost growth in the LRIP phase of the program. Therefore, to achieve the overall cost avoidance projected by JET, the unit cost of full-rate aircraft must be reduced by 54 percent from the unit cost of the LRIP aircraft instead of by 27.9 percent, as projected before the program restructure. Revised Exit Criteria Resulted From Restructuring

The program exit criteria that were required to be met before awarding contracts for F-22 production aircraft have been revised in the restructured program. The Air Force established exit criteria for each lot of LRIP aircraft and the first lot of full-rate production aircraft. Air Force and DOD officials noted that key aircraft performance parameters are routinely reported in periodic Air Force and DOD reports, such as the Selected Acquisition Report, to acquisition and other executives. Because of the potential for cost growth in the F-22 program, we also recommend that the Secretary reconsider the potential savings that can be achieved by reducing the performance requirements of the F-22, as previously suggested by the Defense Science Board. Recommendations of the Joint Estimate Team

The Joint Estimate Team recommended that the Air Force slow the manufacturing of development aircraft to ensure an efficient transition from development to low-rate initial production; increase the time available for avionics software development and integration; develop a more effective avionics ground test capability; implement revised avionics flight test processes; extend the flight test schedule by 9 months to allow additional time to identify, analyze, and resolve avionics anomalies; extend the development program by 12 months to accommodate a 9-month flight test extension; finish development of a baseline capability before beginning dedicated initial operational test and evaluation; delete the plans to produce preproduction aircraft and conduct dedicated initial operational test and evaluation with two refurbished development aircraft and the first two production aircraft; delay initiation of full-rate production by 10 months; slow the rates of low-rate initial production to make funds available for development activities and increase system maturity; and deliver a mature avionics capability before initial operational capability planned for November 2004. 5, 1997).
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Air Force's February 1997 plans to restructure the F-22 program, focusing on the: (1) estimated cost of the restructured program and viability of cost reduction initiatives; (2) planned timing for realization of benefits from initiatives; and (3) criteria for approving initiation and continuation of production.

What GAO Found

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