Restructuring continued throughout 2011 and into 2012, adding to costs  and extending the schedules for achieving key activities. The new JSF baseline projects a total acquisition cost of $395.7  billion, an increase of $117.2 billion (42 percent) from the prior 2007  baseline. Full rate production is now planned for 2019, a delay of 6 years from the  2007 baseline. Unit cost estimates continue to increase and have now  doubled since the start of development. Over the long haul, affordability is  a key challenge. Projected annual acquisition funding needs average  more than $12.5 billion through 2037 and life-cycle operating and support  costs are estimated at $1.1 trillion. About 6 percent of this total funding requirement has been appropriated  through fiscal year 2011. Since the department still plans to eventually acquire the  full complement of U.S. aircraft—2,443 production jets—the procurement  costs, fielding schedules, and support requirements for the deferred  aircraft will be incurred in future years beyond 2017. With the latest reduction, the program now plans to procure a total of 365  aircraft through 2017, about one-fourth of the 1,591 aircraft expected in  the 2002 plan. If future funding is not available at these  projected levels, the impacts on unit costs and program viability are  unclear. Comparative data  for the Navy’s CV and Marine Corps’ STOVL with the legacy aircraft to be  replaced was not available. Mixed Performance in 2011 Affected by Concurrency and Technical Risks

Much of the instability in the JSF program has been and continues to be  the result of highly concurrent development, testing, and production  activities. During 2011, overall performance was mixed as the program  achieved 6 of 11 primary objectives for the year. Developmental flight  testing gained momentum and had tangible success, but it has a long  road ahead with testing of the most complex software and advanced  capabilities still in the future. Even with the progress in 2011, most development flight testing, including  the most challenging, still lies ahead. Late releases  of software have delayed testing and training and added costs. For example, only 4 percent of mission systems requirements  planned in system development and demonstration have been verified. The program has  experienced significant challenges developing and integrating mission  systems software. and logistics systems are critical to realizing the  The helmet mounted display in particular continues to have significant  technical deficiencies that make it less functional than legacy equipment. Contract Overruns and Concurrency Costs Indicate the Program Has Not Yet Stabilized Design and Manufacturing

The program has not yet demonstrated a stable design and  manufacturing process capable of efficient production. Engineering  changes are persisting at relatively high rates and additional changes will  be needed as testing continues. Until  manufacturing processes are in control and engineering design changes  resulting from information gained during developmental testing are  reduced, there is risk of further cost growth. Even with the substantial reductions in near-term  procurement quantities, DOD is still investing billions of dollars on  hundreds of aircraft while flight testing has years to go. Cost overruns on each of the first four annual procurement  contracts are currently projected to total about $1 billion (see table 3). Each was delivered more than 1 year late. This is in addition to the $672 million  for the government’s share of contract cost overruns. Conclusions

The JSF remains the critical centerpiece of DOD’s long-term tactical  aircraft portfolio. Substantial  concurrency costs are expected to continue for several more years. If funding demands cannot be fully met, it  would be important for congressional and defense decisionmakers to  understand the programmatic and cost impacts from lower levels of  funding; however, DOD officials have not thoroughly analyzed JSF  impacts should funding expectations be unmet. Effectively managing the expanding  network of global suppliers and improving the supply chain will be key to  improving cost and schedule outcomes, increasing manufacturing  throughput, and enabling higher production rates. Finally, because of the complexity and criticality of the global supply chain  that has already experienced some problems, we recommend the Under  Secretary of Defense for Acquisition, Technology and Logistics direct the  JSF program office to conduct a comprehensive assessment of the  supply chain and transportation network to ensure it is organized, secure,  and capable of producing and delivering parts in the quantities and times  needed to effectively and efficiently build and sustain over 3,000 aircraft  for the U.S. and international partners. We also discussed related software development, test, and integration  with Defense Contract Management Agency (DCMA) and Director,  Operational Test, and Evaluation (DOT&E) officials and reviewed DOT&E  annual assessments of the JSF program, the Joint Strike Fighter  Operational Test Team Report, and the F-35 Joint Strike Fighter  Concurrency Quick Look Review. The program undergoes re-plan  to address higher than  expected design weight, which  added $7 billion and 18 months  to development schedule. DOD concurred with all three of  the recommendations. Appendix IV: Budgeted Funding and Procurement Quantities, FY 2011-2017

	Procurement funding Air Force (CTOL)

Appendix V: Short Takeoff and Vertical Landing Aircraft Probation Period and Progress

In January 2011, the Secretary of Defense placed the short takeoff and  vertical landing (STOVL) aircraft on “probation” for 2 years, citing  technical issues unique to the variant that would add to the aircraft’s cost  and weight. GAO-11-323R.
Why GAO Did This Study

The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), is the Department of Defenses (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 DODs long-term recapitalization plans to replace hundreds of legacy aircraft. Total U.S. investment is now projected at nearly $400 billion to develop and acquire 2,457 aircraft through 2037 and will require a long-term, sustained funding commitment. The JSF has been extensively restructured over the last 2 years to address relatively poor cost, schedule, and performance outcomes.
This report, prepared in response to the National Defense Authorization Act for Fiscal Year 2010, addresses (1) JSF program cost and schedule changes and affordability issues; (2) performance objectives, testing results, and technical risks; and (3) contract costs, concurrency impacts, and manufacturing. GAOs work included analyses of a wide range of program documents and interviews with defense and contractor officials.

What GAO Found

Joint Strike Fighter restructuring continued throughout 2011 and into 2012, adding to cost and schedule. The new program baseline projects total acquisition costs of $395.7 billion, an increase of $117.2 billion (42 percent) from the prior 2007 baseline. Full rate production is now planned for 2019, a delay of 6 years from the 2007 baseline. Unit costs per aircraft have doubled since start of development in 2001. Critical dates for delivering warfighter requirements remain unsettled because of program uncertainties. While the total number of aircraft DOD plans to buy has not changed, it has for 3 straight years reduced near-term procurement quantities, deferring aircraft and costs to future years. Since 2002, the total quantity through 2017 has been reduced by three-fourths, from 1,591 to 365. Affordability is a key challengeannual acquisition funding needs average about $12.5 billion through 2037 and life-cycle operating and support costs are estimated at $1.1 trillion. DOD has not thoroughly analyzed program impacts should funding expectations be unmet.
Overall performance in 2011 was mixed as the program achieved 6 of 11 important objectives. Developmental flight testing gained momentum and is now about 21 percent complete with the most challenging tasks still ahead. Performance of the short takeoff and vertical landing variant improved this year and its probation period to fix deficiencies was ended after 1 year with several fixes temporary and untested. Developing and integrating the more than 24 million lines of software code continues to be of concern. Late software releases and concurrent work on multiple software blocks have delayed testing and training. Development of critical mission systems providing core combat capabilities remains behind schedule and risky. To date, only 4 percent of the mission systems required for full capability have been verified. Deficiencies with the helmet mounted display, integral to mission systems functionality and concepts of operation, are most problematic. The autonomic logistics information system, integral technology for improving aircraft availability and lowering support costs, is not fully developed.
Most of the instability in the program has been and continues to be the result of highly concurrent development, testing, and production activities. Cost overruns on the first four annual procurement contracts total more than $1 billion and aircraft deliveries are on average more than 1 year late. Program officials said the governments share of the cost growth is $672 million; this adds about $11 million to the price of each of the 63 aircraft under those contracts. Effectively managing the expanding network of global suppliers will be key to improving program outcomes, increasing manufacturing throughput, and enabling higher production rates. In addition to contract overruns, concurrency costs of at least $373 million have been incurred on production aircraft to correct deficiencies found in testing. The manufacturing process is still absorbing higher than expected number of engineering changes resulting from flight testing, changes which are expected to persist at elevated levels into 2019, making it difficult to achieve efficient production rates. More design and manufacturing changes are expected as testing continues, bringing risks for more contract overruns and concurrency costs. Even with the substantial reductions in near-term production quantities, DOD still plans to procure 365 aircraft for $69 billion before developmental flight tests are completed.

What GAO Recommends

GAO recommends that (1) DOD analyze cost and program impacts from potentially reduced future funding levels and (2) assess the capability and challenges facing the JSFs global supply chain. DOD concurred with the second recommendation and agreed with the value of the first, but believed its annual budget efforts are sufficient. GAO maintains that more robust data is needed and could be useful to congressional deliberations.