DOD has set major expectations for the program. According to DOD, these technologies  represent a quantum leap over legacy tactical aircraft capabilities. Starting production before ensuring the design is mature  through flight testing significantly increases the risk of costly design  changes that will push the program over budget and behind schedule. Key Testing Events Will Not Be Completed before Significant Procurement Investments Are Made

The JSF program plans to begin low-rate initial production of the aircraft  before many of JSF’s technology advances and basic flying qualities are  flight-tested and to produce substantial quantities of aircraft before initial  operational testing is completed. By the time testing is planned to be completed, in  2013, DOD will have procured more than double that amount—424 aircraft  at an estimated cost of about $49 billion. Cost reimbursement contracts  place substantial risk on the buyer—in this case DOD—because the  contractor’s responsibility for performance costs is minimized or reduced. Evolutionary Acquisition Strategy Provides a Less Risky Alternative for the JSF Program

The JSF acquisition strategy currently plans a single-step approach to  deliver a quantum leap in tactical fighter capability by 2013 and has  already felt the negative cost and schedule impacts from the executing this  approach. This evolutionary approach is actually the preferred approach in  DOD’s acquisition policy for acquiring new systems for more rapid  delivery of incremental capabilities to the warfighter. JSF Program Is Designed to Deliver Full Required Capability in a Single-Step Development Program

Instead of establishing time-phased requirements for aircraft to be  delivered in sequence that could first meet DOD’s need to recapitalize its  aging fleet of aircraft and then evolve the aircraft to eventually achieve  improved capabilities in future system development increments, DOD  chose a single-step development approach to deliver the full required  capability by the end of system development in 2013. Since the program’s start, development cost has increased 84  percent, the development schedule has increased by almost 5 years, and  planned delivery of capabilities to the warfighter has been delayed. As a result,  DOD’s buying power has been significantly reduced—program acquisition  unit costs have increased by 28 percent, or $23 million, since first  estimates. The F-16 fighter program, the Air Force’s JSF  predecessor, successfully evolved capabilities over the span of about 30  years, delivering increases of capabilities quickly and often, as  technologies became available. 4). 5). DOD has an alternative. With 90 percent  of DOD’s remaining planned investment in JSF, it can adopt a knowledge- driven and evolutionary acquisition approach to reduce JSF program risks,  recapitalize its aging tactical air force sooner, and deliver needed  capabilities to the warfighter more quickly. Without changes, the acquisition plan will  put at risk $50 billion for procuring JSF aircraft at the same time the  program develops and tests the aircraft’s expected performance  capabilities over a 7-year, 12,000 hour flight test program. Significant efforts remain in the JSF program to demonstrate  the aircraft will perform as expected.
Why GAO Did This Study

The Joint Strike Fighter (JSF) is DOD's most expensive aircraft program. The program represents 90 percent of the remaining planned investment for recapitalizing DOD's aging tactical aircraft fleet. GAO is required by law to review the program annually for 5 years, beginning in fiscal year 2005. This is our second report and GAO assessed the program's acquisition approach--in terms of capturing knowledge for key investment decisions--and identified an alternative to improve outcomes.

What GAO Found

DOD is investing heavily in procuring JSF aircraft before flight testing proves it will perform as expected. For example, the JSF program plans to produce 424 low-rate initial production aircraft, at a total estimated cost of more than $49 billion, by 2013--the same time at which the program plans to complete initial operational testing. Producing aircraft before testing demonstrates the design is mature increases the likelihood of design changes that will lead to cost growth, schedule delays, and performance problems. Because the program will lack key design and testing knowledge, DOD plans to use cost reimbursement contracts to procure early production aircraft. This type of contract places a substantially greater cost risk on DOD and the taxpayers. Confidence that investment decisions will deliver expected capability within cost and schedule goals increases as testing proves the JSF will work as expected. At the same time, the JSF program has not adopted an evolutionary approach to acquiring the aircraft--despite DOD policy that prefers such an approach. Instead, the JSF program has contracted to develop and deliver the aircraft's full capability in a single-step, 12-year development program--a daunting task given the need to incorporate the technological advances that, according to DOD, represent a quantum leap in capability. DOD's buying power has already been reduced. Since initial estimates, program acquisition unit costs have increased by 28 percent, or $23 million. Development costs have increased 84 percent, planned purchases have decreased by 535 aircraft, and the completion of development has slipped 5 years, delaying delivery of capabilities to the warfighter. With more than 90 percent of the JSF investment remaining, DOD officials have the opportunity to adopt a knowledge-based and evolutionary acquisition strategy that would maximize DOD's return on its investment. The acquisition approach used for the F-16 fighter, the Air Force's JSF predecessor, could provide a model for delivering JSF capabilities to the warfighter sooner and recapitalizing tactical aircraft forces more quickly while lowering risk. The F-16 program successfully evolved capabilities over the span of about 30 years, with an initial capability delivered to the warfighter about 4 years after development started.