	JSF Restructuring Improves Program, but Affordability Is Challenged by Rising Costs and Delays

DOD has substantially restructured the JSF program over the past 15  months, taking positive actions that should lead to more achievable and  predictable outcomes. Restructuring has consequences—higher  development costs, fewer aircraft in the near term, training delays, and  extended times for testing and delivering capabilities to warfighters. Near-term procurement quantities were reduced by 246 aircraft through  2016; the annual rate of increase in production was lowered; and the start  of full-rate production moved to 2018, a 5-year slip from the current  baseline. To address technical problems and test deficiencies for the Marine Corps’  STOVL variant, the department significantly scaled back its procurement  quantities and directed a 2-year period for evaluating and engineering  technical solutions to inform future decisions on this variant. Annual funding  levels more than double and quantities more than triple during this period. Also, the estimated  average unit procurement price for the JSF has about doubled since  program start and current forecasts indicate that life-cycle costs will be  substantially higher than the legacy aircraft it replaces. Going forward, the JSF will require unprecedented demands for funding in  a period of more austere defense budgets where it will have to annually  compete with other defense and nondefense priorities for the  discretionary federal dollar. It had mixed  success, achieving 6 goals and making varying degrees of progress on the  other 6. Although still hampered by the late delivery of test aircraft to testing sites,  the development flight test program significantly ramped up operations in  2010, accomplishing 3 times as many test flights as the previous 3 years  combined. Program Has Still Not Fully Demonstrated a Stable Design and Mature Manufacturing Processes as It Enters Its Fifth Year of Production

After completing 9 years of system development and 4 years of  overlapping production activities, the JSF program has been slow to gain  adequate knowledge to ensure its design is stable and the manufacturing  process is ready for greater levels of annual production. Specifically, the program has not yet  stabilized aircraft designs—engineering changes continue at higher than  expected rates long after critical design reviews and well into  procurement. Engineering drawings are still being released to the  manufacturing floor. More changes are expected as testing accelerates. Also, manufacturing cost increases and delays in delivering test and  production aircraft indicate a need for substantial improvements in factory  throughput and performance of the global supply chain. Testing Has Been Slow and Has Not Demonstrated That the Aircraft Will Work in Its Intended Environment

Since the first flight in December 2006, only about 4 percent of JSF  capabilities have been completely verified by flight tests, lab results, or  both. Furthermore, only a small portion of the extensive network of ground test  labs and simulation models are fully accredited to ensure the fidelity of  results. Software development—essential for achieving about 80 percent  of the JSF functionality—is significantly behind schedule as it enters its  most challenging phase. However, only 3 of 32 labs and models  have been fully accredited to date. Concluding Remarks

The JSF program is at a critical juncture—9 years in development and         4 years in limited production–but still early in flight testing to verify  aircraft design and performance. We determine that  the cost estimate is not reliable  and that a new cost estimate and  schedule risk assessment is  needed. In February 2010, the  department announced a major  restructuring of the JSF program,  including reduced procurement  and a planned move to fixed-price  contracts. Because of additional costs and  schedule delays the program’s  ability to meet warfighter  requirements on time is at risk. Joint Strike Fighter: Progress Made and Challenges Remain. Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications  for Tactical Aircraft Modernization. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), is the Department of Defense's (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 for recapitalizing tactical air forces and will require a long-term commitment to very large annual funding outlays. The estimated total investment cost is currently about $385 billion to develop and procure 2,457 aircraft. Because of a history of relatively poor cost and schedule outcomes, defense leadership over the past 15 months has directed a comprehensive restructuring of the JSF program that is continuing. This testimony draws substantially from our extensive body of work on the JSF including our April 2011 report, the latest annual review mandated in the National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84 244 (2009). This testimony discusses (1) program cost and schedule changes and their implications on affordability; (2) progress made during 2010; (3) design and manufacturing maturity; and (4) test plans and progress. GAO's work included analyses of a wide range of program documents and interviews with defense and contractor officials.

What GAO Found

DOD continues to restructure the JSF program, taking positive, substantial actions that should lead to more achievable and predictable outcomes. Restructuring has consequences--higher up-front development costs, fewer aircraft in the near term, training delays, and extended times for testing and delivering capabilities to warfighters. Total development funding is now estimated at $56.4 billion to complete in 2018, a 26 percent cost increase and a 5-year schedule slip from the current baseline. DOD also reduced procurement quantities by 246 aircraft through 2016, but has not calculated the net effects of restructuring on total procurement costs nor approved a new baseline. Affordability for the U.S. and partners is challenged by a near doubling in average unit prices since program start and higher estimated life-cycle costs. Going forward, the JSF requires unprecedented funding levels in a period of more austere defense budgets. The program had mixed success in 2010, achieving 6 of 12 major goals and progressing in varying degrees on the rest. Successes included the first flight of the carrier variant, award of a fixed-price aircraft procurement contract, and an accelerated pace in development flight tests that accomplished three times as many flights in 2010 as the previous 3 years combined. However, the program did not deliver as many aircraft to test and training sites as planned and made only a partial release of software capabilities. The short takeoff and landing (STOVL) variant had significant technical problems and deficient flight test performance. DOD directed a 2-year period to evaluate and engineer STOVL solutions. After more than 9 years in development and 4 in production, the JSF program has not fully demonstrated that the aircraft design is stable, manufacturing processes are mature, and the system is reliable. Engineering drawings are still being released to the manufacturing floor and design changes continue at higher rates than desired. More changes are expected as testing accelerates. Test and production aircraft cost more and are taking longer to deliver than expected. Manufacturers are improving operations and implemented 8 of 20 recommendations from an expert panel, but have not yet demonstrated a capacity to efficiently produce at higher production rates. Substantial improvements in factory throughput and the global supply chain are needed. Development testing is still early in demonstrating that aircraft will work as intended and meet warfighter requirements. About 4 percent of JSF capabilities have been completely verified by flight tests, lab results, or both. Only 3 of the extensive network of 32 ground test labs and simulation models are fully accredited to ensure the fidelity of results. Software development--essential for achieving about 80 percent of the JSF functionality--is significantly behind schedule as it enters its most challenging phase.