	Background

The JSF is a joint, multinational acquisition program for the Air Force,  Navy, and Marine Corps and eight international partners. More Money and Time Will Be Needed to Complete JSF Development, While DOD Plans to Accelerate Procurement

Two recent estimates indicate that JSF development will cost more and  take longer to complete than reported to the Congress in April 2008,  primarily because of contract cost overruns and extended time to  complete flight testing. New Estimates Project Rising Costs and Further Delays to Complete JSF Development

Development costs are projected to increase between $2.4 billion and   $7.4 billion and the schedule for completing system development extended  from 1 to 3 years, according to recent estimates—one by the JSF Program  Office and one by a joint team of Office of the Secretary of Defense (OSD),  Air Force, and Navy officials. Much Higher Annual Procurement Funding Required to Accelerate JSF Procurement

The program office and joint estimating team also projected procurement  funding requirements for the 6-year period fiscal years 2010-2015 based on  DOD plans to accelerate procurement of operational aircraft. Procurement of Operational Aircraft under Cost Reimbursement Contracts to Continue; Increases the Government’s Exposure to Risks

The JSF program is procuring a substantial number of aircraft on cost  reimbursement contracts. Under the accelerated procurement plan, DOD  could procure as many as 360 aircraft costing about $57 billion through  fiscal year 2013 on cost reimbursement contracts, as illustrated in figure 1. Procuring up to 360 production aircraft on cost reimbursement  contracts—-nearly 15 percent of the total DOD program—seems to be a  tacit acknowledgment by DOD and the contractor that knowledge on JSF  design, production processes, and costs for labor and material is not yet  sufficiently mature and that pricing information is not exact enough for  the contractor to assume the risk under a fixed-price contract. It has taken steps  to improve manufacturing, the supplier base, and schedule management. Time and Money Needed for Manufacturing Development Test Aircraft Continue to Increase

The prime contractor has restructured the JSF manufacturing schedule  three times, each time lengthening the time to deliver aircraft to the test  program. Given these supplier issues,  manufacturing inefficiencies, and accumulating backlog in production, we  believe that the program’s plans to accelerate production in the near term  adds considerable risk and will be difficult to achieve in a cost-effective  manner. DOD decisions to reduce development test aircraft  and flight tests add to the risks, while any additional delays in  manufacturing test aircraft will further compress the schedule. The department has stated that the  contractor’s state-of-the-art ground test labs and a flying test bed will  mitigate risks in the flight regimen and their use will effectively substitute  for flight testing. Significant Investments Made before Development Flight Tests Are Completed

DOD is investing heavily in procuring JSF aircraft before flight testing  proves that they will perform as expected. Figure 5 shows the expected ramp up in  flight testing with most effort occurring in fiscal years 2010 through 2012. Program’s Test Plan Extends Development and Relies Heavily on Ground Testing and Simulations to Verify Aircraft Performance

The JSF Program Office developed a new and improved test plan in the  spring of 2008 that extended the development period by 1 year, better  aligned test resources and availability dates, and lessened the overlap  between development and operational testing. Accelerating plans also does not equate to an ability to deliver to those  plans. 2. Appendix I: Scope and Methodology

To determine the Joint Strike Fighter (JSF) program’s progress in meeting  cost, schedule, and performance goals, we received briefings by program  and contractor officials and reviewed financial management reports,  budget documents, annual selected acquisition reports, monthly status  reports, performance indicators, and other data. This review was the fifth and final effort under  the mandate of the Ronald W. Reagan National Defense Authorization Act  for Fiscal Year 2005.
Why GAO Did This Study

The Joint Strike Fighter (JSF) is the Department of Defense's (DOD) most complex and ambitious aircraft acquisition, seeking to simultaneously produce and field three different versions of the aircraft for the Air Force, Navy, Marine Corps, and eight international partners. The total investment required now exceeds $1 trillion--more than $300 billion to acquire 2,456 aircraft and $760 billion in life cycle operating and support costs, according to program estimates. The Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 requires GAO to review the JSF program annually for 5 years. This is the fifth and final report under the mandate in which GAO (1) determines the program's progress in meeting cost, schedule, and performance goals; (2) assesses manufacturing results and schedule risks; and (3) evaluates development test plans, progress, and risks. GAO's work included analyses of a wide range of program documents, cost data and interviews with defense and contractor officials.

What GAO Found

JSF development will cost more and take longer than reported to the Congress last year, and DOD wants to accelerate procurement. Two recent estimates project additional costs ranging from $2.4 billion to $7.4 billion and 1 to 3 more years to complete development. Despite cost and schedule troubles, DOD wants to accelerate JSF procurement by 169 aircraft from fiscal years 2010 through 2015; this could require up to $33.4 billion in additional procurement funding for those 6 years. DOD plans to procure hundreds of aircraft on cost-reimbursement contracts, magnifying the financial risk to the government. Ongoing manufacturing inefficiencies and parts problems have significantly delayed the delivery of test assets. The prime contractor has extended manufacturing schedules three times and delivered 2 of 13 test aircraft. The program is still recovering from earlier problems that resulted in design changes, late parts deliveries, and inefficient manufacturing. The contractor is taking positive steps to improve operations, the supplier base, and schedule management. Schedule risk analyses could further enhance management insight into problem areas and inform corrective actions. Officials expect to deliver all test aircraft and fix many problems by 2010. By then, DOD plans to have purchased 62 operational aircraft and will be ramping up procurement. Procuring large numbers of production jets while still working to deliver test jets and mature manufacturing processes does not seem prudent, and looming plans to accelerate procurement will be difficult to achieve cost effectively. DOD's revised test plan adds a year to the schedule, better aligns resources and availability dates, and lessens the overlap between development and operational testing, but it still allows little time for error discovery and rework. DOD's decision late in 2007 to reduce test aircraft and flight tests adds to risks while any additional delays in delivering test aircraft will further compress the schedule. The revised plan relies on state-of-the-art simulation labs, a flying test bed, and desk studies to verify nearly 83 percent of JSF capabilities. Only 17 percent is to be verified through flight testing. Despite advances, the ability to so extensively substitute for flight testing has not yet been demonstrated. Significant overlap of development, test, and procurement results in DOD making substantial investments before flight testing proves that the JSF will perform as expected. Under the accelerated procurement plan, DOD may procure 360 aircraft costing an estimated $57 billion before completing development flight testing.