Operational–improved mission capabilities through interoperability  with allied systems. The Arms Export Control Act (AECA) provides DOD the authority to enter  into cooperative programs with U.S. allies. The United  States benefits from financial contributions, increased potential for  international sales of JSF aircraft, and access to partner industry. JSF International Program Relationships Are Complex

The JSF program is made up of a complex set of relationships involving  both government and industry from the United States and eight other  countries—the United Kingdom, Italy, the Netherlands, Turkey, Denmark,  Norway, Canada, and Australia (see fig. In return for their contributions, partner countries have representatives  in the program office with access to program data and technology;  membership on the management decision-making bodies; aircraft delivery  priority over future foreign military sales participants; guaranteed or  potential waiver of nonrecurring aircraft costs; potential levies on future  foreign military sales aircraft sold; and improved relationships for their  industry with U.S. aerospace companies through JSF subcontracting  opportunities. Future cost increases, should  they arise in the program, may fall almost entirely on the United States  because there are no provisions in the negotiated agreements requiring  partners to share these increases. According to program officials and documents, partners have not  been required to share any of these costs because the changes were DOD  directed and unrelated to partner actions or requirements. JSF Technology Transfer Presents Challenges for Program Execution, International Suppliers, and Disclosure Policy

The transfer of technology on the JSF program presents a number of  challenges related to program execution, international suppliers, and  disclosure policy. Further, the  transfer of technologies necessary to achieve aircraft commonality goals  is expected to far exceed past transfers of advanced military technology  and will push the boundaries of U.S. disclosure policy. Export authorizations for critical  suppliers need to be planned for, prepared, and resolved in a timely  fashion, to help avoid schedule delays in the program. The JSF support concept is currently being developed, with input from  the U.S. military services and international partners. But,  if Lockheed Martin’s efforts to meet partner return-on-investment  expectations come into conflict with program cost, schedule, and  performance goals, this could have a negative effect as well. Therefore,  the JSF Program Office will ultimately have to make decisions to balance  partner expectations and program execution. To support this approach, Lockheed Martin has  taken the following steps to manage partner return-on-investment  expectations, identify opportunities for qualified bidders to compete for  JSF contracts, and provide visibility into the subcontracting process for  the program:    To manage partner return-on-investment expectations, Lockheed  Martin sent teams of engineers and business development personnel to  partner countries and assessed suppliers’ ability to compete for JSF  contracts. International participation in the  program, while providing benefits, makes managing these challenges more  difficult and places additional risk on DOD and the prime contractor. Specifically, we identified international  relationships and the benefits they are expected to provide and assessed  how DOD is managing cost sharing, technology transfer, and partner  expectations for industrial return.
Why GAO Did This Study

The Joint Strike Fighter (JSF) is a cooperative program between the Department of Defense (DOD) and U.S. allies for developing and producing next generation fighter aircraft to replace aging inventories. As currently planned, the JSF program is DOD's most expensive aircraft program to date, costing an estimated $200 billion to procure about 2,600 aircraft and related support equipment. Many in DOD consider JSF to be a model for future cooperative programs. To determine the implications of the JSF international program structure, GAO identified JSF program relationships and expected benefits and assessed how DOD is managing cost sharing, technology transfer, and partner expectations for industrial return.

What GAO Found

The JSF international program structure is based on a complex set of relationships involving both government and industry from the United States and eight partner countries. The program is expected to benefit the United States by reducing its share of program costs, giving it access to foreign industrial capabilities, and improving interoperability with allied militaries. Partner governments expect to benefit from defined influence over aircraft requirements, improved relationships with U.S. aerospace companies, and access to JSF program data. Yet international participation also presents a number of challenges. For example, while international partners can choose to share any future program cost increases, they are not required to do so under the terms of negotiated agreements. Therefore, the burden of any future increases may fall almost entirely on the United States. Technology transfer also presents challenges. The large number of export authorizations needed to share project information, solicit bids from partner suppliers, and execute contracts must be submitted and resolved in a timely manner to ensure that partner industry has the opportunity to compete for subcontracts and key contracts can be executed on schedule. Transfers of sensitive U.S. military technologies--which are needed to achieve aircraft commonality goals--will push the boundaries of U.S. disclosure policy. While actions have been taken in an attempt to address these challenges, additional actions are needed to control costs and manage technology transfer. Finally, if partners' return-on-investment expectations are not met, support within their countries could deteriorate. To realize this return-on-investment, partners expect their industry to win JSF contracts through competition--a departure from other cooperative programs, which directly link contract awards to financial contributions. If the prime contractor's efforts to meet these expectations come into conflict with program cost, schedule, and performance goals, the program office will have to make decisions that balance these potentially competing interests.