The Air Force and contractors have entered into memoranda of understanding that relate the affordability of F-22 production to contract prices that will be negotiated for low-rate initial production. Potential Cost Reductions Identified by Contractors Have Increased

In an effort to offset production cost increases, F-22 contractors have been developing production cost reduction plans to enhance production technology, improve manufacturing techniques, and improve acquisition strategies and subcontract agreements for buying materials. Latest F-22 Production Cost Estimates Exceed Cost Limitation by a Greater Margin

In late 2000, the Air Force cost estimators projected, in an estimate supporting the fiscal year 2002 budget request, that production costs of 333 F-22s were likely to exceed the $37.6 billion congressional cost limitation by $2 billion. While the status of individual cost reduction plans are tracked by contractors and the F-22 Program Office, we believe regular reporting by the Air Force to the Under Secretary of Defense on the status of these plans is necessary to continuously assess their impact on the estimated cost of F-22 production. To compare the latest F-22 production cost estimates of the Air Force and the Office of the Secretary with the congressional production cost limitation and to determine the extent to which cost reductions plans were considered in establishing these estimates, we reviewed the Joint Estimating Team's report and various Air Force briefings. Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program (GAO/NSIAD-97-156, June 4, 1997).
Why GAO Did This Study

The Air Force F-22 Raptor, an air superiority aircraft with an air-to-ground attack capability is set for completion in September 2003. However, contracts to begin 10 low-rate initial production aircraft for fiscal year 2001 have been delayed until after completion of the President's review of Department of Defense (DOD) programs. The Air Force plans to procure 333 production aircraft through 2013. The cost of F-22 production is limited by law, but the total number of aircraft to be procured is unspecified. This report (1) identifies the cost reduction plans by F-22 contractors, (2) compares the military's latest F-22 production cost estimates with the congressional cost limitation and determines the extent to which cost reduction plans were considered in establishing these estimates, and (3) provides the status of DOD's actions to implement GAO's earlier recommendations on production cost estimates and cost reduction plans for the F-22 program.

What GAO Found

GAO found that enhancing production technology, improving manufacturing techniques, and improving acquisition practices have contributed to cost reductions. Both the Air Force and the Office of the Secretary cost estimators projected that F-22 production costs would exceed the congressional cost limitation if the Air Force were to procure 333 F-22s. DOD and the Air Force have partially responded to the recommendations in GAO's August 2000 report on the F-22.