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Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks

GAO-08-388 Published: Mar 11, 2008. Publicly Released: Mar 11, 2008.
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Highlights

The Joint Strike Fighter (JSF) program seeks to produce and field three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The estimated total investment for JSF now approaches $1 trillion to acquire and maintain 2,458 aircraft. Under congressional mandate, GAO has annually reviewed the JSF program since 2005. GAO's prior reviews have identified a number of issues and recommended actions for reducing risks and improving the program's outcomes. This report, the fourth under the mandate, focuses on the program's progress in meeting cost, schedule, and performance goals; plans and risks in development and test activities; the program's cost-estimating methods; and future challenges facing the program. To conduct its work, GAO identified changes in cost and schedule from prior years and their causes, evaluated development progress and plans, assessed cost-estimating methodologies against best practices, and analyzed future budget requirements.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense Because of the elevated risks and the valid objections raised by the test community and other DOD offices, the Secretary of Defense should direct elements of the department to revisit and, if appropriate, revise the Mid-Course Risk Reduction plan recently approved. This should be supported by an intensive analysis that includes causes of management reserve depletion, an evaluation of progress against the baseline manufacturing schedule, and the progress made in correcting deficiencies in the contractor's earned value management system. It should also include an in-depth examination of alternatives to the current plan and address the specific concerns raised by officials regarding testing capacity, the integration of ground and flight tests, and backup plans should capacity become overloaded.
Closed – Implemented
Our March 2008 report criticized DOD's mid-course risk reduction plan, in particular, the cuts made to flight test assets and test plans and its failure to address root causes depleting management reserves. We recommended that the plan be revisited and revised, if appropriate. DOD partially concurred--they did not change the decision but agreed to monitor its execution. Since that report was issued, JSF cost and schedule continued to deteriorate and management reserves were again depleted. DOD finally acknowledged a need to change and, amidst wide criticism, the tenets of the mid-course risk reduction plan have mostly been abandoned. In February 2010, DOD announced a major restructuring of the JSF program that directly addresses the issues in our recommendation. Chief among these actions are the restoration of one of the two test aircraft dropped by the mid-course plan and the addition of three production aircraft to supplement development testing. The restructuring also added time and more flight tests to the development test period and another software integration line to further address test capacity issues and integration of ground and flight tests. Furthermore, the Independent Manufacturing Review Team (aircraft production) and the Joint Assessment Team (engine manufacturing) recommended numerous actions that were adopted by DOD to address manufacturing delays and inefficiencies, including problems related to the depletion of management reserves and earned value management system. The June 2010 ADM directed further actions along these lines and other changes related to the Nunn-McCurdy certification recently issued.
Department of Defense So that DOD may have an accurate picture of JSF cost and schedule requirements, and that Congress may have an accurate understanding of future funding requirements, the Secretary of Defense should direct that the JSF program office to update its cost estimate using best practices, so that the estimate is comprehensive, accurate, well documented, and credible. Specifically, the JSF program office should (1) include costs that were inappropriately omitted from the estimate; (2) identify performance requirements that have been traded off in development; (3) fully document assumptions, data sources and methodologies in the cost model; and (4) perform a risk and uncertainty analysis to focus on key cost drivers and reduce the risk of cost overruns.
Closed – Implemented
The JSF Program Office updated its cost estimate in July 2008. The updated cost estimate includes funding requirements for fiscal years 2010 though 2015, which should cover the remainder of the program's development efforts as currently planned. The updated estimate was used by the services and DOD in formulation of the fiscal year 2010 President's Budget.
Department of Defense So that DOD may have an accurate picture of JSF cost and schedule requirements, and that Congress may have an accurate understanding of future funding requirements, the Secretary of Defense should direct that the program conduct a full Schedule Risk Analysis to ensure that its schedules are fully understood, manageable, and executable.
Closed – Implemented
GAO recommended that the Department of Defense direct the Joint Strike Fighter (JSF) program to perform schedule risk assessments, an important tool to improve management insight on cost and schedule execution and risks. DOD concurred. Due to DOD's inaction, we issued a similar recommendation in GAO-09-303. Subsequently, the Undersecretary of Defense for Acquisition Technology and Logistics specifically directed the JSF program office to conduct a comprehensive schedule risk assessment in an Acquisition Decision Memo dated June 2, 2010. The program completed a schedule risk assessment in the summer of 2011 as part of the overall process to establish its new acquisition program baseline (APB). The program will continue to do periodic schedule risk assessments every six months.
Department of Defense So that DOD may have an accurate picture of JSF cost and schedule requirements, and that Congress may have an accurate understanding of future funding requirements, the Secretary of Defense should direct that DOD conduct a full, independent cost estimate that should be conducted according to the highest standards of any DOD cost estimating organization, based on a comprehensive review of program data; that this cost estimate be reviewed by an independent third party such as the Cost Analysis Improvement Group; and that the results of these estimates be briefed to all interested parties in DOD and Congress.
Closed – Implemented
DOD directed an independent joint cost assessment be performed by a joint team of Navy, Air Force, and Office of the Secretary of Defense cost experts. The joint team reported the results of their assessment in September 2008. The cost estimate included funding requirements for fiscal years 2010 though 2015, which should cover the remainder of the program's development efforts as currently planned. The estimate was used to help formulate 2010 budget plans.

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Topics

AircraftCost analysisCost overrunsDefense cost controlDefense procurementFighter aircraftFinancial managementMilitary aircraftMilitary research and developmentOperational testingPerformance measuresProgram evaluationProgram managementResearch and development costsRisk assessmentRisk managementSchedule slippagesProgram goals or objectivesCost estimates