Joint Strike Fighter:
Assessment of DOD's Funding Projection for the F136 Alternate Engine
GAO-10-1020R, Sep 15, 2010
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The Joint Strike Fighter (JSF) program began in 1996 with an acquisition strategy that called for a competitive engine acquisition program. The program planned to first develop and procure the F135 primary engine and, with a few years lag time, develop the F136 second (or alternate) engine to compete with the F135 engine for future procurements and life-cycle support activities. The Department of Defense (DOD) requested funding for both engines annually as the JSF program progressed until the fiscal year 2007 budget submission, at which point the DOD stopped requesting funding for the F136 alternate engine. Defense officials believe that the operational risks of relying on a single engine supplier are low and do not justify the extra costs to maintain a second engine source. DOD further states that there is no guarantee that having an engine competition will create enough long-term savings to outweigh the up-front costs and now intends to acquire only the F135 primary engine. However, Congress has continued to fund the alternate engine development program annually through fiscal year 2010. According to the Secretary of Defense, DOD would need an additional $2.9 billion in funding over the next 6 years to support an alternate engine program up to the point where it believes it could begin competition in 2017. This amount includes the additional funding DOD says is needed with respect to the alternate engine to finish system development and demonstration, allow sufficient time for the contractor to gain production experience before DOD begins the competition, and create a logistics support system for the engine. DOD has stated that it has higher priority needs for this funding and has not included any funding in its fiscal year 2011 budget request for the alternate engine.
The $2.9 billion funding projection cited by DOD as the additional funding required to support an alternate engine program was intended to provide a general sense of the funding needed. As such, the projection does not include the same level of fidelity and precision normally associated with a detailed, comprehensive estimate. DOD analysts relied largely on data, assumptions, and methodologies from an analysis done 3 years ago and have characterized the $2.9 billion projection as having an equal chance of being too high or too low. Therefore, this projection should be viewed as one point within a range of possible costs depending on the factors and assumptions used, and not as an absolute amount. Different assumptions and more detailed information could either increase or decrease the $2.9 billion funding projection. That said, we found two key assumptions made by DOD in developing the $2.9 billion funding projection that have a significant impact on the estimated amount of upfront investment needed. These assumptions were (1) 4 years of noncompetitive procurements of both engines would be needed to allow the alternate engine contractor sufficient time to gain production experience and complete developmental qualification of the engine, and (2) the government would need to fund quality and reliability improvements for engine components. Past studies and historical data we examined indicate that it may take less than 4 years of noncompetitive procurements and that competition may obviate