National Defense:

F-22 Restructuring

NSIAD-97-100R: Published: Feb 28, 1997. Publicly Released: Feb 28, 1997.

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GAO provided information on the: (1) inflation rates the Department of Defense (DOD) directed the Air Force to use to estimate the cost of the F-22 advanced tactical fighter program; (2) requirement for two-seat F-22s for training; and (3) plan to buy 70 F-22s during the low-rate initial production phase.

GAO noted that: (1) DOD directed the Air Force to assume an inflation rate of about 2.2 percent per year for all years after 1996, which may cause an understatement of the estimated cost of the F-22 program; (2) the Air Force used an estimated inflation rate of 3.2 percent; (3) the higher inflation indices could have significant budgetary implications for more than the F-22 program; (4) GAO is concerned that the use of the 2.2 percent rate on all defense acquisition programs could cause a substantial understatement of funding requirements; (5) to reduce funding requirements, the activities to develop and produce 42 aircraft in a two-seat configuration for training have been deferred and the applicable costs deleted from the estimated total cost of the program; (6) the Defense Appropriation Act for fiscal year 1997 required the Air Force to make available at least $1 million to assess the budgetary, cost, technical, operational, training, and safety issues associated with a decision to eliminate development and production of the two-seat aircraft; (7) if a decision is made to go forward with development and production of the two-seat F-22, the estimated total cost of the program will increase by over $500 million; (8) the Air Force's F-22 restructuring plan calls for buying 70 F-22 aircraft during low-rate initial production (LRIP), which represents about 16 percent of the total planned production quantity; (9) although a legislative requirement to explain why any planned LRIP quantities need to exceed 10 percent of the procurement quantity is not retroactive to the F-22 program, the restructuring of the program is closely related to the issues that culminated in that legislation; and (10) providing an explanation for buying 16 percent of the total planned production of F-22s under LRIP would demonstrate DOD's intent to comply with the spirit of the law.

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