The Multinational F-16 Aircraft Program:

Its Progress and Concerns

PSAD-79-63: Published: Jun 25, 1979. Publicly Released: Jun 25, 1979.

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The multinational F-16 aircraft program requires the United States to place contracts totalling about $1.6 billion (January 1975 dollars) with producers in Belgium, Denmark, the Netherlands, and Norway.

The coproduction requirement has created numerous management challenges. At least two European coproducers have profited in converting their currency to U.S. dollars, and others are suspected of doing the same. This is a violation of an agreement between the United States and the European participating governments (EPG). In addition, due to the dollar's decline, the United States has been subjected to increased costs under the F-16 program. European government and industry officials have pointed out serious difficulty in complying with U.S. procurement regulations and cost accounting standards. They would like some relief from certain U.S. requirements before they participate in future coproduction arrangements. By sharing the reliability improvements warranty program with the EPG, the United States is obtaining the warranty it was originally offered, but for less aircraft and at a substantially increased cost. Furthermore, the Air Force and Pratt and Whitney Aircraft (P&WA) disagree as to the definition of a fiscal year 1975 dollar, which will affect the absorption of any costs over the specified engine price as well as cost increases. Since the F-16 will provide a standardized weapon system for five countries, emphasis has been placed on maintaining commonality between U.S. and EPG aircraft. Most engineering changes have been accepted by all participating nations, although the development costs of these changes are not always shared by participating countries.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: In order to improve F-16 program management, the Secretary of Defense should do the following: (1) establish a consistent practice for U.S. dealings with European governments and industries in coproduction programs in consultation with the Cost Accounting Standards Board and the Office of Federal Procurement Policy; (2) require that cost estimates on the impact of coproduction on U.S. Air Force aircraft costs be made at least annually; (3) determine whether a prompt resolution of the disagreement between the Air Force and P&WA regarding the definitions of the term fiscal year 1975 dollars is needed to help EPG and the U.S. Government in assessing this cost impact; and (4) require the Air Force to review the cost sharing of all approved and future F-16 engineering changes to make sure development costs are shared according to the Memorandum of Understanding.

    Agency Affected:

 

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