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Before the Subcommittee on AirLand, Committee on Armed Services, U.S. 

United States Government Accountability Office:


For Release on Delivery Expected at 2:30 p.m. EDT:

Wednesday, April 6, 2005:

Tactical Aircraft:

F/A-22 and JSF Acquisition Plans and Implications for Tactical Aircraft 

Statement of Michael Sullivan, Director:

Acquisition and Sourcing Management Issues:


GAO Highlights:

Highlights of GAO-05-519T, a testimony before the Subcommittee on 
AirLand, Committee on Armed Services, U.S. Senate: 

Why GAO Did This Study:

The F/A-22 Raptor and Joint Strike Fighter (JSF)—two of the Department 
of Defense’s (DOD) major tactical aircraft fighter programs—are 
intended to replace aging tactical fighter aircraft with highly 
advanced, stealthy aircraft. The two programs combined have a potential 
future investment of more than $240 billion.

This testimony highlights key concerns in the F/A-22 and JSF programs 
and discusses the implications on DOD’s overall investment strategy for 
modernizing its tactical fixed-wing aircraft. Last month, GAO issued 
comprehensive reports on the numerous setbacks these programs have 
experienced since they were initiated and their effect on the F/A-22 
and JSF business cases.

What GAO Found:

Significant changes in the F/A-22 program have severely weakened its 
original business case. Since the F/A-22 program began in 1986, new 
threats emerged and mission requirements changed; to keep the F/A-22 
viable, the Air Force has planned for large investments in new 
capabilities. Significant delays and cost increases have affected 
affordability, reducing planned deliveries from 750 F/A-22 aircraft to 
fewer than 180. The recent budget decision to terminate procurement of 
the F/A-22 after fiscal year 2008 and the prospect of additional 
funding cuts also have significant implications for the program’s 
viability and modernization efforts. 

JSF’s original business case, established when the program began in 
1996, is unexecutable. The cost estimate to develop the aircraft has 
increased 80 percent, operational capability has been pushed out 2 
years, and expected acquisition quantities have been cut by 535 
aircraft. The JSF program is approaching key investment decisions that 
will greatly influence the efficiency of the remaining funding—more 
than 90 percent of the $245 billion estimated total program costs. This 
sizable investment greatly raises the stakes to meet future promises. 
While DOD has been working to resolve early design and performance 
problems, continuing program uncertainties suggest DOD could use more 
time to gain knowledge before it commits to a new business case and 
moves forward. To reduce the risk of further cost and schedule growth, 
any new business case must include an acquisition strategy that adopts 
an evolutionary, knowledge-based approach to product development. 
Currently, the JSF program plans to make key production decisions 
before critical knowledge is captured.

JSF Program’s Annual Funding Requirements from 2005 to 2027: 

[See PDF for image]

[End of figure]

Taken together, these issues have broader implications for the DOD 
tactical fixed-wing aircraft modernization program, raising questions 
as to whether overarching goals to reduce average aircraft age and 
ownership costs while maintaining the force structure are now 
achievable. The 2005 Quadrennial Defense Review provides an opportunity 
for DOD to assess needs and plans and to weigh options for 
accomplishing its tactical aircraft goals.

What GAO Recommends:

GAO made recommendations in two reports issued in March 2005. For the 
F/A-22 program, GAO reiterated and expanded upon its 2004 
recommendation for DOD to establish a new business case—one that 
justifies the continued expenditure of funds on the F/A-22. For the JSF 
program, GAO recommended that—before the program moves forward—DOD 
establish an executable business case that is consistent with best 
practices and DOD policy regarding knowledge-based, evolutionary 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Michael J. Sullivan at 
(202) 512-4841 or

[End of section]

Mr. Chairman and members of the subcommittee:

I am pleased to be here today to participate in the Subcommittee's 
hearing on the status of two of the Department of Defense's (DOD) major 
tactical aircraft fighter programs, the F/A-22 Raptor and the F-35, 
also known as the Joint Strike Fighter (JSF).[Footnote 1] Both programs 
are intended to replace aging tactical fighter aircraft with highly 
advanced, stealthy aircraft. These two programs represent a potential 
future investment for DOD of about $240 billion to modernize tactical 
fixed-wing aircraft.

My statement today will highlight key concerns in the F/A-22 and JSF 
programs. Our work has shown that because of the significant changes in 
the F/A-22 development and procurement programs and the key investment 
decisions remaining, a new business case is needed to justify aircraft 
quantities and investments in new capabilities. Changes in the JSF 
program and DOD's intent to begin producing aircraft with at least 6 
years of development remaining suggest that the JSF does not yet have 
the knowledge to justify future investments. In addition to 
highlighting specific F/A-22 and JSF program issues, I will discuss the 
implications these development programs have on DOD's overall 
investment strategy for modernizing the tactical fixed-wing aircraft.

My statement is primarily based on our recent reports on the F/A-22 and 
JSF programs.[Footnote 2] We performed the work associated with this 
statement in accordance with generally accepted government auditing 


The F/A-22 has been in development for 19 years, and cost increases and 
delays have created affordability concerns that reduced the number of 
aircraft planned for acquisition. A changing world environment and 
threats over this time frame have compelled the Air Force to plan for 
large investments in new capabilities to keep the F/A-22 viable. 
Termination of F/A-22 procurement after fiscal year 2008 has also 
placed modernization plans in doubt. The original business case 
elements--needs and resources---set at the outset of the program are no 
longer valid, and a new business case is needed to justify future 
investments for aircraft quantities and modernization efforts. The F/A- 
22's acquisition approach was not knowledge-based or evolutionary. It 
attempted to develop revolutionary capability in a single step, causing 
significant technology and design uncertainties and, eventually, 
significant cost overruns and schedule delays. Lessons from the F/A-22 
program can be applied to the JSF program to improve on its outcomes.

While relatively early in its acquisition program, the JSF program has 
experienced design and weight problems that, if not solved, will affect 
aircraft performance. These problems have led to increased development 
and procurement costs and schedule delays so far. In addition, the 
program's customers are still not sure how many aircraft they will 
need. The combination of cost overruns and quantity reductions has 
already diluted DOD's buying power and made the original JSF business 
case unexecutable. Given continuing program uncertainties, DOD could 
use more time right now to gain knowledge before it commits to a new 
business case for its substantial remaining investments. The JSF's 
current acquisition strategy does not embrace evolutionary, knowledge- 
based techniques intended to reduce risks. Key decisions, like the 
planned 2007 production decision, are expected to occur before critical 
knowledge is captured. Time taken now to gain knowledge will avoid 
placing sizable investments in production capabilities at risk to 
expensive changes.

Taken together, the current status and continuing risk in these two 
programs have broader implications to the DOD tactical fixed-wing 
aircraft modernization program, raising questions as to whether its 
overarching goals are now achievable. Decreases in quantities alone-- 
about 30 percent since original plans--raise questions about how well 
the aircraft will complement our tactical air forces in the future.


The F/A-22 aircraft program is acquiring the Air Force's next 
generation, multimission fighter for about $63.8 billion.[Footnote 3] 
The continued need for the F/A-22, its increasing costs, and the 
quantities required to perform its mission have been the subject of a 
continuing debate within DOD and Congress. Supporters cite the F/A-22's 
advanced features--stealth, supercruise speed, maneuverability, and 
integrated avionics--as integral to the Air Force's Global Strike 
initiative and for maintaining air superiority over potential future 
adversaries for years to come.[Footnote 4] Critics, on the other hand, 
argue that the Soviet threat the F/A-22 was originally designed to 
counter no longer exists and that its remaining budget dollars could 
better be invested in enhancing current air assets and acquiring new 
and more transformational capabilities that will allow it to meet 
evolving threats. The debate continues as a December 2004 budget 
decision by the Office of the Secretary of Defense (OSD) reduced F/A-22 
funding and the number of aircraft to be acquired. A full-rate 
production decision is expected in early April, but the Air Force 
already has 98 aircraft on contract.[Footnote 5]

The JSF program is DOD's most costly aircraft acquisition program. The 
program's goals are to develop and field more than 2,400 stealthy 
strike fighter aircraft for the Navy, Air Force, and Marine Corps and 
potentially several hundred more aircraft for U.S. allies. 
International participation in the development of this system is a 
vital part of the acquisition strategy. The JSF is intended to provide 
greater capability and to replace DOD's aging fighter and attack 
aircraft. DOD estimates that the total cost to develop and procure its 
fleet of aircraft will reach $245 billion, with total costs to maintain 
and operate the JSF adding another $344 billion over its life cycle. 
Since the program began in November 1996, it has experienced technical 
challenges that have resulted in significant cost increases and 
schedule overruns. During most of 2004, the program worked to 
understand and define current development risks in order to prepare 
more accurate cost and delivery estimates to support development and 
production investment decisions planned over the next 2 years.

A key to successful acquisition programs is the development of a 
business case that should match requirements with resources--proven 
technologies, sufficient engineering capabilities, time, and funding--
-when undertaking a new product development. First, the user's needs 
must be accurately defined, alternative approaches to satisfying these 
needs must be properly analyzed, and quantities needed for the chosen 
system must be well understood. The developed product must be 
producible at a cost that matches the users' expectations and budgetary 
resources. Finally, the developer must have the resources to design and 
deliver the product with the features that the customer wants and to 
deliver it when it is needed. If the financial, material, and 
intellectual resources to develop the product are not available, a 
program incurs substantial risk in moving forward.

A New Business Case Is Needed to Justify Continued Investment in the F/ 
A-22 Program:

Since its inception in 1986, the F/A-22 aircraft program has 
encountered numerous and continuing management and technical 
challenges. Changing threats, missions, and requirements have severely 
weakened the original business case. Program milestones have slipped 
substantially; development costs have more than doubled; and a 
modernization program was added. The recent budget decision to 
terminate procurement after fiscal year 2008, the prospect of 
additional cuts because of ceilings on program cost, and upcoming 
defense reviews have significant implications for the program's 
viability and the future of modernization efforts.

In March 2004, we reported that the significant changes in the F/A-22's 
cost, quantity, capabilities, and mission and the persistent problems 
and delays in its development and testing schedules called for a new 
business case to justify the continued need for the F/A-22.[Footnote 6] 
We recommended that OSD direct the Air Force to consider alternatives 
and examine the constraints of future defense spending. In subsequent 
testimony, we reiterated this position, stating that competing 
priorities--both internal and external to DOD's budget--require a sound 
and sustainable business case for DOD's acquisition programs based on 
comprehensive needs assessments and a thorough analysis of available 
resources.[Footnote 7] In response to our recommendation, DOD stated 
its routine budgeting processes annually addressed business case issues 
on the F/A-22. We disagreed, as we do not think those processes provide 
the breadth or depth of analysis needed to develop a comprehensive new 
business case.

Problems in the F/A-22 Program Strain Future Viability:

When initiated, the F/A-22 acquisition program planned to complete 
development in 1995, achieve initial operational capability by March 
1996, and ultimately procure 750 aircraft. The Air Force currently 
plans to complete system development in 2005, achieve initial 
operational capability by December 2005, and procure 178 aircraft.

Amidst concerns about escalating costs and schedule, the Congress 
placed cost limitations on both development and production budgets in 
1997,[Footnote 8] later removing the development cost cap.[Footnote 9] 
According to the Air Force, the current production cost cap is $37.3 
billion. Affordability concerns have, in part, led to the steady 
decrease in procurement quantities. Two major reviews of defense force 
structure and acquisition plans--the 1993 Bottom-Up Review and the 1997 
Quadrennial Defense Review (QDR)--significantly reduced F/A-22 
quantities. OSD's "buy to budget" acquisition strategy essentially 
placed a ceiling on total program costs resulting in reducing 
quantities, and in December 2004, Program Budget Decision 753 reduced 
F/A-22 funding by $10.5 billion, further reducing in all likelihood 
procurement quantities from 275 to 178 aircraft.[Footnote 10] The 
December 2004 budget decision also ended procurement in fiscal year 
2008, instead of fiscal year 2011.

Decreased procurement quantities, along with increased development and 
production costs and increased costs to modernize and enhance 
capability, have led to rising acquisition unit costs. Figure 1 
illustrates the downward trend in procurement quantities and the upward 
trend in program acquisition unit costs.[Footnote 11]

Figure 1: Quantity and Program Acquisition Unit Cost of F/A-22s:

[See PDF for image]

[End of figure]

In arguing for reversal of the December 2004 budget decision to stop 
procurement of the F/A-22 in 2008, Air Force officials noted that the 
decision obviates production economies and efficiencies that the Air 
Force expected to achieve through a multiyear procurement contract that 
was to begin in fiscal year 2008. Officials also stated that cutting 
production quantities from the final years of the program limits 
expected savings in annual unit procurement costs. As with many DOD 
acquisitions, Air Force program officials had assumed in future budgets 
that the costs for buying F/A-22s would decrease as a result of 
manufacturing efficiencies, reduced fixed costs, productivity projects, 
and more economical buying quantities. For example, the average unit 
flyaway cost for the F/A-22 in 2003 was about $178 million, while the 
unit flyaway costs for future annual buys were projected before the 
budget decision to decrease to $127 million, $111 million, and $108 
million in fiscal years 2007, 2008, and 2009 respectively.[Footnote 12] 
Now that the program will be truncated in 2008, the less expensive 
aircraft in 2009 and beyond will not be bought and unit costs are now 
projected at $135 million in 2007 and $149 million in 2008 (increases 
associated with close-out of production).

The F/A-22 program changes have also resulted in schedule delays for 
completing development testing, operational testing, and, consequently, 
the full-rate production decision. That decision is currently expected 
later this month but could slip again given the unsettled environment. 
One critical input to the decision is the report by the Office of the 
Director of Operational Test and Evaluation to the Congress and defense 
leadership on the adequacy and results of the recently completed 
initial operational test and evaluation.[Footnote 13] In addition, the 
F/A-22 program must demonstrate it satisfies criteria established by 
the Defense Acquisition Board in November 2004, which include 
delivering a fully resourced plan for follow-on testing to correct 
deficiencies identified in initial operational testing and evaluation, 
achieving design stability of the avionics software, demonstrating 
mature manufacturing processes, and validating technical order 
data.[Footnote 14]

Final reports detailing the results from initial operational testing 
and evaluation were not available for our review, but Air Force test 
officials told us that testing showed the F/A-22 was "overwhelmingly 
effective" as an air superiority fighter and that its supporting 
systems were "potentially suitable" pending the correction of 
identified deficiencies. Operational testing of the limited ground 
attack capability in the current design was not conducted but is 
scheduled during follow-on testing planned to start in July 
2005.[Footnote 15] Air Force officials believe that test results 
support approval of full-rate production. They also believe that 
deficiencies identified in aircraft reliability and maintainability 
(including maintaining low observable characteristics) and in the 
integrated diagnostic systems are readily correctible and the aircraft 
should meet the needs of the warfighter by the scheduled initial 
operational capability date in December 2005. However, whether the Air 
Force can accomplish all of this by December 2005 remains to be seen.

Future of Modernization Plans in Doubt:

Originally, the F/A-22 was intended to replace the F-15 and achieve air-
to-air superiority to counter large numbers of advanced Soviet fighters 
in conventional warfare. However, over the 19 years that the aircraft 
has been in development, the projected Cold War threats never 
materialized and new threats emerged, changing tactical fighter 
requirements and operational war plans. The Air Force now plans to 
implement a Global Strike concept of operations by developing a robust 
air-to-ground attack capability to allow the aircraft to counter a 
greater variety of targets, such as surface-to-air missiles systems, 
that pose a significant threat to U.S. aircraft. It also plans to equip 
most of the F/A-22 fleet with improved capabilities to satisfy expanded 
warfighter requirements and to take on new missions, including 
intelligence data gathering and the suppression of enemy air defenses 
and interdiction.

To implement its Global Strike concept, the Air Force established a 
time-phased modernization program. Table 1 shows how the Air Force 
intended to integrate new capabilities incrementally before the 
December 2004 budget decision reduced quantities by 96 aircraft. At the 
time of our review, officials were still determining the impacts of the 
budget decision on the modernization program content and quantities.

Table 1: Planned Modernization Enhancements for the F/A-22 Program:

[See PDF for image]

Sources: Air Force and Office of Secretary of Defense.

[A] Global Strike Enhanced includes two increments of capability, with 
the first increment incorporated in fiscal year 2009 and the second in 

[B] The Air Force planned to have three configurations (called blocks) 
that included specific enhancements developed in the modernization 

[C] This quantity included in Global Strike Full amount. Total 128 
aircraft planned for block 40.

[End of table]

In March 2003, OSD's Cost Analysis Improvement Group (CAIG) estimated 
that the Air Force would need $11.7 billion for the planned 
modernization programs through fiscal year 2018.[Footnote 16] The Air 
Force's latest estimate includes about $4.1 billion through fiscal year 
2011 for the first two modernization increments (blocks 20 and 30) and 
about $1.3 billion through fiscal year 2011 for the latter two 
increments (block 40). The Air Force will continue to manage blocks 20 
and 30 as part of the F/A-22 acquisition program. To manage block 40 
efforts, OSD has directed the Air Force to establish a separate 
modernization program.[Footnote 17] Future modernization costs beyond 
2011 have not been fully definitized and are subject to change. The 
modernization program manager projected annual funding of $700 to $750 
million would be needed for the currently planned modernization program 
after 2011.

The December 2004 budget decision places much of the modernization 
program in doubt, particularly the latter stages. This is because that 
decision terminated F/A-22 procurement after fiscal year 2008 and many 
of these new and advanced capabilities had been planned for aircraft 
that now will not be bought. Therefore, if the budget cut is sustained, 
the modernization program as currently planned is largely obsolete and 
some funding for advanced capabilities planned to be incorporated after 
fiscal year 2008 could be available for other uses. At the time of our 
review, Air Force officials were still restructuring the modernization 
program in response to the budget decision, including revising the 
desired mix of capabilities and the number of aircraft in each 
configuration. With the reduced quantity, they are considering having 
only two configurations, with the second incorporating some 
enhancements originally planned for the third configuration.

The budget decision causes a ripple effect on other resource plans tied 
to the modernization. For example, it brings into question the need for 
(1) upgrades to the computer architecture and processors estimated to 
cost between $400 million and $500 million; (2) upgrades to government 
laboratory and test range infrastructure like software avionics 
integration labs, flying test beds, and test ranges estimated to cost 
about $1.8 billion; and (3) changes in other activities supporting 
modernization enhancements in the production line, retrofit of 
aircraft, and establishing depot maintenance support estimated at more 
than $1.6 billion.

New JSF Business Case and Acquisition Strategy Is Critical for Program 

Unlike the F/A-22 program, which is near the end of development, the 
JSF program is approaching key investment decisions that will greatly 
influence the efficiency of the remaining funding--over 90 percent of 
the $245 billion estimated total program costs--and determine the risk 
DOD is willing to accept. DOD has not been able to deliver on its 
initial promise, and the sizable investment greatly raises the stakes 
to meet future promises. Given continuing program uncertainties, DOD 
could use more time to gain knowledge before it commits to a new 
business case and moves forward. Any new business case must be 
accompanied by an acquisition strategy that adopts an evolutionary 
approach to product development--one that enables knowledge-based 
decisions to maximize the return on remaining dollars--as dictated by 
best practices.

DOD Needs More Time to Develop a New JSF Business Case:

Increased program costs, delayed schedules, and reduced quantities have 
diluted DOD's buying power and made the original JSF business case 
unexecutable. Program instability at this time makes the development of 
a new and viable business case difficult to prepare. The cost estimate 
to fully develop the JSF has increased by more than 80 percent. 
Development costs were originally estimated at roughly $25 billion. By 
the 2001 system development decision, these costs increased almost $10 
billion, and by 2004, costs increased an additional $10 billion, 
pushing total development cost estimates to nearly $45 billion. Current 
estimates for the program acquisition unit cost are about $100 million, 
a 23 percent increase since 2001. Ongoing OSD cost reviews could result 
in further increases to the estimated program cost. At the same time, 
procurement quantities have been reduced by 535 aircraft and the 
delivery of operational aircraft has been delayed. Figure 2 shows how 
costs, quantities, and schedules have changed since first estimates 
based on data as of January 2005.

Figure 2: Measures of JSF Cost and Schedule Changes:

[See PDF for image]

[End of figure]

Ongoing program uncertainties--including uncertainties about the 
aircraft's design and procurement quantities--make it difficult to 
understand what capabilities can be delivered with future investments. 
For example, DOD has been working over the past year to restructure the 
JSF program to accommodate changes in the aircraft's design; until this 
restructuring is completed, it will be difficult to accurately estimate 
program costs. The need for design changes largely resulted from the 
increased weight of the short takeoff and vertical landing variant and 
the impact it was having on key performance parameters. The other JSF 
variants' designs were affected as well. The program plans to have a 
more comprehensive cost estimate in the spring of 2005. However, a 
detailed assessment has not been conducted to determine the impact that 
the restructured program will have on meeting performance 
specifications. Until the detailed design efforts are complete--after 
the critical design review in February 2006--the program will have 
difficulty assessing the impact of the design changes on performance. 
While the program office anticipates that recent design changes will 
allow the aircraft to meet key performance parameters, it will not know 
with certainty if the weight problems have been resolved until after 
the plane is manufactured and weighed in mid-2007.

Program officials are also examining ways to reduce program 
requirements while keeping cost and schedules constant. Design and 
software teams have found greater complexity and less efficiency as 
they develop the 17 million lines of software needed for the system. 
Program analysis indicated that some aircraft capabilities will have to 
be deferred to stay within cost and schedule constraints. As a result, 
the program office is working with the warfighters to determine what 
capabilities could be deferred to later in the development program or 
to follow-on development efforts while still meeting the warfighter's 
basic needs. It may be some time before DOD knows when and what 
capabilities it will be able to deliver. The content and schedule of 
the planned 7-year, 10,000-hour flight test program is also being 
examined. According to the program office, the test program was already 
considered aggressive, and recent program changes have only increased 
the risks of completing it on time.

Finally, uncertainty about the number and mix of variants the services 
plan to purchase will also affect JSF's acquisition plans. While the 
Air Force has announced its intention to acquire the short takeoff and 
vertical-landing variant, it has yet to announce when or how many it 
expects to buy or how this purchase will affect the quantity of the 
conventional takeoff and landing variant it plans to buy. The number 
and mix of JSF variants that the Navy and Marine Corps intend to 
purchase--and their related procurement costs--also remain 
undetermined. Foreign partners have expressed intent to buy about 700 
aircraft between 2012 and 2015, but no formal agreements have been 
signed at this time. The 2005 Quadrennial Defense Review--an 
examination of U.S. defense needs--could also affect the procurement 
quantities and schedule. In developing a reliable business case, 
knowing the quantities to be purchased is equally as important as other 
elements. Without knowing types and quantities the program manager 
cannot accurately estimate costs or plan for production.

Timely Capture of Product Knowledge Needed to Support Future Business 

In recent years, DOD has revised its weapons acquisition policy to 
support an evolutionary, knowledge-based strategy based on best 
practices--key to executing a future business case and making more 
informed business decisions.[Footnote 18] With an evolutionary 
acquisition approach, new products are developed in increments based on 
available resources. Design elements that are not currently achievable 
are planned for and managed as separate acquisitions in future 
generations of the product with separate milestones, costs, and 
schedules. While JSF's acquisition strategy calls for initially 
delivering a small number of aircraft with limited capabilities, the 
program has committed to deliver the full capability by the end of 
system development and demonstration in 2013 within an established cost 
and schedule for a single increment, contrary to an evolutionary 

In addition, JSF's planned approach will not capture adequate knowledge 
about technologies, design, and manufacturing processes for investment 
decisions at key investment junctures. Our past work has shown that to 
ensure successful program outcomes, a high level of demonstrated 
knowledge must be attained at three key junctures for each increment in 
the program. Table 2 compares best practice and JSF knowledge 
expectations at each critical point.

Table 2: Knowledge Attainment on JSF Program at Critical Junctures:

Knowledge point 1: Best practice: Should be achieved at development 
Knowledge point 2: Best practice: Should be achieved by the design 
Knowledge point 3: Best practice: Should be achieved by the start of 

Knowledge point 1: Separate technology and product development, deliver 
mature technology, and have preliminary design based on systems 
engineering principles; 
Knowledge point 2: Completion of 90 percent of engineering drawing 
packages for structures and systems, critical design review completed, 
and design prototyped; 
Knowledge point 3: 100 percent of critical manufacturing processes 
under statistical control, demonstration of a fully integrated product 
in its operational environment to show it will work as intended, and 
reliability goals demonstrated.

Best practice: JSF practice; 
Knowledge point 1: Knowledge point 1 was not attained at milestone B in 
Knowledge point 2: Knowledge point 2 will not be attained by design 
review in 2006 under current plan; 
Knowledge point 3: Knowledge point 3 will not be attained by start of 
production in 2007 under current plan.

Knowledge point 1: Failed to separate technology and product 
development. Critical technologies not mature and sound preliminary 
design not established. Several technologies not expected to be mature 
until after production begins; 
Knowledge point 2: The program estimates 35 percent of the engineering 
drawing packages are expected to be released at the critical design 
reviews. Also, prototype testing will not be done prior to the design 
review. The design will not be stable until after production begins; 
Knowledge point 3: Program does not expect to demonstrate that the 
critical processes are under statistical control until 2009. Program 
expects to demonstrate that a fully integrated aircraft will work as 
intended and meets reliability goals in 2010-2012 timeframe.

Source: GAO data and analysis of DOD data:

[End of table]

As shown in table 2, the JSF program will lack critical production 
knowledge when it plans to enter low-rate initial production in 2007. 
The department has included about $152.4 million in its fiscal year 
2006 budget request to begin long lead funding for low-rate initial 
production. This production decision is critical, and the knowledge 
required to be captured by knowledge point 3 in our best practice model 
should be achieved before this critical juncture is reached. If 
production begins without knowledge that the design is mature, critical 
manufacturing processes are under control, and reliability is 
demonstrated, costly changes to the design and manufacturing processes 
can occur, driving up costs and delaying delivery of the needed 
capability to the warfighter. The size of the potential risk is 
illustrated in the production ramp-up and investments planned after 
this decision is made. Between 2007 (the start of low-rate production) 
and 2013 (the scheduled start of full-rate production) DOD plans to buy 
nearly 500 JSF aircraft--20 percent of its planned total buys--at a 
cost of roughly $50 billion. Under the program's preliminary plan, DOD 
expects to increase low-rate production from 5 aircraft a year to 143 
aircraft a year, significantly increasing the financial investment 
after production begins.[Footnote 19] Between 2007 and 2009, the 
program plans to increase low-rate production spending from about $100 
million a month to more than $500 million a month, and before 
development has ended and an integrated aircraft has undergone 
operational evaluations, DOD expects to spend nearly $1 billion a month.

To achieve its production rate, the program will invest significantly 
in tooling, facilities, and personnel. According to contractor 
officials, an additional $1.2 billion in tooling alone would be needed 
to ramp up the production rate to 143 aircraft a year. Over half of 
this increase would be needed by 2009--more than 2 years before 
operational flight testing begins. Figure 3 shows the planned 
production ramp up, along with the concurrently planned development 
program for the JSF.

Figure 3: Overlap of JSF Low-Rate Production and System Development and 
Demonstration Activities (Includes U.S. and U.K. Quantities):

[See PDF for image]

[End of figure]

Following are examples of technology, design, and production knowledge 
that should be but will not be captured when the low-rate production 
decision is scheduled to be made.

* Only one of JSF's eight critical technologies is expected to be 
demonstrated in an operational environment by the 2007 production 

* Only about 40 percent of the 17 million lines of code needed for the 
system's software will have been released, and complex software needed 
to integrate the advanced mission systems is not scheduled for release 
until about 2010--3 years after JSF is scheduled to enter production. 
Further, most structural fatigue testing and radar cross section 
testing of full-up test articles are not planned to be completed until 

* The program will not demonstrate that critical manufacturing 
processes are in statistical control, and flight testing of a fully 
configured and integrated JSF (with critical mission systems and 
prognostics technologies) is not scheduled until 2011.

Further, because of the risk created by the extreme overlap of 
development and production, the program office plans to place initial 
production orders on a cost reimbursement contract, placing a higher 
cost risk burden on the government than is normal. These contracts 
provide for payment of allowable incurred costs, to the extent 
prescribed in the contract. They are used when uncertainties involved 
in contract performance do not permit costs to be estimated with 
sufficient accuracy to use any type of fixed-price contract and place 
greater cost risk on the buyer--in this case, DOD. In the case of the 
JSF, a fixed-price contract will not be possible until late in the 
development program.

JSF's Substantial Funding Requirements May Be Difficult to Sustain in 
the Current Fiscal Environment:

Regardless of likely increases in program costs, the sizable continued 
investment in JSF must be viewed within the context of the fiscal 
imbalance facing the nation over the next 10 years. The JSF program 
will have to compete with many other large defense programs as well as 
other priorities external to DOD's budget. JSF's acquisition strategy 
assumes an unprecedented $225 billion in funding over the next 22 years 
or an average of $10 billion a year (see fig. 4).[Footnote 20]

Figure 4: JSF Program's Annual Funding Requirements (as of December 

[See PDF for image]

[End of figure]

Funding challenges will be even greater if the program fails to stay 
within current cost and schedule estimates. For example, we estimate 
that another 1-year delay in JSF development would cost $4 billion to 
$5 billion based on current and expected development spending rates. A 
10-percent increase in production costs would amount to $20 billion.

Implications for the Current Status of Tactical Aircraft Programs:

Continuing changes and uncertainties in the F/A-22 and JSF programs 
present significant challenges to DOD in achieving its modernization 
plans which attempt to blend many factors within affordability 
constraints. Factors in the decision making process can include 
aircraft age, ownership costs, readiness, force structure, operating 
concepts, competing needs, available funds, defense policy, and 
others.[Footnote 21] Today, both F/A-22 and JSF programs include 
significantly fewer aircraft than originally planned---30 percent fewer 
or over 1,000 aircraft. Deliveries intended to provide an operational 
capability have also been delayed in both programs, almost 10 years in 
the case of the F/A-22, requiring legacy systems to operate longer than 
planned. As legacy tactical aircraft age and near the end of their 
useful life, they require ever increasing investments to keep them 
ready and capable as the threat evolves--the cost of ownership.

The reduced F/A-22 force size, now fewer than 180 F/A-22 aircraft 
instead of 750 aircraft planned at the start of the program, could 
affect the Air Force's force structure and employment strategy. The Air 
Force still maintains it has a nominal requirement for 381 aircraft to 
meet its new Air and Space Expeditionary Forces--the operational 
mechanism through which the Air Force allocates forces to meet the 
combatant commanders' force rotation requirements--and Global Strike 
concept of operations. The Air Force planned on 10 F/A-22 squadrons to 
support this operational concept. Using the Air Force's normal methods 
for calculating force requirements, only about 110 aircraft of the 
total aircraft procured would be classified as available for combat and 
assignment to operational units[Footnote 22]--yielding only 4 or 5 
typical fighter squadrons for assigning across the planned 10 air and 
space expeditionary units. The reduced fleet size may require the Air 
Force to consider the F/A-22 as a low-density/high-demand asset, which 
would require changes in these expected management and employment 
strategies. It also has implications for related resources and plans, 
including military personnel requirements, numbers of operating 
locations, support equipment, spare parts, and logistical support 

Other factors will come to play in the 2005 Quadrennial Defense Review. 
OSD has directed the review to include an assessment of joint air 
dominance in future warfare and the contributions provided by all 
tactical aircraft. An announced defense policy goal is to redirect 
investment from areas of conventional warfare, where the United States 
enjoys a strong combat advantage, toward more transformational 
capabilities needed to counter "irregular" threats, such as the 
insurgency in Iraq and the ongoing war on terror. DOD is also 
conducting a set of joint capability reviews to ensure acquisition 
decisions are based on providing integrated capabilities rather than 
focused on individual weapons systems. The study results, although 
still months away, could further affect the future of the F/A-22 and 
JSF programs including the F/A-22's modernization plan. In these 
analyses, the new tactical aircraft will also have to compete for 
funding, priority, and mission assignments with operational systems, 
such as the F-15 and F/A-18, and other future systems, such as the 
Joint Unmanned Combat Air Systems.

The 2005 Quadrennial Defense Review provides an opportunity for DOD to 
assess tactical fixed-wing aircraft modernization plans and weigh 
options for accomplishing its specific as well as overarching tactical 
aircraft goals. It is critical that their investment be well-managed 
and balanced against DOD's other priorities. Through the review, DOD 
can seek answers to overall investment strategy questions:

* What is the role of tactical aircraft in relation to other defense 

* Will planned investments in tactical aircraft allow DOD to achieve 
these capabilities and overall transformational goals?

* Where disconnects exist between goals and expected investment 
outcomes, what are the impacts and how will DOD compensate to minimize 
future security and investment risks?

If DOD fails to answer these questions and continues with its current 
modernization strategy, it will likely arrive in the future with needs 
similar to those that exist today but with fewer options and resources 
to resolve those needs. As DOD evaluates its tactical aircraft 
investment alternatives, knowledge at the program level is needed to 
understand how the F/A-22 and JSF can help achieve overall tactical 
aircraft modernization goals. More specific questions need to be 
answered for these programs including:

* Is the F/A-22 the most cost-effective alternative to fill gaps in 
ground attack and intelligence-gathering requirements?

* How many F/A-22s are needed and affordable to carry out the 
aircraft's original mission, air superiority, and new ground attack and 
intelligence gathering missions?

* If requirements for the new F/A-22 capabilities are legitimate and 
not solvable by other means, does the Air Force have the resources 
(mature technologies, design knowledge, time, and money) to begin 
investments in a new development program for the F/A-22 enhancements?

* What is the immediate need for JSF aircraft? Delivery of its ultimate 
capability or replacing aging aircraft with an initial capability? Does 
the acquisition plan satisfy this need?

* Does the program have the required knowledge about needed quantities 
and capabilities and resources (mature technologies, design knowledge, 
time, and money) to develop a reliable business case at this time?

* Does DOD have the right acquisition strategy to develop and produce a 
JSF that will maximize its return on the more than $220 billion 
investment that remains in this program?

While the JSF program started off with a higher-risk approach by 
starting system development with immature technologies, now is the time 
to implement an evolutionary and knowledge-based acquisition strategy 
to manage the system development phase and stabilize the design before 
making large investments in tooling, labor, and facilities to test and 
manufacture the aircraft. The JSF is relatively early in its system 
development and demonstration phase and has an opportunity to learn 
from the F/A-22 program experience. It must take the time needed now to 
gather knowledge needed to resolve key issues that could ultimately 
result in additional cost increases, delays, and performance problems.

Our March 2005 reports on the F/A-22 and JSF made recommendations to 
the Secretary of Defense that would require answering some of these 
questions before making significant additional investments. For the F/ 
A-22, we recommended that a new business case be made to justify 
investments in new capabilities and the quantities needed to satisfy 
mission requirements. For the JSF, we recommended the establishment of 
an executable program consistent with policy and best practices, 
including an affordable first increment with its own business case, and 
the implementation of a knowledge-based acquisition approach to guide 
future investments and reduce risks.

Mr. Chairman, this concludes my prepared statement. I would be happy to 
respond to any questions that you or other members of the Subcommittee 
may have.

Contacts and Staff Acknowledgments:

For future questions about our work on the F/A-22 or JSF, please call 
me or Michael J. Hazard at (202) 512-4841. Other individuals making key 
contributions to this statement include Michael W. Aiken, Marvin E. 
Bonner, Lily J. Chin, Matthew T. Drerup, Bruce D. Fairbairn, Steven M. 
Hunter, Matthew B. Lea, David R. Schilling, and Adam Vodraska.


[1] The third major program, the FA-18EF, currently in production, is 
not a subject of this testimony.

[2] GAO, Tactical Aircraft: Status of the F/A-22 and JSF Acquisition 
Programs and Implications for Tactical Aircraft Modernization, GAO-05- 
390T (Washington, D.C.: Mar. 3, 2005; GAO, Tactical Airlift: Air Force 
Still Needs Business Case to Support F/A-22 Quantities and Increased 
Capabilities, GAO-05-304 (Washington, D.C.: Mar. 15, 2005); and GAO 
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike 
Fighter Program with Different Acquisition Strategy, GAO-05-271 
(Washington, D.C.: Mar. 15, 2005).

[3] This amount consists of $61.3 billion currently budgeted for the 
basic program and the initial stages of the modernization efforts, $1.3 
billion for future start-up costs of a separate acquisition program for 
the latter stages of modernization, and $1.2 billion in costs to 
retrofit aircraft with enhanced capabilities and activate depot 
maintenance activities. 

[4] Global Strike is one of six complementary concepts of operations 
laying out the Air Force's ability to rapidly plan and deliver limited- 
duration and extended attacks against targets.

[5] The Defense Acquisition Board met in late March of this year to 
discuss the F/A-22's progress and readiness for full-rate production. A 
final decision by the milestone decision authority is expected in early 

[6] GAO, Tactical Aircraft: Changing Conditions Drive Need for New F/A- 
22 Business Case, GAO-04-391 (Washington, D.C.: Mar. 15, 2004). 

[7] GAO, Tactical Aircraft: Status of the F/A-22 and Joint Strike 
Fighter Programs, GAO-04-597T (Washington, D.C.: Mar. 25, 2004).

[8] Pub. L. No. 105-85 (Nov. 18, 1997), section 217.

[9] Pub. L. No. 107-107 (Dec. 28, 2001), section 213.

[10] Program Budget Decision 753 nominally reduced the procurement 
quantity to 179 aircraft. Subsequently, the Air Force transferred one 
aircraft to be used as a permanent test bed, reducing the procurement 
quantity to 178. The recent crash of an F/A-22 has reduced planned 
operational aircraft to 177.

[11] Program acquisition unit cost includes funding for development, 
procurement, related military construction, and initial modernization 
divided by total production quantity. It does not include later stage 
modernization costs and certain support costs.

[12] Average unit flyaway cost includes the costs associated with 
procuring one aircraft, including the airframe, engines, avionics, 
other mission equipment, and certain nonrecurring production costs. It 
does not include "sunk" costs for development and test and other costs 
to the whole system, including logistical support and construction. 

[13] Statute 10 U.S.C. 2399 provides that a major defense acquisition 
program may not proceed beyond low-rate initial production until 
initial operational test and evaluation is completed and the 
congressional defense committees have received the report of testing 
results from the Director of Operational Test and Evaluation. This 
report is to contain an opinion of test adequacy and whether the test 
results confirm that the system actually tested is operationally 
effective and suitable for combat. 

[14] The F/A-22 initial operational test and evaluation was conducted 
by the Air Force Operational Test and Evaluation Center from April 
through December 2004 to support the full-rate production decision. Its 
operational test plan was designed to assess the F/A-22's combat 
effectiveness and suitability in an operationally representative 

[15] Air-to-ground attack capabilities are increasingly emphasized by 
the Air Force, and future enhancements are planned for 80 percent of 
the modernized F/A-22s. More robust ground attack and intelligence 
gathering capabilities will be tested in the future as they are 

[16] The OSD CAIG acts as the principal advisory body to the milestone 
decision authority on program cost. The CAIG estimate included costs 
for development, procurement, and retrofit of modernized aircraft. 

[17] In November 2004, the acting Under Secretary of Defense for 
Acquisition, Technology and Logistics directed the Air Force to hold 
separate milestone reviews for the latter stages of the modernization 
program to be consistent with DOD acquisition policy. The Air Force 
plans to manage these efforts as a separate acquisition program. 

[18] DOD Directive 5000.1, The Defense Acquisition System (May 2003); 
DOD Instruction 5000.2, Operation of the Defense Acquisition System 
(May 2003). The directive establishes evolutionary acquisition 
strategies as the preferred approach to satisfying DOD's operational 
needs. The directive also requires program managers to provide 
knowledge about key aspects of a system at key points in the 
acquisition process.

[19] The preliminary plan was what was being considered at the time of 
our review. Since then, in its fiscal year 2006 budget submission, DOD 
has reduced the planned procurement quantities for the U.S. by 38 
aircraft through fiscal year 2011. This includes planned quantities for 
the United Kingdom of 2 aircraft in fiscal year 2009, 4 aircraft in 
fiscal year 2010; 9 aircraft in fiscal year 2011, 9 aircraft in fiscal 
year 2012, and 10 aircraft in fiscal year 2013.

[20] This is based on DOD's December 2003 JSF cost estimate.

[21] GAO, Tactical Aircraft: Modernization Plans Will Not Reduce 
Average Age of Aircraft, GAO-01-163 (Washington, D.C.: Feb. 9, 2001). 
Today acquisition plans include 3,083 aircraft (F/A-22, FA-18EF, and 
JSF). The Air Force has been discussing buying fewer JSF, which would 
further lower the amount of planned new tactical aircraft. 

[22] The remaining aircraft are used for training and development 
activities and to account for aircraft in for maintenance and those 
held in reserve for normal attrition.