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Report to Congressional Committees:

United States Government Accountability Office:

GAO:

March 2005:

Tactical Aircraft: 

Air Force Still Needs Business Case to Support F/A-22 Quantities and 
Increased Capabilities:

GAO-05-304:

GAO Highlights:

Highlights of GAO-05-304, a report to congressional committees: 

Why GAO Did This Study:

The Air Force is preparing a modernization plan that expands the 
capabilities of the F/A-22, which was first designed to serve as an air-
to-air fighter aircraft with very limited ability to strike targets on 
the ground. The Air Force now intends to transform it by adding robust 
air-to-ground capabilities to attack enemy ground threats and by adding 
onboard intelligence data gathering capabilities. After the recent 
budget cut, DOD estimates F/A-22 cost at $63.8 billion for 178 
aircraft. It has been in development for more than 19 years, a decade 
longer than originally envisioned.

In the face of significant cost and schedule overruns, Congress 
mandates that GAO annually assess the F/A-22 program. In this report, 
GAO addresses (1) the Air Force’s business case for the F/A-22 
modernization plan and (2) the recently completed initial operational 
test and evaluation.

What GAO Found:

The Air Force has yet to produce a business case for the next-
generation F/A-22. Much has changed in the years since the F/A-22 
program began nearly 2 decades ago—adversarial threats against U.S. 
aircraft have evolved, and a plan to modernize the F/A-22 significantly 
different than the original aircraft is in progress. A DOD cost 
estimate in 2003 projected the Air Force’s modernization plan to cost 
$11.7 billion through 2018. A December 2004 budget decision reduced 
procurement funding and quantities but did not cut funding for 
modernization. The decision to terminate procurement after fiscal year 
2008 places the current modernization plan in doubt as key ground 
attack and intelligence-gathering enhancements had been slated for 
aircraft now eliminated from the program. Without a new business case 
for adding a more robust ground attack capability and for new 
intelligence missions, the Air Force may be at a disadvantage when the 
time comes to justify the modernization plan in the face of future 
budget constraints. The following table shows the current plan for 
integrating new capabilities:

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

Examples of capabilities to be added: 

2007: Air-to-air plus limited air-to-ground: Improved capability to 
launch Joint Direct Attack Munition at faster speeds; upgrade air-to-
air capabilities. 

2011: Air-to-ground: Add improved radar to seek and destroy advanced 
surface-to-air missile systems; integrate additional air-to-ground 
weapons. 

2013: Additional air-to-ground: Increase capability to suppress or 
destroy full range of air defenses and improve speed and accuracy of 
targeting. 

2015: Enhanced intelligence data gathering: Add integrated 
intelligence, surveillance, and reconnaissance capabilities.

Sources: Air Force and Office of Secretary of Defense (data); GAO 
(analysis and presentation).

[End of table]

DOD is set to conduct the 2005 Quadrennial Defense Review to weigh the 
merits of transformational priorities and investments to determine if 
the best choices are being made to meet military needs within available 
funding levels. This may further influence an F/A-22 business case.

The F/A-22 program recently underwent initial operational testing, but 
testing did not include the air-to-ground missions that the Air Force 
envisions for the aircraft. The Air Force does not expect to conduct 
testing of these capabilities until after a decision is made to enter 
full-rate production. Although a final test report was not available 
for our review, Air Force officials told us that the F/A-22 was 
extremely effective in performing its air-to-air missions. Evaluation 
results of capabilities needed to sustain combat operations and 
maintain aircraft were not as favorable. Additional testing will be 
required to assess corrective actions for deficiencies identified and 
to evaluate new ground attack and intelligence-gathering capabilities 
added by the modernization program.

What GAO Recommends:

GAO is reiterating and expanding upon a 2004 recommendation that DOD 
complete a new and comprehensive business case that reflects the 
current budget environment and justifies future investments and 
specific quantities needed to meet mission requirements. DOD concurred 
and expects to build a business case through such actions as the 2005 
Quadrennial Defense Review and analysis required to support future 
modernization efforts as a separate program.

www.gao.gov/cgi-bin/getrpt?GAO-05-304.

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 sullivanm@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

F/A-22 Modernization Program Lacks Business Case and May Not Be 
Executable as Planned:

Operational Testing Considered Successful by Air Force, but Ground 
Attack Role Has Not Yet Been Tested:

Conclusions:

Recommendations:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: F/A-22 Program Cost, Quantity, and Schedule Changes:

Appendix III: Comments from the Department of Defense:

Related GAO Products:

Tables:

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

Figures:

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

Abbreviations:

CAIG: Cost Analysis Improvement Group: 
DOD: Department of Defense: 
IOT&E: Initial Operational Test and Evaluation: 
OSD: Office of the Secretary of Defense:

United States Government Accountability Office:

Washington, DC 20548:

March 15, 2005:

Congressional Committees:

The F/A-22 aircraft program is acquiring the Air Force's next- 
generation, multi-mission fighter for about $63.8 billion. The 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 
the Department of Defense (DOD) and Congress. Supporters cite its 
advanced features--stealth, supercruise speed, maneuverability, and 
integrated avionics--as integral to the Air Force's Global Strike 
initiative[Footnote 1] and for maintaining air superiority over 
potential future adversaries for years to come. Critics, however, argue 
that the Soviet threat it was originally designed to counter no longer 
exists and that its large budget could better be invested in enhancing 
current air assets and acquiring new and more transformational 
capabilities that will allow it to meet the evolving threat. 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. Meanwhile, the upcoming 2005 Quadrennial 
Defense Review is girding up for a review of force structure, mission 
requirements, and modernization plans.

DOD has been pushing to transform its military operations and 
capabilities to acquire revolutionary weapon systems and meet evolving 
post-Cold War threats. Undertaking this transformational effort 
requires significant funding and competes with other DOD and national 
priorities. When DOD's weapon systems, such as the F/A-22, require more 
time and money than originally anticipated, the extra investment needed 
to solve problems takes funding away from other priorities, slows DOD's 
overall modernization effort, delays capabilities for the warfighter, 
and forces unplanned--and possibly unnecessary--trade-offs among DOD's 
many priorities. Our past work has shown that problems, such as cost 
overruns, arise when weapon programs do not have a sound business 
case[Footnote 2] or capture the knowledge needed to efficiently and 
effectively manage program risks. The end result is a reduction in 
quantities and ultimately in DOD's overall buying power.

The National Defense Authorization Act for Fiscal Year 1998 requires 
GAO to report annually on the F/A-22 development program and cost, 
schedule, and performance issues.[Footnote 3] The act also requires us 
to certify whether we had access to sufficient information to make 
informed judgments on the matters contained in this report. This report 
addresses (1) Air Force business case, plans, and funding for the F/A- 
22 modernization program and (2) the recently completed initial 
operational test and evaluation (IOT&E).

We performed our work from November 2004 to February 2005 in accordance 
with generally accepted government auditing standards. We analyzed 
modernization plans, funding, and impacts from recent budget changes. 
Our observations on operational testing are limited and largely based 
on summary comments and briefing materials provided by testing and 
program officials. We did not review Air Force and OSD reports on 
operational test results because the reports were not available to us 
at the time of our review. Notwithstanding, we believe DOD officials 
gave us access to sufficient information to make informed judgments on 
the matters in this report. Appendix I further discusses this report's 
scope and methodology.

Results in Brief:

The F/A-22 program has changed substantially since it started in 1986, 
and Air Force leaders have not developed a new business case for 
investing billions more dollars to modernize the aircraft that reflects 
this change. A December 2004 budget decision places much of the 
modernization program in doubt and renders the current plan obsolete. 
DOD cut more than $10 billion from the procurement program, ending 
aircraft procurement after 2008. However, the decision did not cut 
budgeted funds planned for modernizing the F/A-22. In March 2003, OSD 
cost analysts had estimated the modernization may cost over $11 billion 
to add more robust ground attack capabilities and much enhanced 
intelligence, surveillance, and reconnaissance capabilities to give the 
F/A-22 more utility and to take on new missions. Many of the advanced 
ground attack and intelligence-gathering modernization efforts were 
intended to be incorporated on aircraft procured after 2008, which have 
now been eliminated. Further, the budget decision and DOD studies to 
reappraise multi-service tactical air modernization programs and 
propose alternative investments call into question the F/A-22's 
expected role and contributions in combination with other DOD assets, 
the numbers of aircraft needed in each of its planned configurations, 
and the affordability and feasibility of modernization plans. If the 
modernization plan were canceled, what is left of the F/A-22 program is 
the original F-22, primarily a state-of-the-art fighter designed to 
counter large numbers of advanced Soviet fighter aircraft, a threat 
that never materialized. Nevertheless, the Air Force still has to 
decide how best to invest the remaining billions of dollars budgeted 
for the program, increasing the need for a new and executable business 
case unless the modernization program is also terminated.

Reports detailing the results from IOT&E 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." Some 
deficiencies and lack of maturity were identified in aircraft 
reliability and maintainability (including maintaining low observable 
characteristics) and in the integrated diagnostic systems used to 
identify and direct maintenance actions. Air Force officials believe 
these deficiencies are readily correctible and should meet the needs of 
the warfighter by the scheduled initial operational capability date in 
December 2005. They also believe that test results support making the 
full-rate production decision planned in late March 2005. Testing to 
demonstrate the limited air-to-ground attack capability included in the 
current design was not done during initial operational testing but is 
scheduled to be done during follow-on testing planned to start in July 
2005. 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 
developed.

In March 2004,[Footnote 4] GAO recommended the Secretary of Defense 
complete a new business case that determines the need for the F/A-22 
(air and ground missions) and the quantities required and affordable. 
DOD did not prepare a new business case as recommended, stating routine 
acquisition and budget processes provide elements of the business case. 
We do not believe the routine processes provide sufficient analysis to 
justify future investments in the new capabilities added by the 
modernization program, especially given the continued uncertainties 
still surrounding these program issues. Therefore, we again recommend 
the Secretary of Defense direct appropriate studies and analyses be 
completed in order to prepare a new business case that justifies the 
new capabilities and affordable quantities. DOD concurred with the 
recommendation this time and said it will provide business case 
elements through the 2005 Quadrennial Defense Review, modernization 
program documentation required by policy, and in other ways.

Background:

The F/A-22 is the Air Force's next-generation air superiority[Footnote 
5] fighter aircraft and incorporates a low observable (stealth) and 
highly maneuverable airframe, advanced integrated avionics, and a new 
engine capable of sustained supersonic flight without the use of 
afterburners. It was originally designed to counter threats posed by 
the Soviet Union and was intended to replace the F-15 fighter in the 
air-to-air combat role. Over the years, the Air Force decided to add a 
more robust air-to-ground capability not previously envisioned but now 
considered necessary to increase the utility of the aircraft. In 2002, 
the F-22 aircraft was redesignated the F/A-22, with the "A" 
representing the expanded ground attack capabilities. Officials 
initiated a modernization program to develop and integrate these new 
capabilities.

The F-22 acquisition program started in 1986 with an intended 
development period of 9 years and an initial operational capability in 
March 1996. The Air Force's plan at that time was to procure 750 
aircraft. In the years since, the original business case has been 
severely weakened as threats, missions, and requirements have changed. 
Further, the program milestones have slipped, the development period 
lengthened to more than 19 years, development costs more than doubled, 
and a modernization program was added. The initial operational 
capability date is now December 2005.

Amidst concerns about escalating costs and schedule, Congress placed 
cost limitations on both development and production budgets in 
1997,[Footnote 6] later removing the development cost cap.[Footnote 7] 
(The current production cost cap is $37.3 billion.) Concomitantly, the 
planned procurement quantity has steadily decreased due to 
affordability concerns and changes in missions and combat requirements. 
Two major reviews of defense force structure and acquisition plans, the 
1993 Bottom-Up Review and the 1997 Quadrennial Defense Review, both 
significantly reduced F/A-22 quantities. In addition, OSD's "buy to 
budget" acquisition strategy, which essentially placed a ceiling on the 
total program costs, has resulted in further cuts to quantity as 
development cost increased. In December 2004, OSD issued Program Budget 
Decision 753, which reduced F/A-22 funding by $10.5 billion and cut 96 
aircraft from the planned procurement quantity. The decision ends 
procurement in 2008, instead of 2011, and would reduce total 
procurement quantity to 178 aircraft.[Footnote 8]

Figure 1 illustrates the downward trend in procurement quantity over 
the years juxtaposed with a rise in program acquisition unit 
costs,[Footnote 9] which has resulted in a significant loss in buying 
power. Program acquisition unit costs have increased largely due to (1) 
increased development and production costs; (2) decreased procurement 
quantities; and (3) increased costs to modernize and enhance 
capability. The current plan supporting the fiscal year 2006 defense 
budget request submitted in February 2005 is to acquire 178 aircraft 
for about $63.8 billion.[Footnote 10] Appendix II illustrates other 
changes in cost, quantity, and schedule experienced by the program 
since its commencement.

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

[See PDF for image]

[End of figure]

Our March 2004 report[Footnote 11] discussed the significant changes in 
cost, quantity, capabilities, and mission since F-22 development began 
in 1986. We reported continued problems and delays in the development 
and testing schedules. We recommended that DOD complete a new business 
case that justifies the continued need for the F/A-22 and the 
quantities needed to carry out the air-to-air versus air-to-ground 
missions. The business case was to also consider alternatives within 
the constraints of future defense spending. Later in 
testimony,[Footnote 12] we stated that there are competing priorities 
both internal and external to DOD's budget that require a sound and 
sustainable business case for DOD's acquisition programs based in clear 
priorities, comprehensive needs assessments, and a thorough analysis of 
available resources. DOD partially concurred with our report 
recommendation but did not prepare a new business case, stating that it 
evaluates the F/A-22 business case elements as part of the routine 
acquisition and budget processes with the results reflected in the 
defense budget. We did not think these kinds of activities sufficiently 
analyzed and addressed the specific business case elements--analysis of 
need for original and new capabilities, assessment of alternatives, 
justification of needed quantities, and evidence that planned 
quantities were affordable.

F/A-22 Modernization Program Lacks Business Case and May Not Be 
Executable as Planned:

The Air Force, in the face of significant changes to the F/A-22, has 
not prepared a new business case to justify the resources needed to add 
a much more robust ground attack capability and to assume new missions. 
The requirements for the F/A-22 have changed significantly since its 
original business case and the available resources are in flux--both 
are key components of a business case needed to support further 
investments. A December 2004 budget decision reduced procurement 
funding and quantities but did not cut funding for modernization. This 
has made the current modernization plan obsolete as key ground attack 
and intelligence gathering enhancements had been slated for aircraft 
that have now been eliminated from the F/A-22 procurement program. 
While its total cost is not clear at this time and program content is 
subject to change, in 2003 OSD cost analysts estimated the 
modernization program would cost about $11.7 billion.

Modernization Program Makes Significant Changes to F/A-22 Requirements 
without a New Business Case:

The Air Force embarked on the expensive and wide-ranging modernization 
program without a new business case to support investments of billions 
of dollars to develop and deliver new capabilities and missions. The 
modernized F/A-22 would differ so significantly from the original 
aircraft in capabilities and missions that it should have been 
developed in an entirely separate acquisition program. Instead, the Air 
Force opted to incorporate modernization efforts within the existing 
acquisition program.[Footnote 13] A business case 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 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.

The original business case for the F/A-22 was made in 1986 to support 
acquiring large quantities of air superiority fighters to engage in 
conventional warfare and counter Cold War-era threats. These threats 
never materialized as expected. Because the program was in development 
for over 19 years, tactical fighter requirements, projected threats, 
and operational war plans changed. To enhance the utility of the F/A-22 
for today and the future, the Air Force now plans to develop a robust 
air-to-ground attack capability to allow the aircraft to engage a 
greater variety of ground 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.

The Air Force established a time-phased modernization program to 
develop and insert new capabilities required to implement the Air 
Force's Global Strike concept of operations. 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:

Fiscal year when enhancements are expected to be incorporated: 2007; 
Capabilities increment: Global Strike Basic; 
Configuration[B]: Block 20; 
Quantity of F/A-22s: 56; 
Examples of enhancements to be added: Improve capability to launch 
Joint Direct Attack Munition at faster speeds and at longer distances; 
upgrade air- to-air capabilities; 

Fiscal year when enhancements are expected to be incorporated: 2011[A]; 
Capabilities increment: Global Strike Enhanced; 
Configuration[B]: Block 30; 
Quantity of F/A-22s: 91; 
Examples of enhancements to be added: Enhance air-to-ground capability 
by adding improved radar capabilities to seek and destroy advanced 
surface-to-air missile systems; integrate additional air-to-ground 
weapons; 

Fiscal year when enhancements are expected to be incorporated: 2013; 
Capabilities increment: Global Strike Full; 
Configuration[B]: Block 40; 
Quantity of F/A-22s: 128; 
Examples of enhancements to be added: Increase capability to suppress 
or destroy the full range of air defenses and improve speed and 
accuracy of targeting; 

Fiscal year when enhancements are expected to be incorporated: 2015; 
Capabilities increment: Enhanced Intelligence, Surveillance, and 
Reconnaissance; 
Configuration[B]: Block 40; 
Quantity of F/A-22s: [C]; 
Examples of enhancements to be added: Add capability for full 
intelligence, surveillance, and reconnaissance integration for 
increased target sets and lethality.

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 
2011.

[B] The Air Force plans to have three configurations (called blocks) 
that include specific enhancements developed in the modernization 
program.

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

[End of table]

Initial development work on modernization enhancements started in 2003 
and is planned to extend over a 12-year period with the first set of 
new capabilities inserted into the production line in fiscal year 2007. 
By the end of development in 2015, the Air Force plans to have three 
different configurations (or blocks) of F/A-22s, each with distinct 
operational capabilities. Based on the current modernization road map, 
the Global Strike Basic configuration (block 20) will include 56 F/A- 
22s built primarily to perform air-to-air missions but with limited air-
to-ground capability. The Global Strike Enhanced configuration (block 
30) includes 91 aircraft that will perform the bulk of air-to- ground 
and electronic attack missions using advanced radars to track targets 
and small diameter bombs to destroy them. Block 40 encompasses both the 
Global Strike Full and Enhanced Intelligence, Surveillance, and 
Reconnaissance increments. This configuration of 128 aircraft is 
expected to perform such missions as suppression of enemy air defenses 
and gathering up-to-date information on potential adversaries' 
locations, resources, and personnel to improve target identification 
and increase kill capabilities. According to program officials, these 
latter two increments are still conceptual in nature and subject to 
revision.

Budget Decisions and Unstable Resources Places the F/A-22 Modernization 
Program in Doubt:

The modernization program as currently planned is much in doubt because 
of the recent budget cut and the likely prospects for more changes. The 
instability in F/A-22 resources and upcoming DOD-wide reviews of 
capabilities and requirements may result in further revisions and 
cutbacks, further impacting modernization plans. Budget and 
programmatic decisions also cause ripple effects on other resource 
plans tied to the modernization, which may open up budgeted funds for 
other uses.

In March 2003, OSD's Cost Analysis Improvement Group (CAIG)[Footnote 
14] estimated that the Air Force would need $11.7 billion for the 
planned modernization programs through fiscal year 2018. The CAIG 
estimate included costs for development, procurement, and retrofit of 
modernized aircraft. The Air Force's latest estimated cost for the 
modernization program is about $5.4 billion through 2011. Future 
modernization costs beyond 2011 have not been definitized and are 
subject to change. The modernization program manager projected annual 
funding of $700 million 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. OSD substantially 
reduced the F/A-22 budget, which will require another strategy for the 
modernization program. It reduced F/A-22 funding by $10.5 billion, 
stopped procurement of aircraft after 2008, and reduced the quantity by 
96 aircraft. This and other events will reduce the Air Force's expected 
buy to no more than 178 aircraft. While the OSD funding decision 
changed the baseline F/A-22 program, it did not change the planned 
funding for the modernization program to add advanced ground attack and 
intelligence gathering capabilities between 2007 and 2015. However, 
many of these new and advanced capabilities had been planned for 
aircraft that will not be built as the budget eliminates F/A-22 
aircraft that had been planned for production after 2008. Air Force 
officials told us they hope to reverse these changes, but officials 
acknowledge that a major restructuring is likely if the proposed 
funding cuts are sustained. If the budget cut is sustained, the 
modernization program as currently planned is largely obsolete and 
funding for these advanced capabilities to be incorporated after 2008 
would be available for other uses. This could include up to $1.2 
billion now budgeted for the start-up of the latter modernization 
increments.

The Air Force's desire to upgrade the F/A-22's computer architecture 
and avionics processors in order to support the block 40 expanded 
capabilities[Footnote 15] may also be affected by the recent budget 
cut. Program officials do not expect the new architecture to be fully 
developed and ready for installation in the F/A-22 until fiscal year 
2010. However, early indications show that the effort to upgrade the 
computer architecture--expected to cost between $400 million and $500 
million--already is experiencing schedule problems and increased risks. 
As a result, the 2010 insertion date may not be achievable as planned 
for the F/A-22. Furthermore, DOD's proposed termination of procurement 
after 2008 raises questions about the need to proceed with the planned 
computer upgrade. The existing processors with some minor upgrades 
would support up to 155 aircraft and most Global Strike Enhanced 
capabilities.

Additionally, since our March 2004 report the program office has 
identified new requirements needed to implement the modernization 
program. The F/A-22 program office has concluded that the F/A-22 
infrastructure, including government laboratories, such as software 
avionics integration labs, flying test beds, and test ranges need to be 
upgraded to ensure a successful modernization program. According to 
program officials, the existing facilities have major resource/capacity 
limitations and are inadequate to support needed software integration 
activities and system performance and operational testing for most 
planned enhancements. The program office has budgeted about $1.8 
billion through fiscal year 2009 for the infrastructure upgrades, 
including funds for engineering and maintenance personnel support. 
According to program officials, the current infrastructure limitations 
have caused some modernization efforts to be deferred to later blocks. 
If modernization plans are curtailed, some infrastructure improvements 
may not be needed.

Even if funding were restored to the F/A-22 program and the above- 
mentioned concerns were resolved, previous funding shortfalls and 
schedule slippages have already resulted in planned capabilities being 
deferred to later years. For example, block 20 enhancements required to 
conduct autonomous search and improve target recognition have been 
deferred to block 30. Similarly, funding problems have caused the Air 
Force to scale back some efforts and delay development of block 30 
electronic attack and small diameter bomb enhancements. In November 
2004, the Defense Contract Management Agency reported that the 
contractor proposes to reduce the amount of planned tasks, defer 
development of software specifications, and incrementally develop a key 
communication component in order to meet an April 2005 system design 
review.

DOD officials stated that they believe the budget cut has some 
diseconomies that may result in procuring even fewer than 178 aircraft. 
They said that stopping aircraft production early affects production 
economies and efficiencies that were expected from a multiyear 
procurement contract and from production line efficiencies. The 
multiyear contract was to begin in fiscal year 2008, the year 
procurement is now curtailed by the budget decision. Now that 
opportunity is gone. Officials also said that cutting production 
quantities from the final years of the program eliminate projected 
savings in annual unit procurement costs. Typical of many DOD 
acquisitions, Air Force program officials had projected future budgets 
assuming that the marginal costs for buying F/A-22s would decrease with 
each passing year of production as a result of manufacturing 
efficiencies, productivity projects, and more economical buying 
quantities. This means that aircraft bought late in the production 
program usually cost less than those bought earlier in the program. For 
example, the average unit flyaway cost[Footnote 16] paid for F/A-22s 
was $212 million per aircraft bought in 2002 and $178 million in 2003. 
Before the budget decision, officials had projected average unit 
flyaway costs to decrease to $127 million, $111 million, and $108 
million in fiscal years 2007, 2008 and 2009, respectively. Now that the 
program has been truncated after 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 (increase associated with 
close-out of production).

OSD has directed that the 2005 Quadrennial Defense Review include an 
assessment of joint air dominance in future warfare and the 
contributions provided by all tactical aircraft, including the F/A-22. 
An announced defense 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 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 weapon systems. The 
study results, although still months away, could further impact the 
future of the F/A-22 program including the modernization plan. The F/A- 
22 will have to compete for funding, priority, and mission assignments 
with operational systems, such as the F-15 and F/A-18, and future 
systems, such as the Joint Strike Fighter and the Joint Unmanned Combat 
Air Systems.

Air Force leadership and the Air Combat Command continue to support the 
multi-mission role for the F/A-22 and do not want to reduce or 
eliminate the new capabilities and missions. Therefore, if 
restructuring is required, program officials are considering other 
options to accommodate the program within reduced funding and fleet 
size. They are considering the possibility of moving forward with 
blocks 20 and 30 but curtailing block 40 because its enhancements are 
slated for those aircraft that have been cut by the budget decision 
(refer to table 1). Officials said that some of the enhancements 
planned for block 40 could be retrofitted into the block 20 and 30 
aircraft. At the time of our review, Air Force officials were 
considering alternative strategies and plans for rephasing funds in 
order to execute the changes in the program enumerated above. It is 
paramount that these issues be settled before moving forward in the 
program.

Operational Testing Considered Successful by Air Force, but Ground 
Attack Role Has Not Yet Been Tested:

Reports detailing the results from IOT&E 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." Some 
deficiencies were noted, particularly in reliability and 
maintainability, but Air Force officials believe these deficiencies can 
be corrected in time to meet the warfighter's needs by the scheduled 
initial operational capability date in December 2005. They also believe 
test results support making the full-rate production decision. Testing 
to demonstrate the limited air-to-ground attack capability was not 
accomplished but is scheduled to be done as part of the follow-on 
operational test planned to start in July 2005.

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 planned for 
March 2005. Its operational test plan was designed to assess the F/A- 
22's combat effectiveness and suitability in an operationally 
representative environment. The warfighter had established five 
critical operational issues for evaluation during operational testing 
to demonstrate effectiveness and suitability:

* effectiveness--demonstrate operational performance to effectively 
execute selected counter-air missions;

* survivability--assess ability to evade and survive against air-to-air 
and surface-to-air threats;

* deployability--evaluate the timely transportability and set up of F/ 
A-22 personnel and equipment into a theater of operations;

* sortie generation--assess how well air crews can generate and launch 
sorties, including maintenance and supply support capabilities; and:

* ground attack--demonstrate limited air-to-ground attack with the 
Joint Direct Attack Munition.

The first two issues assess combat effectiveness in completing selected 
counter air missions and in surviving against representative air and 
ground threats. The second two issues assess suitability of F/A-22 to 
support combat by transporting, deploying and sustaining forces and 
equipment. These four critical operational issues were addressed in 
IOT&E. The fifth critical operational issue--ground attack--was not 
addressed in IOT&E and will be assessed during follow-on operational 
test and evaluation, scheduled to start in July 2005. This follow-on 
testing is also planned to include demonstrations of corrective actions 
for some deficiencies identified during IOT&E and other testing needed 
to achieve initial operational capability in December 2005. Additional 
follow-on operational tests are planned in the future to test new, more 
robust attack capabilities and other enhancements added by the 
modernization program.

Combat effectiveness and survivability testing included extensive 
flight tests to evaluate air-to-air capabilities including (1) 
offensive counter-air missions against aggressor aircraft and (2) 
defensive counter-air missions to accompany and protect friendly strike 
and high value support aircraft from attack by aggressor aircraft. 
These tests incorporated ground and air threats resident at the Air 
Force's Nevada test range. Computer simulations and models were also 
used to evaluate performance against future threats and in other 
scenarios that cannot be replicated in open flight tests.

Test officials told us that the F/A-22 performed all the air-to-air 
missions very satisfactorily, demonstrating "overwhelming 
effectiveness" in their words. Officials also said that, in direct 
comparability tests with the F-15C, the F/A-22 demonstrated a clear 
advantage often many more times the effectiveness of the F-15C. Testing 
did reveal some areas needing improvement, including avionics 
reliability, defensive systems, and other corrective actions that will 
need to be addressed in follow-on testing.

Test officials characterized F/A-22 suitability demonstrations for the 
aircraft and support systems as "potentially suitable." The ability to 
transport and deploy F/A-22 personnel and equipment was adequately 
demonstrated and met the interim goal set by the warfighter regarding 
the number of airlift planes needed to transport forces and support 
equipment in the required amount of time.

Of the four critical operational issues assessed, sortie generation 
experienced the most problems. Officials rated the sortie generation 
area as unsatisfactory. Problems were noted in aircraft reliability and 
maintainability, including maintenance of the aircraft's critical low 
observable characteristics. Problems were also noted in the maturity of 
integrated diagnostic systems, key assets expected to greatly improve 
and accelerate field maintenance activities for meeting sortie rates 
with constrained personnel. Officials believe these and other 
deficiencies can be corrected in time to meet the warfighter's needs. 
For example, officials said the mission capability rate demonstrated 
during testing has continued to improve and is close to achieving the 
warfighter's desired rate, not required until December 2005. However, 
the testing and implementation of most corrective actions will not 
occur until after the full-rate production decision.

Sortie generations and support activities also required the extensive 
involvement of contractor personnel for providing technical assistance, 
off-aircraft maintenance, and engineering, including trouble-shooting 
and use of special test equipment. Air Force officials said that 
extensive contractor involvement has long been planned for the F/A-22 
system, particularly during initial fielding, and that reliance on 
contractor personnel and special test equipment should somewhat lessen 
as Air Force personnel gain experience.

Before full-rate production can start, the Office of the Director of 
Operational Test and Evaluation must still review test results and 
report to Congress and defense leadership.[Footnote 17] In addition, 
the F/A-22 program must demonstrate it satisfies criteria established 
by the Defense Acquisition Board in November 2004. Among other things, 
that criteria includes delivering a fully-resourced plan for follow-on 
testing to correct deficiencies identified in IOT&E, achieving design 
stability of the avionics software, demonstrating mature manufacturing 
processes, and validating technical order data.

Conclusions:

The Air Force, in the face of significant changes to the F/A-22, has 
not prepared a new business case to justify the resources needed to add 
a much more robust ground attack capability and to assume new missions. 
Over the 19 years that the program has been in development, the world 
threat environment has changed and the capabilities the Air Force once 
needed and planned for in the F-22 may not satisfy the warfighter's 
future needs. Additionally, cost growth over time and affordability 
concerns have driven down planned aircraft quantities from 750 to 178 
aircraft. The Air Force is now planning a modernization program that 
will substantially change the role of the F/A-22. Because of budget 
cuts in the program that have eliminated F/A-22 procurement after 2008 
the modernization program as planned is obsolete. Even if aircraft are 
restored to the procurement plan beyond 2008, this modernization is 
projected to occur over a 12-year period. Based on the program's 
current knowledge, there is significant risk that the planned 
modernization would not move ahead and deliver capability to the 
warfighter on schedule. The original plan to develop and deliver an 
initial capability for the F-22 was 9 years--it has taken nearly 20 
years. Our body of work in best practices tells us one thing for 
certain, and that is that the chances of attaining successful outcomes 
are substantially increased when a business case is made that matches 
requirements and resources for developing a product. Right now both 
requirements and resources for the F/A-22 program are in a state of 
flux and it lacks a business case to move forward with billions of 
dollars in planned investments.

Over the immediate horizon, planned studies present OSD with 
opportunities to answer questions about need and affordability of the 
F/A-22. The 2005 Quadrennial Defense Review is expected to make a 
strategic assessment of available and planned tactical air capabilities 
to help determine where to target resources. Likewise, an ongoing 
series of joint capabilities reviews, to include the F/A-22, could help 
determine where the F/A-22 now fits in the force structure. These top- 
level studies would provide information needed for a specific F/A-22 
business case that would place DOD leaders in a better position to 
decide on remaining F/A-22 investments in concert with other tactical 
aircraft and DOD needs. The F/A-22 full rate production decision is 
currently planned for March 2005, before the results of these studies 
are available and production is already at near full rate quantities.

Recommendations:

Because of evolving threats against the United States; pending changes 
in U.S. defense plans; the lack of clarity regarding F/A-22 required 
capabilities, quantities, and resources; the recent budget decision; 
and upcoming reviews on joint air capabilities, we are reiterating and 
expanding upon the recommendation in our March 2004 report for a new 
and comprehensive business case to justify future investment in the F/ 
A-22 program. We recommend the Secretary of Defense complete a new 
business case that determines the continued need for the F/A-22 and 
that specifically:

(a) justifies the F/A-22's expanded air-to-ground capabilities based on 
an assessment of alternatives to include both operational assets and 
planned future weapon systems;

(b) justifies the quantity of F/A-22 aircraft needed to satisfy 
requirements for air-to-air and air-to-ground missions;

(c) provides evidence that the planned quantity and capabilities are 
affordable within current and projected budgets and the statutory 
funding limitation;

(d) addresses impacts of the recent budget decision on the need for and 
cost of future developmental activities, long-term logistical support 
and basing decisions, and the ability to take advantage of cost 
reduction efforts, such as multiyear contracting and productivity 
improvement; and:

(e) justifies the need for investments for a new computer architecture 
and avionics processor, and F/A-22 infrastructure deficiencies.

Agency Comments and Our Evaluation:

In written comments on a draft of this report, DOD concurred with our 
recommendation. They identified the following actions planned that 
would accomplish business case elements: (1) the 2005 Quadrennial 
Defense Review will address quantity of aircraft needed for air-to-air 
and air-to-ground missions; (2) Defense Acquisition Board reviews of 
the F/A-22 program will ensure that initial modernization efforts have 
validated requirements and are tested; and (3) the plan to break out 
the latter stages of modernization as a separate acquisition program 
will require the Air Force to develop requirements, perform an analysis 
to substantiate those requirements, and justify investments in new 
capabilities.

DOD also stated its concern that by only reporting total program 
acquisition unit cost (pp. 5 and 6 herein), the report does not provide 
a balanced picture. They asked us to also present information 
concerning the steady reduction in unit flyaway costs over the course 
of the program. Flyaway costs do not include "sunk" costs and fixed 
expenses for program start-up, development, test, construction, and 
support but focus on the procurement costs of buying additional 
systems, costs that generally decrease as a production program matures 
and manufacturing efficiency improves. In response, we provided 
additional information about flyway costs and potential diseconomies 
from truncating the procurement program (see p. 12). We also 
incorporated other technical comments from DOD where appropriate.

We are sending copies of this report to the Secretary of Defense; the 
Secretary of the Air Force; and the Director, Office of Management and 
Budget. Copies will also be made available to others on request. Please 
contact me or Michael J. Hazard at (202) 512-4841 if you or your staff 
has any questions concerning this report. Other contributors to this 
report were Robert Ackley, Michael W. Aiken, Lily J. Chin, Bruce D. 
Fairbairn, Steven M. Hunter, and Adam Vodraska.

Signed by: 

Michael J. Sullivan: 
Director: 
Acquisition and Sourcing Management:

List of Congressional Committees:

The Honorable John Warner: 
Chairman: 
The Honorable Carl Levin: 
Ranking Minority Member: 
Committee on Armed Services: 
United States Senate:

The Honorable Ted Stevens: 
Chairman: 
The Honorable Daniel K. Inouye: 
Ranking Minority Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate:

The Honorable Duncan L. Hunter: 
Chairman: 
The Honorable Ike Skelton: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives:

The Honorable C. W. Bill Young: 
Chairman: 
The Honorable John P. Murtha: 
Ranking Minority Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives:

[End of section]

Appendix I: Scope and Methodology:

To determine the Air Force's F/A-22 modernization plans and funding 
requirements, we analyzed budget documents, cost reports, acquisition 
plans, and project listings to identify the purpose, scope, and cost of 
the modernization efforts. Officials from the Air Force and the Office 
of the Secretary of Defense (OSD) briefed us on program details, 
specific candidate projects, and program history. We compared current 
plans and project listings with previous time periods to determine 
changes in modernization projects and schedules. We also compared cost 
estimates prepared by the Air Force and OSD's cost analysts in order to 
identify key differences in assumptions used, cost factors applied, and 
time periods and to reconcile how these differences impacted final 
results.

To determine the results and implications of the initial operational 
test and evaluation on the F/A-22 program, we first reviewed test 
plans, laws and regulations governing operational tests, and management 
direction affecting the scope and schedule of testing. We then 
discussed summary results and program impacts, including schedule 
issues, with testing and evaluating officials from the Air Force and 
OSD. We also reviewed briefing materials used by testing officials to 
inform DOD management and congressional staffs on the results of 
initial operational test and evaluation (IOT&E). However, at the time 
of our review, the final reports on IOT&E results from the Air Force's 
Operational Test and Evaluation Center and the OSD Director of 
Operational Test and Evaluation were not issued nor were drafts made 
available to us. Accordingly, our analysis of actual results and data 
was somewhat constrained and our reporting limited to providing summary 
level observations on test scope, results, and corrective actions 
identified. Notwithstanding, DOD officials gave us access to sufficient 
information to make informed judgments on the matters covered in this 
report.

In performing our work, we obtained information and interviewed 
officials from the Office of the Secretary of Defense, Washington, 
D.C., including the offices of the Under Secretary of Defense for 
Acquisition, Technology and Logistics, the Director of Operational Test 
and Evaluation, the Program Analysis and Evaluation, and the Cost 
Analysis Improvement Group; Air Force Headquarters, Washington, D.C.; 
F/A-22 System Program Office, Wright-Patterson Air Force Base, Ohio; 
Air Combat Command, Langley Air Force Base, Virginia; Air Force 
Operational Test and Evaluation Center, Kirkland Air Force Base, New 
Mexico; and the Combined Flight Test Center, Edwards Air Force Base, 
California.. We performed our work from November 2004 through February 
2005 in accordance with generally accepted government auditing 
standards.

[End of section]

Appendix II: F/A-22 Program Cost, Quantity, and Schedule Changes:

[See PDF for image]

[End of figure]

[End of section]

Appendix III: Comments from the Department of Defense:

OFFICE OF THE UNDER SECRETARY OF DEFENSE:
ACQUISITION, TECHNOLOGY AND LOGISTICS:

3000 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-3000:

MAR 09 2005:

Mr. Michael J. Sullivan:
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office:
441 G Street, NW: 
Washington, D.C. 20548:

Dear Mr. Sullivan:

This is the Department of Defense's (DoD's) response to the Government 
Accountability Office's (GAO's) draft report, "TACTICAL AIRCRAFT: Air 
Force Still Needs Business Case to Support F/A-22 Quantities and 
Increased Capabilities," dated February 15, 2005 (GAO Code 120380/GAO- 
05-304).

The draft GAO report provides one recommendation in five parts. The 
Department of Defense concurs with the recommendation. A discussion of 
the ways in which the Department is addressing the recommendation is 
provided at Attachment 1. Additional comments and recommendations 
regarding the report are provided at Attachment 2. In particular, the 
Department is concerned that by only presenting total acquisition unit 
cost, the report does not provide a balanced picture of the cost to 
produce F/A-22 aircraft. We strongly recommend that the report also 
present information depicting the steady reduction in unit-flyaway 
costs over the course of the F/A-22 program.

Thank you for the opportunity to respond to this draft report.

Sincerely,

Signed by: 

Glenn F. Lamartin: 
Director:
Defense Systems:

Attachments: As stated:

"TACTICAL AIRCRAFT: Air Force Still Needs Business Case to Support F/A- 
22 Quantities and Increased Capabilities"

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATION:

RECOMMENDATION: GAO recommends the Secretary of Defense complete a new 
business case that determines the continued need for the F/A-22 and 
that specifically:

(a) justifies the F/A-22's expanded air-to-ground capabilities based. 
on an assessment of alternatives to include both operational assets and 
planned future weapon systems;

(b) justifies the quantity of F/A-22 aircraft needed to satisfy 
requirements for air-to-air and air-to-ground missions;

(c) provides evidence that the planned quantity and capabilities are 
affordable within current and projected budgets and the statutory 
funding limitation;

(d) addresses impacts of the recent budget decision on the need for and 
cost of future developmental activities, long-term logistical support 
and basing decisions, and the ability to take advantage of cost 
reduction efforts, such as multiyear contracting and productivity 
improvement; and:

(e) justifies the need for investments for a new computer architecture 
and avionics processor, and F/A-22 infrastructure deficiencies.

RESPONSE: The Department of Defense (DoD) concurs with the GAO's 
recommendation. Actions are currently underway, or planned, to 
accomplish those items addressed in the recommendation.

As noted in the report, the PB06 budget deliberations require that the 
2005 Quadrennial Defense Review (QDR) include an assessment of joint 
air dominance in future warfare and the contributions provided by all 
tactical aircraft, including the F/A-22. Accordingly, the QDR will 
address the quantity of F/A-22 aircraft needed to satisfy requirements 
for air-to-air and air-to-ground missions. In support of the QDR, DoD 
is performing an aircraft capabilities study. The objective of this 
study is to evaluate the capabilities that planned U.S. air superiority 
and strike forces will bring to bear in meeting future potential 
threats, and to assess options that may be developed to reduce selected 
risks. Options may include alternative force structures, aircraft and 
system upgrades, and enhancements to the F/A-22's air-to-air and air- 
to-ground capabilities. A product of the QDR will be an assessment of 
the affordability of alternative tactical aviation force structures, 
including procurement quantities and development of enhanced 
capabilities.

Moreover, in its oversight of the development and acquisition of 
modernization Increment 4, the Department will conduct an analysis that 
is consistent with the GAO's definition of a business case, as defined 
in the report. As noted in the GAO's draft report, the Acting Under 
Secretary of Defense (Acquisition, Technology and Logistics) "directed 
the Air Force to break out the latter stages of the modernization 
efforts and manage it as a separate acquisition program." This refers 
specifically to Increment 4, which the Air Force has not defined, but 
which may include a new computer architecture and avionics processor. 
The Air Force is required by DoD and Joint Chiefs of Staff regulations 
to develop requirements and perform an analysis to substantiate those 
requirements, and to justify investments in the new capabilities 
proposed. The analysis must show that the concept can be developed and 
produced within existing resources. The decision to proceed will also 
be based on an assessment of cost, schedule and technical risk. The 
risk assessment will address the adequacy of design knowledge. If the 
development requires advanced technologies, those technologies must be 
demonstrated to a sufficient level of maturity to permit development to 
proceed with acceptable cost, schedule, and technical risk.

Although the Department has decided to manage Increments 2 and 3 as 
part of the existing F/A-22 program, those spirals will be subject to 
separate Defense Acquisition Board (DAB) reviews. These DAB reviews 
will ensure that each capability increment has validated requirements 
and is subject to operational test and evaluation.

The Department recognizes that President's Budget for Fiscal Year 2006 
(PB-06) will have an impact on decisions regarding logistical support 
and basing, and on the viability of cost-reduction initiatives. The Air 
Force currently is evaluating these impacts. Because the PB-06 curtails 
production in Fiscal Year 2008, it effectively forecloses the multi- 
year procurement of F/A-22 aircraft. 

[End of section]

Related GAO Products:

Defense Acquisitions: Assessments of Major Weapon Programs. GAO-04-248. 
Washington, D.C.: March 31, 2004.

Tactical Aircraft: Status of the F/A-22 and Joint Strike Fighter 
Programs. GAO-04-597T. Washington, D.C.: March 25, 2004.

Tactical Aircraft: Changing Conditions Drive Need for New F/A-22 
Business Case. GAO-04-391. Washington, D.C.: March 15, 2004.

Best Practices: Better Acquisition Outcomes Are Possible If DOD Can 
Apply Lessons from F/A-22 Program. GAO-03-645T. Washington, D.C.: April 
11, 2003.

Tactical Aircraft: Status of the F/A-22 Program. GAO-03-603T. 
Washington, D.C.: April 2, 2003.

Tactical Aircraft: DOD Should Reconsider Decision to Increase F/A-22 
Production Rates While Development Risks Continue. GAO-03-431. 
Washington, D.C.: March 14, 2003.

Tactical Aircraft: F-22 Delays Indicate Initial Production Rates Should 
Be Lower to Reduce Risks. GAO-02-298. Washington, D.C.: March 5, 2002.

Tactical Aircraft: Continuing Difficulty Keeping F-22 Production Costs 
Within the Congressional Limitation. GAO-01-782. Washington, D.C.: July 
16, 2001.

Tactical Aircraft: F-22 Development and Testing Delays Indicate Need 
for Limit on Low-Rate Production. GAO-01-310. Washington, D.C.: March 
15, 2001.

Defense Acquisitions: Recent F-22 Production Cost Estimates Exceeded 
Congressional Limitation. GAO/NSIAD-00-178. Washington, D.C.: August 
15, 2000.

Defense Acquisitions: Use of Cost Reduction Plans in Estimating F-22 
Total Production Costs. GAO/T-NSIAD-00-200. Washington, D.C.: June 15, 
2000.

F-22 Aircraft: Development Cost Goal Achievable If Major Problems Are 
Avoided. GAO/NSIAD-00-68. Washington, D.C.: March 14, 2000.

Defense Acquisitions: Progress in Meeting F-22 Cost and Schedule Goals. 
GAO/T-NSIAD-00-58. Washington, D.C.: December 7, 1999.

Fiscal Year 2000 Budget: DOD's Production and RDT&E Programs. GAO/ 
NSIAD-99-233R. Washington, D.C.: September 23, 1999.

Budget Issues: Budgetary Implications of Selected GAO Work for Fiscal 
Year 2000. GAO/OCG-99-26. Washington, D.C.: April 16, 1999.

Defense Acquisitions: Progress of the F-22 and F/A-18E/F Engineering 
and Manufacturing Development Programs. GAO/T-NSIAD-99-113. Washington, 
D.C.: March 17, 1999.

F-22 Aircraft: Issues in Achieving Engineering and Manufacturing 
Development Goals. GAO/NSIAD-99-55. Washington, D.C.: March 15, 1999.

F-22 Aircraft: Progress of the Engineering and Manufacturing 
Development Program. GAO/T-NSIAD-98-137. Washington, D.C.: March 25, 
1998.

F-22 Aircraft: Progress in Achieving Engineering and Manufacturing 
Development Goals. GAO/NSIAD-98-67. Washington, D.C.: March 10, 1998.

Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program. 
GAO/NSIAD-97-156. Washington, D.C.: June 4, 1997.

Defense Aircraft Investments: Major Program Commitments Based on 
Optimistic Budget Projections. GAO/T-NSIAD-97-103. Washington, D.C.: 
March 5, 1997.

F-22 Restructuring. GAO/NSIAD-97-100R. Washington, D.C.: February 28, 
1997.

Tactical Aircraft: Concurrency in Development and Production of F-22 
Aircraft Should Be Reduced. GAO/NSIAD-95-59. Washington, D.C.: April 
19, 1995.

Tactical Aircraft: F-15 Replacement Issues. GAO/T-NSIAD-94-176. 
Washington, D.C.: May 5, 1994.

Tactical Aircraft: F-15 Replacement Is Premature as Currently Planned. 
GAO/NSIAD-94-118. Washington, D.C.: March 25, 1994.

FOOTNOTES

[1] 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.

[2] The business case is defined as demonstrated evidence that (1) the 
warfighter need exists and that it can best be met with the chosen 
concept and (2) the concept can be developed and produced within 
existing resources--including design knowledge, demonstrated 
technologies, adequate funding, and adequate time to deliver the 
product.

[3] P. L. 105-85 (Nov. 18, 1997), section 217(d). The act states that 
no report is required after Engineering and Manufacturing Development 
under the program has been completed. If the scheduled March 2005 full- 
rate production decision occurs, it means that the overall program has 
officially moved beyond the development phase into large-scale 
production. Accordingly, this would be the last GAO report under this 
mandate. 

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

[5] Air superiority is the degree of air dominance that allows the 
conduct of operations by land, sea, and air forces without prohibitive 
interference by the enemy.

[6] P. L. 105-85 (Nov. 18, 1997), section 217.

[7] P. L. 107-107 (Dec. 28, 2001), section 213.

[8] Program Budget Decision nominally reduced procurement quantity to 
179 aircraft. Subsequently, the Air Force transferred one production 
aircraft to be dedicated to testing, further reducing procurement 
quantity to 178. It should also be noted that the recent crash of an F/ 
A-22 has reduced planned operational aircraft to 177.

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

[10] The total 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 
related costs to retrofit aircraft with enhanced capabilities and 
activate depot maintenance activities. 

[11] GAO-04-391.

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

[13] 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 now 
plans to manage these efforts as a separate acquisition program while 
continuing to manage the initial stages of modernization in the 
existing F/A-22 program.

[14] The OSD CAIG acts as the principal advisory body to the milestone 
decision authority on acquisition program costs.

[15] GAO-04-391, p. 8 through 10, discusses Air Force needs, plans, and 
associated risks for a new computer architecture and avionics processor 
to support the modernization program.

[16] 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, such as development and test, and other 
costs to the whole system including logistical support and construction.

[17] 10 U.S.C. section 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 about test adequacy and whether the 
test results confirm that the system actually tested is operationally 
effective and suitable for combat.

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