Issues in Achieving Engineering and Manufacturing Development Goals
NSIAD-99-55: Published: Mar 15, 1999. Publicly Released: Mar 15, 1999.
- Full Report:
Pursuant to a legislative requirement, GAO followed up on its report on the Air Force's F-22 engineering and manufacturing development (EMD) program, focusing on whether: (1) the Air Force is likely to complete the EMD program without exceeding the cost limitation established by the National Defense Authorization Act for Fiscal Year 1998; and (2) GAO had access to sufficient information to make informed judgments on matters covered by this report.
GAO noted that: (1) the Air Force estimates it can complete F-22 EMD within the cost limitation; (2) however, the F-22 contractor cost and schedule plans, as defined in 1997, were not fully accomplished; (3) costs exceeded the budgets established to accomplish planned work, and work planned was not always completed on schedule; (4) the Air Force viewed the potential for further cost growth as a threat to completing EMD within the cost limitation; (5) although the Air Force devised ways to avoid and reduce costs, GAO questions whether EMD, as planned, can be completed within the cost limitation; (6) cost reviews by the Air Force and the contractors in 1998 identified potential program cost growth of $482 million that, if not addressed, could increase program costs above the cost limitation of $18.939 billion; (7) Air Force and contractor plans to address this potential cost growth have not all been finalized; (8) the contractor has notified the Air Force that F-22 EMD program costs may increase if sales of C-130J aircraft, which are manufactured in the same plant as the F-22, are lower than anticipated because the F-22 program will have to absorb a higher share of the plant's overhead costs; (9) deliveries and first flights of the next four flight-test aircraft are expected to be late, reducing flight-testing time available before planned EMD completion; (10) unless the Air Force can successfully compress or reduce the remaining flight tests to complete EMD as scheduled, EMD costs will increase; (11) there have been delays in developing F-22's integrated avionics systems, and the schedule for completing avionics development appears unrealistic; (12) the Air Force estimates that the F-22 will meet or exceed all its required performance parameters; (13) the estimates are based on computer simulations, studies, and flight-test data; (14) the Air Force expects additional flight testing to confirm the estimates; (15) as of December 1998, the Air Force had completed about 200 flight-test hours and the selected performance demonstrations and events required by the Under Secretary of Defense for Acquisition and Technology before F-22 production activities begin; (16) in December 1998, the Secretary of Defense submitted a report about F-22 testing and production risks to Congress, and the Air Force awarded a contract to initiate production activities; and (17) the Air Force and the contractors gave GAO access to sufficient information to make informed judgments on the matters covered in this report.
Recommendations for Executive Action
Status: Closed - Not Implemented
Comments: DOD did not believe that additional direction from the Secretary of Defense was warranted. DOD stated that it believed that mechanisms already in place to monitor the F-22 program are adequate to ensure that the status of program cost and the development schedule, particularly avionics development and integration, are fully understood prior to the production decision. The recommendation should be closed.
Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to formulate a more realistic avionics development schedule. In doing so, the Secretary should consider the progress to date, the Joint Estimating Team's avionics schedule, and the impact a more realistic schedule would have on the EMD programs' estimated cost.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: Although DOD partially concurred with this recommendation, it indicated that such evaluations and assessments would only be speculation, and did not promise any action, except to negotiate overhead rates in the normal course of business. However, following this report, the DCMA did a review of the overhead rates for the F-22, assessing the impacts of changing business base caused by the C-130 J program. The result showed that the F-22 would have to absorb a larger share of the overhead costs. GAO reported this information to Congress the following year in NSIAD-00-68.
Recommendation: The Secretary of Defense should evaluate how decisions regarding C-130J production are likely to impact F-22 EMD and assess the Air Force's ability to negate additional overhead costs that may be allocated to F-22 EMD.
Agency Affected: Department of Defense