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Pursuant to a congressional request, GAO provided information on the Air Force F-22 Raptor production cost estimate, focusing on: (1) the status of cost reduction plans, including some plans not yet implemented, and Air Force procedures for reporting on the plans; and (2) a comparison of the 1999 production cost estimates with the congressional cost limitation.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. To enhance the visibility of the Air Force's plans to reduce production costs, the Secretary of Defense should direct the Air Force to report to the Under Secretary of Defense for Acquisition, Technology, and Logistics on the status of the production cost reduction plans each quarter. For each contractor, this report should include, as a minimum, summary information such as the total number of cost reduction plans identified, the number implemented, the total estimated reductions, and the reductions realized to date. The report should also highlight major changes, such as additions or deletions from the list of plans, from the previous report.
Closed - Implemented
In its response to the final report, DOD concurred with the recommendation. In July 2004, a DOD official (the PEO) explained that DOD has expanded reporting to ensure summary data on all production cost reduction plans is reported at quarterly reviews to the Under Secretary of Defense for Acquisition, Technology, and Logistics per GAO's recommendation.
Department of Defense 2. Since both Office of the Secretary and Air Force cost estimators projected that the F-22 production costs would exceed the congressionally imposed cost limitation and the possibility exists that these cost estimates could increase further if some cost reductions do not materialize, the Secretary of Defense should reconcile the number of F-22s that need to be procured with the congressional cost limitation and report to Congress on the implications of procuring fewer F-22s because of potentially higher costs.
Closed - Implemented
In commenting on the final report, DOD stated that it will use the Quadrennial Defense Review to evaluate force structure needs of the DOD and address affordability of the F-22. After the Quadrennial Defense Review, they said that the Selected Acquisition Report for the F-22 will identify any adjustments to quantities to conform to the congressional cost limitation and/or planned budgets. The Quadrennial Defense Review is complete, but the two latest F-22 Selected Acquisition Reports do not identify quantity adjustments necessary to stay within the production cost limitation. These reports only identify quantities that can potentially be procured for an additional $5.4 billion over the production cost limitation. In response to GAO testimony and its February 2003 report on the F-22, the House Committee on Government Reform, Subcommittee on National Security formally requested information from DOD on the number of F-22s that could be acquired under the production cap, as well as the impact of buying fewer aircraft because of the cap. The DOD responded to the Committee with a letter that estimated number of F-22s (216 to 218) and provided their analysis of the operational impacts of buying fewer aircraft.

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