Background

The F-35 Joint Strike Fighter program is a joint, multinational acquisition  intended to develop and field an affordable, highly common family of next  generation strike fighter aircraft for the United States Air Force, Navy,  Marine Corps, and eight international partners. The F-35 is a single-seat,  single-engine aircraft incorporating low-observable (stealth) technologies,  defensive avionics, advanced sensor fusion, internal and external  weapons, and advanced prognostic maintenance capability. There are  three variants. The conventional takeoff and landing (CTOL) variant,  designated the F-35A, will be an multi-role, stealthy strike aircraft  replacement for the Air Force’s F-16 Falcon and the A-10 Thunderbolt II  aircraft, and will complement the F-22A Raptor. The short takeoff and  vertical landing (STOVL) variant, the F-35B, will be a multi-role stealthy  strike fighter to replace the Marine Corps’ F/A-18C/D Hornet and AV-8B  Harrier aircraft. The carrier-suitable variant (CV), the F-35C, will provide  the Department of Navy a multi-role, stealthy strike aircraft to complement  the F/A-18 E/F Super Hornet. Lockheed Martin is the aircraft contractor  and Pratt & Whitney is the engine contractor.
DOD began the Joint Strike Fighter program in October 2001 with a  highly concurrent, aggressive acquisition strategy with substantial overlap  between development, testing, and production. The program was  rebaselined in 2004 following weight and performance problems and  rebaselined again in 2007 because of additional cost growth and  schedule slips. Following an extensive department-wide review, the  Secretary of Defense in February 2010 announced a major restructuring  of the program due to poor cost and schedule outcomes and continuing  problems. DOD added time and money for development, provided  additional resources for testing, and reduced the number of aircraft to be  procured in the near-term. In March 2010, the department declared that  the program exceeded critical cost growth thresholds established by  statute—a condition known as a Nunn-McCurdy breach—and  subsequently certified to the Congress in June 2010 that the F-35  program should continue. Due to the cost breach, the Under Secretary of  Defense for Acquisition, Technology, and Logistics rescinded the  program’s approval to enter system development and DOD began efforts  to establish a new acquisition program baseline. The department  continued restructuring actions during 2011 and 2012 that added more  cost, extended schedules, and further reduced aircraft procurement  quantities in the near-term. The quantity of F-35 aircraft to be procured in  total was not changed, but restructured plans have deferred to future  years the procurement of 410 aircraft originally planned to be procured  through 2017 based on the 2007 revised baseline. Through the end of  calendar year 2012, the contractor has delivered a total of 52 aircraft–14  test and 38 production aircraft.
In March 2012, DOD established a new acquisition program baseline for  the F-35 program that incorporated the numerous positive and more  realistic restructuring actions taken since 2010. Officials also reauthorized  continuation of system development, approved continuation of low rate  initial procurement, divided the program for reporting purposes into  aircraft and engine subprograms, and took other actions required due to  the Nunn-McCurdy cost breach. The March 2012 baseline is the F-35’s  fourth, including the original estimate at the start of development in  October 2001. Table 1 shows changes in cost, quantity, and major  schedules associated with each baseline and also a June 2010 interim  estimate at the time of Nunn-McCurdy breach. The causes of cost growth  and schedule delays from 2001 to 2012 are documented in past GAO  reports (see appendix l and Related Products).

	Program Made Progress in 2012, but Majority of Testing Still Ahead

The F-35 program made progress in 2012 on several fronts. The program  met or substantially met most of its key management objectives  established for the year. Also, development flight testing exceeded the  planned number of flights by a good margin for 2012, but did not quite  accomplish the planned number of test points.considerable progress in addressing significant technical risks needing  resolution, such as the helmet mounted display. Furthermore, software  management practices improved, but this area continued to require more  time and effort than planned. While the F-35 program made progress in   The program made  2012, the bulk of development testing and evaluation is ahead, is planned  to continue into 2016, and is expected to identify additional deficiencies  impacting aircraft design and performance. To date, slightly more than 11  percent of development contract performance specifications have been  verified as met and the development flight test program has cumulatively  accomplished just over one-third of the test points and test flights  planned. The operational test community raised concerns about the F-35  readiness for training, development test plans and results, and the  schedule and resources for starting initial operational testing in 2017.

		F-35 Program Met Most of Its 2012 Key Management Objectives

The F-35 program office annually establishes major management  objectives it wants to achieve in the upcoming year. The program  achieved 7 of the 10 primary objectives (70 percent) it established for  2012 and made substantial progress on one other. Table 2 summarizes  the 2012 objectives and accomplishments.
In addition to the 7 objectives met, the F-35 program substantially met  one more–the block 3 critical design review was completed in late  January 2013 following the preliminary design review in November 2012.  The remaining two objectives that were not met: (1) the contractor  delivered 30 production aircraft compared to the program goal of 40 and  (2) its Earned Value Management System (EVMS) corrective action plan  was not approved. EVMS compliance is a long-standing issue and  concerns all Lockheed Martin aircraft produced for DOD, not just the F- 35. In 2007, the Defense Contract Management Agency, the agency  responsible for auditing defense contractors’ systems, found Lockheed  Martin’s process did not meet 19 of 32 required guidelines and, in  October 2010, withdrew the determination of compliance. While  acknowledging that Lockheed Martin has made improvements, DCMA in  2012 found the company still deficient on 13 guidelines. EVMS is an  important, established tool for tracking costs, controlling schedule,  identifying problems early, and providing accurate product status reports.  DOD requires its use by major defense suppliers to facilitate good insight  and oversight of the expenditure of government dollars.

		Development Flight Test Program Made Progress

The F-35 development flight test program also substantially met 2012  expectations with some revisions to original plans. The program  exceeded its planned number of flights by 18 percent, although it fell short  of its plan in terms of test points flown by about 3 percent, suggesting that   Test officials had to  the flights flown were not as productive as expected.make several adjustments to plans during the year due to aircraft  operating and performance limitations and late releases of software to  test. As a result, none of the three variants completed all the 2012  baseline points as originally planned. However, the test team was able to  add and complete some test points that had been planned for future  years. In this manner, the program was actually able to accomplish more  test points in total than planned. Figure 1 compares the total baseline  flight test points accomplished in 2012 against the initial plan for each test  vehicle.
Results from flight testing in 2012 included the following:
Aircraft dedicated to testing mission systems exceeded the number of  planned flights and fell just short of accomplishing the total test points  planned. Testing supported development of software providing  training and initial warfighting capability as well as baseline signature  testing. Overall progress in verifying and fielding enhanced  capabilities was limited, largely because of late and incomplete  software.
The Navy’s F-35C carrier-suitable variant exceeded its number of  planned flights and planned test points for 2012. Testing verified the  basic flight envelope (demonstrating ranges of speed and altitude),  flight with external weapons, and prepared the aircraft for simulated  carrier landings. The program also accomplished shore-based tests of  a redesigned arresting hook (the hook engages the landing wires on  aircraft carriers).
The Marine Corp’s F-35B short takeoff and vertical landing variant  exceeded the number of flights and test points. It successfully  completed the first weapons release, engine air start tests, fuel dump  operations, expanded flight envelope with weapons loaded, and radar  signature testing. It also tested re-designed air inlet doors in vertical  lift operations.
The Air Force’s F-35A conventional takeoff and landing variant  accomplished high angle of attack testing, initial weapons separation,  and engine air start. It also evaluated flying qualities with internal and  external weapons, and expanded the envelope for airspeed and  altitude. This variant did not accomplish as many flights as planned  and fell short of planned test points by about 15 percent. Operating  restrictions and deficiencies in the air refueling system were the main  constraints.

		F-35 Program Made Progress Addressing Significant Technical Risks

Flight, ground, and lab testing has identified significant technical and  structural concerns that, if not addressed, would substantially degrade the  F-35’s capabilities and mission effectiveness. The F-35 program made  considerable progress in 2012 to address these major technical risks:
The helmet mounted display (which provides flight data, targeting, and  other sensor data to the pilot) is integral to the mission systems  architecture, to reduce pilot workload, and to achieve the F-35’s  concept of operations. The original helmet mounted display  encountered significant technical deficiencies and did not meet  warfighter requirements. The program is pursuing a dual path by  developing a second, less capable helmet while working to fix the first  helmet design. Both helmets are being evaluated and program and  contractor officials told us that they have increased confidence that  the helmet deficiencies will be fixed. DOD may make a decision as to  which helmet to procure in 2013, but the selected helmet is not  expected to be integrated into the baseline aircraft until 2015.
The Autonomic Logistics Information System (ALIS) is an important  tool to predict and diagnose maintenance and supply issues,  automating logistics support processes and providing decision aids  aimed at reducing life cycle sustainment costs and improving force  readiness. ALIS is developed and fielded in increments. Limited  capability ALIS systems are in use at training and testing locations.  More capable versions are being developed and program and  contractor officials told us that the program is on track to fix identified  shortcomings and field the fully capable system in 2015. Limited  progress was made in 2012 on developing a smaller, transportable  version needed to support unit level deployments to operating  locations.
During 2012, the carrier variant Arresting Hook System was  redesigned after the original hook was found to be deficient, which  prevented active carrier trials. During shore-based tests, the program  accomplished risk reduction testing of a redesigned hook point to  inform this new design. The preliminary design review was conducted  in August 2012 and the critical design review in February 2013. Flight  testing of the redesigned system is slated for late 2013.
Ground testing also made continued progress in 2012, including  structural and durability testing to verify that all three variants can  achieve expected life and identify life-limited parts. Over time, testing  has discovered bulkhead and rib cracks. The program is testing some  redesigned structures and planning other modifications. Officials plan  to retrofit test and production aircraft already built and make changes  to the production line for subsequent aircraft. Current projections  show the aircraft and modifications remain within weight targets.

		While Software Development Continues to Provide Significant Challenges, Software Management Has Improved

The F-35 software development effort is one of the largest and most  complex in DOD history. It is essential to achieve capabilities such as  sensor fusion, weapons and fire control, maintenance diagnostics, and  propulsion. Recent management actions to refocus software development  activities and to implement improvement initiatives appear to be yielding  benefits, but software will continue to be a very challenging and high risk  undertaking for this program, especially for mission systems. Over time,  software requirements have grown in size and complexity and the  contractor has taken more time and effort than expected to write  computer code, integrate it on aircraft and subsystems, conduct lab and  flight tests to verify it works, and to correct defects found in testing.
The aircraft contractor and F-35 program office have recently taken steps  to improve software management and output. In addition to completing  most work on the first major software block, other significant management  actions should enhance future software and mission system outcomes.  These actions include:  starting up and operating a second system integration lab, adding  substantial testing and development capability; prioritizing and focusing resources on the next block of software and  decreasing concurrent work on multiple blocks;  implementing improvement initiatives recommended by an  independent software review; and evaluating the possible deferral of some capabilities, either to later  blocks or moving them outside the current F-35 program to follow on  development efforts.
Our April 2011 report discussed the need for several of these actions. For  instance, we recommended that DOD undertake an independent software  review. Subsequently, an independent review was conducted and  contractor software managers implemented several improvement  initiatives recommended by that review. These are yielding benefits. For  example, program officials reported that the time span to fix defects has  decreased from180 days to 55 days, allowing the program to keep better  pace even though the number of defects has increased. In addition, the  time taken to build and release software to testing has decreased from  187 hours to 30 hours due to new automated processes. Contractor  officials currently plan to broaden the assessment’s initiatives to other  software development efforts, including logistics and training. Our 2011  report also discussed the need to reduce concurrent block work and to  evaluate the possible deferral of the most advanced capabilities to future  increments; program officials are actively pursuing these areas as  discussed above.
These recent management actions are positive and encouraging, but  overall, software development activities in 2012 lagged behind plans.  Most software code has been developed, but a substantial amount of  integration and test work remains before the program can demonstrate  full warfighting capability. Software capabilities are developed, tested and  delivered in three major blocks and two increments—initial and final— within each block. The status of the three blocks is described below:
Block 1.0, providing initial training capability, was largely completed in  2012, although some final development and testing will continue.  Also, the capability delivered did not fully meet expected requirements  relating to the helmet, ALIS, and instrument landing capabilities.
Block 2.0, providing initial warfighting capabilities and limited  weapons, fell behind due to integration challenges and the  reallocation of resources to fix block 1.0 defects. The initial increment,  block 2A, delivered late and was incomplete. Full release of the final  increment, block 2B, has been delayed until November 2013 and  won’t be complete until late 2015. The Marine Corps is requiring an  operational flight clearance from the Naval Air Systems Command  before it can declare an initial operational capability (IOC) for its F- 35B force. IOC is the target date each service establishes for fielding  an initial combat capable force.
Block 3.0 providing full warfighting capability, to include sensor fusion  and additional weapons, is the capability required by the Navy and Air  Force for declaring their respective IOC dates. Thus far, the program  has made little progress on block 3.0 software. The program intends  initial block 3.0 to enter flight test in 2013, which will be conducted  concurrently with the final 15 months of block 2B flight tests. Delivery  of final block 3.0 capability is intended to begin nearly 3 years of  developmental flight tests in 2014. This is rated as one of the  program’s highest risks because of its complexity.
In particular, the development and testing of software-intensive mission  systems are lagging, with the most challenging work ahead. About 12  percent of mission systems capabilities are validated at this time, up from  4 percent about 1 year ago. Progress on mission systems was limited by  contractor delays in software delivery, limited capability in the software  when delivered, and the need to fix problems and retest multiple software  versions. Further development and integration of the most complex  elements—sensor fusion and helmet mounted display—lie ahead. Sensor  fusion integrates data from critical subsystems and displays the  information to the pilot. Figure 2 depicts the percentage of sensor fusion  work associated with each software block. About 36 percent of the sensor  fusion work was completed in software block 1. Final verification and  closure of remaining fusion requirements through block 3 will not be  completed until 2016.
The critical work to test and verify aircraft design and operational  performance for the F-35 program is far from complete. Cumulatively  since the start of developmental flight testing, the program has flown  2,595 of 7,727 planned flights (34 percent) and accomplished 20,495 of  59,585 test points (34 percent). For development testing as a whole, the  program has verified 11.3 percent of the F-35 development contract  specifications (349 of 3,094 specifications) through November 2012.  Contract specifications include specific design parameters and operating  requirements such as speed and range that the F-35 aircraft are expected  to meet. Three-fourths of the total contract specifications cannot be fully  evaluated, verified, and approved until the final increment of software is  released and fully tested. Testing of the final increment is expected to  begin in 2014 and continue through 2016.
Initial operational test and evaluation (IOT&E) is scheduled to begin in  2017. This date is dependent on successful completion of development  test and evaluation. IOT&E evaluates the combat effectiveness and  suitability of the aircraft in an operationally realistic environment. Its  successful completion is a prerequisite for DOD’s plans to approve the F- 35 for full rate production in 2019. Operational testers have raised  concerns about F-35’s current operational capabilities and suitability,  readiness for training activities, and the progress of developmental  testing. Further, the testing offices in the Office of the Secretary of  Defense (OSD) have not approved the latest revision to the test and  evaluation master plan because of concerns about the timing and  resources available for IOT&E and unacceptable overlap of development  with the start of IOT&E. We will continue to monitor the concerns and  progress of operational testing during future F-35 reviews.
Achieving key performance parameters are critical to the F-35 meeting  the warfighter’s operational requirements. They include measures such  as range, weapons carriage, mission reliability, and sortie rates. These  parameters also cannot be fully verified until the end of IOT&E in 2019.  Based on limited information, DOD is currently projecting that the F-35  program is either meeting or close to meeting at least threshold  (minimum) performance requirements.

	After a Slow Start, Aircraft Manufacturing and Deliveries Are Beginning to Catch Up to Plans

While initial F-35 production overran target costs and delivered late, there  are several encouraging signs indicating better outcomes in the coming  years. Overall, manufacturing and supply operations are improving with  the latest data showing labor hours to build the aircraft decreasing,  deliveries accelerating, quality measures improving, and parts shortages  declining. That said, the program is working through the continuing effects  from the F-35’s highly concurrent acquisition strategy. For example, the  program is continuing to incur substantial costs for rework to fix  deficiencies discovered in testing, but the amount per aircraft is dropping.  Nevertheless, continuing discoveries in testing will likely drive additional  changes to design and manufacturing processes at the same time  production rates increase. DOD’s substantial reductions in near-term  procurement quantities have decreased–but not eliminated– the risk from  investing billions of dollars on hundreds of aircraft before testing proves  the aircraft design and verifies that its performance and reliability meet  requirements.

		Manufacturing Is Becoming More Efficient

Analyses of labor, parts, and quality data, observations on the  manufacturing floor, and discussions with defense and contracting  officials provide signs that F-35 manufacturing and supply processes are  improving. The aircraft contractor is moving down a steep learning curve,  which is a measure that the work force is gaining important experience  and that processes are maturing as more aircraft are built. Other  indicators of improvement include the following:
The decrease in labor hours needed to complete aircraft at the prime  contractor’s plant as the labor force gains experience. For example,  the first Air Force production jet was delivered in May 2011 and  required about 149,000 labor hours at the prime’s plant to build, while  an Air Force jet delivered in December 2012 only required about  94,000 labor hours. Overall, the contractor reported a 37 percent  reduction in direct labor during 2012.
The improvement in the contractor’s labor efficiency rate, a measure  of how long it is taking to complete certain work tasks against  engineering standards. Labor efficiency on the first production aircraft  was 6 percent and improved to 13 percent for the 31st production  aircraft. While still low, Defense Contract Management Agency  officials stated that the rate should continue to improve with increased  production due to work force learning and factory line enhancements.
The decrease in span times—the number of calendar days to  manufacture aircraft in total and in specific work staging areas. The  aircraft contractor is altering assembly line processes to streamline  factory flow. As a result, for example, span time in the final assembly  area declined by about one-third in 2012 compared to 2011.
The increase in factory throughput as the contractor delivered 30  production aircraft in 2012 compared to 9 in 2011. During our plant  visit in 2012, we observed an increased level of activity on the  manufacturing floor as compared to 2011. The contractor had more  tooling in place, had altered and streamlined processes, and had  factory expansion plans underway.
The decrease in traveled work (work done out of sequence or  incomplete items moving to the next work station), parts shortages on  the line, and product defects. For example, traveled work declined 90  percent and the defect rate declined almost 80 percent in 2012  compared to 2011. Other quality indicators such as scrap rates and  non-conformances also improved from prior years and are trending in  a positive direction. These have all been major contributors to past  cost increases and schedule delays.
The accomplishment of a schedule risk analysis to improve the  contractor’s master schedule and related schedules. A schedule risk  analysis is a comprehensive evaluation that uses statistical  techniques to examine the fidelity of schedule estimates and the  likelihood of accomplishing work as scheduled. It provides better and  timelier insight into program performance to help identify and resolve  schedule roadblocks.
The improvement in aircraft contractor manufacturing processes,  although not fully mature compared to best practice standards. The  aircraft contractor is using statistical process control to bring critical  manufacturing processes under control so they are repeatable,  sustainable, and consistently producing parts within quality tolerances  and standards. The best practice standard is to have all critical  manufacturing processes in control by the start of production. Just  over one-third of manufacturing processes are currently judged to be  capable of consistently producing quality parts at the best practice  standard. The contractor has a plan in place to achieve the best  practice standard by the start of full-rate production in 2019. We have  observed this quality practice on only a few DOD programs.
Going forward, effective management of the global supply chain is vital to  boost production rates to planned levels, to control costs, and maintain  quality. The aircraft contractor is developing a global supply chain of more  than 1,500 suppliers. Effective supplier management will be critical to  efficient and quality manufacturing at higher annual rates. Currently, a  relatively small number of suppliers provide most of the material, but that  is expected to change in the future, especially as international firms get  more of the business. Management of international supplier base  presents unique challenges, including (1) differing U.S. and foreign  government policies, (2) differences in business practices, and (3) foreign  currency exchange rates. These can complicate relationships and hinder  effective supply chain integration.
The aircraft contractor is implementing stringent supplier quality  management practices. For example, Lockheed Martin officials assess  the overall performance of key component suppliers against program  goals for production affordability, contract cost growth, delivery times, part  shortage occurrences, and field performance, as well as the number of  corrective action reports filed against the supplier. In total, key component  suppliers are assessed and rated across 23 measures, as applicable and  the contractor works with suppliers to improve performance.

		Production Costs Are Trending Toward Targets and Aircraft Deliveries Are Accelerating

As discussed earlier, aircraft labor hours to build aircraft are decreasing  with more experience and the program is moving down the learning curve  as projected. The fifth annual low rate initial production (LRIP) contract  was recently negotiated with cost targets reflecting additional gains in  efficiency. DOD and contractor officials also expressed confidence that  contracts for the 6th and 7th annual buys will be negotiated by this  summer and reflect similar performance. The first four LRIP contracts,  however, over-ran their target costs, in total by $1.2 billion. According to  program documentation, the government’s share of the total overrun is  about $756 million under the sharing incentive provisions in these  contracts. Cost increases range from 6.5 percent to 16.1 percent more  than negotiated costs. LRIP 4, the largest by dollar and number of  aircraft, had the smallest percent increase in cost, indicating better  performance. Contract costs and increases are summarized in table 3.
The contractor has delivered 39 aircraft under LRIP contracts through the  end of December 2012–nine in 2011 and 30 in 2012. Figure 3 tracks  actual delivery dates against the dates specified in the contracts.  Deliveries were late an average of 11 months compared to the contracted  dates, but the data shows that the delivery rate has improved  considerably. For example, the first two production aircraft were late 16  and 15 months, respectively, whereas the last two delivered were each 2  months late. Fluctuations in some deliveries during mid-2012 are impacts  from the labor strike last summer that the contractor does not expect to  continue. Other factors contributing to late deliveries include design  changes to the aircraft; traveled work; scrap, repair, and rework hours;  and parts shortages.
In addition to contract cost overruns, the program is incurring substantial  costs to retrofit (rework) produced aircraft needed to fix deficiencies  discovered in testing. These costs are largely attributable to the  substantial concurrency, or overlap, between testing and manufacturing  activities. The F-35 program office projects rework costs of about $900  million to fix the aircraft procured on the first four annual procurement  contracts. On average, rework adds about $15.5 million to the price of  each of the 58 U.S. aircraft under these contracts.
Substantial rework costs are forecast to continue through the 10th annual  contract (fiscal year 2016 procurement), but at decreasing amounts  annually and on each aircraft. The program office projects about $827  million more to rework aircraft procured under the next 6 annual  contracts. Government liability for these costs depends on share ratios to  be negotiated. The government and Lockheed Martin reached agreement  under the LRIP 5 contract that costs for known changes due to  concurrency will be shared 50/50.  Other cost overruns under this  contract will be shared 55/45 until the contract ceiling is reached, at which  point the contractor assumes total responsibility for overruns. The lagging  cost and schedule performance on the first four production contracts and  the high costs of rework can be largely attributed to the continuing effects  of the F-35’s highly concurrent acquisition strategy. The program started  manufacturing aircraft before designs were stable, before establishing  mature manufacturing processes, and before sufficiently testing the  design and aircraft performance. A November 2011 report on  concurrency by senior level DOD officials confirms these observations.  The report states that F-35 testing continues to find technical issues with  significant design and production impacts and requiring rework on  produced aircraft. It expresses a lack of confidence in the design stability  that was lower than expected given the quantities of aircraft procured and  potential for more rework costs.

		Aircraft Design Changes Continue to Impact Efficiency and Add to Risk

Even with the positive trends in manufacturing, cost, and schedule  discussed above, the government continues to incur risk by procuring  large quantities of aircraft with the majority of testing still ahead. The  contractor continues to make major design and tooling changes and alter  manufacturing processes concurrent with development testing.  Engineering design changes from discoveries during manufacturing and  testing are declining in number, but are still substantial and higher than  expected from a program this far into production. With extensive testing  ahead, discoveries in testing will drive more design changes, possibly  impacting manufacturing processes and the supplier base. Figure 4  graphically depicts monthly engineering change “traffic.” The forecast  indicates that about one-third of projected design changes in total are to  come and will hover around 200 per month through the end of system  development, initial operational testing, and start of full rate production in  2019.
Demonstrating the reliability of a system is another indicator that the  design is stable and ready for production. During system acquisition,  reliability growth improvements should occur over time as problems are  identified, tested, and fixed, usually through design changes and  manufacturing process improvements. We have reported in the past that  it is important to demonstrate that the system reliability is on track to meet  goals before production begins as changes after production commences   One key indicator of F-35 reliability is the  can be inefficient and costly.mean flying hours between failures, that is, the average time an aircraft  can fly before a maintenance action is required to repair a component or  system that is not performing as designed. Figure 5 projects F-35  performance on this indicator compared to 2012 plans and eventual  goals. Compared to data from one year ago, each variant demonstrated  some reliability growth in 2012, but each is lagging behind its plan. The  Marine Corps’ STOVL demonstrated the biggest increase–from 0.5 hours  in 2011 to 1.4 hours currently—but it is also the furthest behind plans. We  also note that the rates planned by October 2012 were little changed from  those established for October 2011.
DOD is investing billions of dollars on hundreds of aircraft before the  design is stable, testing proves that it works and is reliable, and  manufacturing processes mature to where aircraft can be produced in  quantity to cost and schedule targets. The department’s substantial  reductions in procurement quantities in the past few years lowered this  risk, but did not eliminate it.in procuring 121 aircraft through the 2012 buy (the 6th annual  procurement lot). According to the new acquisition baseline and flight test  schedule, DOD will procure 289 aircraft for $57.8 billion before the end of  developmental flight testing (see table 4).

	Costs and Funding for Acquisition and Sustainment Remain Very Challenging Moving Forward

Ensuring that the acquisition costs of the F-35 are affordable so that  aircraft can be bought in the quantities and time required by the warfighter  will be of paramount concern to the Congress, U.S. military, and  international partners. Annual acquisition funding requirements for the  United States currently average $12.6 billion per year through 2037. Once  acquired, the current forecasts of life cycle sustainment costs for the F-35  fleet are considered unaffordable by defense officials. Efforts are under  way to try and lower annual operating and support costs. Uncertainties  and delays in the F-35 program are forcing new plans for recapitalizing  fighter forces and the military services are incurring increased costs to  buy, modify, and sustain legacy fighters.

		Acquiring F-35 Aircraft at Required Annual Quantities Will Be Expensive

The March 2012 acquisition program baseline incorporates the  department’s positive restructuring actions since 2010. These actions  place the F-35 program on firmer footing, but aircraft are expected to cost  more and deliveries to warfighters will take longer than in previous  baselines. In terms of acquisition funding requirements, the new baseline  projects total development and procurement budget requirements of $316  billion from 2013 through 2037. Figure 6 shows these budget projections.  The rebaselined program will require an average of $12.6 billion annually  through 2037, an unprecedented demand on the defense procurement  budget. Maintaining this level of sustained funding will be difficult in a  period of declining or flat defense budgets and competition with other “big  ticket items” such as the KC-46 tanker and a new bomber program.
When approving the new 2012 program baseline, the acting  Undersecretary of Defense for Acquisition, Technology, and Logistics  established affordability unit cost targets for each variant to be met by the  start of full-rate production in 2019. To meet these targets, the program  will have to reduce unit costs by about 26 percent (STOVL), 35 percent  (CTOL), and 39 percent (CV) from the unit costs in the fiscal year 2012  budget request. Our analysis indicates that these targets are achievable if  the future year prices and quantities used to construct the new baseline  are accurate.
Some international partners are also expressing concern about F-35  prices and schedule delays. Besides the consequences for international  cooperation and fighter force commonality, there are at least two other  important financial impacts. First, U.S. future budgets assume the  financial quantity benefits of partners purchasing at least 697 aircraft.  Second, the current procurement profile for the F-35 projects a rapid  buildup in partner buys—195 aircraft through 2017 that comprise about  half the total production during the 5-year period 2013 through 2017. If  fewer aircraft are procured in total or in smaller annual quantities, unit  costs paid by the U.S. and partners will likely rise.
To better understand the potential impacts on prices from changes in  quantities, OSD’s Cost Assessment and Program Evaluation (CAPE)  office did a sensitivity analysis to forecast impacts on F-35 average  procurement unit costs assuming various quantities purchased by the  United States and international partners. For example, if the United  States bought its full quantity of 2,443 aircraft and the partners did not  buy any aircraft, CAPE calculated that the average unit cost would  increase by 6 percent. If the United States bought 1,500 aircraft and the  partners bought their expected quantity of 697, unit costs would rise by 9  percent. If the United States bought 1,500 and the partners 0, unit costs  would rise 19 percent.

		Controlling Sustainment Costs Is a Major Concern

In addition to the costs for acquiring aircraft, significant concerns and  questions persist regarding the cost to operate and sustain F-35 fleets  over the coming decades. The current sustainment cost projection by  CAPE for all U.S. aircraft, based on an estimated 30 year service life,  exceeds $1 trillion. This raises long-term affordability concerns for the  military services and international partners. F-35 operating and support  costs (O&S) are currently projected to be 60 percent higher than those of  the existing aircraft it will replace. Using current program assumptions of  aircraft inventory and flight hours, CAPE recently estimated annual O&S  costs of $18.2 billion for all F-35 variants compared to $11.1 billion spent  in 2010 to operate and sustain the legacy aircraft. DOD officials have  declared that O&S costs of this magnitude are unaffordable and are  actively engaged in evaluating opportunities to reduce F-35 life-cycle  sustainment costs, such as basing and infrastructure reductions,  competitive sourcing, and reliability improvements.

		F-35 Delays Have Increased Recapitalization Costs for Existing Fighters

IOC dates are critical milestones for the F-35 program because these are  the target dates for fielding initial combat capable forces as required by  the warfighters when justifying the need for the new weapon system. As  shown earlier in table 1, these dates have slipped over time and have not  been reset in the new baseline. The military services have been  reassessing their needs for several years and have deferred setting new  target dates for acquiring warfighting capabilities until operational test  plans are better understood. Based on service criteria espoused earlier in  the program, it would appear that the earliest possible IOC dates are now  2015 for the Marine Corps and 2017 for the Air Force and Navy.
Because of F-35 delays and uncertainties, the military services are  extending the service life of legacy aircraft to bridge the gap in F-35  deliveries and mitigate projected shortfalls in fighter aircraft force  requirements. In November 2012, we reported current cost estimates of  almost $5 billion (in 2013 dollars) to extend the service life of 300 Air  Force F-16s and 150 Navy F/A-18s, with additional quantities possible if  needed to maintain inventory levels. At the Congress’s behest, the Navy  is also buying 41 new F/A-18 E/F Super Hornets at a budgeted cost of  about $3.1 billion (then-year dollars). The services will incur additional  future sustainment costs to support these new and extended-life aircraft.  F-35 delays and uncertainties continue to make it difficult for the services  to establish and implement retirement schedules for existing fleets and to  develop firm basing and manpower plans for housing and supporting  future forces.

	Concluding Observations

Overall, the F-35 Joint Strike Fighter program is now moving in the right  direction after a long, expensive, and arduous learning process. It still has  tremendous challenges ahead. The program must fully validate design  and operational performance against warfighter requirements, while, at  the same time, making the system affordable so that the United States  and partners can acquire new capabilities in the quantity needed and can  then sustain the force over its life cycle. Recent restructuring actions have  improved the F-35’s prospects for success, albeit at greater costs and  further delays. Many of the restructuring actions—more time and  resources for development flight testing, reduced annual procurements,  the recognition of concurrency risks, independent cost and software  assessments, and others—are responsive to our past recommendations.  Recent management initiatives, including the schedule risk analysis and  the software assessment, also respond to prior recommendations. As a  result, we are not making new recommendations in this report. DOD and  the contractor now need to demonstrate that the F-35 program can  effectively perform against cost and schedule targets in the new baseline  and deliver on promises. Until then, it will continue to be difficult for the  United States and international partners to confidently plan, prioritize, and  budget for the future; retire aging aircraft; and establish basing plans with  a support infrastructure. Achieving affordability in annual funding  requirements, aircraft unit prices, and life-cycle operating and support  costs will in large part determine how many aircraft the warfighter can  ultimately acquire, sustain, and have available for combat.

	Agency Comments and Our Evaluation

DOD provided comments on a draft of this report, which are reprinted in  appendix III.  DOD concurred with the report’s findings and conclusions.
We are sending copies of this report to appropriate congressional  committees; the Secretary of Defense; the Secretaries of the Air Force,  Army, and Navy; the Commandant of the Marine Corps; and the Director  of the Office of Management and Budget. The report is available at no  charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at ((202) 512-4841 or sullivanm@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Staff members making key contributions to  this report are listed in Appendix IV.

Appendix I: Prior GAO Reports and DOD Responses

	Est. dev. costs dev. length aircraft unit cost Key program event $34.4 Billion 10 years $69 Million

Start of system development  and demonstration approved.
Primary GAO message  Critical technologies needed for  key aircraft performance  elements not mature. Program  should delay start of system  development until critical  technologies mature to  acceptable levels.
DOD response and actions  DOD did not delay start of  system development and  demonstration stating  technologies were at acceptable  maturity levels and will manage  risks in development.
The program undergoes re- plan to address higher than  expected design weight, which  added $7 billion and 18  months to development  schedule.
We recommended that the  program reduce risks and  establish executable business  case that is knowledge-based  with an evolutionary acquisition  strategy.
DOD partially concurred but did  not adjust strategy, believing  that its approach is balanced  between cost, schedule and  technical risk.
Program sets in motion plan to  enter production in 2007  shortly after first flight of the  non-production representative  aircraft.
The program planned to enter  production with less than 1  percent of testing complete. We  recommended program delay  investing in production until  flight testing shows that F-35  performs as expected.
DOD partially concurred but did  not delay start of production  because it believed the risk level  was appropriate.
Congress reduced funding for  first two low-rate production  buys thereby slowing the ramp  up of production.
Progress was being made but  concerns remained about undue  overlap in testing and  production. We recommended  limits to annual production  quantities to 24 a year until  flying quantities are  demonstrated.
DOD non-concurred and felt that  the program had an acceptable  level of concurrency and an  appropriate acquisition strategy.
DOD implemented a Mid- Course Risk Reduction Plan to  replenish management  reserves from about $400  million to about $1 billion by  reducing test resources.
We believed new plan  increased risks and DOD should  revise it to address testing,  management reserves, and  manufacturing concerns. We  determined that the cost  estimate was not reliable and  that a new cost estimate and  schedule risk assessment is  needed.
DOD did not revise risk plan or  restore testing resources, stating  that it will monitor the new plan  and adjust it if necessary.  Consistent with a report  recommendation, a new cost  estimate was eventually  prepared, but DOD refused to  do a risk and uncertainty  analysis.

	Est. dev. costs dev. length aircraft unit cost Key program event $44.4 Billion 13 years $104 Million

The program increased the  cost estimate and adds a year  to development but  accelerated the production  ramp up. Independent DOD  cost estimate (JET I) projects  even higher costs and further  delays.
Primary GAO message  Moving forward with an  accelerated procurement plan  and use of cost reimbursement  contracts is very risky. We  recommended the program  report on the risks and  mitigation strategy for this  approach.
DOD response and actions  DOD agreed to report its  contracting strategy and plans to  Congress and conduct a  schedule risk analysis. The  program completed the first  schedule risk assessment with  plans to update semi-annually.  The Department announced a  major restructuring reducing  procurement and moving to  fixed-price contracts.
The program was restructured  to reflect findings of recent  independent cost team (JET  II) and independent  manufacturing review team.  As a result, development  funds increased, test aircraft  were added, the schedule was  extended, and the early  production rate decreased.
Costs and schedule delays  inhibit the program’s ability to  meet needs on time. We  recommended the program  complete a full comprehensive  cost estimate and assess  warfighter and IOC  requirements. We suggest that  Congress require DOD to tie  annual procurement requests to  demonstrated progress.
DOD continued restructuring,  increasing test resources and  lowering the production rate.  Independent review teams  evaluated aircraft and engine  manufacturing processes. Cost  increases later resulted in a  Nunn-McCurdy breach. Military  services are currently reviewing  capability requirements as we  recommended.
Restructuring continued with  additional development cost  increases; schedule growth;  further reduction in near-term  procurement quantities; and  decreased the rate of increase  for future production. The  Secretary of Defense placed  the STOVL variant on a 2 year  probation; decoupled STOVL  from the other variants; and  reduced STOVL production  plans for fiscal years 2011 to  2013.
The restructuring actions are  positive and if implemented  properly, should lead to more  achievable and predictable  outcomes. Concurrency of  development, test, and  production is substantial and  provides risk to the program.  We recommended the program  maintain funding levels as  budgeted; establish criteria for  STOVL probation; and conduct  an independent review of  software development,  integration, and test processes.
DOD concurred with all three of  the recommendations. DOD  lifted STOVL probation, citing  improved performance.  Subsequently, DOD further  reduced procurement quantities,  decreasing funding  requirements through 2016. The  initial independent software  assessment began in and  ongoing reviews are planned  through 2012.

	Est. dev. costs dev. length aircraft unit cost Key program event $55.2 Billion 18 years $137 Million

The program established a  new acquisition program  baseline and approved the  continuation of system  development, increasing costs  for development and  procurements and extending  the period of planned  procurements by 2 years.
Primary GAO message  Extensive restructuring places  the program on a more  achievable course. Most of the  program’s instability continues  to be concurrency of  development, test, and  production. We recommend the  Cost Assessment and Program  Evaluation office conduct an  analysis on the impact of lower  annual funding levels; F-35  program office conducts an  assessment of the supply chain  and transportation network.
DOD response and actions  DOD partially concurred with  conducting an analysis on the  impact of lower annual funding  levels and concurred with  assessing the supply chain and  transportation network.

Appendix II: Scope and Methodology

To evaluate F-35 Joint Strike Fighter program performance during  calendar year 2012, we compared key management objectives on testing,  training, contracting, cost and schedule activities to progress made during  the year on each objective. On development flight testing, we interviewed  F-35 program office, the aircraft contractor, and the office of the Director  of Operational Test and Evaluation (DOT&E) officials on development test  plans and results against expectations.  We obtained and analyzed data  on flights and test points, both planned and accomplished during 2012,  and also compared progress against the total plans to complete. We  obtained officials’ comments and reports on technical risks. We evaluated  progress made and work to complete on major technical risks, including  the helmet, logistics system, carrier arresting hook, and structural cracks.   We reviewed status of software development and integration, contractor  management improvement initiatives, issues on data fusion, and the  impacts of late releases of software on the test program.  We reviewed  key documents related to this objective, including DOT&E’s annual F-35  assessment, the Joint Strike Fighter Operational Test Team Report, and  the Independent Software Assessment.
To assess manufacturing and supply performance indicators, production  results, and design changes, we obtained and analyzed manufacturing  contract cost, aircraft delivery, and work performance data through the  end of calendar year 2012 to assess progress against plans. We  reviewed data and briefings provided by the program office, aircraft  contractor, and the Defense Contract Management Agency (DCMA) in  order to identify issues and assess impacts on supplier performance,  costs of rework, manufacturing labor and quality data, and maturity of  design and manufacturing process controls. We also determined reasons  for manufacturing cost overruns and delivery delays, discussed program  and contractor plans to improve, and projected the impact on  development and operational tests. We interviewed contractor and DCMA  officials to discuss the Earned Value Management System (EVMS) and  Lockheed’s progress in improving its system.  We did not conduct our  own analysis of EVMS since the system has not yet been re-validated by  DCMA. We also reviewed the Office of the Secretary of Defense’s F-35  Joint Strike Fighter Concurrency Quick Look Review.
To determine acquisition and sustainment costs going forward, we  received briefings by program and contractor officials and reviewed  financial management reports, budget briefings annual Selected  Acquisition Reports, monthly status reports, performance indicators, and  other data through the end of calendar year 2012. We identified changes  in cost and schedule, and obtained officials’ reasons for these changes.
We reviewed total program funding requirements in the Selected  Acquisition Reports since the program’s inception and analyzed fiscal  year 2013 President’s Budget data.  We used this data to project annual  funding requirements through the expected end of the F-35 acquisition in  2037. We obtained and discussed the life cycle operating and support  cost projections made by the Cost Assessment and Program Evaluation  office and discussed future plans of the Department to try and reduce life  cycle sustainment costs.
In performing our work, we obtained financial data, programmatic  information, and interviewed officials from the F-35 Joint Program Office,  Arlington, Virginia; Lockheed Martin Aeronautics, Fort Worth, Texas;  Defense Contract Management Agency, Fort Worth, Texas; and the  Under Secretary of Defense for Acquisition, Technology, and Logistics,  the Director of Operational Test and Evaluation, and the Cost  Assessment and Program Evaluation office, all organizations within the  Office of the Secretary of Defense in Washington, D.C.
We assessed the reliability of DOD and Contractor data by: reviewing  existing information about the data, and interviewing agency officials  knowledgeable about the data. We determined that the data were  sufficiently reliable for the purposes of this report. We conducted this  performance audit from August 2012 to March 2013 in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on  our audit objectives.

Appendix III: Comments from the Department of Defense

Appendix IV: GAO Contact and Staff Acknowledgments

	GAO Contact

	Acknowledgments

In addition to the contact name above, the following staff members made  key contributions to this report: Bruce Fairbairn, Assistant Director; Marvin  Bonner; Dr. W. Kendal Roberts; Erin Stockdale; Jungin Park; Megan  Porter and John Lack.

Related GAO Products

Joint Strike Fighter: DOD Actions Needed to Further Enhance  Restructuring and Address Affordability Risks.  GAO-12-437.   Washington, D.C.: June 14, 2012.
Defense Acquisitions: Assessments of Selected Weapon Programs.  GAO-12-400SP. Washington, D.C.: March 29, 2012.
Joint Strike Fighter: Restructuring Added Resources and Reduced Risk,  but Concurrency Is Still a Major Concern. GAO-12-525T. Washington,  D.C.: March 20, 2012.
Joint Strike Fighter: Implications of Program Restructuring and Other  Recent Developments on Key Aspects of DOD’s Prior Alternate Engine  Analyses. GAO-11-903R. Washington, D.C.: September 14, 2011.
Joint Strike Fighter: Restructuring Places Program on Firmer Footing, but  Progress Is Still Lagging. GAO-11-677T. Washington, D.C.: May 19,  2011.
Joint Strike Fighter: Restructuring Places Program on Firmer Footing, but  Progress Still Lags. GAO-11-325. Washington, D.C.: April 7, 2011.
Joint Strike Fighter: Restructuring Should Improve Outcomes, but  Progress Is Still Lagging Overall. GAO-11-450T. Washington, D.C.:  March 15, 2011.
Tactical Aircraft: Air Force Fighter Force Structure Reports Generally  Addressed Congressional Mandates, but Reflected Dated Plans and  Guidance, and Limited Analyses. GAO-11-323R. Washington, D.C.:  February 24, 2011.
Defense Management: DOD Needs to Monitor and Assess Corrective  Actions Resulting from Its Corrosion Study of the F-35 Joint Strike  Fighter. GAO-11-171R. Washington D.C.: December 16, 2010.
Joint Strike Fighter: Assessment of DOD’s Funding Projection for the  F136 Alternate Engine. GAO-10-1020R. Washington, D.C.: September  15, 2010.
Tactical Aircraft: DOD’s Ability to Meet Future Requirements is Uncertain,  with Key Analyses Needed to Inform Upcoming Investment Decisions.  GAO-10-789. Washington, D.C.: July 29, 2010.
Defense Acquisitions: Assessments of Selected Weapon Programs.  GAO-10-388SP. Washington, D.C.: March 30, 2010.
Joint Strike Fighter: Significant Challenges and Decisions Ahead.   GAO-10-478T. Washington, D.C.: March 24, 2010.
Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting  Warfighter Requirements on Time. GAO-10-382. Washington, D.C.:  March 19, 2010.
Joint Strike Fighter: Significant Challenges Remain as DOD Restructures  Program. GAO-10-520T. Washington, D.C.: March 11, 2010.
Joint Strike Fighter: Strong Risk Management Essential as Program  Enters Most Challenging Phase. GAO-09-711T. Washington, D.C.: May  20, 2009.
Defense Acquisitions: Assessments of Selected Weapon Programs.  GAO-09-326SP. Washington, D.C.: March 30, 2009.
Joint Strike Fighter: Accelerating Procurement before Completing  Development Increases the Government’s Financial Risk. GAO-09-303.  Washington D.C.: March 12, 2009.
Defense Acquisitions: Better Weapon Program Outcomes Require  Discipline, Accountability, and Fundamental Changes in the Acquisition  Environment. GAO-08-782T. Washington, D.C.: June 3, 2008.
Defense Acquisitions: Assessments of Selected Weapon Programs.  GAO-08-467SP. Washington, D.C.: March 31, 2008.
Joint Strike Fighter: Impact of Recent Decisions on Program Risks.   GAO-08-569T. Washington, D.C.: March 11, 2008.
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.  GAO-08-388. Washington, D.C.: March 11, 2008.
Tactical Aircraft: DOD Needs a Joint and Integrated Investment Strategy.  GAO-07-415. Washington, D.C.: April 2, 2007.
Defense Acquisitions: Analysis of Costs for the Joint Strike Fighter Engine  Program. GAO-07-656T. Washington, D.C.: March 22, 2007.
Joint Strike Fighter: Progress Made and Challenges Remain.   GAO-07-360. Washington, D.C.: March 15, 2007.
Tactical Aircraft: DOD’s Cancellation of the Joint Strike Fighter Alternate  Engine Program Was Not Based on a Comprehensive Analysis.   GAO-06-717R. Washington, D.C.: May 22, 2006.
Defense Acquisitions: Major Weapon Systems Continue to Experience  Cost and Schedule Problems under DOD’s Revised Policy. GAO-06-368.  Washington, D.C.: April 13, 2006.
Defense Acquisitions: Actions Needed to Get Better Results on Weapons  Systems Investments. GAO-06-585T. Washington, D.C.: April 5, 2006.
Tactical Aircraft: Recapitalization Goals Are Not Supported by  Knowledge-Based F-22A and JSF Business Cases. GAO-06-487T.  Washington, D.C.: March 16, 2006.
Joint Strike Fighter: DOD Plans to Enter Production before Testing  Demonstrates Acceptable Performance. GAO-06-356. Washington, D.C.:  March 15, 2006.
Joint Strike Fighter: Management of the Technology Transfer Process.  GAO-06-364. Washington, D.C.: March 14, 2006.
Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications for  Tactical Aircraft Modernization. GAO-05-519T. Washington, D.C: April 6,  2005.
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike Fighter  Program with Different Acquisition Strategy. GAO-05-271. Washington,  D.C.: March 15, 2005.

Summary:
Why GAO Did This Study

The F-35 Lightning II, the Joint Strike Fighter, is DOD's most costly and ambitious aircraft acquisition. The program is developing and fielding three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The F-35 is critical to long-term recapitalization plans as it is intended to replace hundreds of existing aircraft. This will require a long-term sustained funding commitment. Total U.S. investment is nearing $400 billion to develop and procure 2,457 aircraft through 2037. Fifty-two aircraft have been delivered through 2012. The F-35 program has been extensively restructured over the last 3 years to address prior cost, schedule, and performance problems. GAO's prior reviews of the F-35 made numerous recommendations to improve outcomes, such as increasing test resources and reducing annual procurement quantities.
This report, prepared in response to the National Defense Authorization Act for 2010, addresses (1) F-35 program performance during 2012, including testing, technical risks, and software; (2) manufacturing performance indicators, production results, and design changes; and (3) acquisition and sustainment costs going forward. GAO's work included analyses of a wide range of program documents and interviews with defense and contractor officials.

What GAO Found

The F-35 program achieved 7 of 10 key management objectives for 2012 and made substantial progress on one other. Two objectives on aircraft deliveries and a corrective management plan were not met. Also in 2012, the program conducted more developmental flight tests than planned and made considerable progress in addressing critical technical risks, such as the helmet-mounted display. With about one-third of development flight testing completed, much testing remains to demonstrate and verify F-35 performance. Software management practices are improved, but with significant challenges ahead as software integration and testing continue to lag behind plans.
Manufacturing and supply processes are also improving--indicators such as factory throughput, labor efficiency, and quality measures are all positive. While initial F-35 production overran target costs and delivered aircraft late, the latest data shows labor hours decreasing and deliveries accelerating. The program is working through the continuing effects from its concurrent acquisition strategy that overlapped testing and manufacturing activities. For example, the program is continuing to incur substantial costs for rework to fix deficiencies discovered in testing, but the amount of rework needed on each aircraft is dropping.
Going forward, ensuring affordability--the ability to acquire aircraft in quantity and to sustain them over the life cycle--is of paramount concern. With more austere budgets looming, F-35 acquisition funding requirements average $12.6 billion annually through 2037. The new F-35 acquisition baseline incorporates the Department of Defense's (DOD) positive restructuring actions taken since 2010, including more time and funding for development and deferred procurement of more than 400 aircraft to future years. These actions place the F-35 program on firmer footing, although aircraft will cost more and deliveries to warfighters will take longer. The program continues to incur financial risk from its plan to procure 289 aircraft for $57.8 billion before completing development flight testing. Meanwhile, the services are spending about $8 billion to extend the life of existing aircraft and to buy new ones to mitigate shortfalls due to F-35 delays.

What GAO Recommends

GAO is not making recommendations in this report. DOD's restructuring of the F-35 program and other actions are responsive to many prior recommendations. DOD agreed with GAO's report findings and conclusions.