GAO

United States General Accounting Office

Testimony

Before the Committee on Government Reform, 

Subcommittee on National Security, Veterans Affairs, and 

International Relations, House of Representatives

For Release Expected

at 10:00 a.m. EST

Tuesday,

December 7, 1999

DEFENSE ACQUISITIONS 

Progress in Meeting F-22 

Cost and Schedule Goals

Statement for the Record by Louis J. Rodrigues, Director, 

Defense Acquisitions Issues, National Security and 

International Affairs Division 

GAO/T-NSIAD-00-58

Page 1 GAO/T-NSIAD-00-58

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to submit this statement for the record. The 

Subcommittee requested that we provide information on the status of cost 

and schedule issues of the Air Force’s F-22 aircraft development and 

procurement program. 

As directed by the National Defense Authorization Act for Fiscal Year 1998, 

we reported to the Congress in March 1999 about the extent to which cost, 

schedule, and performance goals were being met in the F-22 engineering 

and manufacturing development (EMD) program.1

 That report was 

supplemented by testimony before the Subcommittee on Airland Forces of 

the Senate Armed Services Committee in March 1999. 2

 This statement 

summarizes the relevant parts of that report and testimony, describes the 

congressional actions on the fiscal year 2000 budget request, updates the 

information we provided to the Congress in March 1999, and discusses Air 

Force and contractor initiatives to control production costs. Appendix I 

lists products we have issued that relate to the F-22 program. 

The National Defense Authorization Act for Fiscal Year 1998 established 

cost limits for F-22 EMD and production. The act instructed the Secretary 

of the Air Force to adjust the cost limits for economic inflation and 

compliance with changes in federal, state, and local laws. In December 

1999, the cost limits, as adjusted, were $18.880 billion for EMD and 

$39.759 billion for production. The production cost limit does not specify a 

quantity of aircraft.

Results in Brief In March 1999 we reported that it was unlikely the Air Force would be able 

to keep the F-22 EMD program, as planned, within the cost limit 

established by the Congress. In addition, we expressed concern about the 

significant reduction the Air Force had made in the testing it planned to 

complete before awarding contracts to initiate advance procurement to 

accelerate F-22 production. 

1 F-22 Aircraft: Issues in Achieving Engineering and Manufacturing Development Goals

(GAO/NSIAD-99-55, Mar. 15, 1999).

2 Defense Acquisitions: Progress of the F-22 and F/A-18E/F Engineering and Manufacturing 

Development Programs (GAO/T-NSIAD-99-113, Mar.17, 1999).
Page 2 GAO/T-NSIAD-00-58

Both authorization and appropriations acts for fiscal year 2000 established 

further congressional direction for the F-22 program. For example, the 

authorization act required certification by the Secretary of Defense, prior 

to beginning low-rate initial production, that the EMD test plan is adequate 

for determining F-22 operational effectiveness and suitability. The 

appropriations act did not approve the beginning of F-22 low-rate initial 

production but approved funding for acquisition of additional flight-test 

aircraft with research, development, test, and evaluation funding. 

The F-22 program has made progress in manufacturing and testing aircraft. 

However, there continues to be several important issues regarding the cost 

of the EMD and production programs and the schedules for completion of 

EMD activities leading to production of F-22s in higher quantities. For 

example, preliminary indications from our ongoing review of the EMD 

program’s status show that, compared to the program’s status in March 

1999, sufficient cost reductions have not been implemented to ensure that 

EMD activities, as planned, can be completed within the cost limitation, 

and completion dates for testing F-22 aircraft may be further delayed. Our 

evaluation of the Air Force’s progress in meeting cost, schedule, and 

performance goals is continuing as directed in the National Defense 

Authorization Act for Fiscal Year 1998. We plan to issue a report to the 

Congress concerning our current evaluation by March 15, 2000. 

In 1997, the Air Force indicated that the most probable cost for production 

of 438 F-22 aircraft would exceed its cost estimate by $13 billion. The Air 

Force plans to implement initiatives to offset this projected cost increase. 

As requested by this Subcommittee, we have initiated a review of the Air 

Force’s and prime contractor’s efforts to reduce production costs.

EMD Program Status 

as of March 1999 

In March 1999, the Air Force estimated it could complete the F-22 EMD 

program within the congressional cost limit of $18.880 billion. However, 

during 1998, contractor costs had exceeded budgets; in addition, work had 

not always been completed as scheduled. The Air Force and F-22 

contractor had identified potential cost growth totaling $667 million. We 

reported that F-22 EMD costs would rise above the cost limit if this 

potential cost growth was not addressed. At that time, the Air Force and 

contractor were developing ways to reduce the costs, such as improving 

efficiency and deferring or reducing program activities to keep EMD costs 

within the congressional limit.
Page 3 GAO/T-NSIAD-00-58

Our March 1999 report and testimony also identified several other issues 

that could affect the Air Force’s ability to complete the program within the 

cost limit:

• The contractor had notified the Air Force that F-22 program costs could 

increase further if sales of C-130J aircraft, which are manufactured in 

the same plant as the F-22, were lower than anticipated because the F-22 

program would have to absorb a higher than planned share of the plant’s 

overhead costs.

• First flights of the third through the sixth test aircraft were expected to 

be late, reducing the time available to accomplish flight-tests before 

planned completion of EMD and potentially requiring extension of EMD.

• Development of the F-22’s integrated avionics systems had been delayed 

and the schedule for completing avionics development appeared 

unrealistic. If EMD completion were to be extended to complete 

avionics development, additional costs would be incurred.

• Completing static and fatigue tests on the airframe structure had been 

delayed. Problems identified during these tests could require additions 

to planned EMD activities.

In addition, we reported that the Air Force had substantially reduced the 

flight-testing hours it had planned to accomplish before awarding 

production contracts. This would increase the risk of entering production. 

Authorization and 

Appropriations Actions 

Associated With Fiscal 

Year 2000 Budget 

Request

For fiscal year 2000, the Air Force requested $1.6 billion for low-rate initial 

production of six F-22 aircraft. Both authorization and appropriations acts 

for fiscal year 2000 established further congressional direction for the F-22 

program. The authorization act required that, before beginning low-rate 

initial production, the Secretary of Defense must certify that the EMD test 

plan is adequate for determining F-22 operational effectiveness and 

suitability; and that both EMD and production can be executed within the 

respective cost limits. The appropriations act, among other provisions 

affecting the F-22 program, did not approve the beginning of F-22 low-rate 

initial production but approved funding for acquisition of additional flighttest aircraft with research, development, test, and evaluation funding. The 

appropriations act restricted award of a fully funded contract to begin lowrate initial production until (1) the first flight of an F-22 incorporating block 

3 avionics software has been conducted; (2) the Secretary of Defense 

certifies to the congressional defense committees that criteria identified in 

the act for the award of low-rate initial production have been met; and 

(3) the Director of Defense Operational Test and Evaluation reports on the 
Page 4 GAO/T-NSIAD-00-58

adequacy of testing to date to measure and predict performance of F-22 

avionics systems, stealth characteristics, and weapons delivery systems.

Current EMD Program 

Status 

Before I discuss the current EMD program, I need to point out that the 

congressional actions on the fiscal year 2000 budget for the F-22 program 

could require changes to the F-22 program that have not, at this time, been 

fully defined. Accordingly, our comments regarding the program may 

change as the Air Force and Department of Defense change the program 

and the relationships between EMD activities and initiation of the 

production phase of the F-22 program. The F-22 program has made 

progress in manufacturing and testing aircraft; however, there continues to 

be several important issues regarding the cost of the EMD and production 

programs, and the schedules for completion of EMD activities that are 

intended to lead to production of F-22s in higher quantities. Preliminary 

indications from our ongoing review of the EMD program’s status are that, 

compared to the program’s status in March 1999, (1) sufficient cost 

reductions have not yet been implemented to ensure that EMD activities, as 

planned, can be completed within the cost limitation; (2) the impact on the 

F-22 program of lower than planned C-130J sales has not been determined; 

(3) deliveries of F-22 test aircraft have been further delayed; (4) fiscal year 

2000 actions by the Congress increased the time available to test F-22s 

before beginning low-rate initial production; (5) some avionics milestones 

have been further delayed; (6) the avionics schedule planned by the Air 

Force still appears to be unrealistic; and (7) completion dates for testing of 

ground test articles have been further delayed. I will now discuss each of 

these areas in greater detail.

Mitigation of Identified Cost 

Growth in EMD Program

According to the Air Force, $536.7 million (about 80 percent) of the 

identified $667 million in F-22 EMD cost growth has been mitigated through 

implementation of various cost reduction initiatives. These initiatives are 

designed to reduce costs by improving efficiency and deferring or reducing 

program activities. However, the cost growth to be mitigated could be 

larger than previously determined. The Air Force provided us information 

showing that the potential cost growth may increase. We are reviewing the 

Air Force’s identification of and plans to mitigate this additional cost 

growth.
Page 5 GAO/T-NSIAD-00-58

Potential Impact if C-130J 

Sales Are Lower Than 

Planned

Because of the lower than anticipated sales of the C-130J cargo aircraft by 

Lockheed Martin, the F-22 program may have to absorb a higher share of 

the Lockheed Martin plant’s overhead costs. Lockheed Martin produces 

both the C-130J cargo aircraft and the F-22 aircraft in its Marietta, Georgia, 

plant. The agreement in effect in March 1999 between Lockheed Martin and 

the Air Force concerning the distribution of plant overhead costs for both 

the C-130J and the F-22 program was predicated on the production of 24 to 

25 C-130J aircraft per year. However, 19 C-130J aircraft were produced in 

calendar year 1999, and production for calendar years 2000-2003 is 

estimated at about 17 aircraft per year. Reductions in C-130J aircraft 

produced could result in higher amounts of overhead costs being absorbed 

by the F-22 program.

Delays in Delivering Test 

Aircraft

The 1997 flight-test plan included about 250 flight-test months.3 In March 

1997, we testified that because of manufacturing problems, several 

flight-test aircraft would be delivered late, resulting in 16.9 fewer flight-test 

months available through scheduled completion of EMD. In June 1999, the 

Air Force acknowledged further delays in the delivery of most of the 

flight-test aircraft due to continuing wing delivery problems. As a result of 

the further delay, there are now almost 29 fewer flight-test months 

available. If the test program were to be extended, the cost of EMD would 

increase. 

We are concerned that additional delivery delays may further reduce 

flight-test months available to complete flight-testing. For example, 

Lockheed Martin recently reported that wing deliveries may be further 

delayed. Flight-test time is essential for the program to test and prove 

specific features of the aircraft as well as to reduce the risk to the 

government as commitments are made to production. 

Congressional Actions 

Allow for More Testing Time 

Prior to Low-rate Initial 

Production

Because of delays in the EMD program, the Air Force substantially reduced 

the amount of flight-testing planned before beginning production. At the 

beginning of 1999, the program goal was to complete a total of 519 

flight-test hours by the end of 1999. Even though the Air Force is close to 

reaching this goal, as we reported in March 1999, earlier plans scheduled 

many more flight-test hours for completion by December 1999, which at the 

3 A flight-test month is one flight-test aircraft available for 1 month.
Page 6 GAO/T-NSIAD-00-58

time, was the planned date of the first low-rate initial production contract 

award. The actions of the Authorization and Appropriations Committees on 

the fiscal year 2000 budget delayed the beginning of production until 

certain conditions are met. As a result, more time is available to complete 

flight-tests, therefore reducing risks before the decision is made to commit 

to low-rate initial production. As the Air Force makes changes to the F-22 

program to reflect fiscal year 2000 congressional actions, we will continue 

evaluating the relationships of EMD, testing, and production commitments.

Avionics Milestones Are 

Further Delayed

We reported in March 1999 that development of avionics systems for the 

F-22 was behind the schedule established in 1997. Development problems 

with the communication, navigation and identification system, and, to a 

lesser extent, the electronic warfare system caused schedule delays and 

cost growth in avionics development. Because of these problems, the Air 

Force did not complete the first major avionics segment, known as block 1, 

until May 1999, 4 months behind schedule. Furthermore, we reported in 

March 1999 that the first flight of the first avionics test aircraft with block 1 

avionics was scheduled for February 2000, but this event is now scheduled 

for May 2000. Flight-testing of the next scheduled avionics segment, known 

as block 2, is also expected to be delayed.

Avionics Schedule Still 

Appears Unrealistic

In 1997, an evaluation team concluded that avionics development could 

take more time than planned because of delays in avionics blocks 1, 2, 3, 

and 3.1. Even though block 1 was completed4

 behind schedule and block 2 

is expected to be completed behind schedule, the current avionics 

schedule shows blocks 3 and 3.1 avionics being completed 6 and 3 months, 

respectively, before the completion dates the Air Force and the evaluation 

team considered realistic in 1997. If blocks 3 and 3.1 take longer than 

planned to be completed, additional costs will be incurred.

Further Delays in Testing of 

Ground Test Articles

Two major tests of F-22 airframe structural integrity continue to be 

delayed. These are static testing, designed to ensure the aircraft can 

withstand flight stresses, and fatigue testing, which involves subjecting the 

aircraft to the structural stresses expected within its planned life. Static 

tests have been delayed 12 months and fatigue tests have been delayed 

4

 That is, completed to the point it is placed on an EMD aircraft in preparation for flighttesting.
Page 7 GAO/T-NSIAD-00-58

14 months. These are longer delays than the Air Force expected in March 

1999. The following table shows the continuing delays in completing these 

tests by comparing the schedules in 1997, March 1999, and as of November 

1999.

Table 1: Delayed Completion Dates for Static and Fatigue Testing

F-22 Production Cost 

Reduction Initiatives

Concerned about growing costs of the F-22 program, the Assistant 

Secretary of the Air Force for Acquisition, in June 1996, established a team 

to estimate the most probable costs of the F-22 EMD and production 

programs. The team estimated, in January 1997, that the production costs 

for 438 F-22s would increase by $13.1 billion to about $61.2 billion. The 

team identified cost reduction initiatives that it expected to offset the 

production cost increase. DOD subsequently reduced the planned 

procurement quantity to 339 aircraft.

On November 23, 1999, this Subcommittee asked us to review the progress 

the Air Force and the contractors have made in implementing cost 

reduction initiatives needed to remain within the production cost limit for 

the program. We have initiated the requested review. 

This concludes our statement. We appreciate the opportunity to have it 

placed in the record.

Contact and 

Acknowledgments

For future contacts regarding this statement, please contact Louis J. 

Rodrigues at (202) 512-4841. Individuals making key contributions to this 

statement included Marvin Bonner, Todd Brannon, Edward Browning, 

Leonard Benson, Allen Li, Robert Murphy, and Don Springman. 

Test 1997 schedule March 1999 schedule

Schedule as of 

November 1999

Static October 1999 February 2000 October 2000

Fatigue December 1999 September 2000 February 2001
Page 8 GAO/T-NSIAD-00-58 

Related GAO Products

Fiscal Year 2000 Budget: DOD's Procurement and RDT&E Programs

(GAO/NSIAD-99-233R, Sept. 23, 1999).

Budget Issues: Budgetary Implications of Selected GAO Work for Fiscal 

Year 2000 (GAO/NSIAD-99-233R, Apr. 16, 1999).

Defense Acquisitions: Progress of the F-22 and F/A-18E/F Engineering and 

Manufacturing Development Programs (GAO/T-NSIAD-99-113, 

Mar. 17, 1999).

F-22 Aircraft: Issues in Achieving Engineering and Manufacturing 

Development Goals (GAO/NSIAD-99-55, Mar. 15, 1999).

F-22 Aircraft: Progress of the Engineering and Manufacturing Development 

Program (GAO/T-NSIAD-98-137, Mar. 25, 1998).

F-22 Aircraft: Progress in Achieving Engineering and Manufacturing 

Development Goals (GAO/NSIAD-98-67, Mar. 10, 1998).

Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program

(GAO/NSIAD-97-156, June 4, 1997).

Defense Aircraft Investments: Major Program Commitments Based on 

Optimistic Budget Projections (GAO/T-NSIAD-97-103, Mar. 5, 1997).

F-22 Restructuring (GAO/NSIAD-97-100BR, Feb. 28, 1997).

Tactical Aircraft: Concurrency in Development and Production of 

F-22 Aircraft Should Be Reduced (GAO/NSIAD-95-59, Apr. 19, 1995).

Air Force Embedded Computers (GAO/AIMD-94-177R, Sept. 20, 1994).

Tactical Aircraft: F-15 Replacement Issues (GAO/T-NSIAD-94-176, 

May 5, 1994).

Tactical Aircraft: F-15 Replacement Is Premature as Currently Planned

(GAO/NSIAD-94-118, Mar. 25, 1994).

(707467) Letr
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