United States Government Accountability Office

GAO Testimony before the Subcommittee on 

Tactical Air and Land Forces, Committee 

on Armed Services, House of 

Representatives

TACTICAL AIRCRAFT

Recapitalization Goals Are 

Not Supported by 

Knowledge-Based F-22A 

and JSF Business Cases 

Statement of Michael Sullivan, Director 

Acquisition and Sourcing Management 

For Release on Delivery

Expected at 2:00 p.m. EST 

Thursday, March 16, 2006

 

GAO-06-487T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2006

TACTICAL AIRCRAFT

Recapitalization Goals Are Not Supported 

by Knowledge-Based F-22A and JSF 

Business Cases 

Highlights of GAO-06-487T, a testimony 

before the Subcommittee on Tactical Air 

and Land Forces, Committee on Armed 

Services, House of Representatives 

The Department of Defense’s 

(DOD) F-22A and Joint Strike 

Fighter (JSF) programs aim to 

replace many of the Department’s 

aging tactical fighter aircraft—

many of which have been in DOD’s 

inventory for more than 20 years. 

Together, the F-22A and JSF 

programs represent a significant 

investment for DOD—currently

estimated at almost $320 billion. 

GAO has reported on the poor

outcomes in DOD’s acquisitions of 

tactical aircraft and other major 

weapon systems. Cost and 

schedule overruns have diminished

DOD’s buying power and delayed 

the delivery of needed capabilities 

to the warfighter. Last year, GAO 

testified that weaknesses in the 

F-22A and JSF programs raised

questions as to whether DOD’s 

overarching tactical aircraft 

recapitalization goals were

achievable. 

At the request of this 

Subcommittee, GAO is providing

updated testimony on (1) the 

extent to which the current F-22A 

and JSF business cases are 

executable, (2) the current status

of DOD’s tactical aircraft 

recapitalization efforts, and 

(3) potential options for 

recapitalizing the air forces as DOD 

moves forward with its tactical

aircraft recapitalization efforts. 

The future of DOD’s tactical aircraft recapitalization depends largely on the 

outcomes of the F-22A and JSF programs—which represent about $245 

billion in investments to be made in the future. Both programs continue to 

be burdened with risk. The F-22A business case is unexecutable in part 

because of a 198 aircraft gap between the Air Force requirement and what 

DOD estimates it can afford. The JSF program, which has 90 percent of its 

investments still in the future, plans to concurrently test and produce 

aircraft thus weakening DOD’s business case and jeopardizing its 

recapitalization efforts. It plans to begin producing aircraft in 2007 with less 

than 1 percent of the flight test program completed. 

DOD’s current plan to buy about 3,100 new major tactical systems to replace 

its legacy aircraft represents a 33-percent reduction in quantities from 

original plans. With reduced buys and delays in delivery of the new systems,

costs to keep legacy aircraft operational and relevant have increased. While

the Secretary of Defense maintains that continued U.S. air dominance 

depends on a recapitalized force, DOD has not presented an investment 

strategy for tactical aircraft systems that measures needs, capability gaps, 

alternatives, and affordability. Without such a strategy, DOD cannot 

reasonably ensure it will recapitalize the force and deliver needed

capabilities to the warfighter within cost and schedule targets. As DOD 

moves forward with its efforts to recapitalize its tactical aircraft, it needs to 

rethink the current business cases for the F-22A and JSF programs. This 

means matching needs and resources before more F-22A aircraft are 

procured and ensuring the JSF program demonstrates acceptable aircraft 

performance before it enters initial production. 

Comparison of Original and Current Procurement Quantities for F/A-18EF, F-22A and JSF 

Original plan

2005 plan

Cumulative aircraft orders

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Source: GAO analysis of DOD data.

www.gao.gov/cgi-bin/getrpt?GAO-06-487T.

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. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to participate in the subcommittee’s hearing 

on the Department of Defense’s (DOD) tactical air forces, including two of 

its major tactical aircraft fighter programs—the F-22A and the F-35, also 

known as the Joint Strike Fighter (JSF).1

 Both programs are intended to 

replace aging tactical fighter aircraft with highly advanced, stealthy 

aircraft. These two programs together represent a significant investment—

currently estimated at almost $320 billion—for DOD. To date nearly 

$75 billion has been appropriated for these programs, and based on 

current plans, they represent a potential future investment of about 

$245 billion over the next 20 years. In fiscal year 2007 alone, the budget

request under consideration for these programs represents over $8 billion. 

Given the large potential investment that the F-22A and JSF programs 

represent, decisions based on fact and knowledge about needs and 

resources are key to ensure that sound program investments are made. 

Any discussion of the significance of DOD’s investment in these two 

weapon systems demands that they be placed in the larger context. Fiscal

imbalances and competing national needs will continue to constrain 

discretionary spending for years to come. Over the past 5 years, the 

department has doubled its planned investments in new weapon systems 

from about $700 billion in 2001 to nearly $1.4 trillion in 2006. At the same 

time, research and development cost growth on new weapons continues to

be about 30 to 40 percent. This is how one must view major new 

investments, such as the F-22A and JSF, because more money may not be 

an option for the future. Rather, the key to getting better outcomes is to 

make individual programs more executable. 

We have reported and testified in the past on the disappointing outcomes 

of DOD’s acquisitions of tactical aircraft and other major weapon systems 

(see GAO Related Products). DOD’s budgeting plans and the reality of the 

costs of its systems have been vastly different. Performance—if defined as 

the capability that actually reaches the warfighter—tends to fall short of 

expectations, as cost increases often result in late deliveries of smaller 

quantities of weapon systems. DOD has lost opportunities and buying 

power in the process. Last year, we testified that weaknesses in the F-22A 

 1

The third major program, the F/A-18E/F, currently in production, is not a subject of this

testimony. 

Page 1 GAO-06-487T 
and JSF programs raised questions as to whether DOD’s overarching 

tactical aircraft recapitalization goals were achievable.2

My testimony today focuses on (1) the extent to which the current F-22A 

and JSF business cases are executable, (2) the current status of DOD’s 

tactical aircraft recapitalization efforts, and (3) potential options for 

recapitalizing the air forces as DOD moves forward with its tactical

aircraft recapitalization efforts. We performed our work in accordance 

with generally accepted government auditing standards. 

DOD currently does not have an executable business case for buying the 

F-22A. Over the 19 years that the aircraft has been in development, the 

world has changed and the capabilities the Air Force once needed and 

planned for the F-22A no longer satisfy today’s needs. The Air Force’s 

current stated need is for 381 F-22As to satisfy original air-to-air missions 

and recently added requirements for more robust air-to-ground attack and

intelligence-gathering capabilities. However, because of past cost overruns 

and current budget constraints, DOD can now afford only 183 F-22As. This

leaves a 198-aircraft gap between the Air Force’s stated need and what the 

acquisition process is able to deliver. DOD’s business case for the JSF 

program still includes significant cost and schedule risk that continues to

jeopardize timely recapitalization of the tactical force. We recently 

reported that DOD plans to begin procuring large quantities of aircraft in 

2007 with less than 1 percent of the flight test program completed.3

 By 

2010, it expects to have procured 126 aircraft with only 35 percent of the

flight test program completed. Concurrently testing and procuring the 

aircraft adds to the program’s cost and schedule risks, further weakening 

DOD’s buying power and jeopardizing its ability to recapitalize its aging 

tactical air force in a timely and efficient manner.

Summary 

As there were last year at this time, there are many unanswered questions 

about whether DOD can achieve its overarching goals for modernizing its 

aging tactical air forces. In recent testimony on the results of the 

department’s 2006 Quadrennial Defense Review (QDR), the Secretary of 

Defense stated that continued U.S. air dominance depends on a 

 2

GAO, Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications for Tactical

Aircraft Modernization, GAO-05-519T (Washington, D.C.: Apr. 6, 2005). 

3

GAO, Joint Strike Fighter: DOD Plans to Enter Production before Testing Demonstrates 

Acceptable Performance, GAO-06-356 (Washington D.C.: March 15, 2006). 

Page 2 GAO-06-487T 
recapitalized fleet. However, DOD’s 2006 QDR report, issued last month, 

did not present a detailed investment strategy for tactical aircraft systems 

that addressed needs, capability gaps, alternatives, and affordability. 

Lacking a strategy that identifies capability gaps and affordable 

alternatives, DOD cannot reasonably ensure that new tactical air 

capabilities will be delivered to the warfighter within cost and schedule 

targets. Right now, DOD plans to replace legacy aircraft with about 1,400 

fewer new major tactical systems than it had originally planned—almost a 

one-third reduction in quantities. Additionally, delivery of these new 

systems has lagged far behind original plans, increasing operating costs to

keep legacy aircraft relevant and in the inventory longer than expected

and delaying delivery of needed capabilities to the warfighter. 

Despite these substantial setbacks, we believe DOD can reduce cost risk 

on its current acquisitions and deliver needed capabilities more quickly. 

This could allow it to recapitalize the aging tactical air force sooner and 

reduce costs to maintain the current inventory. To do so, however, DOD 

must rethink the business cases for the F-22A and JSF programs. Before 

procuring more F-22A aircraft, the Air Force and the Office of the 

Secretary of Defense should agree on a business case for the appropriate 

quantity of F-22A aircraft that (1) satisfies current Air Force needs and (2)

is affordable given today’s budget realities. The JSF acquisition program 

can reduce cost and schedule risks by adopting a new knowledge-based 

business case. The JSF program should delay production and investments 

in production capability until the aircraft design qualities and integrated 

mission capabilities of the fully configured and integrated JSF aircraft 

variants have been proven to work in flight testing. DOD should also 

develop a knowledge-based business case that matches requirements with 

proven technologies, design knowledge, and available funding. 

Capabilities that demand technological advances which are not yet 

demonstrated should be part of future increments that are funded and 

managed separately once demonstrated. With such an approach DOD 

could enter low-rate production sooner and deliver a useful product in 

sufficient quantities to start replacing DOD’s aging tactical aircraft force. 

The F-16 acquisition program provides strong precedent for this type of 

acquisition strategy. It began delivering aircraft in 4 years and within 

predicted costs. GAO recommended these actions in a recent JSF report 

and DOD agreed that these were appropriate things to do but it believed 

its current acquisition strategy will allow it to achieve the JSF program 

objectives. 

Finally, at a broader level, DOD needs to apply more discipline and 

controls to establish realistic business cases for acquisition programs and 

Page 3 GAO-06-487T 
then execute them more efficiently. This may require a new look at 

policies and perhaps statute. 

Over the past 20 years, DOD has been engaged in an effort to modernize its 

aging tactical aircraft force. The F-22A and JSF, along with the F/A-18E/F, 4

are the central elements of DOD’s overall recapitalization strategy for its 

tactical air forces. The F-22A was developed to replace the F-15 air 

superiority aircraft. The continued need for the F-22A, the quantities 

required, and modification costs to perform its mission have been the 

subject of a continuing debate within DOD and the Congress. Supporters 

cite its advanced features—stealth, supercruise speed, maneuverability, 

and integrated avionics—as integral to the Air Force’s Global Strike 

initiative and for maintaining air superiority over potential future 

adversaries.5

 Critics argue that the Soviet threat it was originally designed

to counter no longer exists and that its remaining budget dollars could be 

better invested in enhancing current air assets and acquiring new and 

more transformational capabilities that will allow DOD to meet evolving 

threats. Its fiscal year 2007 request includes $800 million for continuing 

development and modifications for aircraft enhancements such as 

equipping the F-22A with an improved ground attack capability and 

improving aircraft reliability. The request also includes about $2.0 billion 

for advance procurement of parts and funding of subassembly activities 

for the initial 20 aircraft of a 60-aircraft multiyear procurement. 

Background 

JSF is a replacement for a substantial number of aging fighter and attack 

aircraft currently in the DOD inventory. For the Air Force, it is intended to

replace the F-16 and A-10 while complementing the F-22A. For the Marine 

Corps, the JSF is intended to replace the AV-8B and F/A-18 A/C/D; for the 

Navy, the JSF is intended to complement the F/A-18E/F. DOD estimates 

that as currently planned, it will cost $257 billion to develop and procure 

about 2,443 aircraft and related support equipment, with total costs to 

maintain and operate JSF aircraft adding $347 billion over the program’s 

life cycle. After 9 years in development, the program plans to deliver its 

 4

The F/A-18E/F,which began development in 1992, evolved from the F/A-18 aircraft 

program and has been in production since 1997. Currently, the program is producing 

aircraft under its second multiyear contract. Because of the maturity of the F/A-18E/F 

program, we did not review it for this engagement. 

5

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. 

Page 4 GAO-06-487T 
first flight test aircraft later this year. The fiscal year 2007 budget request 

includes $4 billion for continuing development and $1.4 billion for the 

purchase of the first 5 procurement aircraft, initial spares, and advance 

procurement for 16 more aircraft to be purchased in 2008. 

We have frequently reported on the importance of using a sound, 

executable business case before committing resources to a new product 

development. In its simplest form, such a business case is evidence that 

(1) the warfighter’s needs are valid and can best be met with the chosen 

concept and quantities, and (2) the chosen concept can be developed and 

produced within existing resources—that is, proven technologies, design 

knowledge, adequate funding, and adequate time to deliver the needed 

product. At the heart of a good business case is a knowledge-based 

strategy to product development that demonstrates high levels of 

knowledge before significant commitments of time and money are made.

The future of DOD’s tactical aircraft recapitalization depends largely on

the outcomes of the F-22A and JSF programs—which represent about $245 

billion in investments to be made in the future. Yet achieving expected 

outcomes for both these programs continues to be fraught with risk. We 

have reported that the F-22A’s original business case is unexecutable and 

does not reflect changing conditions over time. Currently, there is a 

significant mismatch between the Air Force’s stated need for F-22A 

aircraft and the resources the Office of the Secretary of Defense (OSD) is 

willing to commit. The business case for the JSF program, which has 90 

percent of its investments still in the future, significantly overlaps 

production with development and system testing—a strategy that often

results in cost and schedule increases. Both programs are at critical 

junctures that require DOD to make important business decisions. 

F-22A and JSF 

Acquisition Business 

Cases Still Include 

Considerable Risks 

Page 5 GAO-06-487T 
Matching F-22A 

Requirements and 

Resources Is 

Crucial to Future 

Recapitalization 

Investment Decisions 

According to the Air Force, a minimum of 381 modernized F-22A aircraft 

are needed to satisfy today’s national strategic requirements6

—a buy that

is roughly half the 750 aircraft originally planned, but more than double 

the 183 aircraft OSD states available funding can support. Since the Air 

Force began developing the F-22A in 1986, the business case for the 

program has changed radically— threats have changed, requirements have 

been added, costs have increased, funds have been added, planned 

quantities have been reduced, and deliveries of the aircraft to the 

warfighter have been delayed. There is a 198-aircraft capability gap today.

Decisions in the last 2 years have worsened the mismatch between Air 

Force requirements and available resources, further weakening the F-22A

program’s business case. Without a new business case, an agreement on 

an appropriate number of F-22As for our national defense, it is uncertain

as to whether additional investments in the program are advisable. 

The original business case for the F-22A program was to develop air 

superiority fighters to counter a projected threat of significant quantities 

of advanced Soviet fighters. During the 19-year F-22A development 

program, that threat did not materialize to the degree expected. Today, the 

requirements for the F-22A have evolved to include what the Air Force has 

defined as a more robust ground attack capability to destroy expected air

defense systems and other ground targets and an intelligence-gathering 

capability. However, the currently configured F-22A is not equipped to 

carry out these roles without further investments in its development. The 

F-22As modernization program is currently being planned for three basic 

blocks, or spirals, of increasing capability to be developed and delivered

over time. Current Air Force estimates of modernization costs, from 2007 

through 2016, are about $4.3 billion. Additional modernization is expected, 

but the content and costs have not been determined or included in the 

budget. 

OSD has restructured the acquisition program twice in the last 2 years to 

free up funds for other priorities. In December 2004, DOD reduced the 

program to 179 F-22As to save about $10.5 billion. This decision also 

 6

 The Air Force states a need for one squadron of 24 F-22A aircraft for each of the 10 Air 

Expeditionary Forces, the planned organization of the Air Force aircraft and personnel for

operations and deployments. This equates to 240 aircraft. The remaining 141 aircraft are

needed for training, and attrition, and to allow for periodic depot maintenance required for 

each aircraft. The Air Force states that if all 381 aircraft are acquired, the Air Force could 

retire about 566 legacy aircraft; if not, several billions of modification dollars will be 

required to extend their structural life to keep them operational. 

Page 6 GAO-06-487T 
terminated procurement in 2008. In December 2005, DOD changed the F22A program again, adding $1 billion to extend production for 2 years to

ensure a next-generation fighter aircraft production line would remain in 

operation in case JSF experienced delays or problems. It also added 4 

aircraft for a total planned procurement of 183 F-22As. As part of the 2005

change, aircraft previously scheduled in 2007 will not be fully funded until

2008 or later.

OSD and the Air Force plan to buy the remaining 60 F-22As in a multiyear 

procurement that would buy 20 aircraft a year for 3 years—2008 through 

2010. The Air Force plans to fund these aircraft in four increments—an 

economic order quantity to buy things cheaper; advanced procurement for 

titanium and other materials and parts to protect the schedule;

subassembly; and final assembly. The Air Force plans to provide Congress 

a justification for multiyear procurement in May 2006 and the fiscal year 

2007 President’s Budget includes funds for multiyear procurement. The 

following table shows the Air Force’s plan for funding the multiyear 

procurement. Air Force officials have told us that an additional $400 

million in funds are needed to complete the multiyear procurement and 

that the accelerated schedule to obtain approval and start the effort adds

risk to the program, creating more weaknesses in the current F-22A 

business case. 

Page 7 GAO-06-487T 
Table 1: F-22A Proposed Multiyear Procurement Funding 

Dollars in millions 

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Total

Lot 7 Buy 

Economic Order Quantity 200.0 200.0

Advance Procurement 569.2 569.2

Subassembly 1,503.9 1,503.9

Final Assembly 1,362.4 1,362.4

Other Cost 68.1 68.1

Subtotal $569.2 $1,772.0 $1,362.4 $3,703.6

Lot 8 Buy 

Advance Procurement 277.4 277.4

Subassembly 1,433.3 1,433.3

Final Assembly 1,342.8 1,342.8

Other Cost 47.4 47.4

Subtotal $277.4 $1,480.7 $1,342.8 $3,100.9

Lot 9 Buy 

Advance Procurement 366.6 366.6

Subassembly 1,515.7 1,515.7

Final Assembly 1,694.5 1,694.5

Other Cost 48.3 16.2 12.9 77.4

Subtotal $366.6 $1,564.0 $1,710.7 $12.9 $3,654.2

Total $569.2 $2,049.4 $3,209.7 $2,906.8 $1,710.7 $12.9 $10,458.7

Source: DOD data. 

Note: Other cost includes funding for modifications and munitions. 

A 198-aircraft gap between what the Air Force needs and what is 

affordable raises questions about what additional capabilities need to be 

included in the F-22A program. In March 2005, we recommended that the

Air Force develop a new business case that justified additional 

investments in modernizing the aircraft to include greater ground attack 

and intelligence-gathering capabilities before moving forward. DOD 

responded to our report that business case decisions were handled 

annually in the budget decisions and that the QDR would analyze 

requirements for the F-22A and make program decisions. However, it is 

not clear from the QDR report, issued last month, what analyses were 

conducted to determine the gaps in capability, the alternatives considered, 

the quantities needed, or the costs and benefits of the F-22A program. 

Therefore, questions about the F-22A program remain: 

Page 8 GAO-06-487T 
• What capability gaps exist today and will exist in the future (air 

superiority, ground attack, electronic attack, intelligence gathering)? 

• What alternatives besides the F-22A can meet these needs? 

• What are the costs and benefits of each alternative? 

• How many F-22As are needed? 

• What capabilities should be included? 

Until these questions are answered and differences are reconciled, further 

investments in the program—for either the procurement of new aircraft or 

modernization—cannot be justified.

JSF Business Case Still 

Contains Cost and 

Schedule Risks 

The JSF program appears to be on the same path as the F-22A program. 

After being in development for 9 years, the JSF program has not produced 

the first test aircraft, has experienced substantial cost growth, has reduced

the number of planned aircraft, and has delayed delivery of the aircraft to

the warfighter. Moreover, the JSF program remains committed to a 

business case that invests heavily in production before testing has 

demonstrated acceptable performance of the aircraft. At the same time, 

the JSF program has contracted to develop and deliver the aircraft’s full 

capability in a single-step, 12-year development program—a daunting task 

given the need to incorporate the technological advances that, according 

to DOD, represent a quantum leap in capability. The business case is a 

clear departure from the DOD policy preference that calls for adopting an 

evolutionary approach to acquisitions. Furthermore, the length and cost of

the remaining development are exceedingly difficult to accurately 

estimate, thereby increasing DOD’s risks in contracting for production. 

With this risky approach, it is likely that the program will continue to 

experience significant cost and schedule overruns. 

The JSF program expects to begin low-rate initial procurement in 2007 

with less than 1 percent of the flight test program completed and no 

production representative prototypes built for the three JSF variants.7

Technologies and features critical to JSF’s operational success, such as a 

low observable and highly common airframe, advanced mission systems, 

and maintenance prognostics systems, will not have been demonstrated in 

a flight test environment when production begins. Other key 

 7

 The JSF aircraft design includes three variants: a conventional takeoff and landing 

variant; an aircraft carrier-suitable variant; and a short takeoff and vertical landing. 

Page 9 GAO-06-487T 
demonstrations that will have not been either started or only in the initial 

stages before production begins include 

• testing with a fully integrated aircraft—mission systems and full 

software, 

• structural and fatigue testing of the airframe, and 

• shipboard testing of Navy and Marine Corps aircraft. 

When the first fully integrated and capable development JSF is expected to

fly in 2011, DOD will already have committed to buy 190 aircraft at an 

estimated cost of $26 billion. According to JSF program plans, DOD’s lowrate initial production quantities will increase from 5 aircraft a year in 2007 

to 133 a year in 2013, when development and initial operational testing are 

completed.8

 By then, DOD will have procured more than double that 

amount—424 aircraft at an estimated cost of about $49 billion, and 

spending for monthly production activities is expected to be about $1 

billion, an increase from $100 million a month when production is 

scheduled to begin in 2007. Figure 1 shows the significant overlap in 

development and testing and the major investments in production. 

 8

 These figures do not include the potential for orders for international partners during lowrate initial production. Preliminary data indicate that these orders could significantly 

increase this rate. 

Page 10 GAO-06-487T 
Figure 1: Overlap of Low-Rate Initial Production Investments and Testing Demonstrations of the JSF Variants 

Cumulative 0 2 5 3 70 126 190 291 424

aircraft

Cumulative 

production 

investment

(in billions of dollars)

$0.2 $4.9 $11.7 $1 $1.5 8.7 $26 $36.9 $49.3

Percentage of

flight test program

completea

0 1% 3% 13% 35% 56% 77% 98%

Airframe

durability and

reliability tests

Block 1

(air interdiction)

Block 3

(deep strike

capabilities)

Block 2

(close air support,

improved

air interdiction)

Ground tests

Lifetime 1 Lifetime 2

Basic flying

qualities and

aircraft first flights

Mission

capabilities

2006 2007 2008 2009 2010 2011 2012 2013

Source: DOD (2005 data); GAO (analysis and presentation).

Early

prototype

Short takeoff

plane

Conventional

plane

Fatigue tests

Static tests

Developmental testing Operational testing

Developmental testing Operational testing

Developmental testing

Operational

testing

Carrier plane

a

Flight testing data reflects the percentage of the total flight tests completed at the time of the planned 

investment decision, which is currently planned for January of each year. 

The overlap in testing and production is the result of a business case and

acquisition strategy that has proven to be risky in past programs like 

F-22A, Comanche, and B-2A, which far exceeded the cost and delivery

goals set at the start of their development programs. JSF has already 

increased its cost estimate and delayed deliveries despite a lengthy 

Page 11 GAO-06-487T 
replanning effort that added over $7 billion and 18 months to the 

development program. JSF officials have stated that the restructured 

program has little or no flexibility for future changes or unanticipated 

risks. The program has planned about 8 years to complete significant 

remaining activities of the system development and demonstration phase, 

including 

• fully maturing 7 of the 8 critical technologies; 

• completing the designs and releasing the engineering drawings for all 

three variants; 

• manufacturing and delivering 15 flight test aircraft and 7 ground test 

articles; 

• developing 19 million lines of software code; and

• completing a 7-year, 12,000-hour flight test program. 

The JSF program’s latest planned funding profile for development and 

procurement, produced in December 2004 by the JSF program office, 

assumes annual funding rates to hover close to $13 billion between 2012 

and 2022, peaking at $13.8 billion in 2013. If the program fails to achieve its

current estimated costs, funding challenges could be even greater than 

that. The Office of Secretary of Defense Cost Analysis Improvement Group 

was to update its formal independent cost estimate in the spring of 2005. 

The group now does not expect to formally complete its estimate until 

spring 2006, but its preliminary estimate was substantially higher than the 

program office’s. A modest cost increase would have dramatic impacts on 

funding. For example, a 10 percent increase in production costs would 

amount to over $21 billion (see fig. 2). 

Page 12 GAO-06-487T 
Figure 2: JSF’s Annual Funding Requirements, as of December 2004

Billions of then-year dollars

Source: GAO analysis of DOD data.

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

5.8

6.5

7.9

10.2

9.7

9

12.9

13.8

12.5 12.8 12.7 12.7 12.7 12.7 12.7 12.9 12.9

11.5

9.4

8.9 8.8

8.2

DOD has recently made decisions to reduce near-term funding 

requirements that could cause future JSF costs to increase. It had begun to

invest in the program to develop an alternative engine for the aircraft, but 

now plans to cancel further investments in order to make the remaining 

funds available for other priorities. According to DOD, it believes that 

there is no cost benefit or savings with an engine competition for the JSF 

and there is low operational risk with going solely with a single engine

supplier. DOD has already invested $1.2 billion in funding for this 

development effort through fiscal year 2006. By canceling the program, it 

expects to save $1.8 billion through fiscal year 2011. Developing 

alternative engines is a practice that has been used in past fighter aircraft

development programs like the F-16 and F-15 programs. An alternative 

engine program may help maintain the industrial base for fighter engine 

technology, result in price competition in the future for engine acquisition 

and spare parts, instill incentives to develop a more reliable engine, and 

ensure an operational alternative should the current engine develop a 

problem that would ground the entire fleet of JSF aircraft. As result, the 

JSF decision should be supported by a sound business case analysis. To 

date, we have not seen such an analysis. 

Finally, the uncertainties inherent in concurrently developing, testing, and

producing the JSF aircraft prevent the pricing of initial production orders

on a fixed price basis. Consequently, the program office plans to place 

initial procurement orders on cost reimbursement contracts. These 

Page 13 GAO-06-487T 
contracts will provide for payment of allowable incurred costs, to the 

extent prescribed in the contract. With cost reimbursement contracts a 

greater cost risk is placed on the buyer—in this case, DOD. For the JSF, 

procurement should start when risk is low enough to enter into a fixed 

price agreement with the contractor based on demonstrations of the fully 

configured aircraft and manufacturing processes. 

DOD has not been able to achieve its recapitalization goals for its tactical 

aircraft forces. Originally, DOD had planned to buy a total of 4,500 tactical 

aircraft to replace the aging legacy force. Today, because of delays in the

acquisition programs, increased development and procurement costs, and 

affordability pressures, it plans to buy almost one-third fewer tactical

aircraft (see fig. 3). The delivery of these new aircraft has also been 

delayed past original plans. DOD has spent nearly $75 billion on the F-22A 

and JSF programs since they began, but this accounts for only 122 new 

operational aircraft. 

DOD’s Tactical 

Aircraft 

Recapitalization Goals 

Are Not Being Met 

Figure 3: Comparison of Original and Current Procurement Quantities for the F/A-18E/F, F-22A, and JSF Tactical Aircraft 

Original plan

2005 plan

Cumulative aircraft orders

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Source: GAO analysis of DOD data.

Page 14 GAO-06-487T 
Because DOD’s recapitalization efforts have not materialized as planned,

many aircraft acquired in the 1980s will have to remain in the inventory 

longer than originally expected, incurring higher investment costs to keep 

them operational. According to DOD officials, these aging aircraft are 

approaching the end of their service lives and are costly to maintain at a

high readiness level. While Air Force officials assert that aircraft readiness

rates are steady, they agree that the costs to operate and maintain its 

aircraft over the last decade have risen substantially. Regardless, the 

military utility of the aging aircraft is decreasing. 

The funds used to operate, support, and upgrade the current inventory of 

legacy aircraft represent opportunity costs that could be used to develop 

and buy new aircraft. From fiscal years 2006 to 2011, DOD plans to spend 

about $57 billion9

 for operations and maintenance and military personnel 

for legacy tactical fighter aircraft. Some of these funds could be invested 

in newer aircraft that would be more capable and less costly to operate. 

For example, the Air Force Independent Cost Estimate Summary shows 

that the F-22A will be less expensive to operate than the F-15. The F-22A 

will require fewer maintenance personnel for each squadron, and one 

squadron of F-22As can replace two squadrons of F-15. This saves about 

780 maintenance personnel as well as about $148 million in annual 

operating and support cost according to the independent cost estimate. 

Over the same time frame, DOD also plans to spend an average of $1.5 

billion each year—-or $8.8 billion total—to modernize or improve legacy 

tactical fighter aircraft (see fig. 4). Further delays or changes in the F-22A 

or JSF programs could require additional funding to keep legacy aircraft in

the inventory and relevant to the warfighter’s needs. 

 9

Figure includes cost data for F/A-18 E/F because it could not be broken out from the F-18 

costs.

Page 15 GAO-06-487T 
Figure 4: Development and Modification Estimates for Legacy Tactical Fighter 

Aircraft 

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2006 2007 2008 2009 2010 2011

0

1

2

3

4

5

6

7

8

9

10

Annual Investment

(dollars in billions)

Cumulative Investment

(dollars in billions)

Source: Fiscal year 2007 President’s Budget Request.

Cumulative

Annual development and procurement modification funds

Note: Not all modification costs may be reflected. Decisions stemming from the 2006 QDR or recent 

DOD actions have changed tactical aircraft program funding. Also, F/A-18E/F data were included

because they could not be broken out from the F/A-18 data. 

In testimony last year, we suggested that the QDR would provide an

opportunity for DOD to assess its tactical aircraft recapitalization plans 

and weigh options for accomplishing its specific and overarching goals. In

February 2006, the Secretary of Defense testified that recapitalization of 

DOD’s tactical aircraft is important to maintain America’s air dominance. 

Despite this continued declaration about recapitalizing tactical aircraft, 

DOD’s 2006 QDR report did not present a detailed investment strategy that 

addressed needs and gaps, identified alternatives, and assessed costs and

benefits. With limited information contained in the QDR report, many 

questions are still unanswered about the future of DOD’s tactical aircraft 

modernization efforts. 

Page 16 GAO-06-487T 
As DOD moves forward with its efforts to recapitalize its tactical aircraft 

force, it has the opportunity to reduce operating costs and deliver needed

capabilities to the warfighter more quickly. To take advantage of this 

opportunity, however, DOD must fundamentally change the way it buys 

weapon systems. Specifically, the department must change how it selects 

weapon systems to buy, and how it establishes and executes the business 

case. Although the F-22A program has progressed further in the 

acquisition process than the JSF program, both programs are at critical 

decision-making junctures, and the time for DOD to implement change is 

now. 

DOD Has an 

Opportunity to Set Its 

Tactical Aircraft 

Recapitalization 

Efforts 

on Track 

Before additional investments in the F-22A program are made, DOD and 

the Air Force must agree on the aircraft’s capabilities and quantities and 

the resources that can be made available to meet these requirements. A 

cost and benefit analysis of F-22A capabilities and alternative solutions 

weighed against current and expected threats is needed to determine 

whether a sound business case for the F-22A is possible and whether 

investing an additional $13.8 billion over the next 5 years to procure or 

modernize these aircraft is justified. 

With more than 90 percent of investment decisions to develop, test, and

buy JSF aircraft remaining, DOD could implement significant changes in 

its business case before investing further in the JSF program. The JSF 

program should delay production and investments in production capability 

until the aircraft design qualities and integrated mission capabilities of the 

fully configured and integrated JSF aircraft variants have been proven to 

work in flight testing. Also, an evolutionary acquisition strategy to limit 

requirements for the aircraft’s first increment of capabilities that can be 

achieved with proven technologies and available resources could 

significantly reduce the JSF program’s cost and schedule risks. Such a 

strategy would allow the program to begin testing and low-rate production 

sooner and, ultimately, to deliver a useful product in sufficient quantities 

to the warfighter sooner. Once the JSF is delivered, DOD could begin 

retiring its aging and costly tactical aircraft. Capabilities that demand as 

yet undemonstrated technologies would be included as requirements in 

future JSF aircraft increments that would be separately managed. An 

evolutionary, knowledge-based acquisition approach would not only help

Page 17 GAO-06-487T 
significantly minimize risk and deliver capabilities to the warfighter 

sooner, it would be in line with current DOD policy preferences. 10

DOD’s use of an evolutionary, knowledge-based approach is not 

unprecedented. The F-16 program successfully evolved capabilities over 

the span of 30 years, with an initial F-16 capability delivered to the 

warfighter about 4 years after development started. Figure 5 illustrates the 

F-16 incremental development approach. 

 10 DOD argues that the JSF program is using an evolutionary approach because it is

developing capabilities in a series of blocks. However, the approach is not truly 

evolutionary, as DOD does not consider each block as a separate program—a critical 

aspect of an evolutionary approach. In addition, DOD currently expects to buy 95 percent 

of the JSF aircraft in the final block—which delays providing useful capabilities to the 

warfighter. 

Page 18 GAO-06-487T 
Figure 5: F-16 Incremental Development Approach

Second

increment

Third

increment

Fourth

increment

Fifth

increment

First

increment

Multirole day fighter

Fly-by-wire flight controls

Highly maneuverable

Multirole day fighter

Structural improvements for 

 future subsystems

Airframe refinements

Multirole, all-weather fighter

Improved radar

Advanced cockpit

Alternate fighter engine

 added

Larger weapons payload

Multirole, all-weather, 

 precision strike fighter

GPS capabilities

Improved ground targeting

Upgraded computer

Multirole, all-weather, 

 suppression of enemy 

 air defense fighter

Advanced targeting system

Precision weapons

Improved engine

F-16

increment

Incremental

capabilities added

Number of

aircraft delivered

Source: DOD (data); GAO (analysis and presentation).

Development effort Production effort

0

Years after start of full-scale development

5 10 15 20 25 30

329

456

721

462

271

The F-16 program provides a good acquisition model for the JSF program. 

For JSF, an evolutionary approach could entail delivering a first increment 

aircraft with at least as much capability as legacy aircraft with sufficient 

quantities to allow DOD to retire its aging tactical aircraft sooner and 

reduce operating inefficiencies. Limiting development to 5-year 

increments or less, as suggested in DOD’s acquisition policy, would force 

smaller, more manageable commitments in capabilities and make costs 

and schedules more predictable. Some of the more challenging JSF 

capabilities, such as advanced mission systems or prognostics 

technologies, would be deferred and added to follow-on efforts once they 

are demonstrated in the technology development environment—a more 

Page 19 GAO-06-487T 
conducive environment to maturing and proving new technologies. A 

shorter system development phase would have other important benefits. It 

would allow DOD to align a program manager’s tenure to the completion 

of the phase, which would enable program managers to be held 

accountable for decisions. It also would allow DOD to use fixed-price-type 

contracts for production, and thereby reduce the government’s cost risk. 

Additionally, DOD should do a more comprehensive business case 

analysis of the costs, benefits and risks before terminating the alternative 

engine effort. A competitive engine program may (1) incentivize 

contractors’ to minimize life cycle costs; (2) improve engine reliability and 

quality in the future; (3) provide operational options; and (4) maintain the 

industrial base. 

At a broader level, DOD needs to make more substantive changes to its 

requirements, funding, and acquisition processes to improve weapon 

system program outcomes. We have recommended these changes in past 

reports and DOD has agreed with them. The January 2006 Defense 

Acquisition Performance Assessment report, based on a study directed by

the Deputy Secretary of Defense, made some important observations 

regarding DOD acquisitions. The report concluded that the current 

acquisition process is slow, overly complex, and incompatible with 

meeting the needs of DOD in a diverse marketplace. Notably, the report 

confirmed that a successful acquisition process must be based on 

requirements that are relevant, timely, informed by the combatant 

commanders, and supported by mature technologies and resources 

necessary to realize development. The report also pointed out that DOD’s 

acquisition process currently operates under a “conspiracy of hope,” 

striving to achieve full capability in a single step and consistently 

underestimating what it would cost to attain this capability. The report 

makes a number of key recommendations for changing DOD’s acquisition

process including the following: 

• develop a new requirements process that has greater combatant 

commander involvement and is time-phased, fiscally informed, and 

jointly prioritized; 

• change the current acquisition policy to ensure a time-constrained 

development program is strictly followed; 

• keep program managers from the start of development through 

delivery of the “Beyond Low-Rate Initial Production Report”; and 

• move the start of a development program to the point in time that a 

successful preliminary design review is completed. 

Page 20 GAO-06-487T 
Our work in weapons acquisition and best practices over the past several 

years has drawn similar conclusions. We have made numerous 

recommendations on DOD’s acquisition processes and policy—as well as 

recommendations on specific major weapon system programs—to 

improve cost, schedule, and performance outcomes and to increase 

accountability for investment decisions. In 2000, DOD revised its 

acquisition policy to address some of our recommendations. Specifically, 

DOD has written into its policy an approach that emphasizes the 

importance of knowledge at critical junctures before managers agree to 

invest more money in the next phase of weapon system development. 

Theoretically, a knowledge-based approach results in evolutionary—that 

is, incremental, manageable, predictable—development and uses controls 

to help managers gauge progress in meeting cost, schedule, and 

performance goals. However, DOD policy lacks the controls needed to

ensure effective implementation of this approach. Furthermore, decision

makers have not consistently applied the necessary discipline to

implement its acquisition policy and assign much-needed accountability 

for decisions and outcomes. Some of key elements of acquisition that we 

believe DOD needs to focus on include the following: 

• constraining individual program requirements by working within 

available resources and by leveraging systems engineering; 

• establishing clear business cases for each individual investment; 

• enabling science and technology organizations to shoulder the 

technology burden; 

• ensuring that the workforce is capable of managing requirements 

trades, source selection, and knowledge-based acquisition strategies; 

• establishing and enforcing controls to ensure appropriate knowledge is 

captured and used at critical junctures before moving programs 

forward and investing more money; and 

• aligning tenure for program managers that matches the program’s 

acquisition time to ensure greater accountability for outcomes. 

In conclusion, despite DOD’s repeated declaration that recapitalizing its 

aging tactical aircraft fleet is a top priority, the department continues to 

follow an acquisition strategy that consistently results in escalating costs 

that undercut DOD’s buying power, forces DOD to reduce aircraft 

purchases, and delays delivering needed capabilities to the warfighter. 

Continuing to follow a strategy that results in disappointing outcomes 

cannot be encouraged—particularly given our current fiscal and national 

security realities. 

Page 21 GAO-06-487T 
Mr. Chairman, this concludes my prepared statement. I will be happy to 

answer any questions you or other members of the subcommittee may 

have. 

Joint Strike Fighter: DOD Plans to Enter Production before Testing 

Demonstrates Acceptable Performance, GAO-06-356 (Washington D.C.: 

March 15, 2006). 

GAO Related 

Products 

Defense Acquisitions: Business Case and Business Arrangements Key 

for Future Combat System’s Success, GAO-06-478T (Washington D.C.: 

March 1, 2006). 

Defense Acquisitions: DOD Management Approach and Processes Not 

Well-Suited to Support Development of Global Information Grid, GAO-06-

211, (Washington D.C.: January 30, 2006). 

Defense Acquisitions: DOD Has Paid Billions in Award and Incentive 

Fees Regardless of Acquisition Outcomes, GAO-06-66, (Washington D.C.: 

December 19, 2005). 

Unmanned Aircraft Systems: Global Hawk Cost Increase Understated in

Nunn-McCurdy Report, GAO-06-222R, (Washington D.C.: December 15, 

2005) 

DOD Acquisition Outcomes: A Case for Change, GAO-06-257T, 

(Washington D.C.: November 15, 2005). 

Defense Acquisitions: Progress and Challenges Facing the DD(X)

Surface Combatant Program GAO-05-924T. (Washington D.C.: 

07/19/2005).

Defense Acquisitions: Incentives and Pressures That Drive Problems 

Affecting Satellite and Related Acquisitions. GAO-05-570R. (Washington 

D.C.: 06/23/2005). 

Defense Acquisitions: Resolving Development Risks in the Army’s 

Networked Communications Capabilities is Key Fielding Future Force.

GAO-05-669 (Washington D.C.: 06/15/2005). 

Progress of the DD(X) Destroyer Program. GAO-05-752R. (Washington 

D.C.: 06/14/2005) 

Page 22 GAO-06-487T 
Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications 

for Tactical Aircraft Modernization. GAO-05-519T. (Washington D.C.: 

04/06/2005).

Defense Acquisitions: Assessments of Selected Major Weapon Programs. 

GAO-05-301 (Washington D.C.: 03/31/2005). 

Defense Acquisitions: Future Combat Systems Challenges and Prospects 

for Success. GAO-05-428T. (Washington D.C.: 03/16/2005). 

Defense Acquisitions: Changes in E-10A Acquisition Strategy Needed 

Before Development Starts. GAO-05-273 (Washington D.C.: 03/15/2005). 

Defense Acquisitions: Future Combat Systems Challenges and Prospects 

for Success. GAO-05-442T (Washington D.C.: 03/15/2005). 

Tactical Aircraft: Air Force Still Needs Business Case to Support F/A-22 

Quantities and Increased Capabilities. GAO-05-304. (Washington D.C.: 

03/15/2005).

Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike 

Fighter Program with Different Acquisition Strategy. GAO-05-271. 

(Washington D.C.: 03/15/2005). 

Tactical Aircraft: Status of F/A-22 and JSF Acquisition Programs and 

Implications for Tactical Aircraft Modernization. GAO-05-390T

(Washington D.C.: 03/03/2005). 

Defense Acquisitions: Plans Need to Allow Enough Time to Demonstrate 

Capability of First Littoral Combat Ships. GAO-05-255 (Washington D.C.: 

03/01/2005).

Defense Acquisitions: Improved Management Practices Could Help 

Minimize Cost Growth in Navy Shipbuilding Programs. GAO-05-183

(Washington D.C.: 02/28/2005). 

Unmanned Aerial Vehicles: Changes in Global Hawk’s Acquisition 

Strategy Are Needed to Reduce Program Risks. GAO-05-06 (Washington 

D.C.: 11/05/2004). 

Page 23 GAO-06-487T (120524) 
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