Testimony 

Before the Subcommittee on Tactical Air 

and Land Forces, Committee on Armed 

Services, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 9:00 a.m. EST 

Thursday, March 3, 2005 TACTICAL AIRCRAFT

Status of the F/A-22 and JSF 

Acquisition Programs and 

Implications for Tactical 

Aircraft Modernization 

Statement of Michael Sullivan and Allen Li, Directors 

Acquisition and Sourcing Management Issues 

GAO-05-390T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-390T. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Allen Li at (202) 

512-4841 or lia@gao.gov, or Michael J. 

Sullivan at (202) 512-4841 or 

sullivanm@gao.gov. 

Highlights of GAO-05-390T, a testimony to 

before the Subcommittee on Tactical Air 

and Land Forces, Committee on Armed 

Services, House of Representatives 

March 3, 2005

TACTICAL AIRCRAFT

Status of the F/A-22 and JSF Acquisition 

Programs and Implications for Tactical 

Aircraft Modernization 

The F/A-22 and Joint Strike Fighter 

(JSF)—two of the Department of 

Defense’s (DOD) major tactical 

aircraft fighter programs—are 

intended to replace aging tactical 

fighter aircraft with highly 

advanced, stealthy aircraft. The 

two programs combined have a 

potential future investment of more 

than $240 billion. 

 

Later this month, GAO plans to 

issue comprehensive reports on the 

numerous setbacks each of these 

programs has experienced since 

they were initiated and their effect 

on the F/A-22 and JSF business 

cases. This testimony highlights 

key concerns in the F/A-22 and JSF 

programs and discusses the 

implications of these concerns on 

DOD’s overall investment strategy 

for modernizing its tactical fixed 

wing aircraft. 

What GAO Recommends

GAO is making recommendations 

in its two tactical aircraft reports to 

be issued later this month. For the 

F/A-22 program, GAO is reiterating 

its 2004 recommendation for DOD 

to establish a new business case—

one that justifies the continued 

expenditure of funds on the F/A-22. 

For the JSF program, GAO is 

recommending that DOD establish 

an executable business case that is 

consistent with best practices and 

DOD policy regarding knowledgebased, evolutionary acquisitions, 

before the program moves forward. 

Significant changes in the F/A-22 program have severely weakened its 

original business case. Since the F/A-22 program began in 1986, new threats 

emerged and mission requirements changed; to keep the F/A-22 viable, the 

Air Force has planned for large investments in new capabilities. Significant 

delays and cost increases have affected affordability, reducing planned 

deliveries from 750 F/A-22 aircraft to fewer than 180. The recent budget 

decision to terminate procurement of the F/A-22 after fiscal year 2008 and 

the prospect of additional funding cuts also have significant implications for 

the program’s viability and modernization efforts. 

JSF’s original business case, established when the program began in 1996, is 

unexecutable. The cost estimate to develop the aircraft has increased 80 

percent, operational capability has been pushed out 2 years, and expected 

acquisition quantities have been cut by 535 aircraft. The JSF program is 

approaching key investment decisions that will greatly influence the 

efficiency of the remaining funding—over 90 percent of the $245 billion 

estimated total program costs. This sizable investment greatly raises the 

stakes to meet future promises. While DOD has been working to resolve 

early design and performance problems, continuing program uncertainties 

suggest DOD could use more time to gain knowledge before it commits to a 

new business case and moves forward. To reduce the risk of further cost and 

schedule growth, any new business case must include an acquisition strategy 

that adopts an evolutionary, knowledge-based approach to product 

development. Currently, the JSF program plans to make key production 

decisions before critical knowledge is captured. 

JSF Program’s Annual Funding Requirements from 2005 to 2027 

0

2

4

6

8

10

12

14

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Dollars in billions

Fiscal year

Source: GAO analysis of DOD data.

Taken together, the status and problems in these two programs have broader 

implications for the DOD tactical fixed wing aircraft modernization program, 

raising questions as to whether its overarching goals to reduce average 

aircraft age and ownership costs while maintaining the force structure are 

now achievable. The 2005 Quadrennial Defense Review provides an 

opportunity for DOD to assess needs and plans and to weigh options for 

accomplishing its tactical aircraft goals. 
Page 1 GAO-05-390T 

We are pleased to be here today to participate in the Subcommittee’s 

hearing on the status of two of the Department of Defense’s (DOD) major 

tactical aircraft fighter programs, the F/A-22 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 represent a potential future investment for DOD of about 

$240 billion to modernize tactical fixed wing aircraft. 

Our statement today will highlight key concerns in the F/A-22 and JSF 

programs. Our work has shown that because of the significant changes in 

the F/A-22 development and procurement programs and key investment 

decisions remaining, a new business case is needed to justify aircraft 

quantities and investments in new capabilities. Changes in the JSF 

program and DOD’s intent to begin producing aircraft with at least 6 years 

of development remaining suggest that the JSF does not yet have the 

knowledge to justify future investments. In addition to highlighting 

specific F/A-22 and JSF program issues, we will discuss the implications 

these development programs have on DOD’s overall investment strategy 

for modernizing the tactical fixed wing aircraft. 

Our statement is primarily based on our recent evaluations and 

forthcoming reports on the F/A-22 and JSF programs.2

 We performed the 

work associated with this statement in accordance with generally 

accepted government auditing standards. 

The F/A-22 has been in development for 19 years, and cost increases and 

delays have created affordability concerns that reduced the number of 

aircraft planned for acquisition. A changing world environment and threats 

over this time frame have compelled the Air Force to plan for large 

investments in new capabilities to keep the F/A-22 viable. Termination of 

F/A-22 procurement after fiscal year 2008 has also placed modernization 

plans in doubt. The original business case elements—needs and 

resources—-set at the outset of the program are no longer valid, and a new 

business case is needed to justify future investments for aircraft quantities 

and modernization efforts. The F/A-22’s acquisition approach was not 

knowledge-based or evolutionary. It attempted to develop revolutionary 

 1

The third major program, the FA-18EF, currently in production, is not a subject of this 

testimony. 

2

Reports are expected to be released on March 15, 2005. 

Summary 
Page 2 GAO-05-390T 

capability in a single step, causing significant technology and design 

uncertainties and, eventually, significant cost overruns and schedule 

delays. Lessons from the F/A-22 program can be applied to the JSF 

program to improve on its outcomes. 

While relatively early in its acquisition program, the JSF program has 

experienced design and weight problems that, if not solved, will affect 

aircraft performance. These problems have led to increased development 

and procurement costs and schedule delays so far. In addition, the 

program’s customers are still not sure how many aircraft they will need. 

The combination of cost overruns and quantity reductions has already 

diluted DOD’s buying power and made the original JSF business case 

unexecutable. Given continuing program uncertainties, DOD could use 

more time right now to gain knowledge before it commits to a new 

business case for its substantial remaining investments. The JSF’s current 

acquisition strategy does not embrace evolutionary, knowledge-based 

techniques intended to reduce risks. Key decisions, like the planned 2007 

production decision, are expected to occur before critical knowledge is 

captured. Time taken now to gain knowledge will avoid placing sizable 

investments in production capabilities at risk to expensive changes. 

Taken together, the current status and continuing risk in these two 

programs have broader implications to the DOD tactical fixed wing 

aircraft modernization program, raising questions as to whether its 

overarching goals are now achievable. Decreases in quantities alone—

about 30 percent since original plans—raise questions about how well the 

aircraft will complement our tactical air forces in the future. 

The F/A-22 aircraft program is acquiring the Air Force’s next generation, 

multi-mission fighter for about $63.8 billion.3

 The continued need for the 

F/A-22, its increasing costs, and the quantities required 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 

 3

This amount consists of $61.3 billion currently budgeted for the basic program and the 

initial stages of the modernization efforts, $1.3 billion for future start-up costs of a separate 

acquisition program for the latter stages of modernization, and $1.2 billion in costs to 

retrofit aircraft with enhanced capabilities and activate depot maintenance activities. 

Background 
Page 3 GAO-05-390T 

potential future adversaries for years to come.4 Critics, on the other hand, 

argue that the Soviet threat it was originally designed to counter no longer 

exists and that its remaining budget dollars could better be invested in 

enhancing current air assets and acquiring new and more transformational 

capabilities that will allow it to meet evolving threats. The debate 

continues as a December 2004 budget decision by the Office of the 

Secretary of Defense (OSD) reduced F/A-22 funding and the number of 

aircraft to be acquired. A full-rate production decision is scheduled to 

occur in March 2005, but the Air Force already has 98 aircraft on contract. 

The JSF program is the DOD’s most costly aircraft acquisition program. 

The program’s goals are to develop and field more than 2,400 stealthy 

strike fighter aircraft for the Navy, Air Force, and Marine Corps and 

potentially several hundred more aircraft for U.S. allies. International 

participation in the development of this system is a vital part of the 

acquisition strategy. The JSF is intended to provide greater capability and 

to replace DOD’s aging fighter and attack aircraft. DOD estimates that the 

total cost to develop and procure its fleet of aircraft will reach $245 billion, 

with total costs to maintain and operate the JSF adding another $344 

billion over its life cycle. Since the program began in November 1996, it 

has experienced technical challenges that have resulted in significant cost 

increases and schedule overruns. During most of 2004, the program 

worked to understand and define current development risks in order to 

prepare more accurate cost and delivery estimates to support 

development and production investment decisions planned over the next 2 

years. 

A key to successful acquisition programs is the development of a business 

case that should match requirements with resources—proven 

technologies, sufficient engineering capabilities, time, and funding—-when 

undertaking a new product development. First, the user’s needs must be 

accurately defined, alternative approaches to satisfying these needs must 

be properly analyzed, and quantities needed for the chosen system must be 

well understood. The developed product must be producible at a cost that 

matches the users’ expectations and budgetary resources. Finally, the 

developer must have the resources to design and deliver the product with 

the features that the customer wants and to deliver it when it is needed. If 

 4

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-05-390T 

the financial, material, and intellectual resources to develop the product 

are not available, a program incurs substantial risk in moving forward. 

Since its inception in 1986, the F/A-22 aircraft program has encountered 

numerous and continuing management and technical challenges. Changing 

threats, missions, and requirements have severely weakened the original 

business case. Program milestones have slipped substantially, 

development costs have more than doubled, and a modernization program 

was added. The recent budget decision to terminate procurement after 

fiscal year 2008, the prospect of additional cuts because of ceilings on 

program cost, and upcoming defense reviews have significant implications 

for the program’s viability and the future of modernization efforts. 

In March 2004, we reported that the significant changes in the F/A-22’s 

cost, quantity, capabilities, and mission and the persistent problems and 

delays in its development and testing schedules called for a new business 

case to justify the continued need for the F/A-22. 5

 We recommended that 

OSD direct the Air Force to consider alternatives and examine the 

constraints of future defense spending. In subsequent testimony, we 

reiterated this position, stating that competing priorities—both internal 

and external to DOD’s budget—require a sound and sustainable business 

case for DOD’s acquisition programs based in comprehensive needs 

assessments and a thorough analysis of available resources.6

 In response 

to our recommendation, DOD stated its routine budgeting processes 

annually addressed business case issues on the F/A-22. We disagreed, as 

we do not think those processes provide the breadth or depth of analysis 

needed to develop a comprehensive new business case. 

When initiated, the F/A-22 acquisition program planned to complete 

development in 1995, achieve initial operational capability by March 1996, 

and ultimately procure 750 aircraft. The Air Force currently plans to 

complete development in 2005, achieve initial operational capability by 

December 2005, and procure 178 aircraft. 

 5

GAO, Tactical Aircraft: Changing Conditions Drive Need for New F/A-22 Business Case, 

GAO-04-391 (Washington, D.C.: Mar. 15, 2004). 

6

GAO, Tactical Aircraft: Status of the F/A-22 and Joint Strike Fighter Programs, 

GAO-04-597T (Washington, D.C.: Mar. 25, 2004). 

A New Business Case 

Is Needed to Justify 

Continued Investment 

in the F/A-22 Program 

Problems in the F/A-22 

Program Strain Future 

Viability 
Page 5 GAO-05-390T 

Amidst concerns about escalating costs and schedule, the Congress placed 

cost limitations on both development and production budgets in 1997,7

later removing the development cost cap.8

 According to the Air Force, the 

current production cost cap is $37.3 billion. Affordability concerns have, in 

part, led to the steady decrease in procurement quantities. Two major 

reviews of defense force structure and acquisition plans—the 1993 

Bottom-Up Review and the 1997 Quadrennial Defense Review (QDR)—

significantly reduced F/A-22 quantities. OSD’s “buy to budget” acquisition 

strategy essentially placed a ceiling on total program costs resulting in 

reducing quantities, and in December 2004, Program Budget Decision 753 

reduced F/A-22 funding by $10.5 billion, further reducing in all likelihood 

procurement quantities from 275 to 178 aircraft.9

 The December 2004 

budget decision also ended procurement in fiscal year 2008, instead of 

fiscal year 2011. 

Decreased procurement quantities, along with increased development and 

production costs and increased costs to modernize and enhance 

capability, have led to rising acquisition unit costs. Figure 1 illustrates the 

downward trend in procurement quantities and the upward trend in 

acquisition unit costs.10

 7

 Pub. L. 105-85 (Nov. 18, 1997), section 217. 

8

 Pub. L. 107-107 (Dec. 28, 2001), section 213. 

9

 Program Budget Decision 753 reduced the procurement quantity to 179 aircraft. 

Subsequently, the Air Force transferred one aircraft to be used as a permanent test bed, 

reducing the procurement quantity to 178. The recent crash of an F/A-22 has reduced 

planned operational aircraft to 177. 

10 Program acquisition unit cost includes funding for development, procurement, related 

military construction, and initial modernization divided by total production quantity. 
Page 6 GAO-05-390T 

Figure 1: Quantity and Total Acquisition Unit Cost of F/A-22s 

In arguing for reversal of the December 2004 budget decision to stop 

procurement of the F/A-22 in 2008, Air Force officials note that the 

decision obviates production economies and efficiencies that it expected 

to achieve through a multiyear procurement contract that was to begin in 

fiscal year 2008. Officials also stated that cutting production quantities 

from the final years of the program limit expected savings in annual unit 

procurement costs. As with many DOD acquisitions, Air Force program 

officials had assumed in future budgets that the costs for buying F/A-22s 

would decrease as a result of manufacturing efficiencies, reduced fixed 

costs, productivity projects, and more economical buying quantities. For 

example, the average recurring cost for the F/A-22 in 2003 was about $178 

million, while the average flyaway unit costs for future annual buys were 

projected to decrease to $127 million, $111 million, and $108 million in 

fiscal years 2007, 2008, and 2009 respectively.11

 11 Flyaway unit costs include the cost to produce the basic aircraft, propulsion, and mission 

systems. 

Years

Source: U.S. Air Force (data); GAO (presentation).

Quantity Unit cost in millions of dollars

800

700

600

500

400

300

200

100

Procurement quantity

Total acquisition unit cost

0

350

300

250

200

150

100

50

0

1986 1991 1993 1997 2003 2005
Page 7 GAO-05-390T 

The F/A-22 program changes have also resulted in schedule delays for 

completing development testing, operational testing, and, consequently, 

the full-rate production decision. That decision is currently planned for 

later this month but could slip again given the unsettled environment. 

Before full-rate production can start, the Office of the Director of 

Operational Test and Evaluation must report to the Congress and defense 

leadership on the results of the recently completed initial operational test 

and evaluation.12 In addition, the F/A-22 program must demonstrate it 

satisfies criteria established by the Defense Acquisition Board in 

November 2004, which include delivering a fully resourced plan for followon testing to correct deficiencies identified in initial operational testing 

and evaluation, achieving design stability of the avionics software, 

demonstrating mature manufacturing processes, and validating technical 

order data.13

Final reports detailing the results from initial operational testing and 

evaluation were not available for our review, but Air Force test officials 

told us that testing showed the F/A-22 was “overwhelmingly effective” as 

an air superiority fighter and that its supporting systems were “potentially 

suitable” pending the correction of identified deficiencies. Operational 

testing of the limited ground attack capability in the current design was 

not conducted but is scheduled during follow-on testing planned to start in 

July 2005.14 Air Force officials believe that test results support making the 

full-rate production decision planned in late March 2005. They also believe 

that deficiencies identified in aircraft reliability and maintainability 

(including maintaining low observable characteristics) and in the 

integrated diagnostic systems are readily correctible and the aircraft 

 12Statute 10 U.S.C. 2399 provides that a major defense acquisition program may not proceed 

beyond low-rate initial production until initial operational test and evaluation is completed 

and the congressional defense committees have received the report of testing results from 

the Director of Operational Test and Evaluation. This report is to contain an opinion of test 

adequacy and whether the test results confirm that the system actually tested is 

operationally effective and suitable for combat. 

13The F/A-22 initial operational test and evaluation was conducted by the Air Force 

Operational Test and Evaluation Center from April through December 2004 to support the 

full-rate production decision planned for March 2005. Its operational test plan was designed 

to assess the F/A-22’s combat effectiveness and suitability in an operationally 

representative environment. 

14Air-to-ground attack capabilities are increasingly emphasized by the Air Force, and future 

enhancements are planned for 80 percent of the modernized F/A-22s. More robust ground 

attack and intelligence gathering capabilities will be tested in the future as they are 

developed. 
Page 8 GAO-05-390T 

should meet the needs of the warfighter by the scheduled initial 

operational capability date in December 2005. However, whether the Air 

Force can accomplish all of this by December 2005 remains to be seen. 

Originally, the F/A-22 was intended to replace the F-15 and achieve air-toair superiority to counter large numbers of advanced Soviet fighters in 

conventional warfare. However, over the 19 years that the aircraft has 

been in development, the projected Cold War threats never materialized 

and new threats emerged, changing tactical fighter requirements and 

operational war plans. The Air Force now plans to implement a Global 

Strike concept of operations by developing a robust air-to-ground attack 

capability to allow the aircraft to counter a greater variety of targets, such 

as surface-to-air missiles systems, that pose a significant threat to U.S. 

aircraft. It also plans to equip most of the F/A-22 fleet with improved 

capabilities to satisfy expanded warfighter requirements and to take on 

new missions, including intelligence data gathering and the suppression of 

enemy air defenses and interdiction. 

To implement its Global Strike concept, the Air Force established a timephased modernization program. Table 1 shows how the Air Force intends 

to integrate new capabilities incrementally. 

Future of Modernization 

Plans in Doubt 
Page 9 GAO-05-390T 

Table 1: Planned Modernization Enhancements for the F/A-22 Program 

 Fiscal year when enhancements are expected to be incorporated 

 2007 2011a 2013 2015 

Configurationb Block 20 Block 30 Block 40 

Capabilities increment Global Strike Basic Global Strike 

Enhanced 

Global Strike Full Enhanced Intelligence, 

Surveillance, and 

Reconnaissance 

Quantitiesc 56 91 128 

Examples of enhancements 

to be added 

Update air-to-air 

capabilities and 

improve capabilities to 

launch the Joint Direct 

Attack Munition at 

faster airspeeds and 

longer distances 

Enhance air-to-ground 

capability by adding 

improved radar 

capabilities to seek 

and destroy advanced 

surface-to-air missile 

systems; integrate 

additional air-to-ground 

weapons 

Increase capability to 

suppress or destroy 

the full range of air 

defenses and improve 

speed and accuracy of 

targeting 

Add capability for full 

intelligence, surveillance, 

and reconnaissance 

integration for increased 

target sets and lethality 

Sources: Air Force and Office of Secretary of Defense. 

a

Global Strike Enhanced includes two increments of capability, with the first increment incorporated in 

fiscal year 2009 and the second in 2011. 

b

The Air Force plans to have three configurations (called blocks) that include specific enhancements 

developed in the modernization program. 

c

Quantities in each configuration reflect Air Force plans prior to the December 2004 budget decision 

that reduced quantities. 

In March 2003, OSD’s Cost Analysis Improvement Group (CAIG) estimated 

that the Air Force would need $11.7 billion for the planned modernization 

programs through fiscal year 2018.15 The Air Force’s latest estimate 

includes about $4.1 billion through fiscal year 2011 for the first two 

modernization increments (blocks 20 and 30) and about $1.3 billion 

through fiscal year 2011 for the latter two increments (block 40). The Air 

Force will continue to manage blocks 20 and 30 as part of the F/A-22 

acquisition program. To manage block 40 efforts, OSD has directed the Air 

Force to establish a separate modernization program.16 Future 

modernization costs beyond 2011 have not been fully definitized and are 

 15The OSD CAIG acts as the principal advisory body to the milestone decision authority on 

program cost. The CAIG estimate included costs for development, procurement, and 

retrofit of modernized aircraft. 

16In November 2004, the acting Under Secretary of Defense for Acquisition, Technology and 

Logistics, directed the Air Force to hold separate milestone reviews for the latter stages of 

the modernization program to be consistent with DOD acquisition policy. The Air Force 

plans to manage these efforts as a separate acquisition program. 
Page 10 GAO-05-390T 

subject to change. The modernization program manager projected annual 

funding of $700 to $750 million would be needed for the currently planned 

modernization program after 2011. 

The December 2004 budget decision places much of the modernization 

program in doubt, particularly the latter stages. This is because that 

decision terminated F/A-22 procurement after fiscal year 2008 and many of 

these new and advanced capabilities had been planned for aircraft that 

now will not be bought. Therefore, if the budget cut is sustained, the 

current modernization program will be obsolete and the funding for 

advanced capabilities planned to be incorporated after fiscal year 2008 

would be available for other uses. 

The budget decision causes a ripple effect on other resource plans tied to 

the modernization. For example, it brings into question the need for (1) 

upgrades to the computer architecture and processors estimated to cost 

between $400 million and $500 million; (2) upgrades to government 

laboratory and test range infrastructure like software avionics integration 

labs, flying test beds, and test ranges estimated to cost about $1.8 billion; 

and (3) changes in other activities supporting modernization 

enhancements in the production line, retrofit of aircraft, and establishing 

depot maintenance support estimated at more than $1.6 billion. 

Unlike the F/A-22 program, which is near the end of development, the JSF 

program is approaching key investment decisions that will greatly 

influence the efficiency of the remaining funding—-over 90 percent of the 

$245 billion estimated total program costs—-and determine the risk DOD 

is willing to accept. DOD has not been able to deliver on its initial promise, 

and the sizable investment greatly raises the stakes to meet future 

promises. Given continuing program uncertainties, DOD could use more 

time to gain knowledge before it commits to a new business case and 

moves forward. Any new business case must be accompanied by an 

acquisition strategy that adopts an evolutionary approach to product 

development—one that enables knowledge-based decisions to maximize 

the return on remaining dollars—as dictated by best practices. 

Increased program costs, delayed schedules, and reduced quantities have 

diluted DOD’s buying power and made the original JSF business case 

unexecutable. Program instability at this time makes the development of a 

new and viable business case difficult to prepare. The cost estimate to 

fully develop the JSF has increased by over 80 percent. Development costs 

New JSF Business 

Case and Acquisition 

Strategy Is Critical for 

Program Success 

DOD Needs More Time to 

Develop a New JSF 

Business Case 
Page 11 GAO-05-390T 

were originally estimated at roughly $25 billion. By the 2001 system 

development decision, these costs increased almost $10 billion, and by 

2004, costs increased an additional $10 billion, pushing total development 

cost estimates to nearly $45 billion. Current estimates for the program 

acquisition unit cost are about $100 million, a 23 percent increase since 

2001. Ongoing OSD cost reviews could result in further increases to the 

estimated program cost. At the same time, procurement quantities have 

been reduced by 535 aircraft and the delivery of operational aircraft has 

been delayed. Figure 2 shows how costs, quantities, and schedules have 

changed since first estimates. 
Page 12 GAO-05-390T 

Figure 2: Measures of JSF Cost and Schedule Changes 
Page 13 GAO-05-390T 

Ongoing program uncertainties—including uncertainties about the 

aircraft’s design and procurement quantities—make it difficult to 

understand what capabilities can be delivered with future investments. 

For example, DOD has been working over the past year to restructure the 

JSF program to accommodate changes in the aircraft’s design; until this 

restructuring is completed, it will be difficult to accurately estimate 

program costs. The need for design changes largely resulted from the 

increased weight of the short takeoff and vertical landing variant and the 

impact it was having on key performance parameters. The other JSF 

variants’ designs were affected as well. The program plans to have a more 

comprehensive cost estimate in the spring of 2005. However, a detailed 

assessment has not been conducted to determine the impact that the 

restructured program will have on meeting performance specifications. 

Until the detailed design efforts are complete—after the critical design 

review in February 2006—the program will have difficulty assessing the 

impact of the design changes on performance. While the program office 

anticipates that recent design changes will allow the aircraft to meet key 

performance parameters, it will not know with certainty if the weight 

problems have been resolved until after the plane is manufactured and 

weighed in mid-2007. 

Program officials are also examining ways to reduce program 

requirements while keeping cost and schedules constant. Design and 

software teams have found greater complexity and less efficiency as they 

develop the 17 million lines of software needed for the system. Program 

analysis indicated that some aircraft capabilities will have to be deferred 

to stay within cost and schedule constraints. As a result, the program 

office is working with the warfighters to determine what capabilities could 

be deferred to later in the development program or to follow-on 

development efforts while still meeting the warfighter’s basic needs. It 

may be some time before DOD knows when and what capabilities it will 

be able to deliver. The content and schedule of the planned 7-year, 10,000-

hour flight test program is also being examined. According to the program 

office, the test program was already considered aggressive, and recent 

program changes have only increased the risks of completing it on time. 

Finally, uncertainty about the number and mix of variants the services 

plan to purchase will also affect JSF’s acquisition plans. While the Air 

Force has announced its intention to acquire the short takeoff and vertical 

landing variant, it has yet to announce when or how many it expects to 

buy or how this purchase will affect the quantity of the conventional 

takeoff and landing variant it plans to buy. The number and mix of JSF 

variants that the Navy and Marine Corps intend to purchase—and their 
Page 14 GAO-05-390T 

related procurement costs—also remain undetermined. Foreign partners 

have expressed intent to buy about 700 aircraft between 2012 and 2015, 

but no formal agreements have been signed at this time. The upcoming 

2005 Quadrennial Defense Review—an examination of U.S. defense 

needs—could also affect the procurement quantities and schedule. In 

developing a reliable business case, knowing the quantities to be 

purchased is equally as important as other elements. Without knowing 

types and quantities the program manager cannot accurately estimate 

costs or plan for production. 

In recent years, DOD has revised its weapons acquisition policy to support 

an evolutionary, knowledge-based strategy based on best practices—key 

to executing a future business case and making more informed business 

decisions.17 With an evolutionary acquisition approach, new products are 

developed in increments based on available resources. Design elements 

that are not currently achievable are planned for and managed as separate 

acquisitions in future generations of the product with separate milestones, 

costs, and schedules. While JSF’s acquisition strategy calls for initially 

delivering a small number of aircraft with limited capabilities, the program 

has committed to deliver the full capability by the end of system 

development and demonstration in 2013 within an established cost and 

schedule for a single increment, contrary to an evolutionary approach. 

In addition, JSF’s planned approach will not capture adequate knowledge 

about technologies, design, and manufacturing processes for investment 

decisions at key investment junctures. Our past work has shown that to 

ensure successful program outcomes, a high level of demonstrated 

knowledge must be attained at three key junctures for each increment in 

the program. Table 2 compares best practice and JSF knowledge 

expectations at each critical point. 

 17DOD Directive 5000.1, The Defense Acquisition System (May 2003); DOD Instruction 

5000.2, Operation of the Defense Acquisition System (May 2003). The directive establishes 

evolutionary acquisition strategies as the preferred approach to satisfying DOD’s 

operational needs. The directive also requires program managers to provide knowledge 

about key aspects of a system at key points in the acquisition process. For example, 

program managers are required to reduce integration risk and demonstrate product design 

prior to the design readiness review and to reduce manufacturing risk and demonstrate 

producibility prior to full-rate production. The instruction implements the directive and 

establishes detailed policy for evolutionary acquisition. 

Timely Capture of Product 

Knowledge Needed to 

Support Future Business 

Decisions 
Page 15 GAO-05-390T 

Table 2: Knowledge Attainment on JSF Program at Critical Junctures 

Best practice Knowledge point 1 Knowledge point 2 Knowledge point 3 

 Should be achieved at 

development start. 

Should be achieved by the design 

review. 

Should be achieved by the start of 

production. 

 Separate technology and product 

development, deliver mature 

technology, and have preliminary 

design based on systems 

engineering principles. 

Completion of 90 percent of 

engineering drawing packages for 

structures and systems, critical 

design review completed, and 

design prototyped. 

100 percent of critical 

manufacturing processes under 

statistical control, demonstration 

of a fully integrated product in its 

operational environment to show it 

will work as intended, and 

reliability goals demonstrated. 

JSF Practice Knowledge point 1 was not 

attained at milestone B in 2001. 

Knowledge point 2 will not be 

attained by design review in 

2006 under current plan. 

Knowledge point 3 will not be 

attained by start of production 

in 2007 under current plan. 

 Failed to separate technology and 

product development. Critical 

technologies not mature and 

sound preliminary design not 

established. Several technologies 

not expected to be mature until 

after production begins. 

The program estimates 35 percent 

of the engineering drawing 

packages are expected to be 

released at the critical design 

reviews. Also, prototype testing 

will not be done prior to the design 

review. The design will not be 

stable until after production 

begins. 

Program does not expect to 

demonstrate that the critical 

processes are under statistical 

control until 2009. Program 

expects to demonstrate that a fully 

integrated aircraft will work as 

intended and meets reliability 

goals in 2010-2012 timeframe. 

Source: GAO data and analysis of DOD data 

As shown in table 2, the JSF program will lack critical production 

knowledge when it plans to enter low-rate initial production in 2007. The 

department has included about $152.4 million in its fiscal year 2006 budget 

request to begin long lead funding for low-rate initial production. This 

production decision is critical and knowledge required to be captured by 

Knowledge Point 3 in our best practice model should be achieved before it 

is made. If production begins without knowledge that the design is mature, 

critical manufacturing processes are under control, and reliability is 

demonstrated, costly changes to the design and manufacturing processes 

can occur, driving up costs and delaying delivery of the needed capability 

to the warfighter. The size of the potential risk is illustrated in the 

production ramp-up and investments planned after this decision is made. 

Between 2007 (the start of low-rate production) and 2013 (the scheduled 

start of full-rate production) DOD plans to buy nearly 500 JSF aircraft—20 

percent of its planned total buys—at a cost of roughly $50 billion. The 

program expects to increase low-rate production from 5 aircraft a year to 

143 aircraft a year, significantly increasing the financial investment after 
Page 16 GAO-05-390T 

production begins.18 Between 2007 and 2009, the program plans to increase 

low-rate production spending from about $100 million a month to over 

$500 million a month, and before development has ended and an 

integrated aircraft has undergone operational evaluations, DOD expects to 

spend nearly $1 billion a month. 

To achieve its production rate, the program will invest significantly in 

tooling, facilities, and personnel. According to contractor officials, an 

additional $1.2 billion in tooling alone would be needed to ramp up the 

production rate to 143 aircraft a year. Over half of this increase would be 

needed by 2009—more than 2 years before operational flight testing 

begins. Figure 3 shows the planned production ramp up along with the 

concurrently planned development program for the JSF. 

 18 This includes planned quantities for the United Kingdom of 2 aircraft in fiscal year 2009, 4 

aircraft in fiscal year 2010; 9 aircraft in fiscal year 2011, 9 aircraft in fiscal year 2012, and 10 

aircraft in fiscal year 2013. 
Page 17 GAO-05-390T 

Figure 3: Overlap of JSF Low-Rate Production and System Development and Demonstration Activities (Includes U.S. and U.K. 

Quantities) 

Following are examples of technology, design, and production knowledge 

that should be but will not be captured when the low-rate production 

decision is scheduled to be made. 

• Only one of JSF’s eight critical technologies is expected to be 

demonstrated in an operational environment by the 2007 production 

decision. 

• Only about 40 percent of the 17 million lines of code needed for the 

system’s software will have been released, and complex software needed 

to integrate the advanced mission systems is not scheduled for release 

until about 2010—3 years after JSF is scheduled to enter production. 

Further, most structural fatigue testing and radar cross section testing of 

full-up test articles are not planned to be completed until 2010. 

• The program will not demonstrate that critical manufacturing processes 

are in statistical control, and flight testing of a fully configured and 

integrated JSF (with critical mission systems and prognostics 

technologies) is not scheduled until 2011. 
Page 18 GAO-05-390T 

Further, because of the risk created by the extreme overlap of 

development and production, the program office plans to place initial 

production orders on a cost reimbursement contract, placing a higher cost 

risk burden on the government than is normal. These contracts provide for 

payment of allowable incurred costs, to the extent prescribed in the 

contract. They are used when uncertainties involved in contract 

performance do not permit costs to be estimated with sufficient accuracy 

to use any type of fixed price contract and place greater cost risk on the 

buyer—in this case, DOD. In the case of the JSF, a fixed price contract will 

not be possible until late in the development program. 

Regardless of likely increases in program costs, the sizable continued 

investment in JSF must be viewed within the context of the fiscal 

imbalance facing the nation over the next 10 years. The JSF program will 

have to compete with many other large defense programs as well as other 

priorities external to DOD’s budget. JSF’s acquisition strategy assumes an 

unprecedented $225 billion in funding over the next 22 years, or an 

average of $10 billion a year (see fig. 4).19

 19 This is based on DOD’s December 2003 JSF cost estimate. 

JSF’s Substantial 

Funding 

Requirements May Be 

Difficult to Sustain in 

the Current Fiscal 

Environment 
Page 19 GAO-05-390T 

Figure 4: JSF Program’s Annual Funding Requirements (as of December 2003) 

Funding challenges will be even greater if the program fails to stay within 

current cost and schedule estimates. The consequences of an even modest 

cost increase or schedule delay would be dramatic. For example, we 

estimate that another 1-year delay in JSF development would cost $4 

billion to $5 billion based on current and expected development spending 

rates. A 10-percent increase in production costs would amount to $20 

billion. 
Page 20 GAO-05-390T 

Continuing changes and uncertainties in the F/A-22 and JSF programs 

present significant challenges to DOD in achieving its modernization plans 

which attempt to blend many factors within affordability constraints. 

Factors in the decision making process can include aircraft age, ownership 

costs, readiness, force structure, operating concepts, competing needs, 

available funds, defense policy, and others.20 Today, both F/A-22 and JSF 

programs include significantly fewer aircraft than originally planned—-30 

percent fewer or over 1,000 aircraft. Deliveries intended to provide an 

operational capability have also been delayed in both programs, almost 10 

years in the case of the F/A-22, requiring legacy systems to operate longer 

than planned. As legacy tactical aircraft age and near the end of their 

useful life, they require ever increasing investments to keep them ready 

and capable as the threat evolves—the cost of ownership. 

The reduced F/A-22 force size, now fewer than 180 F/A-22 aircraft instead 

of 750 aircraft planned at the start of the program, could affect the Air 

Force’s force structure and employment strategy. The Air Force still 

maintains it has a nominal requirement for 381 aircraft to meet its new Air 

and Space Expeditionary Forces—the operational mechanism through 

which the Air Force allocates forces to meet the combatant commanders’ 

force rotation requirements—and Global Strike concept of operations. The 

Air Force planned on 10 F/A-22 squadrons to support this operational 

concept. Using the Air Force’s normal methods for calculating force 

requirements, only about 110 aircraft of the total aircraft procured would 

be classified as available for combat and assignment to operational 

units21—yielding only 4 or 5 typical fighter squadrons for assigning across 

the planned 10 air and space expeditionary units. The reduced fleet size 

may require the Air Force to consider the F/A-22 as a low-density/highdemand asset, which would require changes in these expected 

management and employment strategies. It also has implications for 

related resources and plans, including military personnel requirements, 

numbers of operating locations, support equipment, spare parts, and 

logistical support mechanisms. 

 20GAO, Tactical Aircraft: Modernization Plans Will Not Reduce Average Age of Aircraft, 

GAO-01-163 (Washington, D.C.: Feb. 9, 2001). Today acquisition plans include 3,083 aircraft 

(F/A-22, FA-18EF, and JSF). The Air Force has been discussing buying fewer JSF, which 

would further lower the amount of planned new tactical aircraft. 

21The remaining aircraft are used for training and development activities and to account for 

aircraft in for maintenance and those held in reserve for normal attrition. 

Implications for the 

Current Status of 

Tactical Aircraft 

Programs 
Page 21 GAO-05-390T 

Other factors will come to play in the 2005 Quadrennial Defense Review. 

OSD has directed the review to include an assessment of joint air 

dominance in future warfare and the contributions provided by all tactical 

aircraft. An announced defense policy goal is to redirect investment from 

areas of conventional warfare, where the United States enjoys a strong 

combat advantage, toward more transformational capabilities needed to 

counter “irregular” threats, such as the insurgency in Iraq and the ongoing 

war on terror. DOD is also conducting a set of joint capability reviews to 

ensure acquisition decisions are based on providing integrated capabilities 

rather than focused on individual weapons systems. The study results, 

although still months away, could further affect the future of the F/A-22 

and JSF programs including the F/A-22’s modernization plan. In these 

analyses, the new tactical aircraft will also have to compete for funding, 

priority, and mission assignments with operational systems, such as the F15 and F/A-18, and other future systems, such as the Joint Unmanned 

Combat Air Systems. 

The upcoming Quadrennial Defense Review provides an opportunity for 

DOD to assess tactical fixed wing aircraft modernization plans and weigh 

options for accomplishing its specific as well as overarching tactical 

aircraft goals. It is critical that their investment be well managed and 

balanced against DOD’s other priorities. Through the review, DOD can 

seek answers to overall investment strategy questions: 

• What is the role of tactical aircraft in relation to other defense capabilities? 

• Will planned investments in tactical aircraft allow DOD to achieve these 

capabilities and overall transformational goals? 

• Where disconnects exist between goals and expected investment 

outcomes, what are the impacts and how will DOD compensate to 

minimize future security and investment risks? 

If DOD fails to answer these questions and continues with its current 

modernization strategy, it will likely arrive in the future with needs similar 

to those that exist today but with fewer options and resources to resolve 

those needs. As DOD evaluates its tactical aircraft investment alternatives, 

knowledge at the program level is needed to understand how the F/A-22 

and JSF can help achieve overall tactical aircraft modernization goals. 

More specific questions need to be answered for these programs including: 

• Is the F/A-22 the most cost-effective alternative to fill gaps in ground 

attack and intelligence gathering requirements? 
Page 22 GAO-05-390T 

• How many F/A-22s are needed and affordable to carry out the aircraft’s 

original mission, air superiority, and new ground attack and intelligence 

gathering missions? 

• If requirements for the new F/A-22 capabilities are legitimate and not 

solvable by other means, does the Air Force have the resources (mature 

technologies, design knowledge, time, and money) to begin investments in 

a new development program for the F/A-22 enhancements? 

• What is the immediate need for JSF aircraft? Deliver of its ultimate 

capability or replacing aging aircraft with an initial capability? Does the 

acquisition plan satisfy this need? 

• Does the program have the required knowledge about needed quantities 

and capabilities and resources (mature technologies, design knowledge, 

time, and money) to develop a reliable business case at this time? 

• Does DOD have the right acquisition strategy to develop and produce a 

JSF that will maximize its return on the more than $220 billion investment 

that remains in this program? 

While the JSF program started off with a higher-risk approach by starting 

system development with immature technologies, now is the time to 

implement an evolutionary and knowledge-based acquisition strategy to 

manage the system development phase and stabilize the design before 

making large investments in tooling, labor, and facilities to test and 

manufacture the aircraft. The JSF is relatively early in its system 

development and demonstration phase and has an opportunity to learn 

from the F/A-22 program experience. It must take the time needed now to 

gather knowledge needed to resolve key issues that could ultimately result 

in additional cost increases, delays, and performance problems. 

Our F/A-22 and JSF reports planned to be issued on March 15, 2005, will 

include recommendations that DOD answer some of these questions 

before significant additional investments are made. 

Mr. Chairman, this concludes our prepared statement. We would be happy 

to respond to any questions that you or other members of the 

Subcommittee may have. If you have future questions about our work on 

the F/A-22 or JSF, please call Allen Li at (202) 512-4841. 

(120241) 
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