United States General Accounting Office 

Testimony

Before the Subcommittee on National Security, 

Emerging Threats, and International Relations, 

Committee on Government Reform, House of 

Representatives 

GAO

For Release on Delivery 

Expected at 11:00 a.m. EDT 

Monday, July 21, 2003 JOINT STRIKE FIGHTER 

ACQUISITION 

Managing Competing 

Pressures Is Critical to 

Achieving Program Goals 

Statement of Katherine V. Schinasi, Director 

Acquisition and Sourcing Management 

GAO-03-1012T 
The JSF program is based on a complex set of relationships among 

governments and industries from the United States and eight partner 

countries. The program is expected to benefit the United States by reducing 

its share of program costs, giving it access to foreign industrial capabilities, 

and improving interoperability with allied militaries. Partner governments 

expect to benefit financially and technologically through relationships with 

U.S. aerospace companies and access to JSF program data. 

Yet international participation also presents a number of challenges. 

Because of their contributions to the program, partners have significant 

expectations for financial returns, technology transfer, and information 

sharing. If these expectations are not met, their support for the program 

could deteriorate. To realize these financial returns, partners expect their 

industry to win JSF contracts through competition—a departure from 

cooperative programs, which directly link contract awards to financial 

contributions. However, recent actions by the prime contractor could 

indicate a departure from this competitive approach and a return to directed 

work share. Technology transfer also presents challenges. Transfers of 

sensitive U.S. military technologies—which are needed to achieve aircraft 

commonality and interoperability goals—will push the boundaries of U.S. 

disclosure policy. In addition, a large number of export authorizations are 

needed to share project information and execute contracts. These 

authorizations must be submitted and resolved in a timely manner to 

maintain program schedules and ensure partner industry has the opportunity 

to compete for subcontracts. Finally, recent technical challenges threaten 

program costs and possibly partner participation in the program. While 

partners can choose to share any future program cost increases, they are not 

required to do so. Therefore, the burden of any future increases may fall 

almost entirely on the United States. If efforts to meet any of these partner 

expectations come into conflict with program cost, schedule, and 

performance goals, the program office will have to make decisions that 

balance these potentially competing interests within the JSF program. 

Joint Strike Fighter 

The Joint Strike Fighter (JSF) is a 

cooperative program between the 

Department of Defense (DOD) and 

U.S. allies for developing and 

producing next generation fighter 

aircraft to replace aging 

inventories. As currently planned, 

the JSF program is DOD’s most 

expensive aircraft program to date, 

costing an estimated $200 billion to 

procure about 2,600 aircraft and 

related support equipment. Many in 

DOD consider JSF to be a model 

for future cooperative programs. 

To determine the implications of 

the JSF international program 

structure, GAO identified JSF 

program relationships and 

expected benefits, and assessed 

how DOD is managing challenges 

associated with partner 

expectations, technology transfer, 

and recent technical concerns. 

GAO is not making 

recommendations in this 

testimony. In a report issued 

concurrently (GAO-03-775), GAO is 

recommending that the Secretary 

of Defense direct the JSF program 

office to ensure that international 

supplier planning anticipates and 

mitigates risks associated with 

technology transfer and that 

information concerning the 

selection and management of 

suppliers is available, closely 

monitored, and used to improve 

program outcomes. In comments 

on that report, DOD concurred 

with the recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-03-1012T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Katherine V. 

Schinasi at (202) 512-4841 or 

schinasik@gao.gov. 

Highlights of GAO-03-1012T, a testimony 

before the Subcommittee on National 

Security, Emerging Threats, and 

International Relations, Committee on 

Government Reform, House of 

Representatives 

July 21, 2003 

JOINT STRIKE FIGHTER ACQUISITION 

Managing Competing Pressures Is 

Critical to Achieving Program Goals 
Page 1 GAO-03-1012T Joint Strike Fighter Acquisition 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss the Joint Strike Fighter (JSF) 

international acquisition strategy. DOD views the JSF program as 

both a model for acquisition reform and an example for the future of 

international cooperation. We have previously reported to you on how 

the JSF program is being managed relative to best practices for product 

development. Central to these best practices is the understanding that 

attainment of sufficient knowledge at key program junctures results in a 

low-risk path from design to production. 

My statement focuses on the structure of the JSF program, the benefits 

and challenges cooperative development brings to the overall acquisition 

approach, and the opportunity DOD has to achieve critical program 

goals. We are also releasing a report today, done at your request, which 

addresses many of the issues I am discussing in this statement. 

Because international participation adds complexity to already challenging 

acquisition programs, proponents of other DOD acquisition efforts are 

assessing the potential benefits of using the JSF model and incorporating 

key elements into their program strategies. Choices made to balance both 

partner expectations and overall program goals will be critical not only to 

the success of this program, but potentially for many future cooperative 

development efforts. DOD and the JSF Program Office need to ensure 

that sufficient knowledge is available and appropriately used in making 

these decisions. 
Page 2 GAO-03-1012T Joint Strike Fighter Acquisition 

The JSF program is DOD’s largest cooperative program. It is structured on 

a multitiered set of relationships involving both government and industry 

from the United States and eight allied nations—the United Kingdom, Italy, 

the Netherlands, Turkey, Denmark, Norway, Canada, and Australia. These 

relationships are shown in figure 1. 

Figure 1: JSF Program Relationships 

a

Figure does not reflect relationships that the prime contractors may have with nonpartner countries. 

Background 
Page 3 GAO-03-1012T Joint Strike Fighter Acquisition 

The JSF program structure was established through a framework 

memorandum of understanding (MOU) and individual supplemental 

MOUs between each of the partner country’s defense department or 

ministry and DOD, negotiating on behalf of the U.S. government. These 

agreements identify the roles, responsibilities, and expected benefits for 

all participants. The current negotiated agreement covers only the system 

development and demonstration phase, and participation now does not 

guarantee participation in future phases. 

The program intends to produce three fighter variants to meet multiservice 

requirements: conventional flight for the Air Force, short take-off and 

vertical landing for the Marine Corps, and carrier operations for the Navy. 

As currently planned, the program will cost about $200 billion to develop 

and procure about 2,600 aircraft and related support equipment. 

In October 2001, DOD awarded Lockheed Martin Aeronautics Company 

a contract for the system development and demonstration phase. Pratt 

and Whitney and General Electric were awarded contracts to develop the 

aircraft engines. This phase is estimated to last about 10 years and cost 

about $33 billion; it will involve large, fixed investments in human capital, 

facilities, and materials. The next significant knowledge point will be a 

critical design review, currently planned for July 2005. At that time, the 

aircraft design should be stable and engineering drawings should be 

available to confirm that the design performs acceptably and can be 

considered mature. 

The United States and its partners expect to realize a variety of benefits 

from cooperation on the JSF program. The United States expects to 

benefit from partner contributions and potential future aircraft sales; 

access to partner industrial capabilities; and improved interoperability 

with partner militaries once the aircraft is fielded. Partner governments 

expect to benefit financially and obtain an aircraft they could not afford 

to develop on their own. Partners also expect to benefit from increased 

access to JSF program data, defined influence over aircraft requirements, 

and technology transfers to their industries from U.S. aerospace 

companies. For the partners, industrial return, realized through JSF 

subcontract awards, is critical for their continued participation in 

the program. 

United States and 

Partners Expect 

Significant Benefits 
Page 4 GAO-03-1012T Joint Strike Fighter Acquisition 

According to DOD and the program office, through its cooperative 

agreements, the JSF program contributes to armaments cooperation 

policy in the following four areas: 

• Political/military–expanded foreign relations. 

• Economic–decreased JSF program costs from partner contributions. 

• Technical–increased access to the best technologies of foreign 

partners. 

• Operational–improved mission capabilities through interoperability 

with allied systems. 

DOD and the JSF Program Office expect to benefit financially from direct 

partner contributions and through aircraft purchased by partners and 

other international buyers, which reduces overall unit cost. Foreign 

countries become program partners at one of three participation levels, 

based on financial contribution, which the United States uses to defray 

program costs. For the current system development and demonstration 

phase, partner governments have committed to provide over $4.5 billion 

to the JSF program and are expected to purchase 722 aircraft once 

the aircraft enters the production phase.1

 According to DOD, foreign 

military sales to nonpartner countries could include an additional 1,500 to 

3,000 aircraft. Expected partner financial contributions and aircraft 

purchases are detailed in table 1. 

 1

 Israel and Singapore have recently indicated their intention to participate in the program 

as security cooperation participants, a nonpartner arrangement, that offers limited access 

to program information, without a program office presence. 

United States Benefits 

from Financial 

Contributions and Access 

to Partner Industry 
Page 5 GAO-03-1012T Joint Strike Fighter Acquisition 

Table 1: JSF Partner Financial Contributions and Estimated Aircraft Purchases 

 System development and demonstration Production 

Partner country 

Partner 

level 

Financial 

contributions 

(in millions)a

Percentage of 

total costs 

Projected 

quantities

Percentage of 

total quantities 

United Kingdom Level I $2,056 6.2 150 4.7 

Italy Level II $1,028 3.1 131 4.1 

Netherlands Level II $800 2.4 85 2.7 

Turkey Level III $175 0.5 100 3.2 

Australia Level III $144 0.4 100 3.2 

Norway Level III $122 0.4 48 1.5 

Denmark Level III $110 0.3 48 1.5 

Canada Level III $100 0.3 60 1.9 

Total partner $4,535 13.7b 722 22.8 

United States $28,565 86.3 2,443 77.2 

Sources: DOD and JSF program documents and Arms Export Control Act project certifications to Congress. 

a

Chart values do not reflect any nonfinancial contributions from partners. 

b

Percentages do not add due to rounding. 

Contributions can be financial or nonfinancial. For example, Turkey’s 

system development and demonstration contribution was all cash. 

Denmark contributed $110 million in cash, and also the use of an F-16 

aircraft and related support equipment for future JSF flight tests and the 

use of North Atlantic Treaty Organization command and control assets for 

a JSF interoperability study, which were valued to be worth an additional 

$15 million to the program. 

In addition, U.S. industry cooperation with aerospace suppliers in 

partner countries is expected to benefit the JSF program because of the 

specific advanced design and manufacturing capabilities available from 

those suppliers. For example, British industry has a significant presence 

in the program with BAE Systems as a teammate to Lockheed Martin 

and Rolls Royce as a major engine subcontractor. In addition, Fokker 

Aerostructures in the Netherlands is under contract to develop composite 

flight doors for the JSF airframe. 
Page 6 GAO-03-1012T Joint Strike Fighter Acquisition 

Partner governments expect to benefit financially by leveraging significant 

U.S. resources and inventory requirements to obtain an advanced tactical 

aircraft they could not afford to develop on their own. From a government 

perspective, Level I and II partners have been guaranteed waivers of 

nonrecurring aircraft costs; Level III partners will be considered for a 

similar waiver.2

 All partners are also eligible to receive potential levies 

collected on future foreign military sales of aircraft to nonpartner 

customers.3

 In addition, and in most cases more importantly, partners 

have identified industrial return to in-country suppliers as vital to their 

participation in the program. In a recent study assessing the financial 

impact of the JSF program on international suppliers, DOD reported that 

partners could potentially earn between $5 and $40 of revenue in return 

for each dollar contributed to the program. 

Through government and industrial participation, partner countries 

also expect to benefit from the technology transferred from U.S. to 

partner industry through JSF contract awards. Partners expect that 

early participation in the JSF program will improve their defense 

industrial capability through increased access to design, technical, 

and manufacturing data and through the ability to perform advanced 

planning for operation and support of the JSF once it is delivered in their 

respective countries.4

 Involvement in the early phases of the JSF program 

has provided partners with information on the development of aircraft 

requirements, program costs and schedules, and logistics concepts. 

International partners have access to program and technology information 

through participation on senior-level management decision-making bodies, 

representation in the JSF Program Office, and involvement on program 

integrated product teams. Partner program office personnel, regardless of 

participation level, have equal access to most information. Partner staff 

can request information from integrated product teams on which they 

have no membership, as long as the information is not restricted from 

being released to their countries. 

 2

 The President of the United States may reduce or waive cooperative project nonrecurring 

costs in accordance with the Arms Export Control Act (22 U.S.C. 2761 and 2767). 

3

 According to DOD, final disposition of levies and nonrecurring costs for partners will be 

decided in production phase MOU negotiations. 

4

 Most partners have been involved in the JSF program since the concept development 

phase, which began in 1996. 

Partners Benefit 

Financially and from 

Shared Technology 

and Information 
Page 7 GAO-03-1012T Joint Strike Fighter Acquisition 

International program participants have significant expectations regarding 

government and industry return based on their contributions. As such, 

the JSF Program Office and Lockheed Martin are faced with balancing 

these expectations against other program goals. Recent actions by 

Lockheed Martin to address partner concerns could represent a departure 

from the JSF competitive contracting approach and result in increased 

program costs. International participation in the program also presents a 

challenge because the transfer of technologies necessary to achieve DOD’s 

goals for aircraft commonality is expected to far exceed past transfers of 

advanced military technology. Further, export authorizations for critical 

suppliers need timely planning, preparation, and disposition to help avoid 

schedule delays in the program and ensure partners the opportunity to bid 

for contracts. 

DOD and the JSF Program Office have said that the use of competitive 

contracting is central to meeting partner expectations for industrial 

return and will assist in controlling program costs. JSF officials use 

the term “best value” to describe this approach, which is a departure 

from other cooperative development programs that guarantee 

pre-determined levels of works based on contribution.5

 Partner 

representatives generally agree with the JSF competitive approach to 

contracting, but some emphasize that their industries’ ability to win 

JSF contracts whose total value approaches or exceeds their financial 

contributions for the JSF system development and demonstration phase 

is important for their continued involvement in the program. The program 

office and the prime contractor have a great deal of responsibility for 

providing a level playing field for JSF competitions, including visibility into 

the subcontracting process and opportunities for partner industries to bid 

on subcontracts. To that end, Lockheed Martin performed assessments for 

many of the partners to determine the ability of their industries to compete 

for JSF contracts. The results of these assessments in some cases showed 

potential return that far exceeded country contribution levels. In some 

cases, Lockheed Martin then signed agreements with partner governments 

and suppliers to document the opportunities they would have to bid for 

JSF contracts, as well as the potential value of those contracts. 

 5

 This is not necessarily the same as best value under the Federal Acquisition Regulation, 

which is an acquisition that provides the greatest overall benefit in response to the 

requirement and can be obtained by using one or a combination of multiple source 

selection approaches. 

Program Challenges 

Force JSF Program 

to Balance Competing 

Pressures 

Alternate Contracting 

Approach May be Used to 

Meet Partner Expectations 
Page 8 GAO-03-1012T Joint Strike Fighter Acquisition 

DOD and the JSF Program Office have left implementation of the 

competitive contracting approach to Lockheed Martin whose decisions 

will therefore largely determine how partner expectations are balanced 

against program goals. In at least one case, Lockheed Martin has 

promised an international contractor predetermined work that satisfies 

a major portion of that country’s expected return-on-investment. While 

disavowing knowledge of the specific contents of any such agreement, 

DOD was supportive of their use during partner negotiations. DOD 

officials conceded that the agreements contained in these documents 

departed from the competitive approach. However, the agreements 

were necessary to secure political support in some countries, since the 

U.S. government does not guarantee that the partners will recoup their 

investment through industry contracts on the JSF program. In addition, 

Lockheed Martin has recently developed a plan to use “strategic best value 

sourcing” to supplement its original competitive approach. According to 

DOD, this plan will allow for a limited number of work packages to be 

directly awarded to industry in partner countries where contract awards 

to date have not met expectations. While there are predetermined cost 

goals under these strategic awards, there are concerns from some partners 

that this is a departure from the competitive approach and, in fact, a move 

toward prescribed work share. 

Because Lockheed Martin makes the subcontracting decisions, it bears the 

primary responsibility for managing partner expectations—in addition to 

duties associated with designing, developing, and producing the aircraft. 

Lockheed Martin’s actions seem to indicate a response to partner concerns 

about return-on-investment expectations and a desire to ensure continued 

partner participation. Most partners have a clause in their agreements 

that allow for withdrawal from this phase of the program if industrial 

participation is not satisfactory. If a partner decided to leave the program, 

DOD would be deprived of the additional development funding expected 

from that partner. Lockheed Martin could be faced with lower than 

projected international sales, resulting in fewer units sold. At the same 

time, directed work share often results in less than optimal program 

results. For example, other coproduction programs such as the F-16 

Multinational Fighter, which employ the traditional work share approach, 

often pay cost premiums in terms of increased manufacturing costs 

associated with use of foreign suppliers.6

 6

 U.S. General Accounting Office, F-16 Program: Reasonably Competitive Premiums for 

European Coproduction, GAO/NSIAD-90-181 (Washington, D.C.: May 14, 1990). 
Page 9 GAO-03-1012T Joint Strike Fighter Acquisition 

The United States has committed to design, develop, and qualify aircraft 

for partners that fulfill the JSF operational requirements document and 

are as common to the U.S. JSF configuration as possible within National 

Disclosure Policy.7 DOD and the JSF Program Office must balance 

partner expectations for commonality against the transfer of U.S. military 

technology. Decisions in this area will be critical because the extent of 

technology transfers necessary to achieve program goals will push the 

boundaries of U.S. disclosure policy for some of the most sensitive 

U.S. military technology. To address these issues, Lockheed Martin has 

a contract requirement to conduct a study to develop a partner JSF 

specification that fulfills commonality goals. Due to issues related to 

the disclosure review process, the contractor expects to deliver the 

study to the program office in August 2003, 5 months later than originally 

planned. According to DOD, the program has requested exceptions from 

National Disclosure Policy in some cases to achieve aircraft commonality 

goals and avoid additional development costs. Some DOD officials told 

us that technology transfer decisions have been influenced by JSF 

program goals, rather than adjusting program goals to meet current 

disclosure policy. 

DOD, JSF Program Office, and Lockheed Martin officials agreed that 

technology transfer issues should be resolved as early as possible in order 

to meet program schedules without placing undue pressure on the release 

process. The program has taken steps to address potential concerns, 

including chartering a working group to review how past export decisions 

apply to the JSF program; identify contentious items in advance; and 

provide workable resolutions that minimize the impact to the program 

cost, schedule, or performance. However, partners have expressed 

concern about the pace of information sharing and decision making 

related to the JSF support concept. For example, according to several 

partners, greater access to technical data is needed so that they can 

plan for and develop a sovereign support infrastructure as expressed in 

formal exchanges of letters with the United States. The JSF program is 

conducting trade studies to further define the concept for how the JSF 

will be maintained and supported worldwide so that it can start to address 

these issues. According to program officials, this strategy will identify the 

best approach for maintaining JSF aircraft, and it may include logistics 

 7

 Releasability reviews, such as the low observable/counter low observable review process 

for stealth technology, are necessary to transfer certain sensitive technologies and related 

design and manufacturing data to foreign countries and suppliers. 

JSF Stretches Disclosure 

Boundaries 
Page 10 GAO-03-1012T Joint Strike Fighter Acquisition 

centers in partner countries. Follow-on trade studies would determine the 

cost of developing additional maintenance locations. The implementation 

of the global support solution and the options identified in follow-on trade 

studies will have to be in full compliance with the National Disclosure 

Policy, or the program will need to request exceptions. 

Authorization for export of JSF information to partners and international 

suppliers also present challenges for the program. In addition to the 

U.S. government determining the level of disclosure for partners and 

technology areas, JSF contractors must receive authorization to transfer 

data and technology through the export control process. Due to the 

degree of international participation at both a government and an industry 

level, a large number of export authorizations are necessary to share 

project information with governments, solicit bids from partner suppliers, 

and execute contracts. The JSF Program Office and Lockheed Martin 

told us that there were over 400 export authorizations and amendments 

granted during the JSF concept demonstration phase, and they expect that 

the number of export authorizations required for the current phase could 

exceed 1,000. Lockheed Martin officials told us that an increased level of 

resources has been required to address licensing and other export 

concerns for the program. 

Export authorizations for critical suppliers need to have timely 

planning, preparation, and disposition to help avoid schedule delays 

and cost increases in the program. Without proper planning, there could 

be pressure to expedite reviews and approvals of export authorizations to 

support program goals and schedules. In addition, advanced identification 

of potential alternative sources for critical contracts could be an 

appropriate action to prevent schedule delays in the event of unfavorable 

approval decisions. Although it is required to do so, Lockheed Martin has 

not completed a long-term industrial participation plan that provides 

information on JSF subcontracting. Such a plan could be used to 

anticipate export authorizations needed for international suppliers and 

identify potential licensing concerns far enough in advance to avoid 

program disruption or accelerated licensing reviews. Our work has 

shown that past cooperative programs have experienced cost and 

schedule problems as a result of poor planning for licenses. For example, 

like the JSF, the Army’s Medium Extended Air Defense System program 

involves several sensitive technologies critical to preserving the 

U.S. military advantage. That program failed to adequately plan for release 

requirements related to those technologies and saw dramatic increases in 

Export Control Process 

Presents Challenges for 

JSF Program 
Page 11 GAO-03-1012T Joint Strike Fighter Acquisition 

approval times, which affected contractors’ ability to use existing missile 

technology and pursue the cheapest technical solution.8

Timely disposition of export authorizations is also necessary to avoid 

excluding partner industries from competitions. While Lockheed Martin 

has stated that no foreign supplier has been excluded from any of its 

competitions or denied a contract because of fear of export authorization 

processing times or the conditions that might be placed on an 

authorization, the company is concerned this could happen. In fact, one 

partner told us that export license delays have had a negative effect on 

the participation of its companies because some U.S. subcontractors have 

been reluctant to take on the added burden of the license process. The 

U.S. subcontractors must apply for the export authorization on behalf of 

the foreign supplier, which can add time and expense to their contracts. 

Further, we were told that some partner companies have been unable to 

bid due to the time constraints involved in securing an export license. 

The JSF program has attempted to address the additional administrative 

tasks associated with export authorizations by adding resources to help 

prepare applications and exploring ways to streamline the process. 

For example, Lockheed Martin received a global project authorization 

(GPA)—an “umbrella” export authorization that allows Lockheed Martin 

and other U.S. suppliers on the program to enter into agreements with 

over 200 partner suppliers to transfer certain technical data—from the 

Department of State. Approved in October 2002, implementation of the 

GPA was delayed until March 2003 because of supplier concerns related 

to liability and compliance requirements. In March 2003, the first GPA 

implementing agreement between Lockheed Martin and a company in a 

partner country was submitted and approved in 4 business days. JSF 

partners have expressed dissatisfaction with the time it has taken to 

finalize the conditions under which the GPA can be used and 

disappointment that the authorization may not realize their expectations 

in terms of reducing the licensing burdens of the program. As currently 

structured, the GPA does not cover the transfer of any classified 

information or certain unclassified, export-controlled information in 

sensitive technology areas such as stealth, radar, and propulsion. 

 8

 U.S. General Accounting Office, Defense Acquisition: Decision Nears on Medium 

Extended Air Defense System, GAO/NSIAD-98-145 (Washington, D.C.: June 9, 1998). 
Page 12 GAO-03-1012T Joint Strike Fighter Acquisition 

The Joint Strike Fighter program, and its implications for acquisition 

reform and cooperative development, is a good test of whether the 

desire for better outcomes can outweigh traditional management 

pressures. In our 2001 review of JSF technical maturity, we employed 

knowledge standards consistent with best practices and DOD 

acquisition reforms and found that several technologies critical to 

meeting requirements were not sufficiently mature.9

 The best practice 

for such a decision is to have a match between technologies and weapon 

requirements. At its recent preliminary design review, the JSF program 

uncovered significant problems with regard to various issues, including 

aircraft weight, design maturity, and weapons integration. Such problems 

have historically resulted in increased program costs, longer development 

schedules, or a reduction in system capabilities. While such actions can 

negatively affect the U.S. military services, the impact may be more 

substantial for partners because they have less control over program 

decisions and less ability to adjust to these changes. This may affect 

partners’ participation in the program in a variety of ways. 

First, the continued affordability of the development program and the 

final purchase price are important for partners—both of which could be 

affected by recent technical problems. There is no guarantee that partners 

will automatically contribute to cost overruns, especially if the increase 

is attributable to factors outside their control. Therefore, future cost 

increases in the JSF program may fall almost entirely on the United States 

because there are no provisions in the negotiated agreements requiring 

partners to share these increases. Partner representatives indicated 

that they intend to cooperate with the JSF Program Office and Lockheed 

Martin in terms of sharing increased program costs when justified. 

However, some partner officials expressed concern over the tendency of 

U.S. weapon system requirements to increase over time, which results in 

greater risk and higher costs. While some partners could fund portions of 

cost overruns from military budgets if requested, others told us that even if 

they were willing to support such increases, these decisions would have to 

be made through their parliamentary process. 

DOD has not required any of the partners to share cost program 

increases to date. For example, cost estimates for the system development 

and demonstration phase have increased on multiple occasions since the 

 9 Joint Strike Fighter Acquisition: Mature Critical Technologies Needed to Reduce Risks, 

GAO-02-39 (Washington, D.C.: Oct. 19, 2001). 

Technical Concerns 

Could Affect 

Program Costs and 

Partner Participation 
Page 13 GAO-03-1012T Joint Strike Fighter Acquisition 

program started in 1996. During that time, the expected cost for this 

phase went from $21.2 billion to $33.1 billion as a result of scope changes 

and increased knowledge about cost. According to DOD, partners have not 

been required to share any of these costs because the changes were DOD 

directed and unrelated to partner actions or requirements. To encourage 

partners to share costs where appropriate, the United States has said it 

will consider past cost sharing behavior when negotiating MOUs for future 

phases of the program. If a partner refuses to share legitimate costs during 

the system development and demonstration phase, the United States can 

use future phase negotiations to recoup all or part of those costs. In these 

instances, the United States could reduce levies from future sales, refuse 

to waive portions of the nonrecurring cost charges for Level III partners, 

or in a worst case, choose not to allow further participation in the 

program. However, DOD officials have not committed to using these 

mechanisms to encourage cost sharing. Therefore, DOD may be forced to 

choose between accepting the additional cost burden and asking for 

additional partner contributions—which could jeopardize partner support 

for the program. 

The JSF program is not immune to unpredictable cost growth, schedule 

delays, and other management challenges that have historically plagued 

DOD’s systems acquisition programs. International participation in the 

program, while providing benefits, makes managing these challenges 

more difficult and places additional risk on DOD and the prime contractor. 

While DOD expects international cooperation in systems acquisition to 

benefit future military coalition engagements, this may come at the 

expense of U.S. technological and industrial advantages or the overall 

affordability of the JSF aircraft. Over the next 2 years, DOD will make 

decisions that critically affect the cost, schedule, and performance of the 

program. Because Lockheed Martin bears the responsibility for managing 

partner industrial expectations, it will be forced to balance its ability to 

meet program milestones and collect program award fees against meeting 

these expectations—which could be key to securing future sales of the 

JSF for the company. In turn, DOD must be prepared to assess and 

mitigate any risks resulting from these contractor decisions as it fulfills 

national obligations set forth in agreements with partner governments. 

While some steps have been taken to position the JSF program for 

success, given its size and importance, additional attention from DOD 

and the program office would help decrease the risks associated with 

implementing the international program. 

Conclusion 
Page 14 GAO-03-1012T Joint Strike Fighter Acquisition 

In the report we are releasing today, we recommend that DOD ensure 

that the JSF Program Office and its prime contractors have sufficient 

information on international supplier planning to fully anticipate and 

mitigate risk associated with technology transfer and that information 

concerning the selection and management of suppliers is available, 

closely monitored, and used to improve program outcomes. Toward this 

end, DOD and the JSF Program Office need to maintain a significant 

knowledge base to enable adequate oversight and control over an 

acquisition strategy that effectively designs, develops, and produces the 

aircraft while ensuring that the strategy is carried out to the satisfaction 

of the U.S. services and the international partners. Tools are in place to 

provide this oversight and management, but they must be fully utilized to 

achieve program goals. 

DOD concurred with our report recommendations, agreeing to (1) ensure 

that Lockheed Martin’s JSF international industrial plans are continually 

reviewed for technology control, export control, and risk mitigation 

issues and (2) work with Lockheed Martin to achieve effective program 

oversight when it comes to partner expectations and program goals. 

While we commend this proactive response, we note that DOD did not 

provide any detail as to the criteria to be employed for reviewing industrial 

plans. In addition, DOD did not specify how it plans to collect and monitor 

information in suppliers or elaborate on other steps the JSF Program 

Office would take to identify and resolve potential conflicts between 

partner expectations and program goals. 

Through decisions made on the Joint Strike Fighter program today, DOD 

will also influence other acquisition programs like the Missile Defense 

Agency’s suite of land, sea, air, and space defense systems and the Army’s 

Future Combat System. These programs will potentially shape budgetary 

and strategic military policy for the long term, and as such, need to use 

every tool available for success. Adopting knowledge-based policies and 

practices with regard to these critical acquisition programs is an important 

first step to ensuring that success. 
Page 15 GAO-03-1012T Joint Strike Fighter Acquisition 

Mr. Chairman, that concludes my statement. I will be happy to respond to 

any questions you or other Members of the Subcommittee may have. 

For future questions regarding this testimony, please contact Katherine 

Schinasi, (202) 512-4841. Individuals making key contributions to this 

testimony include Tom Denomme, Brian Mullins, and Ron Schwenn. 

Contacts and 

Acknowledgments 

(120274) 
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