Joint Strike Fighter: Restructuring Places Program on Firmer Footing, but Progress Is Still Lagging
Published: 2011-05-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), is the Department of Defense's (DOD) most costly and ambitious aircraft acquisition, seeking to simultaneously develop and field three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The JSF is critical for recapitalizing tactical air forces and will require a long-term commitment to very large annual funding outlays. The estimated total investment cost is currently about $385 billion to develop and procure 2,457 aircraft. Because of a history of relatively poor cost and schedule outcomes, defense leadership over the past 15 months has directed a comprehensive restructuring of the JSF program that is continuing. This testimony draws substantially from our extensive body of work on the JSF including our April 2011 report, the latest annual review mandated in the National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84 244 (2009). This testimony discusses (1) program cost and schedule changes and their implications on affordability; (2) progress made during 2010; (3) design and manufacturing maturity; and (4) test plans and progress. GAO's work included analyses of a wide range of program documents and interviews with defense and contractor officials.
section_title: What GAO Found
paragraphs: DOD continues to restructure the JSF program, taking positive, substantial actions that should lead to more achievable and predictable outcomes. Restructuring has consequences--higher up-front development costs, fewer aircraft in the near term, training delays, and extended times for testing and delivering capabilities to warfighters. Total development funding is now estimated at $56.4 billion to complete in 2018, a 26 percent cost increase and a 5-year schedule slip from the current baseline. DOD also reduced procurement quantities by 246 aircraft through 2016, but has not calculated the net effects of restructuring on total procurement costs nor approved a new baseline. Affordability for the U.S. and partners is challenged by a near doubling in average unit prices since program start and higher estimated life-cycle costs. Going forward, the JSF requires unprecedented funding levels in a period of more austere defense budgets. The program had mixed success in 2010, achieving 6 of 12 major goals and progressing in varying degrees on the rest. Successes included the first flight of the carrier variant, award of a fixed-price aircraft procurement contract, and an accelerated pace in development flight tests that accomplished three times as many flights in 2010 as the previous 3 years combined. However, the program did not deliver as many aircraft to test and training sites as planned and made only a partial release of software capabilities. The short takeoff and landing (STOVL) variant had significant technical problems and deficient flight test performance. DOD directed a 2-year period to evaluate and engineer STOVL solutions. After more than 9 years in development and 4 in production, the JSF program has not fully demonstrated that the aircraft design is stable, manufacturing processes are mature, and the system is reliable. Engineering drawings are still being released to the manufacturing floor and design changes continue at higher rates than desired. More changes are expected as testing accelerates. Test and production aircraft cost more and are taking longer to deliver than expected. Manufacturers are improving operations and implemented 8 of 20 recommendations from an expert panel, but have not yet demonstrated a capacity to efficiently produce at higher production rates. Substantial improvements in factory throughput and the global supply chain are needed. Development testing is still early in demonstrating that aircraft will work as intended and meet warfighter requirements. About 4 percent of JSF capabilities have been completely verified by flight tests, lab results, or both. Only 3 of the extensive network of 32 ground test labs and simulation models are fully accredited to ensure the fidelity of results. Software development--essential for achieving about 80 percent of the JSF functionality--is significantly behind schedule as it enters its most challenging phase.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our work on the F-35 Lightning  II, also known as the Joint Strike Fighter (JSF). The JSF is the Department  of Defense’s (DOD) most costly and ambitious aircraft acquisition, seeking  to simultaneously develop and field three aircraft variants for the Air  Force, Navy, Marine Corps, and eight international partners. DOD is  acquiring the conventional takeoff and landing (CTOL) variant for the Air  Force, the carrier variant (CV) for the Navy and Marine Corps, and the  short takeoff and landing (STOVL) variant for the Marine Corps. The JSF is  the core of DOD’s long-term tactical aircraft recapitalization plans as it is  intended to replace hundreds of legacy aircraft. Total planned U.S.  investment in JSF is now about $385 billion to develop and acquire 2,457  aircraft through 2035. Acquisition costs are expected to rise when the  department establishes a new approved program baseline next month.
With such a substantial funding commitment amidst pressing warfighter  requirements for this next generation capability, DOD has lately  recognized numerous technical, financial, and management shortcomings  and announced a major restructuring of the JSF program in February 2010.  In March 2010, the department declared that the program experienced a  breach of the critical cost growth statutory threshold and subsequently  certified to Congress in June 2010 that the JSF program should continue.  Appendix I summarizes the evolution of JSF cost and schedule estimates  at key junctures in its acquisition history through the Nunn-McCurdy  certification. Since then, in January 2011, the Secretary of Defense  announced additional development cost increases and further changes  consequent to the ongoing restructure.
GAO has reported on the JSF acquisition program for a number of years.  We’ve identified serious and continuing problems, including escalating  costs, deteriorating schedules, unsatisfactory performance in  manufacturing and delivering aircraft, slow progress in testing, and  concerns about not meeting warfighter requirements on time and in  quantity. We issued our latest JSF report on April 7, 2011. While we  supported the thrust and rationale behind the department’s restructuring  actions, we continued to find generally slow progress across the program  and serious affordability challenges, both in terms of the investment costs  to acquire the JSF and the continuing costs to operate and support it over  the life cycle. To sustain a focus on accountability and facilitate trade-offs  within the JSF program, we recommended that DOD (1) maintain annual  funding levels at current budgeted amounts; (2) establish criteria for  evaluating the progress of the short takeoff and landing (STOVL) variant  and make independent reviews, allowing each variant to proceed at its  own pace; and (3) conduct an independent review of the software  development and lab accreditation processes. DOD concurred with our  recommendations, but this has not been the usual case. Appendix II  summarizes key findings and recommendations in our body of work from  2001 through 2010 and the department’s generally lukewarm responses  and actions taken during that period.
My comments today are focused largely on our latest review and the April  2011 report. This was the second annual JSF report under our current  mandate in the National Defense Authorization Act for Fiscal Year 2010.  For that report, we (1) evaluated program cost and schedule changes and  their implications on affordability; (2) identified progress made in 2010  against established goals; (3) assessed elements of design stability and  manufacturing maturity and reviewed production results; and (4) reported  the status of development testing and technical challenges facing the  program. To conduct this work, we evaluated DOD’s restructuring actions  and impacts on the program, tracked cost and schedule changes, and  determined factors driving the changes. We reviewed program status  reports, manufacturing data, test plans, and internal DOD analyses. We  discussed results to date and future plans to complete JSF development  and move further into procurement with officials from DOD, the JSF  program office, contractor officials, and members of the independent  review teams. We toured aircraft and engine manufacturing plants,  obtained production and supply performance indicators, and discussed  improvements underway with contractors. We conducted this  performance audit from May 2010 to March 2011 in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: JSF Restructuring Improves Program, but Affordability Is Challenged by Rising Costs and Delays
paragraphs: DOD has substantially restructured the JSF program over the past 15  months, taking positive actions that should lead to more achievable and  predictable outcomes. Restructuring has consequences—higher  development costs, fewer aircraft in the near term, training delays, and  extended times for testing and delivering capabilities to warfighters. Key  restructuring changes include the following:    The total system development cost estimate rose to $56.4 billion and its  schedule was extended to 2018. This represents a 26 percent increase in  cost and a 5-year slip in schedule compared to the current approved  program baseline established in 2007.
Resources and time were added to development testing. Testing plans  were made more robust by adding another development test aircraft and  the use of several production aircraft; increasing the number of test flights  by one-third; extending development testing to 2016; and reducing its  overlap with initial operational testing.
Near-term procurement quantities were reduced by 246 aircraft through  2016; the annual rate of increase in production was lowered; and the start  of full-rate production moved to 2018, a 5-year slip from the current  baseline.
The military services were directed to reexamine their initial operational  capability (IOC) requirements, the critical need dates when the warfighter  must have in place the first increment of operational forces available for  combat. We expect the Marine Corps’ IOC will slip significantly from its  current 2012 date and that the Air Force’s and Navy’s IOC dates will also  slip from the current dates in 2016.
To address technical problems and test deficiencies for the Marine Corps’  STOVL variant, the department significantly scaled back its procurement  quantities and directed a 2-year period for evaluating and engineering  technical solutions to inform future decisions on this variant. DOD also  “decoupled” STOVL testing from the other two variants so as not to delay  them and to allow all three to proceed at their own speeds.
The fiscal year 2012 Defense Budget reflects the financial effects from  restructuring actions through 2016. Compared to estimates in the fiscal  year 2010 future years defense program for the same 5-year period, the  department increased development funding by $7.7 billion and decreased  procurement funding by $8.4 billion reflecting plans to buy fewer aircraft.  Table 1 summarizes the revised funding requirements and annual  quantities following the Secretary’s reductions. Even after decreasing  near-term quantities and lowering the annual rate of increase in  production, JSF procurement still escalates significantly. Annual funding  levels more than double and quantities more than triple during this period.  These numbers do not include the additional orders expected from the  international partners.
At the time of our review, DOD did not yet know the full impact from  restructuring actions on future procurement funding requirements beyond  this 5-year period. Cost analysts were still calculating the net effects from  deferring the near-term procurement of 246 aircraft to future years and  from lowering the annual rate of increased procurement. After a Nunn- McCurdy breach of the critical cost growth threshold and DOD  certification, the most recent milestone must be rescinded, the program  restructured to address the cause of the breach, and a new acquisition  program baseline must be approved that reflects the certification  approved by the milestone decision authority. The Secretary has not yet  granted new milestone B approval for the JSF nor approved a new  acquisition program baseline; officials expect to do so next month. We  expect future funding requirements will be somewhat higher than  currently projected. This could reduce the quantities considered  affordable by the U.S. and allies, further driving up unit costs.
Affordability—in terms of the investment costs to acquire the JSF, the  continuing costs to operate and maintain it over the life-cycle, and its  impact on other defense programs—is a challenging issue. Including the  funding added by the restructuring actions, system development cost  estimates have increased 64 percent since program start. (Appendix III  summarizes the increases in target prices and major cost drivers for the air  system and primary engine development contracts.) Also, the estimated  average unit procurement price for the JSF has about doubled since  program start and current forecasts indicate that life-cycle costs will be  substantially higher than the legacy aircraft it replaces. Rising JSF costs  erode buying power and may make it difficult for the U.S. and its allies to  buy and sustain as many aircraft as planned.
Going forward, the JSF will require unprecedented demands for funding in  a period of more austere defense budgets where it will have to annually  compete with other defense and nondefense priorities for the  discretionary federal dollar. Figure 1 illustrates the substantive annual  development and procurement funding requirements—almost $13 billion  on average through program completion in 2035. This reflects the  program’s estimate at the time of the fiscal year 2012 budget submission.  As discussed earlier, defense cost analysts are still computing the long- term procurement funding requirements reflecting the deferral of aircraft  to future years.
section_title: Progress in Achieving the JSF Program’s 2010 Goals Was Mixed
paragraphs: The JSF program established 12 clearly stated goals in testing, contracting,  and manufacturing for completion in calendar year 2010. It had mixed  success, achieving 6 goals and making varying degrees of progress on the  other 6. For example, the program exceeded its goal for the number of  development flight tests but did not deliver as many test and production  aircraft as planned. Also, the program awarded its first fixed-price contract  on its fourth lot of production aircraft, but did not award the fixed-price  engine contract in 2010 as planned. Table 2 summarizes JSF goals and  accomplishments for 2010.
Although still hampered by the late delivery of test aircraft to testing sites,  the development flight test program significantly ramped up operations in  2010, accomplishing 3 times as many test flights as the previous 3 years  combined. The Air Force CTOL variant significantly exceeded the annual  plan while initial limited testing of the Navy’s CV variant was judged  satisfactory, below plans for the number and hours of flight but ahead on  flight test points flown. The Marine Corps’ STOVL, however, substantially  underperformed in flight tests, experienced significant down times for  maintenance, and was challenged by several technical issues unique to this  variant that could add to its weight and cost. The STOVL’s problems were  a major factor in the Secretary’s decision to give the STOVL a 2-year  period to solve engineering issues, assess impacts, and inform a future  decision as to whether and how to proceed with this variant. Table 3  summarizes 2010 flight test results for each variant.
section_title: Program Has Still Not Fully Demonstrated a Stable Design and Mature Manufacturing Processes as It Enters Its Fifth Year of Production
paragraphs: After completing 9 years of system development and 4 years of  overlapping production activities, the JSF program has been slow to gain  adequate knowledge to ensure its design is stable and the manufacturing  process is ready for greater levels of annual production. The JSF program  still lags in achieving critical indicators of success expected from well- performing acquisition programs. Specifically, the program has not yet  stabilized aircraft designs—engineering changes continue at higher than  expected rates long after critical design reviews and well into  procurement. Engineering drawings are still being released to the  manufacturing floor. More changes are expected as testing accelerates.  Also, manufacturing cost increases and delays in delivering test and  production aircraft indicate a need for substantial improvements in factory  throughput and performance of the global supply chain.
Engineering drawings released since design reviews and the number and  rate of design changes exceed those planned at program outset and are  not in line with best practices. Critical design reviews were completed on  the three aircraft variants in 2006 and 2007 and the designs declared  mature, but the program continues to experience numerous changes.  Since 2007, the program has produced 20,000 additional engineering  drawings, a 50-percent increase in total drawings and about five times  more than best practices suggest. In addition, changes to drawings have  not yet decreased and leveled off as planned. Figure 2 tracks and  compares monthly design changes and future forecasts against contractor  plans in 2007.
The monthly rate in 2009 and 2010 was higher than expected and the  program now anticipates more changes over a longer period of time— about 10,000 more changes through January 2016. With most of  development testing still ahead for the JSF, the risk and impact from  required design changes are significant. In addition, emerging concerns  about the STOVL lift fan and drive shaft, fatigue cracks in a ground test  article, and stealth-related issues may drive additional and substantive  design changes.
Manufacturing and delivering test jets took much more time and money  than planned. As in prior years, lingering management inefficiencies,  including substantial out-of-station work and part shortages, continued to  increase the labor needed to manufacture test aircraft. Although there  have been improvements in these factors, final acceptance and delivery of  test jets were still delayed. Total labor hours required to produce the test  aircraft increased over time. The cumulative actual labor hours through  2010 to complete the 12 test aircraft exceeded the budgeted hours  estimated in 2007 by more than 1.5 million hours, a 75 percent increase.  Figure 3 depicts forecasted and actual labor hours for building test jets.
DOD began procuring production jets in 2007 and has now ordered 58  aircraft on the first four low-rate initial production lots. The JSF program  anticipated the delivery of 14 production aircraft through 2010, but none  were delivered during that period. Delivery of the two production jets  ordered in 2007 has been delayed several times since the contract was  signed and the first aircraft was just delivered this month. The prices on  each of the first three cost-reimbursable production contracts have  increased from the amounts negotiated at contract awards and the  completion dates for delivering aircraft have been extended over 9 months  on average. We are encouraged by DOD’s award of a fixed-price incentive  fee contract for lot 4 production and the prospects for the cost study to  inform lot 5 negotiations, but we have not examined contract  specifications. Accumulating a large backlog of jets on order but  undelivered is not an efficient use of federal funds, tying up millions of  dollars in obligations ahead of the ability of the manufacturing process to  produce.
The aircraft and engine manufacturers now have significantly more items  in production flow compared to prior years and are making efforts to  implement restructuring actions and recommendations from expert  defense teams assembled to evaluate and improve production and supply  operations. Eight of 20 key recommendations from the independent  manufacturing review team have been implemented as of September 2010.  Until improvements are fully implemented and demonstrated, the  restructuring actions to reduce near term procurement quantities and  establish a more achievable ramp rate are appropriate and will provide  more time to fully mature manufacturing and supply processes and catch  up with aircraft backlogs. Improving factory throughput and controlling  costs—driving down labor and material costs and delivering on time— are  essential for efficient manufacturing and timely delivery to the warfighter  at the increased production rates planned for the future.
section_title: Testing Has Been Slow and Has Not Demonstrated That the Aircraft Will Work in Its Intended Environment
paragraphs: Since the first flight in December 2006, only about 4 percent of JSF  capabilities have been completely verified by flight tests, lab results, or  both. The pace of flight testing accelerated significantly in 2010, but  overall progress is still much below plans forecasted several years ago.  Furthermore, only a small portion of the extensive network of ground test  labs and simulation models are fully accredited to ensure the fidelity of  results. Software development—essential for achieving about 80 percent  of the JSF functionality—is significantly behind schedule as it enters its  most challenging phase.
Development flight testing was much more active in 2010 than prior years  and had some notable successes, but cumulatively still lagged behind  previous expectations. The continuing effects from late delivery of test  aircraft and an inability to achieve the planned flying rates per aircraft  substantially reduced the amount and pace of testing planned previously.  Consequently, even though the flight test program accelerated its pace last  year, the total number of flights accomplished during the first 4 years of  the test program significantly lagged expectations when the program’s  2007 baseline was established. Figure 4 shows that the cumulative number  of flights accomplished by the end of 2010 was only about one-fifth the  numbers forecast by this time in the 2007 test plan.
By the end of 2010, about 10 percent of more than 50,000 planned flight  test points had been completed. The majority of the points were earned  on airworthiness tests (basic airframe handling characteristics) and in  ferrying the planes to test sites. Remaining test points include more  complex and stringent requirements, such as mission systems, ship  suitability, and weapons integration that have yet to be demonstrated.
The JSF test program relies much more heavily than previous weapon  systems on its modeling and simulation labs to test and verify aircraft  design and subsystem performance. However, only 3 of 32 labs and models  have been fully accredited to date. The program had planned to accredit 11  labs and models by now. Accreditation is essential to validate that the  models accurately reflect aircraft performance and it largely depends upon  flight test data to verify lab results. Moreover, the ability to substitute  ground testing for some flight testing is unproven. Contractor officials told  us that early results are providing good correlation between ground and  flight tests.
Software providing essential JSF capability is not mature and releases to  the test program are behind schedule. Officials underestimated the time  and effort needed to develop and integrate the software, substantially  contributing to the program’s overall cost and schedule problems and  testing delays, and requiring the retention of engineers for longer periods.  Significant learning and development work remains before the program  can demonstrate the mature software capabilities needed to meet  warfighter requirements. The JSF software development effort is one of  the largest and most complex in DOD history, providing functionality  essential to capabilities such as sensor fusion, weapons and fire control,  maintenance diagnostics, and propulsion. JSF has about 8 times more on- board software lines of code than the F/A-18E/F Super Hornet and 4 times  for than the F-22A Raptor. While good progress has been reported on the  writing of code, total lines of code have grown by 40 percent since  preliminary design review and 13 percent since the critical design review.  The amount of code needed will likely increase as integration and testing  efforts intensify. A second software integration line added as part of the  restructuring will improve capacity and output.
Delays in developing, integrating, and releasing software to the test  program have cascading effects hampering flight tests, training, and lab  accreditation. While progress is being made, a substantial amount of  software work remains before the program can demonstrate full  warfighting capability. The program released its second block, or  increment, to flight test nearly 2 years later than the plan set in 2006,  largely due to integration problems. Each of the remaining three blocks— providing full mission systems and warfighting capabilities—are now  projected to slip more than 3 years compared to the 2006 plan. Figure 5  illustrates the actual and projected slips for each of the 5 software blocks  in delivering software to the test program.
Schedule delays require retention of engineering staff for longer periods of  time. Also, some capabilities have been moved to future blocks in attempts  to meet schedule and mitigate risks. Uncertainties pertaining to critical  technologies, including the helmet-mounted display and advanced data  links, pose risks for more delays.
section_title: Concluding Remarks
paragraphs: The JSF program is at a critical juncture—9 years in development and         4 years in limited production–but still early in flight testing to verify  aircraft design and performance. If effectively implemented and sustained,  the restructuring DOD is conducting should place the JSF program on a  firmer footing and lead to more achievable and predictable outcomes.  However, restructuring comes with a price—higher development costs,  fewer aircraft received in the near term, training delays, prolonged times  for testing and delivering the capabilities required by the warfighter, and  impacts on other defense programs and priorities. Reducing near-term  procurement quantities lessens, but does not eliminate the still substantial  and risky concurrency of development and production. Development and  testing activities will now overlap 11 years of procurement. Flight testing  and production activities are increasing and contractors are improving  supply and manufacturing processes, but deliveries are still lagging.  Slowed deliveries have led to a growing backlog of jets on order but not  delivered. This is not a good use of federal funds, obligating millions of  dollars well before the manufacturing process can deliver aircraft.
We agree with defense leadership that a renewed and sustained focus on  affordability by contractors and the government is critical to moving this  important program forward and enabling our military services and our  allies to acquire and sustain JSF forces in needed quantities. Maintaining  senior leadership’s increased focus on program results, holding  government and contractors accountable for improving performance, and  bringing a more responsible management approach to the JSF to “live  within its means” may help limit future cost growth and the consequences  for other programs in the portfolio. The JSF acquisition demands an  unprecedented share of the DOD’s future investment funding. The  program’s size and priority are such that its cost overruns and extended  schedules must either be borne by funding cuts to other programs or else  drive increases in the top line of defense spending; the latter may not be an  option in a period of more austere budgets. Given the other priorities that  DOD must address in a finite budget, JSF affordability is critical and DOD  must plan ahead to address and manage JSF challenges and risks in the  future.
Chairman Levin, Ranking Member McCain, and members of the Senate  Armed Services Committee, this completes my prepared statement. I  would be pleased to respond to any questions you may have.
section_title: GAO Contacts and Acknowledgments
paragraphs: For further information on this statement, please contact Michael Sullivan  at (202) 512-4841 or sullivanm@gao.gov. Contact points for our Office of  Congressional Relations and Public Affairs may be found on the last page  of this statement. Individuals making key contributions to this statement  are Bruce Fairbairn, Charlie Shivers, Julie Hadley, Dr. W. Kendal Roberts,  LeAnna Parkey, and Matt Lea.
section_title: Appendix I: Changes in Reported JSF Program Cost, Quantities, and Deliveries
paragraphs: development start)
December 2003  (replan)
April 2010  (initial program  baseline) restructure)
section_title: Appendix II: Prior GAO Reports on JSF and DOD Responses and Subsequent Actions
paragraphs: Start of system  development and  demonstration approved.
Critical technologies needed for  key aircraft performance elements  are not mature. Program should  delay start of system development  until critical technologies are  mature to acceptable levels.
DOD did not delay start of system  development and demonstration  stating technologies were at  acceptable maturity levels and will  manage risks in development.
The program undergoes  re-plan to address higher  than expected design  weight, which added $7  billion and 18 months to  development schedule.
We recommended that the  program reduce risks and establish  executable business case that is  knowledge-based with an  evolutionary acquisition strategy.
DOD partially concurred but does  not adjust strategy, believing that  their approach is balanced  between cost, schedule and  technical risk.
Program sets in motion  plan to enter production in  2007 shortly after first  flight of the non-production  representative aircraft.
The program plans to enter  production with less than 1 percent  of testing complete. We  recommend program delay  investing in production until flight  testing shows that JSF performs  as expected.
DOD partially concurred but did  not delay start of production  because they believe the risk  level was appropriate.
Congress reduced funding  for first two low-rate  production buys thereby  slowing the ramp up of  production.
Progress is being made but  concerns remained about undue  overlap in testing and production.  We recommend limits to annual  production quantities to 24 a year  until flying quantities are  demonstrated.
DOD non-concurred and felt that  the program had an acceptable  level of concurrency and an  appropriate acquisition strategy.
DOD implemented a Mid- Course Risk Reduction  Plan to replenish  management reserves  from about $400 million to  about $1 billion by  reducing test resources.
We believe new plan actually  increases risks and DOD should  revise the plan to address  concerns about testing, use of  management reserves, and  manufacturing. We determine that  the cost estimate is not reliable  and that a new cost estimate and  schedule risk assessment is  needed.
DOD did not revise risk plan nor  restore testing resources, stating  that they will monitor the new plan  and adjust it if necessary.  Consistent with a report  recommendation, a new cost  estimate was eventually  prepared, but DOD did not do a  risk and uncertainty analysis that  we felt was important to provide a  range estimate of potential  outcomes.
The program increased  the cost estimate and  adds a year to  development but  accelerated the production  ramp up. Independent  DOD cost estimate (JET I)  projects even higher costs  and further delays.
Because of development  problems, we stated that moving  forward with an accelerated  procurement plan and use of cost  reimbursement contracts is very  risky. We recommended the  program report on the risks and  mitigation strategy for this  approach.
DOD agreed to report its  contracting strategy and plans to  Congress. In response to our  report recommendation, DOD  subsequently agreed to do a  schedule risk analysis, but still  had not done so as of February  2011. In February 2010, the  department announced a major  restructuring of the JSF program,  including reduced procurement  and a planned move to fixed-price  contracts.
The program was  restructured to reflect  findings of recent  independent cost team  (JET II) and independent  manufacturing review  team. As a result,  development funds  increased, test aircraft  were added, the schedule  was extended, and the  early production rate  decreased.
Because of additional costs and  schedule delays the program’s  ability to meet warfighter  requirements on time is at risk. We  recommend the program complete  a full comprehensive cost estimate  and assess warfighter and IOC  requirements. We suggest that  Congress require DOD to prepare  a “system maturity matrix” - a tool  for tying annual procurement  requests to demonstrated  progress.
DOD continued restructuring  actions and announced plans to  increase test resources and lower  the production rate.  Independent  review teams evaluated aircraft  and engine manufacturing  processes. As we projected in this  report, cost increases later  resulted in a Nunn-McCurdy  breach. Military services are  currently reviewing capability  requirements as we  recommended. The department  and Congress are working on a  “system maturity matrix” tool to  improve oversight and inform  budget deliberations.
Average procurement unit cost.
section_title: Appendix III: System Development Contracts Target Price Changes
paragraphs: Projected development costs for the air system and primary engine  comprise nearly 80 percent of total system development funding  requirements. Both contracts have experienced significant price increases  since contract awards—79 percent and 69 percent respectively. Figures 6  and 7 depict the price histories for these contracts and the reasons behind  major price increases.
section_title: Related GAO Products
paragraphs: Joint Strike Fighter: Restructuring Places Program on Firmer Footing,  but Progress Still Lags. GAO-11-325. Washington, D.C.: April 7, 2011.
Joint Strike Fighter: Restructuring Should Improve Outcomes, but  Progress Is Still Lagging Overall. GAO-11-450T. Washington, D.C.: March  15, 2011.
Tactical Aircraft: Air Force Fighter Force Structure Reports Generally  Addressed Congressional Mandates, but Reflected Dated Plans and  Guidance, and Limited Analyses. GAO-11-323R. Washington, D.C.:  February 24, 2011.
Defense Management: DOD Needs to Monitor and Assess Corrective  Actions Resulting from Its Corrosion Study of the F-35 Joint Strike  Fighter. GAO-11-171R. Washington D.C.: December 16, 2010.
Joint Strike Fighter: Assessment of DOD’s Funding Projection for the  F136 Alternate Engine. GAO-10-1020R. Washington, D.C.: September 15,  2010.
Tactical Aircraft: DOD’s Ability to Meet Future Requirements is  Uncertain, with Key Analyses Needed to Inform Upcoming Investment  Decisions. GAO-10-789. Washington, D.C.: July 29, 2010.
Defense Acquisitions: Assessments of Selected Weapon Programs.   GAO-10-388SP. Washington, D.C.: March 30, 2010.
Joint Strike Fighter: Significant Challenges and Decisions Ahead.   GAO-10-478T. Washington, D.C.: March 24, 2010.
Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting  Warfighter Requirements on Time. GAO-10-382. Washington, D.C.:       March 19, 2010.
Joint Strike Fighter: Significant Challenges Remain as DOD  Restructures Program. GAO-10-520T. Washington, D.C.: March 11, 2010.
Joint Strike Fighter: Strong Risk Management Essential as Program  Enters Most Challenging Phase. GAO-09-711T. Washington, D.C.: May 20,  2009.
Defense Acquisitions: Assessments of Selected Weapon Programs.   GAO-09-326SP. Washington, D.C.: March 30, 2009.
Joint Strike Fighter: Accelerating Procurement before Completing  Development Increases the Government’s Financial Risk. GAO-09-303.  Washington D.C.: March 12, 2009.
Defense Acquisitions: Better Weapon Program Outcomes Require  Discipline, Accountability, and Fundamental Changes in the  Acquisition Environment. GAO-08-782T. Washington, D.C.: June 3, 2008.
Defense Acquisitions: Assessments of Selected Weapon Programs.   GAO-08-467SP. Washington, D.C.: March 31, 2008.
Joint Strike Fighter: Impact of Recent Decisions on Program Risks.  GAO-08-569T. Washington, D.C.: March 11, 2008.
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.  GAO-08-388. Washington, D.C.: March 11, 2008.
Tactical Aircraft: DOD Needs a Joint and Integrated Investment  Strategy. GAO-07-415. Washington, D.C.: April 2, 2007.
Defense Acquisitions: Assessments of Selected Weapon Programs.   GAO-07-406SP. Washington, D.C.: March 30, 2007.
Defense Acquisitions: Analysis of Costs for the Joint Strike Fighter  Engine Program. GAO-07-656T. Washington, D.C.: March 22, 2007.
Joint Strike Fighter: Progress Made and Challenges Remain. GAO-07-360.  Washington, D.C.: March 15, 2007.
Tactical Aircraft: DOD’s Cancellation of the Joint Strike Fighter  Alternate Engine Program Was Not Based on a Comprehensive Analysis.  GAO-06-717R. Washington, D.C.: May 22, 2006.
Defense Acquisitions: Major Weapon Systems Continue to Experience  Cost and Schedule Problems under DOD’s Revised Policy. GAO-06-368.  Washington, D.C.: April 13, 2006.
Defense Acquisitions: Actions Needed to Get Better Results on Weapons  Systems Investments. GAO-06-585T. Washington, D.C.: April 5, 2006.
Tactical Aircraft: Recapitalization Goals Are Not Supported by  Knowledge-Based F-22A and JSF Business Cases. GAO-06-487T.  Washington, D.C.: March 16, 2006.
Joint Strike Fighter: DOD Plans to Enter Production before Testing  Demonstrates Acceptable Performance. GAO-06-356. Washington, D.C.:  March 15, 2006.
Joint Strike Fighter: Management of the Technology Transfer Process.  GAO-06-364. Washington, D.C.: March 14, 2006.
Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications  for Tactical Aircraft Modernization. GAO-05-519T. Washington, D.C:  April 6, 2005.
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike  Fighter Program with Different Acquisition Strategy. GAO-05-271.  Washington, D.C.: March 15, 2005.
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