Tactical Aircraft: Changing Conditions Drive Need for New F/A-22 Business Case
Published: 2004-03-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Following a history of increasing cost estimates to complete F/A-22 development, Congress asked GAO to assess the Air Force's F/A-22 development program annually and determine whether the Air Force is meeting key performance, schedule, and cost goals. On April 23, 2003, a congressional subcommittee requested that the Department of Defense (DOD) provide more detailed information on the business case that supports the estimated quantities and costs for an affordable F/A-22 program. Specifically, GAO (1) identified changes in the F/A-22 program since its inception, (2) reviewed the status of the development activities, and (3) examined the sufficiency of business case information provided for congressional oversight.
section_title: What GAO Found
paragraphs: The Air Force is developing the F/A-22 aircraft to be less detectable to adversaries, capable of high speeds for long ranges, and able to provide a pilot with improved awareness of the surrounding situation through integrated avionics. In addition, the Air Force plans to expand the F/A-22's ability to engage targets on the ground to provide a robust capability not originally planned at the start of the program. The Air Force plans to begin initial operational test and evaluation in March 2004 and to seek full rate production approval in December 2004. The F/A-22 program has experienced several significant changes since it began development in 1986. First, the Air Force cannot afford to purchase the quantities of aircraft that were planned 18 years ago. The Air Force had originally planned to buy 750 aircraft, but it now estimates it can only afford 218 aircraft. Second, in order to develop the expanded air-to-ground attack capability, the Office of Secretary of Defense estimates that the Air Force will need $11.7 billion in modernization funding. Lastly, the Air Force has determined that new avionics computer processors and architecture are needed to support most planned enhancements, which will further increase program costs and risk. Further, the development test program continues to experience problems and risks further delays. The F/A-22's avionics continue to experience shutdowns and failures. Moreover, the F/A-22 has not met its reliability requirements and has experienced failures in its computerized maintenance support system. This has led to aircraft spending more time on the ground undergoing maintenance. Due to the risks of future cost increases and schedule delays, a congressional subcommittee requested that DOD provide business case information on the F/A-22. However, the information DOD provided did not address why this aircraft is needed given current and projected threats. The business case also did not address how many aircraft the Air Force needs to accomplish its missions, how many the Air Force can afford considering the full life-cycle costs, whether investments in new air-to-ground capabilities are needed, and what are the opportunity costs associated with purchasing any proposed quantities of this aircraft. While the response stated that the Air Force still plans to buy 277 F/A-22 aircraft, the Air Force estimates that only 218 aircraft are affordable within congressionally imposed funding limitations. In addition, significant investment decisions remain and could affect another $40 billion to support this program through full rate production and implementation of the spiraled improvement efforts. In light of the uncertainty concerning how many aircraft are needed in today's environment, the large investments that remain, and unknown outcomes of planned operational testing, GAO continues to have concerns regarding the DOD's readiness to make a full rate production decision.

section_title: Letter
paragraphs: The Air Force is developing the F/A-22 aircraft to be an air superiority and  ground attack aircraft with advanced features to make it less detectable to  adversaries, capable of high speeds for long ranges, and able to provide a  pilot with improved awareness of the surrounding situation. The ability  to engage targets on the ground is being expanded to provide a robust  capability not originally planned at the start of the program. The Air  Force plans to begin initial operational test and evaluation (IOT&E) to  demonstrate the aircraft’s operational effectiveness and suitability in  March 2004 and to seek full rate production approval in December 2004.
The National Defense Authorization Act for Fiscal Year 1998 requires  us to assess the Air Force’s F/A-22 development program annually and  determine whether the Air Force is meeting key performance, schedule,  and cost goals. The Chairman of the Subcommittee on Tactical Air and  Land Forces, House Committee on Armed Services, asked us to continue  monitoring the F/A-22 development program during a hearing on April 2,  2003. On April 23, 2003, the Subcommittee on National Security, Emerging  Threats, and International Relations, House Committee on Government  Reform, asked the Department of Defense (DOD) to provide more detailed  information on the business case that supports the estimated quantities  and costs for an affordable F/A-22 program. In response to the concerns  and directions of these various committees, we (1) identified changes in  the F/A-22 program since its inception, (2) reviewed the status of the  development activities, and (3) examined the sufficiency of business case  information provided for congressional oversight.
We performed our work from July 2003 through March 2004 in accordance  with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: The F/A-22 is planned to be an air superiority and ground attack aircraft  with advanced features to make it less detectable to adversaries (stealth  characteristics) and capable of high speeds for long ranges. It has  integrated avionics that greatly improve pilots’ awareness of the situation  surrounding them. The objectives of the F/A-22 development program are  to (1) design, fabricate, test, and deliver 9 F/A-22 development test  aircraft, 2 nonflying structural test aircraft, 6 production representative  test aircraft, and 37 flight-qualified engines; (2) design, fabricate, integrate,  and test the avionics; and (3) design, develop, and test the support and  training systems. The F/A-22 is being developed under contracts with  Lockheed Martin Corporation, the prime contractor (for the aircraft),and  Pratt & Whitney Corporation (for the engine).
Following a history of increasing cost estimates to complete the  development phase of the F/A-22 program, the National Defense  Authorization Act for Fiscal Year 1998 established a cost limitation for  both the development and the production. Subsequently, the National  Defense Authorization Act of 2002 eliminated the cost limitation for the  development, but it left the cost limit for the production. The production  program is now limited to $36.8 billion. The current cost estimate of the  development program is $28.7 billion.
Currently, the F/A-22 program is both in development and production.  Development is in its final stages, and production has been ongoing since  fiscal year 1999.
The aircraft’s development problems and schedule delays in completing  flight testing have led to congressional concerns. The National Defense  Authorization Act for Fiscal Year 2004 prohibited the obligation of  $136 million in procurement funds until the Under Secretary of Defense,  Acquisition, Technology, and Logistics, submitted to the congressional  defense committees, among other things, a certification that the avionics  software installed on test aircraft can operate at least 5 hours on average  before certain types of avionics anomalies occur. The Under Secretary of  Defense, Acquisition, Technology, and Logistics, the final authority in  making acquisition decisions in DOD, has also included this criterion as a  requirement for the F/A-22 program before entering IOT&E .
section_title: Significant Changes Have Occurred in the F/A-22 Program during Nearly Two Decades of Development
paragraphs: The F/A-22 program has experienced several significant changes since it  began development in 1986. First, the Air Force cannot afford to purchase  the quantities of aircraft that were originally planned 18 years ago. This  reduction in buying power is attributed, in a large part, to increases in  development time and cost due to the program’s failure to employ a  knowledge-based acquisition approach to developing the F/A-22.  Second, in September 2002, the Air Force decided to add a more robust  air-to-ground attack capability than previously envisioned but now  deemed needed to increase the utility of the aircraft. This capability will  add significant cost to the program over the next 10 years. Lastly, the Air  Force has determined that new computer processors and architecture are  needed to support some planned enhancements, which will further  increase program costs and risk.
subsections: section_title: Delays and Higher Costs Have Reduced DOD’s Buying Power
paragraphs: Since the F/A-22 acquisition program started in 1986, cost and schedule  estimates have grown significantly, thus contributing to a loss in  buying power. Development costs are now estimated at $28.7 billion, a  127 percent increase over the 1986 estimates. Planned development cycle  time has grown from 9 years to 19 years, and the initial operational  capability date has slipped over 9 years, from March 1996 to December  2005. These schedule extensions, delays, and cost increases were major  contributors to changes in the Air Force’s initial plan to purchase  750 aircraft. Current Air Force budget estimates include plans to purchase  277 aircraft. Table 1 shows the changes in the F/A-22 program since its  start in 1986 based on information provided in Selected Acquisition  Reports over time.
In our 1988 report, the average unit procurement cost was estimated by  the Air Force to be $69 million. Today, after schedule delays and  development problems, the estimated average unit procurement costs  have grown to $153 million—almost a 122 percent increase. The Air Force  does not expect the development program to be completed until 2005 and  with IOT&E still to be completed, the possibility of additional changes and  costs is likely.
As we previously reported, the acquisition approach of the F/A-22  program has contributed to cost increases and delays in schedule. Leading  commercial firms that we studied employ an acquisition approach that  evolves a product to its ultimate capabilities on the basis of mature  technologies and available resources. Further, product enhancements are  planned for subsequent development efforts only when technologies are  proven to be mature and other resources are available. Our work has  shown that commercial firms ensure that high levels of knowledge exist  at three critical junctures in a development program. First, a match  must be made between a customer’s needs and the available resources— technology, engineering knowledge, time, and funding—before a new  development program is launched. Second, a product’s design must  demonstrate its ability to meet performance requirements and be stable  about midway through development. Third, the developer must show that  the product can be manufactured within cost, schedule, and quality targets  and is demonstrated to be reliable before production begins.
In contrast, the F-22 acquisition strategy from the outset was to achieve  full capability in a “big bang” approach instead of evolving development in  manageable increments of new capability. By not using an evolutionary  approach, the Air Force took on significant risk and onerous technology  challenges. The three critical technologies that were immature at the  start of the program included low-observable materials, propulsion,  and integrated avionics. Integrated avionics has been a source of major  schedule delays and cost increases in the F/A-22 program. Starting the  program with these immature technologies prevented the program from  knowing cost, schedule, and performance ramifications until late in the  development program, after significant investments had already been  made. Efforts to mature technology cascaded into development, delaying  attainment of design and production maturity. The overall result has been  significant delays and substantially higher investments to buy over  60 percent fewer aircraft.
section_title: Additional Investments Needed to Expand F/A-22 Capability
paragraphs: Developing an expanded air-to-ground attack capability for the F/A-22 will  be costly and add risk to the program. The Air Force began development  of the F/A-22 as a replacement for the F-15 air superiority fighter with  primary emphasis on the air-to-air role. It was never intended to have  robust air-to-ground capability. Its need was based on a projection that  the Soviet Union would develop and produce large numbers of advanced  fighter aircraft. The F/A-22 was intended to identify, track, and kill  advanced fighters before it was targeted, giving it the edge and making it  a more lethal and survivable aircraft than an F-15. However, the original  Soviet threat never materialized. To enhance the utility of the F/A-22, the  Air Force plans to develop a robust air-to-ground attack capability to be  able to engage a greater variety of ground targets, such as surface-to-air  missile systems, that have posed a significant threat to U.S. aircraft in  recent years.
The Air Force has a modernization program to improve the capabilities of  the F/A-22 focused largely on a new robust air-to-ground capability. It has  five developmental spirals planned over more than a 10-year period, with  the initial spiral started in 2003. Table 2 shows each spiral as currently  planned. In March 2003, the Office of Secretary of Defense’s Cost Analysis  Improvement Group (CAIG) estimated that the Air Force would need  $11.7 billion for the planned modernization program. The CAIG estimate  included costs for development, production, and the retrofit of  some aircraft. As of March 2003, the Air Force F/A-22 approved program  baseline did not include estimated costs for the full modernization effort.  Instead, the Air Force estimate included $3.5 billion for modernization  efforts planned through fiscal year 2009.
section_title: New Computer Architecture and Avionics Processors Needed to Support Expanded Capability
paragraphs: To support the F/A-22’s expanded capability beyond Global Strike  Enhanced, the Air Force has determined that its baseline computer  architecture and critical avionics processors will need to be replaced.  Current processors are old and obsolete, cannot be supported, and do not  have sufficient capacity to meet the increased processing demands  required for planned new air-to-ground capabilities beyond Global Strike  Enhanced. As a bridge to meet this expanded capability, the Air Force  plans to modify some avionics processors and purchase sufficient  quantities to support production of the first 155 F/A-22 aircraft.
The F/A-22 is dependent on its onboard computers and software to  perform its mission. Unlike other fighter aircraft, it has a highly advanced,  integrated avionics system capable of detecting, identifying, and engaging  the enemy at ranges beyond a pilot’s vision. The key to the F/A-22 avionics  lies in its fully integrated core architecture and its two central, networked  computers called common integrated processors (CIP). CIPs use very  high-speed integrated circuits to collect, process, and integrate data and  signals from the aircraft’s sensors. CIP serves as the “brains” for the  F/A-22’s integrated avionics system and is unique to this aircraft.
The primary processor in CIP is the Intel i960MX microprocessor, which  is used strictly for avionics processing. This microprocessor is based on  1990’s technology and has a 32-bit processor that operates at speeds of  25mhz. By today’s technology standards, the processor is considered  obsolete and cannot support spiral developments beyond the Global Strike  Enhanced. In mid-2003, the manufacturer of the microprocessor informed  the Air Force that it planned to permanently shut down the i960MX  production line by January 2004 because the microprocessor was no  longer a viable product for the company.
As a result, the Air Force decided in November 2003 to replace its  computer architecture and avionics processors to support the F/A-22’s  expanded capabilities. In December 2003, the Air Force purchased its last  i960MX microprocessors when it bought 820 of the microprocessors.  According to program officials, this quantity and previously purchased  quantities are sufficient to support production of 155 F/A-22 aircraft. These  officials believe that with some minor upgrades to improve processing  capacity, these processors will be able to support the baseline aircraft  and the developmental spirals—Global Strike Basic and Global Strike  Enhanced. However, the Air Force plans for the remaining  production aircraft to include a new computer architecture and avionics  processor needed to support the final two planned spirals—Global Strike  Full and Enhanced Intelligence, Surveillance, and Reconnaissance.
At the time of our review, the Air Force believed its best long-term  solution to its avionics architecture and computer-processing shortfalls  was a new, modern, open system architecture. Rather than start a new  development program, the program office plans to leverage two other  ongoing Air Force development or modification programs for this  processing capability: the new architecture being developed for the F-35  and the new commercial off-the-shelf general-purpose processors  designed for newer versions of the F-16. According to F/A-22 program  officials, this new architecture will be state-of-the-art and will have ample  processing capacity to accommodate all future air-to-ground capabilities  as currently planned. These officials do not expect the new architecture to  be fully developed and ready for installation in the F/A-22 for at least 5 to  6 years.
F/A-22 program officials acknowledge that this mass changeover of  the F/A-22 computer architecture and avionics processor will be a  time-consuming and costly effort and will likely create additional program  risks. Air Force cost estimates are not yet available. Nevertheless, program  officials estimate the nonrecurring engineering costs alone could be at  least $300 million. At the time of our review, the Air Force had not made  a decision about retrofitting aircraft equipped with the i960MX  microprocessor. Additional risks are likely because the new processor and  architecture are being developed by other major aircraft programs and will  require extensive integration and operational testing to ensure that the  F/A-22 program does not encounter similar problems that have delayed  integration and testing of the F/A-22’s current avionics suite.
section_title: Remaining Development and Operational Testing Could Impact F/A-22 Program Outcomes
paragraphs: The F/A-22 program did not meet key testing goals established for fiscal  year 2003 and required for the aircraft to begin IOT&E testing. The Air  Force’s efforts to stabilize avionics software and improve its performance  have not been sufficiently demonstrated, and entrance criterion previously  set for starting IOT&E testing has been changed. In addition, the F/A-22  program is not performing as expected in some other key performance  areas, including reliability and maintenance support. The ongoing  problems have led to a revised test schedule, which has compressed the  time to complete initial operational testing by 4 months, and have  increased the potential for cost increases and delays in the full rate  production decision. The program has made progress in correcting several  of the design problems we identified in our March 2003 report.
subsections: section_title: Air Force Changed Avionics Performance Criterion to Start Operational Testing
paragraphs: The Air Force changed the avionics stability metric planned as a criterion  to enter IOT&E from an average of 20 hours between avionics software  failures to a broader measure of an average of 5 hours between avionics  software or hardware failures. Current testing shows the program  continues to have problems meeting the new and old avionics stability  metrics.
Because the F/A-22 avionics encountered frequent shutdowns over the  last few years, many test flights were delayed. As a result, the Air Force  Operational Test and Evaluation Center wanted assurances that the  avionics would work before it was willing to start the IOT&E program. It  established a requirement for a 20-hour performance metric that was to be  demonstrated before IOT&E would begin. The metric was Mean Time  Between Instability Events (MTBIE) and tracked two distinct types of  avionics software failures:    Hard failures (type 1) that were the most serious resulting in a complete  avionics system shutdown requiring the need to restart the avionics  system.
Significant failures (type 2) that were less serious failures but required the  pilot to restart an individual subsystem that failed versus the complete  avionics system.
Using personal computers as an analogy, a type 1 failure would be  equivalent to a failure of one’s personal computer that requires it to be  shut down and rebooted, except that the time to restart the F/A-22  avionics system could take substantially longer. A type 2 failure would  be equivalent to a failure in a particular application, such as the word  processing program shutting down. Even with such a failure, other  software applications could still be operated while the word processing  software was restarted. Likewise, in the case of the F/A-22, other  applications would still be operable despite the failure of any single  application, such as a shutdown in the communication, navigation, and  identification system.
In July 2003, the Air Force decided to switch to a different metric—Mean  Time Between Avionics Anomaly (MTBAA)—to measure the performance  of the avionics software for the start of IOT&E. Two main differences  between the new metric and its predecessor are the new metric  (1) includes hardware and some subsystem software failures not  previously counted and (2) requires a failure rate based on an average of  5 hours without experiencing avionics anomalies, instead of 20 hours.  According to Air Force operational test officials, they adopted this new  metric because they believe it is a better measure of the avionics  operational performance needed to start IOT&E, whereas the previous  metric was more technically focused on software performance, excluding  hardware failures. They also said the 5-hour criterion would provide a  minimum amount of effective operational test time to efficiently conduct  IOT&E. In turn, Congress included the new metric in the National Defense  Authorization Act for Fiscal Year 2004. Testing as of January 2004  showed the program had achieved 2.7 hours—54 percent of the  requirement. Once this criterion is achieved, the avionics must still  undergo rigorous operational testing to demonstrate its effectiveness and  suitability in a realistic environment. Figure 1 shows the status of the  MTBIE and MTBAA metrics.
The figure shows that MTBIE, the previous criterion, was demonstrated  at about 67 percent of the requirement. In addition, the type 1 failures,  causing a complete shutdown of the avionics system, have significantly  diminished. They are occurring only about once every 25 hours on  average. This is the result of a substantial effort on the part of the  Air Force and the contractor to identify and fix problems that led to  the instability in the F/A-22 avionics software. Type 2 failures are still  occurring frequently. While less serious when compared to the entire  avionics suite shutting down, type 2 failures become serious if critical  subsystem software shuts down when its function is needed for the  success of the mission or survivability of the aircraft.
In September 2003, the F/A-22 contractor reported a high number of  outstanding avionics Common Problem Reports. Of the 231 reports  of problems not resolved, about 25 (or 11 percent) were identified as  stability-related problems. The remaining 206 reports (89 percent) were  the result of avionics performance or functional problems. For example,  the communication, navigation, and identification subsystem accounted  for nearly 36 percent of the total reports. Because the avionics system is  essential to the success of the F/A-22, the integrated avionics still needs  to be demonstrated to meet design specifications and operational  requirements. Reductions in avionics performance could affect the ability  of the F/A-22 to effectively carry out its expected missions.
section_title: Reliability Requirements Not Being Met
paragraphs: The F/A-22 program is not meeting its requirements for a reliable aircraft  and it is not using a best practice approach. The Air Force established  reliability requirements to be achieved at the completion of development  and at system maturity. As a measure of the system’s overall reliability,  the Air Force established a requirement for 1.95-hours mean time between  maintenance by the completion of development, and 3-hours mean time  between maintenance at system maturity. This measure of reliability  represents the average flight time between maintenance actions. As of  October 2003, the Air Force had only been able to demonstrate a reliability  of about 0.5 flying hours between maintenance actions or about 26 percent  of the development requirement and 17 percent of system maturity  requirement. This has led to the development test aircraft spending more  time than planned on the ground undergoing maintenance.
During 2003, the Air Force identified 68 parts that had a high rate of failure  causing them to be removed or replaced, affecting the F/A-22 system  reliability. The contractor has initiated programs to eliminate the high  failure rates experienced by these parts. The canopy has also been  experiencing failures during testing, allowing it to achieve only about  15 percent of its expected 1,600-hour life. A second manufacturer for  canopies is being developed, but until it has passed qualification testing,  it cannot be used as an alternative source for the high failing canopies.
Best commercial practices for new product development require reliability  to be demonstrated by the start of production. Our work has shown that  product development engineers from leading commercial firms expect to  achieve reliability requirements before entering production. They told us  reliability is attained through an iterative process of design, test, analyze,  and redesign. Commercial firms understand that once a system enters  production, the costs to achieve reliability through this iterative design  change process become significantly more expensive. The F/A-22 aircraft  has been in production since fiscal year 1999, and the Air Force has on  contract 52 production aircraft, and an additional 22 aircraft on long lead  contracts representing 27 percent of the planned buy quantity. With  83 percent of the reliability requirement yet to be achieved through this  iterative design change process, the Air Force can expect to incur  additional development and design change costs. If the Air Force fails to  improve the F/A-22’s reliability before fielding the aircraft, the high failure  rates will result in higher operational and support costs to keep  the aircraft available for training or combat use.
section_title: Immaturity of Maintenance Support Systems
paragraphs: The F/A-22 is designed to have a computerized and paperless maintenance  system that monitors, diagnoses, identifies, and reports failures to  maintenance crews and that is intended to allow a faster maintenance  turnaround to flight status. The onboard Diagnostics Health and  Management system constantly monitors the aircraft’s systems and the  performance of both hardware and software. It collects, analyzes, stores,  and reports failures. Critical failures are reported to the pilot, and all  failures are stored in a portable database for later use by ground  maintenance crews. At the completion of a flight, the database is removed  from the aircraft and is downloaded into a system on the ground, the  Integrated Management Information System, which is a network of  computers the maintainers use to process the maintenance and support  information. This system further analyzes the downloaded information to  determine the problems and match failures with the appropriate digitized  technical order data needed to make the repairs. This information is then  loaded into handheld portable computers that the technicians use to repair  the aircraft.
According to DOD and Air Force test officials, these systems have been  generating false reports of failures, which have caused maintenance staff  to spend more hours than planned replacing items unnecessarily and  trying to identify the actual problems. In addition, the maintenance  systems are not providing all the technical data needed to repair  the aircraft, thus making it more difficult to make repairs. According to the  test officials, they do not have precise data to quantify the extent of the  problems, and they said it has disrupted maintenance activities. A key  indication has been the inability to fly aircraft as planned. We found that  between October 2003 and January 2004 the test force could only fly about  53 percent of the planned test flights and that the maintenance problems  were a key contributor to this poor flying performance.
Air Force officials do not expect the maintenance systems to be fully  matured until December 2005. Consequently, the program office has had  to provide additional funding to the contractor to purchase special test  equipment that will be used to support maintenance requirements during  operational testing. Moreover, because these systems will not be fully  available during the operational testing, it may be difficult to assess the  systems’ real performance.
section_title: Problems in the Development Program Have Led to Further Delays and Changes in Operational Testing
paragraphs: Progress in F/A-22 flight testing was slower than expected in 2003, and  start of IOT&E was delayed an additional 7 months due to avionics and  other problems. Realizing the Air Force would not be ready to enter initial  operational testing as previously planned, the Office of the Secretary of  Defense requested the F/A-22 program to establish a new operational test  plan that included measures to ensure the aircraft and its avionics are  ready before entering operational testing. In response, the Air Force put in  place a two-phase operational test program.
Phase 1, also called an operational assessment, is not the official start of  operational testing. It is intended to assess the F/A-22’s readiness for  IOT&E. Started in October 2003, it calls for testing two F/A-22 aircraft to  conduct live air-to-air missile shots, fly one-ship and two-ship formation  operational sorties, and assess the computerized maintenance system’s  maturity. It will include some flight tests that are planned to be repeated in  IOT&E if the aircraft configuration changes.
Phase 2 testing is considered the actual start of IOT&E. To begin this  phase, the Air Force must meet a number of criteria. Perhaps most  importantly, it must demonstrate that the F/A-22 integrated avionics will  be able to operate for sufficient lengths of time, without shutting down.  Other criteria that must be met prior to IOT&E include the availability of  four fully configured F/A-22 test aircraft and one spare aircraft, the  completion of live missile shots, the completion of key aircraft flight  envelope testing (planned speed, altitude, and maneuver boundaries of the  F/A-22), the completion of operational pilot and maintenance training, a  useable system with technical data to fix problems, and the software  upgrades to the maintenance system.
Figure 2 compares the changes in the planned test program since our  last report.
According to Air Force test officials, results of some phase 1 tests could  be used to satisfy IOT&E requirements if the aircraft and software  configurations do not change for IOT&E testing. This could reduce the  scope of the test effort planned during IOT&E. The Defense Acquisition  Board is scheduled to review the F/A-22’s readiness for IOT&E in  March 2004.
At the present time, the Air Force expects to complete IOT&E in  October 2004, before the full rate production decision, now expected in  December 2004. The time allotted to complete IOT&E under the new test  plan, however, has been compressed by 4 months, assuming phase 1  testing results are not permitted to be used for IOT&E. This means the Air  Force would have less time than previously planned to complete the same  amount of testing. If the Air Force continues to experience delays in  testing prior to IOT&E, then the full rate production decision would also  have to be delayed until IOT&E is complete and the Beyond Low Rate  Initial Production Report is delivered to Congress. There is no consensus  within DOD on the Air Force’s ability to meet this October 2004 milestone.  The Director of Operational Test and Evaluation, Office of Secretary of  Defense, believes the start of testing will slip, although the Air Force  maintains it will meet its schedule.
section_title: Past Design Problems Corrected
paragraphs: The Air Force has corrected design problems discussed in our March 2003  report. To correct the movement or buffeting of the vertical fins in the  tail section of the aircraft, the Air Force designed and implemented  modifications, which strengthen the fin and hinge assemblies. Because of  this problem, the Air Force placed restrictions on flights below 10,000 feet.  Testing was done above and below 10,000 feet, and the flight restrictions  were removed. Likewise, the Air Force modified the aircraft to prevent  overheating concerns in the rear portion of the aircraft by adding thermal  protection and strengthened strategic areas in the aft tail sections. The Air  Force also plans to modify later production aircraft using a new venting  approach to resolve the heat problems. We reported that the Air Force  had also experienced separations in the horizontal tail materials. After  additional testing, the Air Force deemed that the original tails met  requirements established for the life of the airframe. However, the Air  Force redesigned the tail to reduce producibility costs. Tests will be  performed on the redesigned tail in late 2004.
section_title: DOD Did Not Provide Congress Sufficient Business Case Information to Justify Current Aircraft Quantities or Modernization Investment Plans
paragraphs: DOD has not provided Congress with sufficient information to support the  business case for buying and modernizing the F/A-22 program. In our  testimony of April 11, 2003, before the Subcommittee on National Security,  Emerging Threats, and International Relations, House Committee on  Government Reform, we stressed that the issue was not whether the  F/A-22 should be produced, but rather in what quantities it is needed—as  justified by a business case. We discussed the current and future  environments in which the F/A-22 investment decision would have to be  made, including the need to consider opportunity costs inside and outside  DOD. DOD has planned investments over the next several years, on  average $150 billion a year, to keep legacy systems working while at  the same time modernizing and transforming U.S. national defense  capabilities for the future. The F/A-22 program represents a sizable  investment and must compete with other demands within the defense  budget. This competition requires a knowledge-based approach to justify  acquisition investment decisions and an efficient acquisition process to  ensure programs are implemented within expectations set in associated  business cases.
Since the start of the F/A-22 program, acquisition costs have increased,  the aircraft’s mission and key capabilities have expanded, fewer quantities  are affordable, and delivery to the user has been delayed. The Air Force  currently estimates the total F/A-22 acquisition program will cost about  $72 billion, excluding all costs estimated to complete the spiral  improvement effort. Including these costs brings the estimated total  investment for the F/A-22 program to about $80 billion. Through fiscal year  2004, about one-half this investment has been funded.
In light of the changes in the program and investments that remain, the  Subcommittee on National Security, Emerging Threats, and International  Relations, House Committee on Government Reform, asked DOD to  provide a business case justifying the Air Force’s planned number of  F/A-22s (276 at that time) as well as how many F/A-22s are affordable. In  its response, DOD did not sufficiently address key business case questions  such as how many F/A-22s are needed, how many are affordable, and if  alternatives to planned investments increasing the F/A-22 air-to-ground  capabilities exist.
Instead, DOD stated it planned to buy 277 F/A-22s based on a “buy to  budget” concept that determines quantities on the availability and efficient  use of funds by the F/A-22 program office. Furthermore, justification for  expanding the capability, for an estimated $8 billion to $12 billion  investment, was not addressed in DOD’s response. While ground targets  such as surface-to-air missile systems are acknowledged to be a significant  threat today, the business case did not establish a justification for this  investment or state what alternatives were considered. For example, the  F-35 aircraft is also expected to have an air-to-ground role as are planned  future unmanned combat air vehicles. These could be viable alternatives  to this additional investment in F/A-22 capability.
While the business case information submitted to Congress called for  277 aircraft, DOD stated it could only afford to acquire between 216  and 218 aircraft within the congressionally imposed cap on production  costs—currently at $36.8 billion. DOD expects improvements in  manufacturing efficiencies and other areas will provide it with sufficient  funds to buy additional F/A-22 aircraft. However, this seems to be an  unlikely scenario given the program’s history. Under the “buy to budget”  approach, the previous $876 million increase in development costs was  funded by taking funds mostly from production, thus reducing aircraft  quantities by 49. With testing still incomplete and many important  performance areas not yet demonstrated, the possibility for additional  increases in development costs is likely.
section_title: Conclusions
paragraphs: While DOD and the Air Force are focused on completing IOT&E and  making a decision to go into full rate production, a more basic issue needs  to be addressed. The conditions driving the business case that spurred the  major investment decision to initially develop and buy 750 F-22 aircraft  have changed. A revised and comprehensive business case assessment has  not been completed and shared with congressional defense oversight  committees. At the present time, it is uncertain how many F/A-22s are  needed. The program has been in development for about 18 years, and  DOD has invested over $40 billion. This investment represents about one- half the estimated costs projected for the entire F/A-22 program.  Therefore, DOD must still make investment decisions affecting another  $40 billion to support this program through full rate production and  implementation of the spiraled modernization effort. Based on current  design problems and the development efforts that remain, the F/A-22  program’s affordability is uncertain. Current conditions suggest the Air  Force cannot afford to buy much more than 218 aircraft within the cost  limitation imposed by Congress.
In light of the uncertainty concerning how many aircraft are needed in  today’s environment, the large investments that remain, and the unknown  outcomes of planned initial operational testing, we continue to be  concerned with DOD’s readiness to address a December 2004 decision to  enter full rate production. Furthermore, IOT&E, intended to demonstrate  the F/A-22 effectiveness and suitability, has not started and may not be  completed as planned, which may delay the full rate production decision.  With this testing outstanding, the risk is high that additional development  funding will be needed to resolve problems that could result.
section_title: Recommendations for Executive Action
paragraphs: Given the sizable investment that remains in the F/A-22 program, the  uncertainties, and the ever changing financial demands of DOD, Congress  and the Secretary of Defense would benefit from a comprehensive  assessment of the number of F/A-22 aircraft needed as well as assurance  that problems identified in initial operational testing will be identified and  resolved. Specifically, we recommend that the Secretary of Defense take  the following two actions:    Complete a new business case analysis that determines the continued  need for the F/A-22 and that specifically (a) addresses the need for an  expanded air-to-ground capability and an assessment of alternatives, to  include the feasibility of using other assets like the F-35 and unmanned  aerial vehicles planned for the future; (b) justifies the quantity of  F/A-22 aircraft needed to satisfy requirements for air-to-air and  air-to-ground missions; and (c) provides evidence that the planned  quantity is affordable within current budgets and the congressional  funding limitation. The Secretary should provide the results of the  business case analysis to the defense committees before the decision  to start full rate production.
Before the full rate production decision is made and in conjunction with  the Beyond Low-Rate Initial Production Report, provide the defense  committees a plan that shows how the Air Force will correct and fund any  major problems identified and still open after IOT&E is completed.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD stated that it partially  concurred with our two recommendations. Regarding our first  recommendation on completing a new business case for the F/A-22, DOD  stated that it evaluates the F/A-22 business case elements as part of the  annual budget process. Additionally, DOD’s response acknowledged that  this year the department is undertaking a broader set of reviews under the  Joint Capabilities Review process; the F/A-22 will be a part of this review.
The President’s budget submission to Congress will reflect the results of  these review efforts of the F/A-22 business case.
We believe that the various reviews and assessments in the budget process  along with the Joint Capabilities Review process present excellent  opportunities for DOD to conduct a business case analysis. Other  opportunities for completing the business case analysis include the  independent and in-depth study requested by the Office of Management  and Budget for the Comanche and F/A-22 programs. It is important,  however, that the analysis sufficiently address the specific business case  elements included in our recommendation—analysis of continued need,  need for expanded air-to-ground capability, assessment of alternatives,  justification of needed quantities, and evidence that planned quantities are  affordable. In addition, it is important that the outcomes of the business  case analysis are provided to the Congress prior to the full rate production  decision.
Regarding our second recommendation on providing Congress the plans  to resolve outstanding problems after the completion of IOT&E, DOD  stated that the law already requires the Director, Operational Test and  Evaluation, to submit to Congress a Beyond Low Rate Initial Production  Report that includes the results of operational testing. Since this report is  an independent assessment of test results, the department did not believe  it appropriate to include in it Air Force plans and costs for corrective  actions stemming from operational testing. However, DOD will present  these actions and costs to the Defense Acquisition Board for decisions on  the F/A-22 program that will be included in the President’s budget  submission to Congress.
We understand the legal requirements for submitting the Beyond Low Rate  Initial Production Report. We also recognize that this is an independent  report submitted by the Director, Operational Test and Evaluation. The  intent of our recommendation is not to modify the report itself, but to  ensure corrective actions and resultant costs are identified and reported in  a timely fashion and before the full rate production decision is made.  Because plans and costs could span over several years, such information  may or may not be captured in annual budget submissions. We have  modified our recommendation to clarify our intent.
section_title: Scope and Methodology
paragraphs: To determine changes in the F/A-22 program since its inception, we  analyzed cost information from Selected Acquisition Reports and obtained  information from the Air Force on its plans to modernize the F/A-22 to  include enhanced air-to-ground capabilities. We compared prior cost  information with the Air Force’s current estimates to complete  development and production of the F/A-22.
To determine the impact of development and testing on program  outcomes, we examined the extent to which the development program is  meeting planned flight test goals for 2003 and the Air Force’s planned  entry criterion for starting initial operational testing.
In examining sufficiency of the business case DOD provided to a  congressional oversight committee, we obtained a copy of the business  plan and analyzed the various DOD assumptions and approaches used to  make the assessment conclusions.
In making these determinations, assessments, and identifications, we  required access to current information about test results, performance  estimates, schedule achievements and revisions, costs being  incurred, aircraft modifications, and the program’s plans for continued  development and initial production. The Air Force and the contractors  gave us access to sufficient information to make informed judgments on  the matters covered in this report.
In performing our work, we obtained information or interviewed  officials from the Office of the Secretary of Defense, Washington D.C.;  the F/A-22 System Program Office, Wright-Patterson Air Force Base, Ohio;  Lockheed-Martin, Marietta, Georgia; the Defense Contract Management  Agency, Marietta, Georgia; the Air Force Operational Test and Evaluation  Center, Kirkland Air Force Base, New Mexico; and the Combined Flight  Test Center, Edwards Air Force Base, California.
We are sending copies of this report to the Secretary of Defense; the  Secretary of the Air Force; and the Director, Office of Management and  Budget. Copies will also be made available to others on request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
Please contact me at (202) 512-4841 or Michael J. Hazard at (937) 258-7917  if you or your staff have any questions concerning this report. Major  contributors to this report are listed in appendix II.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: GAO Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: Marvin E. Bonner, Edward Browning, Roger Corrado, Steve Hunter, Gary  Middleton, and Robert Ackley made key contributions to this report.
section_title: Related GAO Products
paragraphs: Best Practices: Better Acquisition Outcomes Are Possible If DOD Can  Apply Lessons from F/A-22 Program. GAO-03-645T. Washington, D.C.:  April 11, 2003.
Tactical Aircraft: Status of the F/A-22 Program. GAO-03-603T.  Washington, D.C.: April 2, 2003.
Tactical Aircraft: DOD Should Reconsider Decision to Increase F/A-22  Production Rates While Development Risks Continue. GAO-03-431.  Washington, D.C.: March 14, 2003.
Tactical Aircraft: DOD Needs to Better Inform Congress about  Implications of Continuing Cost Growth. GAO-03-280. Washington, D.C.:  February 28, 2003.
Tactical Aircraft: F-22 Delays Indicate Initial Production Rates Should  Be Lower to Reduce Risks. GAO-02-298. Washington, D.C.: March 5, 2002.
Tactical Aircraft: Continuing Difficulty Keeping F-22 Production Costs  Within the Congressional Limitation. GAO-01-782. Washington, D.C.:  July 16, 2001.
Tactical Aircraft: F-22 Development and Testing Delays Indicate Need  for Limit on Low-Rate Production. GAO-01-310. Washington, D.C.:  March 15, 2001.
Defense Acquisitions: Recent F-22 Production Cost Estimates Exceeded  Congressional Limitation. GAO/NSIAD-00-178. Washington, D.C.:  August 15, 2000.
Defense Acquisitions: Use of Cost Reduction Plans in Estimating  F-22 Total Production Costs. GAO/T-NSIAD-00-200. Washington, D.C.:  June 15, 2000.
Budget Issues: Budgetary Implications of Selected GAO Work for  Fiscal Year 2001. GAO/OCG-00-8. Washington, D.C.: March 31, 2000.
F-22 Aircraft: Development Cost Goal Achievable If Major Problems Are  Avoided. GAO/NSIAD-00-68. Washington, D.C.: March 14, 2000.
Defense Acquisitions: Progress in Meeting F-22 Cost and Schedule Goals.  GAO/T-NSIAD-00-58. Washington, D.C.: December 7, 1999.
Fiscal Year 2000 Budget: DOD’s Production and RDT&E Programs.  GAO/NSIAD-99-233R. Washington, D.C.: September 23, 1999.
Budget Issues: Budgetary Implications of Selected GAO Work for Fiscal  Year 2000. GAO/OCG-99-26. Washington, D.C.: April 16, 1999.
Defense Acquisitions: Progress of the F-22 and F/A-18E/F Engineering  and Manufacturing Development Programs. GAO/T-NSIAD-99-113.  Washington, D.C.: March 17, 1999.