Joint Strike Fighter: Significant Challenges and Decisions Ahead
Published: 2010-03-24T00:00:00

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 current estimated investment is $323 billion to develop and procure 2,457 aircraft. This statement draws substantively from GAO's March 19, 2010 report (GAO-10-382). That report discusses JSF costs and schedules, warfighter requirements, manufacturing performance, procurement rates, and development testing plans. This statement also provides an updated analysis of relative costs and benefits from a second (or alternate) engine program. In previous years, we recommended, among other things, that DOD rethink plans to cut test resources, improve reliability of cost estimates, and reduce the number of aircraft procured before testing demonstrates their performance capabilities. In our March 2010 report, we recommended that DOD (1) make a new, comprehensive assessment of the program's costs and schedule and (2) reassess warfighter requirements. DOD concurred with both recommendations.
section_title: What GAO Found
paragraphs: The JSF program continues to struggle with increased costs and slowed progress--negative outcomes that were foreseeable as events have unfolded over several years. Total estimated acquisition costs have increased $46 billion and development extended 2 1/2 more years, compared to the approved program baseline approved in 2007. Aircraft unit costs will likely exceed the thresholds established by the statutory provision referred to as Nunn McCurdy and may require DOD to recertify the need for the JSF to Congress. The program is at risk for not delivering aircraft quantities and capabilities on time. Dates for achieving initial operational capabilities may have to be extended or some requirements deferred to future upgrades. DOD leadership is taking some positive steps that should reduce risk and provide more realistic cost and schedule estimates. Officials increased time and funding for system development, added four aircraft to the flight test program, and reduced near-term procurement quantities. If effectively implemented, these actions should improve future program outcomes. Currently, however, manufacturing JSF test aircraft continues to take more time, money, and effort than budgeted, hampering the development flight test program. Slowed by late aircraft deliveries and low productivity, the flight test program only completed 10 percent of the sorties planned during 2009. Although restructuring actions should help, there is still substantial overlap of development, test, and production activities while DOD continues to invest in large quantities of production aircraft before variant designs are proven and performance verified. Under the current plan, DOD may procure as many as 307 aircraft at a total estimated cost of $58.2 billion before development flight testing is completed. Our updated analysis on engine costs shows that, without competition, an estimated $62.5 billion will be needed over the remainder of the F135 primary engine effort to cover costs for completing system development, procuring 2,443 engines, production support, and sustainment. Additional investment of between $4.5 billion to $5.7 billion may be required should the department continue competition. Under certain assumptions, the additional costs of continuing the F136 alternate engine program could be recouped if competition were to generate approximately 10.1 to 12.6 percent savings over the life of the program. Air Force data on the first 4 years of competition for engines on the F-16 aircraft projected they would recoup at least that much. Actual savings will ultimately depend on factors such as the number of aircraft actually purchased, the ratio of engines awarded to each contractor, and when the competition begins. Competition may also provide non-quantifiable benefits with respect to better contractor responsiveness, technical innovation and improved operational readiness.

section_title: Letter
paragraphs: I am very pleased to be here today to discuss the F-35 Joint Strike Fighter  (JSF) program. The JSF is the Department of Defense’s (DOD) most costly  and, arguably, its most complex and ambitious acquisition, seeking to  simultaneously develop, produce, and field three aircraft variants for the  Air Force, Navy, Marine Corps, and eight international partners. The JSF is  critical to our nation’s plans for recapitalizing the tactical air forces and  will require a long-term commitment to very large annual funding outlays.  The total expected U.S. investment is now more than $323 billion to  develop and procure 2,457 aircraft.
GAO has issued annual reports on the JSF for the last 6 years. Our most  recent report was issued last week and discussed relatively poor program  cost and schedule outcomes and specific concerns about warfighter  requirements, flight testing, manufacturing, and technical challenges as the  program moves forward.  A recurring theme in our work has been  concern about what we believe is undue concurrency of development,  test, and production activities and the heightened risks it poses to  achieving good cost, schedule, and performance outcomes. We have also  raised concerns about the department continuing to buy large quantities of  low rate production aircraft on cost reimbursement contracts far in  advance of flight and ground testing to verify the design and operational  performance. We are pleased that defense leadership has lately agreed  with our concerns and those of other defense offices and task forces. The  acquisition decision memorandum, dated February 24, 2010, directs  numerous critical actions that we believe will, if effectively implemented,  significantly improve program outcomes and provide more realistic  projections of costs and schedule.
Today, I will discuss (1) JSF current cost and schedule estimates and the  significant challenges ahead as DOD substantially restructures the  acquisition program; and (2) our updated analysis of potential costs and  savings from pursuing a competitive engine program. This statement  draws primarily from our March 2010 report, updated to the extent  possible with new budget data and a recently revised procurement profile  directed by the Secretary of Defense. To conduct this work, we tracked  and compared current cost and schedule estimates with those of prior  years, identified changes, and determined causes. We obtained program  status reports, manufacturing data, and test planning documents. We  conducted our own analyses of the information. We discussed results to  date and future plans with DOD, JSF, and aircraft and engine contractor  officials. We obtained information on the recent restructuring, including  critical inputs from three independent defense teams established to review  program execution, manufacturing capacity, and engine performance. For  the engine cost analysis, we employed the same methodology first  reported in 2007, now updated with current cost and program data. We  conducted this performance audit from May 2009 to March 2010 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: Significant Challenges Remain as DOD Restructures Program
paragraphs: Continuing cost increases and schedule delays culminated in the extensive  restructuring of the JSF program recently announced. Restructuring is not  complete and further cost growth and schedule extensions are likely.  Manufacturing test aircraft continues to take more time, money, and effort  than budgeted, contributing to substantial flight testing delays and raising  questions about the ability to ramp up production as rapidly and steeply as  planned. There is still substantial overlap of development, test, and  production activities while DOD continues to push ahead and invest in  large quantities of production aircraft before variant designs are proven  and system performance verified.
subsections: section_title: Cost Increases and Schedule Delays Increase Risk of Not Meeting Warfighter Requirements on Time
paragraphs: The JSF program continues to struggle with increased costs and slowed  progress—negative outcomes that were foreseeable as events have  unfolded over several years. Total estimated acquisition costs have  increased $46 billion and development extended 2 ½ years, compared to  the program baseline approved in 2007. DOD is now taking some positive  steps that, if effectively implemented, should improve future outcomes  and provide more realistic cost and schedule estimates. Officials increased  time and funding for system development, added four aircraft to the flight  test program, and reduced near-term procurement quantities by 122  aircraft. However, there is still substantial risk that the program will not  deliver the expected number of aircraft and required capabilities on time.  Dates for achieving initial operational capabilities may have to be  extended or some requirements deferred to future upgrades. Also, aircraft  unit costs will likely exceed the thresholds established by the statutory  provision commonly referred to as Nunn-McCurdy and require the  department to certify the need for the JSF to Congress. Program setbacks  in costs, deliveries, and performance directly impact modernization plans  and retirement schedules of the legacy aircraft the JSF is slated to replace.
Table 1 summarizes changes in program cost, quantities, and schedules at  key stages of acquisition. The 2004 replan estimates reflect a quantity  reduction and a major restructuring of the program after integration  efforts and design review identified significant weight problems. The 2007  data is the current approved acquisition baseline and the 2011 budget  request reflects cost increases stemming from a major reassessment of the  program by a joint team comprised of the Office of the Secretary of  Defense (OSD), Air Force, and Navy representatives.
Table 2 shows the extension of major milestone dates for completing key  acquisition activities. The February 2010 restructure reflects the direction  ordered by the Secretary in an acquisition decision memorandum issued  on February 24 and revised on March 3. Completing system development  and approving full-rate production is now expected in April 2016, about      2 ½ years later than planned in the acquisition program baseline approved  in 2007.
section_title: Manufacturing and Engineering Challenges Continue to Slow Aircraft Deliveries and Put the Production Schedule at Risk
paragraphs: Manufacturing JSF test aircraft continues to take more time, money, and  effort than budgeted. By December 2009, only 4 of 13 test aircraft had been  delivered and total labor hours to build the aircraft had increased more  than 50 percent above earlier estimates. Late deliveries hamper the  development flight test program and affect work on production aircraft,  even as plans proceed to significantly ramp up annual procurement rates.  Some improvement is noted, but continuing manufacturing inefficiencies,  parts problems, and engineering technical changes indicate that design  and production processes may lack the maturity needed to efficiently  produce aircraft at planned rates. An independent manufacturing review  team determined that the planned production ramp rate was unachievable  absent significant improvements. While the restructuring has reduced  near-term procurement, annual aircraft quantities are still substantial. In  addition, the program has procured several lots of low rate initial  production (LRIP) aircraft using cost-reimbursement contracts, a contract  type that places most of the cost risk on the government. Continued use of  cost reimbursement contracts beyond initial LRIP quantities indicate that  uncertainties in contract performance exist that do not permit costs to be  estimated with sufficient accuracy for the contractor to assume the risk  under a fixed price contract. Figure 1 compares labor hour estimates for  test aircraft in 2007 and the revised manufacturing plan in 2009.
section_title: Little Progress in Development Testing While Program Continues to Face Technical Challenges
paragraphs: Although DOD’s restructuring actions should help, there is still substantial  overlap of development, test, and production activities while DOD  continues to push ahead and invest in large quantities of production  aircraft before variant designs are proven and system performance  verified. Given the extended development time and reduced near-term  procurement, DOD still intends to procure up to 307 aircraft at an  estimated cost of $58.2 billion before completing development flight  testing by mid fiscal year 2015 (see figure 2). At the same time, progress on  flight testing is behind schedule—slowed by late aircraft deliveries and  low productivity, the flight test program completed only 10 percent of the  sorties planned during 2009, according to the Director of Operational Test  and Evaluation. Other technical challenges include (1) relying on an  extensive but largely unproven and unaccredited network of ground test  laboratories and simulation models to evaluate system performance; (2)  developing and integrating very large and complex software requirements;  and (3) maturing several critical technologies essential to meet operational  performance and logistical support requirements. Collectively, testing and  technical challenges will likely add more costs and time to development,  slowing delivery of capabilities to warfighters and hampering start up of  pilot and maintainer training and initial operational testing.
section_title: Updated Analysis Shows that Competition Savings Still Has Potential to Outweigh Costs Depending on Acquisition Approach
paragraphs: The JSF program began with an acquisition strategy that called for a  competitive engine development effort. In the fiscal year 2007 budget  submission, DOD stopped requesting funding for the alternate engine  (F136). At that time, DOD determined that the risks of a single point  failure in a sole source environment were very low and did not justify the  extra costs to maintain a second source. Each year since then, Congress  has subsequently recommended funding for alternate engine development.  We have previously testified on our assessment that, based on past  defense competitions (including a fighter engine competition started in the  1980s between these same manufacturers) and making certain  assumptions about relative quantities purchased from each, competition  could reasonably be expected to yield enough savings across the JSF life  cycle to offset the remaining investments required to sustain a second  source. Prior studies also indicate a number of nonfinancial benefits from  competition, including better performance, increased reliability, and  improved contractor responsiveness.
As noted in our prior testimonies, the acquisition strategy for the JSF  engine must weigh expected costs against potential rewards—both  quantifiable and non quantifiable. As a result, we have updated our prior  studies conducted in 2007, and later updated in 2008, to assess whether  changes in the JSF program have impacted the costs and benefits of the  sole-source and competitive scenarios for acquisition and sustainment of  the JSF engine. We updated our analysis to include (1) new estimates for  Research, Development, Test, and Evaluation (RDT&E) and additional  sunk costs, (2) a slower production ramp as a result of the recent program  restructure, (3) increased engine unit recurring costs, and (4) updated  production support costs. Based on schedule delays with the program, we  moved the starting point of the procurement competition to fiscal year  2015, a 3-year slip from our past analysis. This adjustment aligns with the  completion of the JSF development flight test program and would start the  competition with the last low-rate initial production aircraft buy. We were  not provided information that allowed us to update operations and  support costs.
Our updated analysis, based largely on data provided by the JSF program  office, found that, without competition, an estimated $62.5 billion will be  needed over the remainder of the F135 primary (current) engine to cover  costs for completing system development, procuring 2,443 engines,  production support, and sustainment. An additional investment of  between $4.5 billion to $5.7 billion (depending on the competitive  scenario) may be required should the department continue competition.  Depending on assumptions, the additional costs of the alternate engine  investment could be recouped if competition were to generate  approximately 10.1 to 12.6 percent savings over the life of the program. Air  Force data on the first 4 years of competition for engines on the F-16  aircraft projected they would recoup at least that much. Actual savings  will ultimately depend on factors such as the number of aircraft actually  purchased, the ratio of engines awarded to each contractor, and when the  competition begins. Competition may also provide non-quantifiable  benefits with respect to better contractor responsiveness, technical  innovation and improved operational readiness. Recent engine cost  concerns and past test failures are other factors that should be considered  in deciding whether to continue the engine competition.
subsections: section_title: Costs of Sole Source Approach
paragraphs: Our updated analysis estimates the remaining costs for the Pratt &  Whitney F135 engine is estimated to be $62.5 billion over the life of the  program. This includes cost estimates for the completion of system  development, procurement of engines, production support, and  sustainment. Table 3 shows the costs remaining to acquire and support the  Pratt & Whitney F135 engine on a sole-source basis in our updated  analysis.
In addition to development of the F135 engine design, Pratt & Whitney also  has responsibility for the common components that will be designed and  developed to go on all JSF aircraft, regardless of which contractor  provides the engine core. This responsibility supports the JSF program  level requirement that the engine be interchangeable—either engine can  be used in any aircraft variant. In the event that Pratt &Whitney is made  the sole-source engine provider, future configuration changes to the  aircraft and common components could be optimized for the F135 engine.
section_title: Additional Costs of Competition
paragraphs: Our updated analysis estimated the additional costs under two competitive  scenarios beginning in fiscal year 2015: one in which contractors are each  awarded 50 percent of the total engine purchases (50/50 split) and one in  which there is an annual 70/30 percent award split of total engine  purchases to either contractor,. Without consideration of potential  savings, the additional costs of competition total about $5.7 billion under  the first scenario and about $4.5 billion under the second scenario. Table 4  shows the additional cost associated with competition under these two  scenarios.
The disparity in costs between the two competitive scenarios reflects the  loss of learning resulting from lower production volume that is accounted  for in the projected recurring flyaway costs used to construct each  estimate. The other costs include approximately $1.3 billion for remaining  F136 development and $140 million in additional standup costs, which  would be the same under either competitive scenario.
section_title: Level of Savings Needed to Recoup Additional Costs Varies Based on Assumptions
paragraphs: Competition may incentivize the contractors to achieve more aggressive  production learning curves, produce more reliable engines that are less  costly to maintain, and invest additional corporate money in technological  improvements to remain competitive. However, it is important to consider  that many of the additional investments associated with competition are  often made earlier in the program’s life cycle, while much of the expected  savings do not accrue for decades. As such, we include a net present value  calculation (time value of money) in the analysis that, once applied,  provides for a better estimate of program rate of return. Our analysis  indicates that recoupment of those initial investment costs would occur at  somewhere between 10.1 and 12.6 percent, depending on the number of  engines awarded to each contractor. A competitive scenario, where one  contractor receives 70 percent of the annual procurement and the other  receives 30 percent, reaches the breakeven point at 10.1 percent savings. A  competitive scenario where both contactors receive 50 percent of the  procurement reaches this point at 12.6 percent savings.
The government’s ability to recoup the additional investments required to  support competition depends largely on (1) the number of aircraft  procured, (2) the ratio that each contractor wins out of that total, and   (3) the savings rate that competitive pressures drive. Another key variable  is when the competition actually begins. In our analysis described above,  we assume competition begins with the fiscal year 2015 buy which would  be after the JSF system development flight test program is currently  scheduled to be completed and would be the last low rate initial  production order. We also ran an alternative scenario where competition  did not begin until 2017, or 2 years later. Such a delay would increase the  level of savings needed to recoup the additional investments. This was  primarily due to the fact that savings from the competition began later in  the life cycle and fewer engines from the total 2,443 procurement would be  available for competition. Assuming competition starts in 2017,  recoupment of the additional investment would occur at 11.3 to 14.1  percent savings depending on whether competitive buys are split either   70/30 or 50/50 between contractors. This range compares to the 10.1 to  12.6 percent range if the competition began in 2015.
Prior experience suggests it may be reasonable to expect savings of at  least that much from a JSF engine competition. While we did not do an in- depth analysis of the competition, the “Great Engine War”, may provide a  good example of the potential savings achievable. The competition was  between Pratt & Whitney and General Electric to supply military engines  for the F-16 and other fighter aircraft programs. At that time, all engines  for the F-14 and F-15 aircraft were being produced on a sole-source basis  by Pratt & Whitney, which was criticized for increased procurement and  maintenance costs, along with a general lack of responsiveness to  government concerns about those programs. Beginning in 1983, the Air  Force initiated a competition that resulted in significant cost savings in the  program. For example, in the first 4 years of the competition, when  comparing actual costs to the program’s baseline estimate, results  included    Nearly 30 percent cumulative savings for acquisition costs,    Roughly 16 percent cumulative savings for operations and support costs,    Total savings of about 21 percent in overall life cycle costs.
It is difficult to estimate the costs that would have been incurred if there  never were a competition. However, prior to the competition, there was an  upward trend in the expected unit costs of the F-16 primary engine. When  the alternate engine was introduced as a competitor, the upward trend  stopped.
section_title: Multiple Studies and Analyses Show Additional Benefits from Competition
paragraphs: Competition for the JSF engines may provide benefits that do not result in  immediate financial savings, but could result in reduced costs or other  positive outcomes over time. Our prior work, along with studies by DOD  and others, indicated there are a number of non financial benefits that may  result from competition, including better performance, increased  reliability, and improved contractor responsiveness. DOD and others have  performed studies and have widespread concurrence as to these other  benefits, including better engine performance, increased reliability, and  improved contractor responsiveness. In fact, in 1998 and 2002, DOD  program management advisory groups assessed the JSF alternate engine  program and found the potential for significant benefits in these and other  areas. While the benefits highlighted may be more difficult to quantify,  they were strongly considered in earlier recommendations to continue the  alternate engine program. These studies concluded that the program  would    Maintain the industrial base for fighter engine technology,    Enhance readiness,   Instill contractor incentives for better performance,    Ensure an operational alternative if the current engine developed    Enhance international participation.
In the OSD Cost Analysis Improvement Group’s (now Cost Assessment  and Program Evaluation) 2007 Joint Strike Fighter Alternate Engine  Acquisition and Independent Cost Analyses Report, it also concluded that  there are nonfinancial benefits to competition.
Another potential benefit from an alternate engine program cited by the  program management advisory group studies is the hedge against a  catastrophic risk that a single point, systemic failure in the engine design  could substantially affect the fighter aircraft fleet. Though current data  indicate that it is unlikely that engine problems would lead to fleet wide  groundings in modern aircraft, having two engine sources for the single- engine JSF further reduces this risk as it is less likely that such a problem  would occur to both engine types at the same time. Because the JSF is  expected to be the primary fighter aircraft in the U.S. inventory, and Pratt  & Whitney is also the sole-source provider of F119 engines for the F-22A  aircraft, DOD is faced with the potential scenario where most of the fleet  could be dependent on similar engine cores, produced by the same  contractor in a sole-source environment.
section_title: JSF Engine Costs and Flight Test Progress Have Not Met Expectations
paragraphs: Both the F135 and F136 have experienced cost growth and delays. The  F135 primary engine development effort—a separate contract from the  airframe development effort—is now estimated to cost about $7.3 billion,  about a 50 percent increase over the original contract award. This includes  an $800 million contract cost overrun in 2008. Engine development cost  increases primarily resulted from higher costs for labor and materials,  supplier problems, and the rework needed to correct deficiencies with an  engine blade during redesign. Engine redesigns and test problems caused  slips in engine deliveries, according to program officials. Officials note that  these late engine deliveries have not yet critically affected the delivery of  test aircraft because airframe production lagged even further behind.  However, the prime contractor has been forced to perform out-of-station  engine installations and other workarounds as a result of engine issues. As  of January 2010, 17 of 18 F135 development flight test engines have been  delivered, seven of which have flown. However, the initial service release  date for the short take-off and vertical landing (STOVL) variant has slipped  from 2007 plans about 21 months until the third quarter 2010.
Engine procurement unit costs are higher than earlier budget estimates.  For example, the negotiated unit cost (2009 buy) for the conventional  take-off and landing variant is now $17.7 million—42 percent higher than  the program’s budget estimate of $12.5 million. Similarly, the unit cost for  the STOVL engine (including lift fan and related parts) rose from $27.6  million, to $33.4 million, a 21 percent increase. JSF program officials cite  several reasons for the higher than budgeted unit costs, including  configuration changes and quantity reductions. Based on recent data  provided by the program office, the average unit costs projected through  the end of procurement has increased by 45 to 55 percent since 2006,  depending on the variant.
As planned, the F136 second engine development is about 3 years behind  F135 engine development. While the time lag and funding instability make  precise assessments more difficult, the second engine contractor is also  facing cost and schedule challenges. Through fiscal year 2010, the  government has invested about $2.9 billion in developing the second  engine and DOD cost analysts estimate that about $1.6 billion more would  be needed to complete F136 development in 2016. F136 contractor  officials told us that funding stability, engine affordability, and testing  issues are key concerns for the program to go forward. According to the  F136 contractor, it believes system development could be completed  earlier by 2014, with less funding. While the F136 engine has not yet been  flown, it has experienced delays. For example, its initial release for flight  testing for the short take-off and vertical landing variant has slipped by  about 21 months to late 2011.
section_title: Concluding Remarks
paragraphs: The JSF is DOD’s largest and most complex acquisition program and the  linchpin of the United States and its allies’ long-term plans to modernize  tactical air forces. It will require exceptional levels of funding for a  sustained period through 2035, competing against other defense and  nondefense priorities for the federal discretionary dollar. The Department  has recently taken some positive steps that, if effectively implemented,  should improve outcomes and provide more realistic, executable program.  However, the program will still be challenged to meet cost and schedule  targets. To date, the Department does not have a full, comprehensive cost  estimate for completing the program. Credible costs and schedules  estimates are critical because they allow DOD management to make sound  trade-off decisions against competing demands and allow Congress to  perform oversight and hold DOD accountable. Because the JSF is  expected to eventually make up most of the tactical aircraft fleet, the  services should have a high degree of confidence in their ability to meet  their initial operational capability requirements and to acquire JSFs in  quantity so that DOD can plan its overall tactical aircraft force structure  strategy. However, the Department has not yet defined reasonable  expectations for achieving initial operational capabilities for each of the  services given the recent restructuring. While the Department has lowered  cost risk by reducing near term procurement quantities, there is still  substantial overlap of development, test, and production activities now  stretching into 2016. Constant program changes and turbulence have made  it difficult to accurately and confidently measure program progress in  maturing the aircraft system. Tying annual investments more directly to  demonstrated progress in developing, testing, and manufacturing aircraft  may be a prudent fiscal measure for ensuring government funds are  invested wisely.
In previous years, we recommended, among other things, that DOD  rethink plans to cut test resources, improve reliability and completeness of  cost estimates, and reduce the annual number of aircraft procured before  testing demonstrates their performance capabilities.  In our March 2010  JSF report, we recommended that DOD (1) make a new, comprehensive  and independent assessment of the costs and schedule to complete the  program, including military construction, other JSF-related expenses, and  life cycle costs; and (2) reassess warfighter requirements and, if necessary,  defer some capabilities to future increments. The department concurred  with both recommendations. We also included a matter for congressional  consideration regarding development of a system maturity matrix as a tool  for measuring progress and evaluating annual budget requests.
A decision whether to continue the alternate engine program will likely  have long term implications for the JSF program, industrial base, and fleet  readiness. Expected costs must be weighed against potential benefits,  both quantifiable and unquantifiable. Last year, Congress enacted  legislation to help improve weapons acquisition outcomes. The legislation,  referred to as the Weapon Systems Acquisition Reform Act of 2009,  included a provision requiring DOD to ensure that the acquisition strategy  for each major defense acquisition program includes measures to ensure  competition, or the option of competition, throughout the life of the  program. The long-term impact on the industrial base is likely to be high  given the size of the JSF program, international participation, and the  expected supplier base. Depending on the assumptions made, a  competitive environment could yield enough financial savings over the life  of the program to offset the immediate cost of investing in competition.  Specifically, key assumptions include the number of aircraft purchased,  the ratio of engines each contractor wins, and savings competitive  pressures drive. The timing of when a competition occurs will also have a  direct bearing on the amount of savings that is needed to recoup the  additional costs of competition. Competition could also provide many  intangible benefits that do not result in immediate financial savings but  could result in reduced costs or other positive outcomes over time. It is  important that DOD and Congress reach an agreement on the best path  forward.
Mr. Chairman, this completes my prepared statement. I would be pleased  to respond to any questions you or other Members of the Committee may  have.
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, Matt Lea, Kris Keener, Ridge Bowman, Charlie  Shivers, Charles W. Perdue, and Greg Campbell.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.