The JSF is a joint, multinational acquisition program for the Air Force, Navy, and Marine Corps and eight international partners. The program began in November 1996 with a 5-year competition between Lockheed Martin and Boeing to determine the most capable and affordable preliminary aircraft design. Lockheed Martin won the competition, and the program entered system development and demonstration in October 2001. Program goals are to develop and field an affordable, highly common family of stealthy, next-generation strike fighter aircraft for the Navy, Air Force, Marine Corps, and U.S. allies. The JSF is a single-seat, single-engine aircraft, designed to rapidly transition between air-to-ground and air-to-air missions while still airborne. To achieve its mission, the JSF will incorporate low-observable (stealth) technologies, defensive avionics, advanced onboard and offboard sensor fusion, internal and external weapons, and advanced prognostic maintenance capability. The JSF family consists of three variants. The conventional takeoff and landing (CTOL) variant will primarily be an air- to-ground replacement for the Air Force’s F-16 Falcon and the A-10 Warthog aircraft, and will complement the F-22A Raptor. The short takeoff and vertical landing (STOVL) variant will be a multi-role strike fighter to replace the Marine Corps’ F/A-18C/D Hornet and AV-8B Harrier aircraft. The carrier-suitable variant will provide the Navy a multi-role, stealthy strike aircraft to complement the F/A-18E/F Super Hornet. DOD is planning to buy a total of 2,456 JSFs and allies are expected to procure a minimum of 730 CTOL and STOVL aircraft. Because of the program’s sheer size and the numbers of aircraft it will replace, the JSF is the linchpin of DOD’s long-term plan to modernize tactical air forces. It is DOD’s largest acquisition program, with total cost currently estimated at $300 billion, and the longest in planned duration, with procurement projected through 2034. In addition, the JSF remains DOD’s largest cooperative program. Our international partners are providing about $4.8 billion toward development, and foreign firms are part of the industrial base producing aircraft. DOD’s funding requirements for the JSF assume economic benefits from these foreign purchases in reducing unit costs for U.S aircraft. Table 1 shows the evolution of DOD’s official estimated cost, quantity, and deliveries from the initiation of system development in October 2001 to the current official program of record dated December 2007 and submitted to the Congress in April 2008. It depicts quantities reduced in the last major program restructure in 2004, the impacts of increased costs on unit prices, and the slip in delivering initial operating capability to the warfighter. In our March 2008 report, we stated that JSF costs would likely grow much higher than reported because the program of record at that time did not include all acquisition costs (including the alternate engine program directed by the Congress), made overoptimistic assumptions, and did not fully reflect the mounting cost and schedule pressures from manufacturing inefficiencies and compressed time frames for completing development. We questioned the Mid-Course Risk Reduction Plan adopted by DOD in September 2007 that cut two development test aircraft, reduced test flights, and accelerated the reduction in the prime contractor’s development workforce in order to replenish management reserves depleted by design changes and manufacturing problems. We recommended that DOD accomplish a full and comprehensive estimate of the total program verified by an independent third party and revisit the Mid-Course Risk Reduction Plan with an intensive analysis of the causes of management reserve depletion, progress against the baseline manufacturing schedule, and correction of deficiencies in the contractor’s earned value management system. DOD agreed to make a comprehensive independent cost estimate, but decided to go ahead as planned with the Mid-Course Risk Reduction Plan, stating that it would monitor and evaluate progress and revise the plan later if it failed to achieve expectations. Two recent estimates indicate that JSF development will cost more and take longer to complete than reported to the Congress in April 2008, primarily because of contract cost overruns and extended time to complete flight testing. DOD also plans to accelerate aircraft procurement over the next 6 years—buying more aircraft sooner than planned last year. This new plan will require significantly more procurement funding sooner, but officials did not assess its net effect on total program costs through completion of JSF acquisition. Development costs are projected to increase between $2.4 billion and $7.4 billion and the schedule for completing system development extended from 1 to 3 years, according to recent estimates—one by the JSF Program Office and one by a joint team of Office of the Secretary of Defense (OSD), Air Force, and Navy officials. Cost overruns on both the aircraft and engine contracts, delays in manufacturing test aircraft, and a need for a longer, more robust flight test program are the primary cost drivers. The joint team’s estimate is higher than the program office’s because it included costs for the alternate engine program directed by the Congress and used more conservative assumptions based on current and legacy aircraft experiences. Program officials contend that funding the program to the higher cost estimate is premature and believe processes are in place to substantially improve on the test experiences of past programs. Regardless, both estimates agree that cost and time to complete development have increased from the official program of record at the time of our review. (See table 2.) The program office’s revised development cost estimate projects an additional $2.4 billion and a 1-year extension in the schedule compared to the official program of record reported to the Congress. This would increase the system development portion of the acquisition program to $46.8 billion and delay its completion to October 2014. The cost increases primarily resulted from the following factors. $1.2 billion for aircraft development. Program officials declared a cost overrun on the prime air system contract because of increased labor hours, higher prices, and supply shortages. Included in this figure is $200 million to be added to the contractor’s management reserve. Last year, we reported that mounting cost and schedule pressures depleted reserves much faster than anticipated. By summer 2007, the program had spent about two-thirds of budgeted funds but had accomplished only half the work required. Since then, DOD’s efforts to restore reserves and fix manufacturing inefficiencies have not fully achieved intended results, requiring another cash infusion. $800 million for engine development. According to officials from the Defense Contract Management Agency, the engine contractor continued to face development problems, which resulted in a contract cost overrun. Higher costs for labor and materials, supplier problems, and the rework needed to correct deficiencies with the engine blade design discovered during ground testing were major contributing factors. $300 million for flight test extension. The program extended system development by 1 year to provide more time for development and operational flight testing. In April 2008, an operational test review team recommended extending the development contract by 1 year. The review team considered but dismissed several other options to address the schedule problem, including deferring requirements. On the other hand, the joint estimating team estimates that it will cost $14.8 billion to complete JSF development, $7.4 billion more than the official program of record at the time of our review. This would increase the total development costs to $51.8 billion from the $44.4 billion reported to the Congress last year—a 17 percent increase. The joint team also projected a 3-year program extension beyond the program of record in order to complete system development, 2 years more than the new program office estimate. The joint team’s estimate was $5 billion more than the new program office estimate. Several factors account for the difference between the two estimates. Alternate engine. The joint estimating team included $1.4 billion to complete development of an alternate engine for the JSF; the program office estimate did not include alternate engine costs. The Congress has directed DOD to develop a second source for the JSF engine to induce competition and to ensure that one engine’s failures would not ground all JSFs, thereby reducing operational risks in the future. DOD has not wanted to pursue this second engine source and twice removed funding from the JSF program line. Engineering staffing. The joint estimating team projected a need for the contractor to retain considerably more engineering staff and for longer periods of time than the program office estimate to complete development, evaluate test results, and correct deficiencies. Releasing engineering staff prematurely risks not discovering problems until late in development or during fielding, when they would be more expensive to address. Software development. The joint estimating team believes that the software productivity rate will be less than the program’s calculation and anticipates much more growth in software requirements. The JSF aircraft is expected to require 7.5 million lines of computer code—the most by far of any aircraft. By comparison, the F/A-18E/F has only 1.1 million and the F-22A 2.2 million. Experiences on past acquisitions have shown 30 to 100 percent growth in software requirements over time, while the JSF Program Office estimate assumed no growth. Flight testing. The joint estimating team projects that flight testing will require more time and effort than the program office has built into its current schedule. Continuing delays in delivering test aircraft are expected to hamper and further compress test schedules. In particular, the joint team projects that the two aircraft dedicated to carrier suitability tests will be late off the production line, thereby delaying test activities. It also projected that the JSF will require about 2,700 hours of flight testing for mission systems, significantly more than the 1,700 hours that the program office currently estimates. Manufacturing production hours.