The Air Force began the F/A-22 development program in 1986 and expected to complete development in 9 years for an estimated cost of $12.6 billion. Today, after being in development for almost two decades, the estimated development cost is $28.7 billion, a 127 percent increase. The average unit procurement cost to buy the F/A-22 has also increased 122 percent. The result of these changes has been a loss of buying power that has reduced the initial buy quantity from 750 to 277 aircraft. Table 1 shows the changes in the development program from 1986 to 2002. We have reported in the past that the F/A-22 acquisition approach was a major contributor to the cost increases and delays in schedule that led to reduced buying power. In testimony last year, we identified lessons to be learned in the F/A-22 program, which did not follow a knowledge-based acquisition approach used by successful commercial firms. 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. These firms then 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. DOD issued new acquisition policy in May 2003 that governs the development of major acquisition systems. This new policy embraces the best practice concepts of knowledge-based, evolutionary acquisition and represents a good first step toward achieving better outcomes from major acquisition programs. The initial F-22 acquisition strategy did not employ an evolutionary approach. Instead, it sought to develop revolutionary capabilities from the outset of the program taking on significant risk and onerous technology challenges. Three critical technologies were immature at the start of the program—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 JSF, which started in 1996, is not as far along in its development, but is experiencing problems that could similarly threaten DOD’s investment. It is at a critical crossroad, one that, based on our prior work, was approached and passed by several other DOD programs without capturing the appropriate knowledge for the sizable investment decisions being made. While the JSF program started with higher risks by failing to mature its technologies, it is considering a delay to its investment decision that determines the need to invest in tooling, labor, and facilities to manufacture aircraft until the airframe design has become more stable. The basic mission of the F/A-22, initially focused on air-to-air dominance, has changed to include a significantly greater emphasis on attacking ground targets. To accomplish this expanded mission, the Air Force will need additional investments to develop and expand air-to-ground attack capabilities for the F/A-22. Moreover, the efforts to expand its capability will also add risks to an already challenged program. To accommodate planned changes will also require a new computer architecture and processor to replace the current less capable ones. The expanded air-to-ground attack capability will allow the F/A-22 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. This was not previously considered a primary role for the aircraft as it was intended to be primarily an air-to-air fighter to replace the F-15. From the outset the F/A-22 was built to counter expected large numbers of new advanced Soviet fighter aircraft, but this expected threat never materialized. The Air Force has a modernization program to improve the capabilities of the F/A-22 focused largely on a more robust air-to-ground capability. It intends to do so using five developmental spirals planned over more than a 10-year period, with the initial spiral started in 2003. 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. Table 2 shows each spiral as currently planned. To complete the planned enhancements, the F/A-22 will also need a new computer architecture and avionics processors. Current architecture and processors will be upgraded to support enhancement through the Global Strike Enhanced development spiral. However, because the current architecture and processors are old and obsolete and do not have sufficient capacity to meet the increased processing demands required for planned new air-to-ground capabilities beyond the Global Strike Enhanced spiral, they must be replaced. Rather than start a new development program, the F/A-22 program office plans to leverage two other ongoing Air Force development or modification programs for this new processing capability: the new architecture being developed for the JSF 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, they 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. 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. 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, but 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 old microprocessor. The Air Force schedule includes plans to make the full rate production decision in December 2004, but initial operational test and evaluation (IOT&E) has not started. The Air Force’s efforts to stabilize avionics software and improve its performance have not been sufficiently demonstrated to start IOT&E, and the planned entrance criterion was changed. In addition, the F/A-22 program is not performing as expected in some other key performance areas like system reliability. These problems have contributed to the need for a new test schedule and an additional 7- month delay in the start IOT&E. Together these problems increase the potential for additional development costs and delays in the full rate production decision. Since our report in March 2003, the Air Force has corrected some key design problems identified at that time, but others remain. The stability and performance of F/A-22 avionics has been a major problem causing delays in the completion of developmental testing and the start of IOT&E. 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. This metric was subsequently changed to a 5-hour metric that included additional types of failures, and it became the Defense Acquisition Board’s criterion to start IOT&E. In turn, Congress included the new metric, known as Mean Time Between Avionics Anomaly or MTBAA, in the National Defense Authorization Act for Fiscal Year 2004. As of January 2004, the Air Force had not been able to demonstrate that the avionics could meet either of these criteria. Testing as of January 2004 showed the program had achieved 2.7 hours— 54 percent of the 5-hour stability requirement to begin IOT&E. While the Air Force has not been able to meet the new criteria, major failures, resulting in a complete shutdown of the avionics system, have significantly diminished. These failures 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. However, less serious failures are still occurring frequently. The F/A-22 program is not meeting its requirements for a reliable aircraft, and it is not using a knowledge-based 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.