DOD began the F-35 acquisition program in October 2001 without adequate knowledge about the aircraft’s critical technologies or design. In addition, DOD’s acquisition strategy called for high levels of concurrency between development, testing, and production. In our prior work, we have identified the lack of knowledge and high levels of concurrency as major drivers in the significant cost and schedule growth as well as performance shortfalls that the program has experienced since 2001. The program has been restructured three times since it began: first in December 2003, again in March 2007, and most recently in March 2012. The most recent restructuring was initiated in early 2010 when the program’s unit cost estimates exceeded critical thresholds established by statute—a condition known as a Nunn-McCurdy breach. DOD subsequently certified to Congress in June 2010 that the program was essential to national security and needed to continue. DOD then began efforts to significantly restructure the program and establish a new acquisition program baseline. These restructuring efforts continued through 2011 and into 2012, during which time the department increased the program’s cost estimates, extended its testing and delivery schedules, and reduced near-term aircraft procurement quantities by deferring the procurement of 450 aircraft into the future—total procurement quantities did not change. Figure 1 shows how planned quantities in the near-term have steadily declined over time. The new F-35 acquisition program baseline was finalized in March 2012, and since that time costs have remained relatively stable. Table 1 shows the significant cost, quantity, and schedule changes from the initial program baseline and the relative stability since the new baseline was established. In March 2012, when the new acquisition program baseline was finalized, DOD had not yet identified new initial operating capability dates for the military services. The following year, DOD issued a memorandum stating that the Marine Corps and Air Force were planning to field initial operating capabilities in 2015 and 2016 respectively, and that the Navy planned to field its initial operating capability in 2018, which represented a delay of 5 to 6 years since the program’s initial baseline. DOD is currently conducting developmental flight testing to verify that the F-35 system’s design works as intended and can reliably provide the capabilities needed for the services to field their respective initial operational capabilities. The program’s flight testing is separated into two key areas referred to as mission systems and flight sciences. Mission systems testing is done to verify that the software and systems that provide warfighting capabilities function properly and meet requirements, while flight science testing is done to verify the aircraft’s basic flying capabilities. For the F-35 program, DOD is developing and fielding mission systems capabilities in software blocks: (1) Block 1, (2) Block 2A, (3) Block 2B, (4) Block 3i, and (5) Block 3F. Each subsequent block builds on the capabilities of the preceding blocks. Blocks 1 and 2A are essentially complete. The program is now focused on completing Block 2B testing to support Marine Corps initial operating capability, but some testing of specific Block 3i and Block 3F capabilities is also being conducted. Blocks 2B and 3i will provide initial warfighting capabilities while Block 3F is expected to provide the full suite of warfighting capabilities. Figure 2 identifies the sequence of software blocks and capabilities expected to be delivered in each. As developmental flight testing continues, DOD is concurrently purchasing and fielding aircraft. The F-35 airframe and engine are managed as one program, but they are manufactured in separate facilities by different contractors. The airframe is being manufactured by Lockheed Martin, the prime contractor, in Fort Worth, Texas, while the engine—which is designated the F135—is manufactured by Pratt & Whitney in Middletown, Connecticut. The engines are purchased by the government directly from Pratt & Whitney and delivered as government furnished equipment to Lockheed Martin for integration into the airframes during production. As a result, engine development and testing activities are managed by Pratt & Whitney and not Lockheed Martin. The F-35 program continued to experience development and testing discoveries over the past year, largely due to a structural failure on the F- 35B durability test aircraft, an engine failure, and more mission system test growth than expected. Together, these factors led to adjustments in the program’s test schedule. Test resources and some aircraft capabilities were reprioritized, and test points were deferred or eliminated. While these actions mitigated some of the schedule risk, ultimately the completion of key developmental test activities had to be delayed. Decisions were also made to restructure an early operational test event that likely would have reduced operational risk for the Marine Corps. The event will now be conducted over time and will not be completed as originally scheduled. Instability in the development program is likely to continue with more complex and demanding development testing still to go. As the program continues to discover problems in development and testing, it also faces a significant challenge to improve the reliability of the engine. Program data show that the reliability of the engine is very poor (less than half of where it should be) and has limited the program’s progress toward its overall reliability targets. The engine contractor, Pratt & Whitney, has identified a number of design changes that it believes will help improve engine reliability, but some of those changes have not yet been implemented. With complex and challenging developmental testing remaining and engine reliability challenges ahead, DOD still plans to increase procurement rates by nearly threefold over the next 5 years. This same highly concurrent strategy has already proven to have negatively impacted the program. According to program reports, $1.7 billion could be incurred in costs associated with retrofits to already delivered aircraft. This cost will likely increase, as more aircraft are purchased and delivered before development ends. A significant structural failure on the F-35B durability test aircraft, an engine failure, and a higher than expected amount of test point growth largely to address software rework, over the past year, delayed key test activities and forced unexpected adjustments to the program’s development schedule and test plans. Each of these three factors is discussed in more detail below. At around 9,000 hours of durability testing—about half of the 16,000 hours required—a major airframe segment, known as a bulkhead, on the F-35B durability test aircraft severed, and one other bulkhead was fractured as a result. Durability testing on the F-35B was halted for more than a year as program officials conducted a root cause analysis and Lockheed Martin worked to repair the durability test aircraft. The root cause analysis determined that the bulkhead severed because its design did not take into account appropriate factors in the manufacturing processes, resulting in a bulkhead that had less durability life than expected. According to officials, the fracture in the other bulkhead was caused by the added weight it had to bear after the first bulkhead severed. Lockheed Martin is currently redesigning the bulkheads to strengthen the aluminum and plans to incorporate the updated designs into the ninth low-rate initial production lot. A total of 50 aircraft will have to be modified using additional structural reinforcement techniques. According to program and contractor officials, because the incident occurred halfway through durability testing, retrofits will not be required until the aircraft reach about half of their expected service life, or about 10 years. According to officials, the total costs of related modifications are yet to be determined at this time. In June 2014, an F-35A engine caught fire during take-off. As a result, the entire F-35 fleet was grounded for nearly one month and then placed under flight restrictions for several additional months. A root cause analysis conducted by Pratt & Whitney determined that excessive heat caused by rubbing between engine fan components ultimately led to parts of the engine breaking free at a high rate of speed, resulting in a fire. The program could not execute any planned flight test points while the fleet was grounded. After flying resumed there were still hundreds of planned test points that could not be executed because the fleet was restricted from flying at the speeds and conducting the maneuvers necessary to execute those points. Despite these obstacles, the program was able to keep its test aircraft productive and accomplished some test points that had been planned to be done in the future. Follow-up inspections conducted by the contractor identified 22 engines with evidence of overheating. Officials have identified a short-term fix that they believe will allow the fleet to return to normal flight test operations. As of January 31, 2015, 18 of 22 engines had received the short-term fix and were cleared to return to normal flight operations. Pratt & Whitney has identified several potential long-term fixes but no final determination has been made. While the program’s test plan for 2014 reflected an allowance of 45 percent growth in mission system software test points for the year— largely to address software rework that might be needed—officials from the Office of the Secretary of Defense noted that the program experienced around 90 percent growth, or nearly twice the planned amount. As of January 2015, 56 percent of the Block 2B functionality had been verified by program officials, which was about 10 percent short of its goal. According to DOD and contractor officials, the higher than anticipated amount of rework was largely due to the fact that portions of the Block 2B software did not function as expected during flight testing. To address these deficiencies, changes were made to the software and this extended the Block 2B test schedule by approximately 3 months. As of January 2015, all of the updated software was in flight testing. DOD continued to address other key technical risks that we have highlighted in the past including the Helmet Mounted Display, Arresting Hook System, and the Autonomic Logistics Information System (ALIS). A new helmet design was developed and integrated that includes previously developed updates and addresses shortfalls in night vision capability. Test pilots we spoke with noted that while testing of the new helmet design has just begun, some improvements over the previous design are evident, but more testing is needed.