United States Government Accountability Office

Report to Congressional Committees

April 2016

F-35 JOINT STRIKE
FIGHTER
Continued Oversight
Needed as Program
Plans to Begin
Development of New
Capabilities

GAO-16-390

April 2016

F-35 JOINT STRIKE FIGHTER
Continued Oversight Needed as Program Plans to
Begin Development of New Capabilities
Highlights of GAO-16-390, a report to
congressional committees

Why GAO Did This Study
With estimated acquisition costs of
nearly $400 billion, the F-35 Joint
Strike Fighter—also known as the
Lightning II —aircraft is DOD's most
costly and ambitious acquisition
program. Since 2001, GAO has
reported extensively on the F-35
program’s cost, schedule, and
performance problems. The program
plans to begin increasing production
rates over the next few years.
The National Defense Authorization
Act for Fiscal Year 2015 contains a
provision for GAO to review the F-35
acquisition program. This report
assesses program (1) affordability,
remaining development, and ongoing
manufacturing, and (2) future
modernization and procurement plans.

What GAO Found
Although the estimated F-35 Joint Strike Fighter (F-35) program acquisition costs
have decreased since 2014, the program continues to face significant
affordability challenges. The Department of Defense (DOD) plans to begin
increasing production and expects to spend more than $14 billion annually for
nearly a decade on procurement of F-35 aircraft. Currently, the program has
around 20 percent of development testing remaining, including complex mission
systems software testing, which will be challenging. At the same time, the
contractors that build the F-35 airframes and engines continue to report improved
manufacturing efficiency and supply chain performance.
DOD plans to manage F-35 modernization as part of the existing program
baseline and is exploring the use of a single contract to procure multiple lots of
future aircraft. Both courses of action have oversight implications. DOD has
begun planning and funding significant new development work to add to the F35’s capabilities. Known as Block 4, the funding needed for this effort is projected
to be nearly $3 billion over the next 6 years (see figure below), which would
qualify it as a major defense acquisition program in its own right.
F-35 Joint Strike Fighter Block 4 Development Costs Increase Near-Term Funding Needs

GAO analyzed total program funding
requirements. GAO analyzed program
documentation including management
reports, test data and results, and
internal DOD program analyses. GAO
also collected and analyzed production
and supply chain performance data,
and interviewed DOD, program, and
contractor officials.

What GAO Recommends
Congress should consider directing
DOD to manage F-35 follow-on
modernization, Block 4, as a separate
and distinct acquisition program with its
own baseline and regular cost,
schedule and performance reporting.
GAO included this matter for
consideration because DOD did not
concur with GAO’s recommendation to
manage Block 4 as a separate
acquisition program. GAO continues to
believe this recommendation is valid as
discussed in this report.
View GAO-16-390. For more information,
contact Michael J. Sullivan at (202) 512-4841
or sullivanm@gao.gov.

DOD does not currently plan to manage Block 4 as a separate program with its
own acquisition program baseline but rather as part of the existing baseline. As a
result, Block 4 will not be subject to key statutory and regulatory oversight
requirements, such as providing Congress with regular, formal reports on
program cost and schedule performance. A similar approach was initially
followed on the F-22 Raptor modernization program, making it difficult to
separate the performance and cost of the modernization from the baseline
program. Best practices recommend an incremental approach in which new
development efforts are structured and managed as separate acquisition
programs with their own requirements and acquisition program baselines. The F22 eventually adopted this approach. If the Block 4 effort is not established as a
separate acquisition program, transparency will be limited. Therefore, it will be
difficult for Congress to hold it accountable for achieving its cost, schedule, and
performance requirements.
United States Government Accountability Office

Contents

Letter

1
Background
Program Continues to Face Affordability Challenges
Initial Development is Nearing Completion and F-35 Program is
Addressing Technical Risks
Manufacturing and Reliability Progress Continue
DOD’s Approach to Managing Follow-on Modernization and Plans
for Purchasing Future Lots of Aircraft Have Oversight
Implications
Conclusions
Matter for Congressional Consideration
Recommendations for Executive Action
Agency Comments and Our Evaluation

Appendix I

3
5
7
12
19
24
25
25
25

Prior GAO Reports on F-35 Joint Strike Fighter and Department of
Defense (DOD) Responses and Subsequent Actions

29

Appendix II

Scope and Methodology

33

Appendix III

Comments from the Department of Defense

35

Appendix IV

GAO Contact and Staff Acknowledgments

37

Related GAO Products

38

Tables
Table 1: Changes in Reported F-35 Joint Strike Fighter Program
Expected Cost, Quantity, and Deliveries, 2001-2015
Table 2: Comparison of the New Capabilities and Weapons of the
F-22 Modernization and F-35 Joint Strike Fighter Block 4
Modernization

Page i

5
22

GAO-16-390 F-35 Joint Strike Fighter

Figures
Figure 1: Changes in F-35 Joint Strike Fighter Procurement
Quantities Expected between 2006 and 2019
Figure 2: F-35 Joint Strike Fighter Budgeted Development and
Procurement Costs by Service
Figure 3: F-35 Joint Strike Fighter Flight Science Test Point
Progress as of December 2015
Figure 4: Subsequent Development and Flight Test Status of F-35
Joint Strike Fighter Mission Systems Software Blocks as
of December 2015
Figure 5: Number of F-35 Joint Strike Fighter Aircraft Delivered
and in Production as of December 2015
Figure 6: Trend in Labor Hours to Build F-35 Joint Strike Fighter
Aircraft by Variant
Figure 7: Reduction in Average Monthly F-35 Joint Strike Fighter
Part Shortage Occurrences at Prime Contractor Facility
from 2014 to 2015
Figure 8: Trend in Labor Hours to build the F-35 Joint Strike
Fighter Engine
Figure 9: F-35 Joint Strike Fighter System-level Reliability and
Maintainability Status as of August 2015
Figure 10: F-35 Joint Strike Fighter Block 4 Development Costs
Increase Near-term Funding Needs
Figure 11: Percentage of Multiyear and Non Multiyear Contracts in
Department of Defense’s Fiscal Year 2016 Major
Defense Acquisition Program Procurement Budget

Page ii

4
6
8
9
13
14
15
16
18
20
24

GAO-16-390 F-35 Joint Strike Fighter

Abbreviations
ALIS
Autonomic Logistics Information System
DOT&E
Director of Operational Test and Evaluation
DOD
Department of Defense
IOC
Initial Operational Capability
LCS
Littoral Combat Ship
MDAP
Major Defense Acquisition Program

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Page iii

GAO-16-390 F-35 Joint Strike Fighter

Letter

441 G St. N.W.
Washington, DC 20548

April 14, 2016
Congressional Committees
With estimated acquisition costs of nearly $400 billion, the F-35 Joint
Strike Fighter (F-35)—also known as the Lightning II—is the Department
of Defense’s (DOD) most costly and ambitious acquisition program.
Through this program, DOD is developing and fielding a family of next
generation strike fighter aircraft, integrating low observable (stealth)
technologies with advanced sensors and computer networking
capabilities for the United States Air Force, Marine Corps, and Navy as
well as eight international partners. 1 The F-35 family is comprised of the
F-35A conventional takeoff and landing variant, the F-35B short takeoff
and vertical landing variant, and the F-35C carrier-suitable variant. The
program is approaching the end of development and will begin increasing
production rates significantly over the next few years. According to
current projections, the U.S. portion of the program will require acquisition
funding of $54 billion over the next five years as it approaches full rate
production and is expected to require about $12 billion a year, on
average, through 2038 to complete development and procure a total of
2,457 aircraft. In addition, DOD and program office estimates indicate that
the F-35 fleet could cost over $1 trillion to operate and support over its
lifetime, which will pose significant affordability challenges.
We have reported on F-35 issues for many years. For example, the
National Defense Authorization Act for Fiscal Year 2010 included a
provision for GAO to review the F-35 acquisition program annually for 6
years. The last report under that provision was issued in April 2015. 2
Similarly, over time, we have reported significant cost, schedule, and
performance problems and have made numerous recommendations for
improvement. DOD has taken action to address many of our

1
The international partners are the United Kingdom, Italy, the Netherlands, Turkey,
Canada, Australia, Denmark, and Norway. These nations contributed funds for system
development and all but Canada and Denmark have signed agreements to procure
aircraft. In addition, Israel, Japan, and South Korea have signed on as foreign military
sales customers.
2

GAO, F-35 Joint Strike Fighter: Assessment Needed to Address Affordability Challenges,
GAO-15-364 (Washington, D.C.: April 14, 2015).

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GAO-16-390 F-35 Joint Strike Fighter

recommendations to varying degrees. See appendix I for a matrix of prior
recommendations and related DOD actions. In addition, a list of related
GAO reports is included at the end of the report.
The National Defense Authorization Act for Fiscal Year 2015 included a
provision for GAO to continue reviewing the F-35 acquisition program
annually until the program reaches full-rate production. This is the first
report under that provision, and in this report we assess (1) program cost
and affordability; (2) remaining development and testing; (3) ongoing
manufacturing including supply chain performance; and (4) future
modernization and procurement plans.
To assess program cost and affordability, we reviewed and analyzed total
program funding requirements to project annual funding requirements
through 2038. To assess the program’s remaining development and
testing, we reviewed and analyzed program briefings, test data and
results, and internal DOD program analyses. We collected data on and
discussed key aspects of F-35 development and test progress with
program management and contractor officials as well as DOD test
officials and program test pilots. To assess ongoing manufacturing and
supply chain performance, we collected and analyzed manufacturing and
supply chain performance data from DOD, Lockheed Martin, and Pratt &
Whitney. To assess future modernization and procurement plans, we
reviewed budget documents to identify costs associated with the
modernization effort and collected and analyzed information regarding
capability and oversight plans. We also reviewed and analyzed best
practices identified by GAO and reviewed relevant DOD policies and
statutes. We also discussed cost and manufacturing efficiency initiatives,
such as the block buy approach, with contractor and program office
officials to understand potential cost savings and plans. We discussed the
program’s plans with program office officials. We assessed the reliability
of the cost, schedule, and performance data by reviewing supporting
documentation and interviewing knowledgeable officials. Based on these
steps, we determined that all of the data we used were sufficiently reliable
for the purposes of this report. Appendix Il contains a more detailed
description of our scope and methodology.
We conducted this performance audit from June 2015 to April 2016 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

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GAO-16-390 F-35 Joint Strike Fighter

the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.

Background

As we have previously reported, 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. 3 In our prior work, we 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. 4 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 NunnMcCurdy breach. 5 DOD subsequently certified to Congress in June 2010
that the program was essential to national security and needed to
continue. DOD then began restructuring the program. The restructuring
continued through 2011 and into 2012, during which time the department
established a new acquisition program baseline reflecting increased
program cost estimates, extended test and delivery schedules, and
reduced near-term aircraft procurement quantities—total procurement
quantities did not change. Figure 1 shows how planned aircraft
procurement quantities in the near-term have declined over time.
3
Concurrency is broadly defined as the overlap between technology development and
product development or between product development and production.
4
GAO-15-364 and GAO, F-35 Joint Strike Fighter: Problems Completing Software Testing
May Hinder Delivery of Expected Warfighting Capabilities, GAO-14-322 (Washington,
D.C.: March 24, 2014).
5

Section 2433 of title 10 of the United States Code, commonly referred to as NunnMcCurdy, requires DOD to notify Congress whenever a major defense acquisition
program’s unit cost experiences cost growth that exceeds certain thresholds. This is
commonly referred to as a Nunn-McCurdy breach. Significant breaches occur when the
program acquisition unit cost or procurement unit cost increases by at least 15 percent
over the current baseline estimate or at least 30 percent over the original estimate. For
critical breaches, when these unit costs increase at least 25 percent over the current
baseline estimate or at least 50 percent over the original, DOD is required to take
additional steps, including conducting an in-depth reassessment of the program.
Programs with critical breaches must be terminated unless the Secretary of Defense
certifies to certain facts related to the program and takes other actions, including
restructuring the program. 10 U.S.C. § 2433a.

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GAO-16-390 F-35 Joint Strike Fighter

Figure 1: Changes in F-35 Joint Strike Fighter Procurement Quantities Expected between 2006 and 2019

While F-35 program cost, quantity, and schedule estimates increased
significantly between the initial program baseline in 2001 and latest
baseline in 2012, they have remained relatively stable over the past 3
years. Table 1 shows the cost, quantity, and schedule changes from the
initial program baseline and the relative stability since the new baseline
was established.

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GAO-16-390 F-35 Joint Strike Fighter

Table 1: Changes in Reported F-35 Joint Strike Fighter Program Expected Cost, Quantity, and Deliveries, 2001-2015
October 2001
initial baseline

March 2012
December
latest baseline 2015 estimates

Change from
2001 to 2012

Change from
2012 to 2015

Expected quantities (number of aircraft)
Developmental quantities

14

14

14

0%

0%

Procurement quantities

2,852

2,443

2,443

-14

0

2,866

2,457

2,457

-14

0

Development

$34.4

$55.2

$55.1

60%

-.18%

Procurement

196.6

335.7

319.1

71

-4.94

2.0

4.8

4.8

140

0

233.0

395.7

379

70

-4.22

Program acquisition

$81

$161

$154.3

99

-4.35

Average procurement

69

137

130.6

99

-4.67

2010-2012

Undetermined

2015-2018

Undetermined

5-6 years

2012

2019

2019

7 years

0 years

Total quantities
Cost estimates (then-year dollars in billions)

a

Military construction
Total program acquisition
Unit cost estimates (then-year dollars in millions)

a

Estimated delivery and production dates
Initial operational capability
Full-rate production
Source: GAO analysis of DOD data | GAO-16-390
a

Annual projected cost estimates expressed in then-year dollars reflect inflation assumptions made by
a program.

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. These new dates represented
a delay of 5 to 6 years from the program’s initial baseline dates. The
Marine Corps declared initial operational capability in July 2015.

Program Continues to
Face Affordability
Challenges

The F-35 program continues to face affordability challenges. The F-35 is
still DOD’s most costly acquisition program. As of December 2015, the
estimated total acquisition cost for the F-35 program is $379 billion, or
$12.1 billion less than DOD reported in 2014. The program will require an
average of $12 billion per year to complete the procurement of aircraft
through 2038. The program expects to reach peak production rates for
U.S. aircraft in 2022, at which point DOD expects to spend more than $14
billion a year on average for a decade (see figure 2). These affordability

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GAO-16-390 F-35 Joint Strike Fighter

challenges will compound as the program competes with other large
acquisition programs including the long range strike bomber and KC-46A
Tanker. At the same time, the number of operational F-35 aircraft that
DOD will have to support will be increasing. The total cost to operate and
support the F-35 fleet is still estimated to be more than $1 trillion. In
recent years, affordability challenges, in part, have forced the Air Force to
defer F-35 aircraft procurements to later years. Since 2014, the Air Force
deferred 45 aircraft between 2017 and 2021 to later years. This will likely
require the military service to make unplanned investments in extending
the service life of their current fighter aircraft. The cost of extending the
lives of current fighter aircraft and acquiring other major weapon systems,
while continuing to produce and field new F-35 aircraft, poses significant
affordability risks in a period of austere defense budgets.
Figure 2: F-35 Joint Strike Fighter Budgeted Development and Procurement Costs by Service

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GAO-16-390 F-35 Joint Strike Fighter

Initial Development is
Nearing Completion
and F-35 Program is
Addressing Technical
Risks

The F-35 program is nearing the completion of the developmental test
program with about 20 percent of its flight sciences and mission systems
testing remaining; however the remaining testing is likely to be
challenging as it will require complex missions and stressing
environments. Developmental flight testing is separated into two key
areas referred to as flight sciences and mission systems. Developmental
flight science testing is done to verify the aircraft’s basic flying
capabilities, while mission systems testing is done to verify that the
software and systems that provide warfighting capabilities function
properly and meet requirements. The remaining mission systems testing
will consist of a large number of weapons accuracy events which have
proven to be difficult in the past. Any delay could pose risk to the timely
start of initial operational test and evaluation and could also increase
concurrency costs. As developmental testing progresses, program
officials continue to address and identify technical risks.

Developmental Flight
Testing Is Nearing
Completion with
Challenging Mission
Systems Software Testing
Remaining

The F-35 program is nearing the completion of developmental flight
testing with only 20 percent of its total planned test points remaining. As
of December 2015, the program completed 6,201 of the 6,264 planned
flight science test points for the year and overall flight science testing was
80 percent complete. Before completing the remaining high speed and
high altitude flight science testing, Lockheed Martin officials noted that
they will incorporate a pressure relief valve into the aircraft’s fuel system
to allow the aircraft to fly at altitudes and speeds that are currently
restricted due to fuel pressure concerns. Lockheed Martin plans to
implement this change by mid-2016. Figure 3 below shows the program’s
progress toward completing flight science testing.

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GAO-16-390 F-35 Joint Strike Fighter

Figure 3: F-35 Joint Strike Fighter Flight Science Test Point Progress as of
December 2015

DOD is developing, testing, and fielding mission systems capabilities in
software blocks. Figure 4 illustrates the mission systems software blocks
being developed for the program, the percent of test points completed by
block, and the build-up to full warfighting capability with Block 3F the final
software block in the current development program.

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GAO-16-390 F-35 Joint Strike Fighter

Figure 4: Subsequent Development and Flight Test Status of F-35 Joint Strike Fighter Mission Systems Software Blocks as of
December 2015

While the program completed all of the mission systems software testing
planned in 2015, much of its Block 3F testing remains and it could be
challenging given the complexity of the missions and the stressing
environments that are required. The program completed 3,381 mission
systems test points, 218 more than the 3,163 test points planned in 2015.
As of December 2015, the program had about 20 percent of mission
systems testing remaining. Block 3F flight testing started later than
planned and program officials believe that the completion of 3F
developmental testing could be delayed by about 2 to 3 months. As of
December 2015, our analysis of program data indicated that Block 3F
testing could be delayed by as much as 6 months if the program performs
at the same rate it has in the past and is executed according to the
current plan with no additional test point growth. A recent report by the

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GAO-16-390 F-35 Joint Strike Fighter

Director of Operational Test and Evaluation Office noted completion of
mission systems testing would likely be delayed until January 2018, or 8
months later than planned.
Although early software blocks (Blocks 1 through 3i) have completed
testing, the program continues to experience problems with some mission
system software functions shutting down and restarting during flight
testing. Officials believed they had identified a fix at the end of 2015, but
recent tests indicate problems still exist. Program officials plan to continue
addressing the issue during 2016 in order to meet the Air Force initial
operational capability in August 2016. Program officials are also
concerned about the tight timeframes to conduct the 55 weapons
accuracy events that remain—30 of which are related to a gun. As of
December 2015, the program had completed 17 weapons events many of
which were delayed by months due to software deficiencies and fleet
groundings. Program officials are analyzing the remaining test schedule
to identify potential efficiencies in their weapons test plan. Any delays in
developmental testing could pose risk to the timely start of initial
operational test and evaluation, currently planned for December 2017.
Delays in mission systems software testing could also increase costs. As
the program conducts developmental testing it also continues to procure
more and more aircraft per year, increasing program concurrency and
cost risk. Through 2016 the program will have spent $56.1 billion to
procure 285 aircraft. Fixes to problems identified during testing have
required retrofits and rework to aircraft that had already been delivered.
To date, program officials have identified a total of $1.4 billion to fix
known issues and have forecasted an additional $369 million for retrofits
and rework related to issues that have yet to be discovered in testing
through 2016. Beyond 2016, the program will no longer track concurrency
costs in the same way because developmental testing is expected to be
complete and the program does not believe that much, if any,
concurrency risk will remain. However, developmental and initial
operational testing will continue beyond this period. By the time initial
operational testing is complete, currently planned for 2019, the program
will have procured 498 aircraft at a cost of $85.7 billion. DOD has taken
steps over the past few years to decrease the costs of concurrency. For
example, officials have tried to incorporate fixes into production earlier in
order to limit the number of fielded aircraft that require retrofits. However,
any delays in testing will likely result in delays in the incorporation of
known fixes, which would increase the number of aircraft that will require
retrofits and rework and increase concurrency costs.

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GAO-16-390 F-35 Joint Strike Fighter

Program Identifying and
Addressing Technical
Risks

As developmental testing nears completion, the F-35 program continues
to address technical risks. The program has incorporated design changes
that appear to have mitigated several of the technical risks that we have
highlighted in prior reports, including problems with the arresting hook
system and bulkhead cracks on the F-35B. 6 However, over the past year,
the program continued to address risks with the Helmet Mounted Display,
Autonomic Logistics Information System (ALIS), and engine seal that we
have identified in the past. The program also identified new risks with the
ejection seat and cracking in the F-35C wing structure. The status of
DOD’s effort to address these issues as of December 2015 is as follows:
•

Helmet Mounted Display—A new helmet intended to address
shortfalls in night vision capability, among other things, was
developed and delivered to the program in 2015. Developmental
testing of the new helmet is mostly complete, with final verification
testing planned in 2016.

•

ALIS—ALIS continues to face risks. For example, the system may not
be deployable and does not have a back-up, should the hardware
system fail. These and other ALIS risks, identified in a report issued in
April 2016 may result in further schedule delays and cost increases. 7
In addition, ALIS continues to lack required capabilities; for instance,
equipment management data is inaccurate or incomplete, and engine
health information is not included in the current version of ALIS. The
program office is taking steps to address these issues including
procuring alternate hardware in case of a failure and working with the
contractor to improve data quality processes.

•

Engine Seal— Program officials have identified a design change to
address the technical problem that resulted in an engine fire in June
2014. This design change has been validated and incorporated into
production. Program and engine contractor officials have identified
180 total engines that will need to be retrofitted, and as of September
2015, 69 of those retrofits had been completed, including all of the
test aircraft. The engine contractor, Pratt & Whitney, is paying for the
retrofits.

6

GAO-15-364 and GAO-14-322

7

GAO, F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its Central
Logistics System. GAO-16-439 (Washington, D.C.: April 14, 2016).

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GAO-16-390 F-35 Joint Strike Fighter

Manufacturing and
Reliability Progress
Continue

•

Ejection Seat—In 2015, program officials discovered that pilots under
136 pounds could possibly suffer neck injuries during ejection.
Officials stated the risk of injury is due to the rotation of the ejection
seat in combination with the thrust from the parachute deployment
during ejection. Officials noted that although the problem was
discovered during testing of the new helmet mounted display, the
helmet’s weight was not the root cause. The program is exploring a
number of solutions to ensure pilot safety including installing a switch
for pilots that would slow the release of the parachute, installing a
head rest that would reduce head movement, and reduce the weight
of the helmet. The cost of these changes has not yet been
determined.

•

Wing Structure Cracks—In 2015, at around 13,700 hours of durability
testing—about 85 percent of the total hours required—program
officials recognized cracking in the wing structure of the F-35C
structural test aircraft. Testing was halted for about 3 months while the
test aircraft was repaired with internal and external straps to
strengthen the structure. Lockheed Martin officials we spoke with
stated that a long-term fix had not been identified. However, the
impact on current fielded aircraft will likely be minimal because few F35C aircraft have been delivered and the discovery occurred beyond
the aircraft’s expected lifecycle.

The F-35 airframe and engine contractors continue to report improved
efficiency and supply chain performance, and program data indicates that
reliability and maintainability are also improving. The number of U.S.
aircraft produced and delivered by the F-35 prime contractor, Lockheed
Martin has remained relatively stable in each of the last four years. As
more aircraft are produced, Lockheed Martin’s manufacturing efficiency
and quality metrics have also improved. In contrast, manufacturing
efficiency and quality metrics have remained relatively stable for Pratt &
Whitney, the engine contractor. At the same time, aircraft reliability and
maintainability have continued to improve, although at slower rates than
program officials expected.

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GAO-16-390 F-35 Joint Strike Fighter

Airframe Manufacturing
Efficiency and Quality
Continue to Improve

Over the last four years, the number of U.S. aircraft produced and
delivered by the F-35 prime contractor, Lockheed Martin, has remained
relatively stable. Since 2011, a total of 154 aircraft have been delivered to
DOD and international partners, 45 of which were delivered in 2015. 8
Figure 5 shows the number of U.S. and international partner aircraft
delivered, as well as the number of F-35 aircraft in production at
Lockheed Martin and its suppliers as of December 2015.
Figure 5: Number of F-35 Joint Strike Fighter Aircraft Delivered and in Production
as of December 2015

8

Lockheed Martin has delivered 10 F-35s to international partners: 2 to Australia, 1 to
Italy, 3 to Great Britain, 2 to the Netherlands, and 2 to Norway.

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GAO-16-390 F-35 Joint Strike Fighter

Although prior to 2015 Lockheed Martin had only delivered one aircraft on
or ahead of their contracted delivery date, the contractor has been
making progress, and in 2015, was able to deliver 15 of the 45 aircraft on
time or early. As Lockheed Martin delivers more aircraft, the number of
average labor hours needed to manufacture each aircraft continues to
decline. Since 2011 average labor hours per aircraft have declined 60
percent on average since the first F-35 aircraft was delivered. Lockheed
Martin officials stated that their goal is to reduce the average labor hours
to around 30,000 hours by 2019. Based on the labor hour trends depicted
in figure 6, Lockheed Martin appears to be on track to achieve its goal.
Figure 6: Trend in Labor Hours to Build F-35 Joint Strike Fighter Aircraft by Variant

Other manufacturing data also indicate that manufacturing efficiency and
product quality continue to improve.
•

The amount of time spent on out-of-station work averaged 5 hours per
aircraft in 2015. This is a reduction of 88 percent since 2014.

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GAO-16-390 F-35 Joint Strike Fighter

•

The time spent on scrap, rework, and repair in the sixth production lot 9
averaged around 8,800 hours per aircraft. This is a reduction of 19
percent from the prior lot.

•

Non-conformances averaged around 3,900 per aircraft in the sixth
production lot. This is consistent with the prior lot.

•

Engineering design changes remained the same. In 2015, changes
averaged 23 per month, the same as in 2014.

Although it has improved, Lockheed Martin’s supply chain continues to
deliver parts late to production, resulting in inefficiencies and requiring
workarounds. Since 2014, there has been a 53 percent reduction in part
shortage occurrences. In 2015, there were a total of 269 less severe
shortages, and 89 most severe shortages on average per month (see
figure 7). The severity of part shortages is measured in four categories,
category 1 being the least severe, and category 4 and above being the
most severe with those shortages requiring a major workaround or work
stoppage.
Figure 7: Reduction in Average Monthly F-35 Joint Strike Fighter Part Shortage
Occurrences at Prime Contractor Facility from 2014 to 2015

According to Lockheed Martin and F-35 program officials, parts continue
to be delivered late largely because of late contract awards and because
the supply base is not yet capable of handling large quantities. We found
in April 2015 that inefficiencies related to limited supply base capabilities
could be exacerbated if this trend continues as production increases. 10
9

Aircraft are procured in groups also known as production lots.

10

GAO-15-364

Page 15

GAO-16-390 F-35 Joint Strike Fighter

This continues to be a risk to the program. Lockheed Martin officials
stated they have a number of initiatives aimed at improving supplier
performance, including conducting additional oversight of some suppliers
and assisting some suppliers with developing corrective action plans. As
a result, Lockheed Martin officials believe the performance of some key
suppliers has improved over the last year.

Engine Deliveries Ahead
of Contract but Efficiency
Challenges Remain

Overall, the delivery rate of the engine manufacturer, Pratt & Whitney,
increased from 27 in 2011 to 42 in 2015. A total of 218 engines have
been delivered to date. In 2015, Pratt & Whitney delivered nearly half of
the engines to DOD ahead of contract requirements. The labor hours
required to assemble an F-35 engine decreased quickly and has
remained relatively steady since engine number 70 was delivered. Pratt &
Whitney officials largely attribute this improvement to lessons learned by
the contractor on previous fighter aircraft engine programs, such as the F22. Figure 8 illustrates the trend in labor hours required to build the F-35
engine, also known as the F-135. According to Pratt & Whitney data, few
additional labor hour reductions are expected; therefore, the contractor is
looking for other ways to gain more manufacturing efficiency.

Figure 8: Trend in Labor Hours to build the F-35 Joint Strike Fighter Engine

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GAO-16-390 F-35 Joint Strike Fighter

Other Pratt & Whitney manufacturing metrics indicate that production
efficiency and quality have remained relatively steady.
•

Scrap, rework, and repair costs have remained steady at around 1.8
percent per engine. Difficulty manufacturing one of the engine rotor
blades—a hollow blade design—has driven much of the scrap and
rework costs in the engine program over the last year. However, Pratt
& Whitney officials have changed the blade design to a solid design
that is easier to produce. The solid blade is expected to decrease
scrap and rework costs.

•

Engineering design changes are relatively low and continue to
decrease. Only 31 of 175 major design changes remain to complete
the engine development program. A majority of these are scheduled
to be implemented in 2016.

According to Pratt & Whitney officials, their supply base does not
currently have the capacity to support maximum production rates. This
poses risk as the F-35 program plans to significantly increase production
rates over the next five years. To mitigate this risk, Pratt & Whitney is
pursuing the potential to have multiple suppliers for some engine parts,
known as dual-sourcing, which they believe will help increase
manufacturing capacity within the supply chain. According to Pratt &
Whitney officials, this approach may also lead to competitive pricing,
provide production stability, and mitigate the risks posed by
underperforming suppliers. In addition, Pratt & Whitney is conducting
production reviews of its supply chain and is managing supplier quality
initiatives to address shortfalls, according to officials.

Reliability and
Maintainability Progress
Continue but Not at
Expected Rates

Although the program has made progress in improving system-level
reliability and maintainability, some metrics continue to fall short of
program expectations in several key areas. For example, as shown in
figure 9, while the metrics in most areas were trending in the right
direction, the F-35 program office’s own assessment indicated that as of
August 2015 the F-35 fleet was falling short of reliability and
maintainability expectations in nine of 19 areas. As of August 2015, the F35 fleet had only flown a cumulative total of 35,940 hours. The program
has time for improvement as the ultimate goals for these reliability and
maintainability metrics are to be achieved by full system maturity, or
200,000 cumulative flight hours across the fleet. The program currently
has a number of projects planned to further increase reliability.

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GAO-16-390 F-35 Joint Strike Fighter

Figure 9: F-35 Joint Strike Fighter System-level Reliability and Maintainability
Status as of August 2015

Similarly, although engine reliability improved significantly in 2015, the
engine was still not performing at expected levels. In 2014, Pratt &
Whitney data indicated that engine reliability—measured as mean flight
hours between failure (design controllable)—was very poor and we

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GAO-16-390 F-35 Joint Strike Fighter

reported in April 2015 that the engine would likely require additional
design changes and retrofits. 11 While Pratt & Whitney has implemented a
number of design changes that have resulted in significant reliability
improvements, the F-35A and F-35B engines are still at about 55 percent
and 63 percent, respectively, of where the program expected them to be
at this point. 12 Program and contractor officials continue to identify ways
to further improve engine reliability.
In addition, average aircraft availability—the percentage of F-35 aircraft
capable of performing missions at a given time—was around 50 percent
when DOD had expected it to be 60 percent as of December 2015.
According to the office of the Director of Operational Test and Evaluation
(DOT&E) aircraft availability must improve significantly before initial
operational testing can begin. 13 In a December 2015 memorandum,
DOT&E also noted that extensive modifications to operational test aircraft
are required and will not be completed in time to start initial operational
testing in 2017 as currently planned. Program officials stated they are
working to accelerate aircraft upgrades to support initial operational test
and evaluation.

DOD’s Approach to
Managing Follow-on
Modernization and
Plans for Purchasing
Future Lots of Aircraft
Have Oversight
Implications

The program is facing key decisions that have transparency and oversight
implications. DOD plans to manage F-35 follow-on modernization,
formerly known as follow-on development, as part of the existing program
baseline and not as a separate program which we have seen before. This
approach does not align with best practices and will likely hinder
transparency and oversight. In addition, the F-35 program is exploring the
potential for using a single contract to purchase multiple lots of future
aircraft—known as a block buy approach—which has potential benefits
and risks.

11

GAO-15-364

12

The F-35C variant will use the same engine as the F-35A variant.

13

The aircraft chosen for operational testing need to demonstrate an 80 percent
availability rate.

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GAO-16-390 F-35 Joint Strike Fighter

F-35 Follow-on
Modernization Approach
Will Likely Hinder
Transparency and
Oversight

Due to evolving threats and changing warfighting environments, DOD has
begun planning and funding the development of new F-35 capabilities,
known as follow-on modernization, but DOD’s current plan for managing
the development of these new capabilities may limit transparency and
oversight. The current F-35 development program is projected to end in
2017, when Block 3F developmental flight testing is complete, at a total
development cost of $55.1 billion. The first increment of follow-on
modernization, known as Block 4, is expected to add new capabilities and
correct deficiencies of nine capabilities carried over from the current
development program such as the prognostics health management
system down-link and communication capabilities. Although the
requirements are not yet final and no official cost estimate has been
developed for Block 4, DOD’s fiscal year 2017 budget request indicates
that the department expects to spend nearly $3 billion on these
development efforts over the next 6 years (see figure 10).
Figure 10: F-35 Joint Strike Fighter Block 4 Development Costs Increase Near-term
Funding Needs

With development costs of this magnitude, the Block 4 program would
exceed the statutory and regulatory thresholds for what constitutes a
major defense acquisition program (MDAP), and it would be larger than
many of the MDAPs in DOD’s current portfolio. However, in August 2015,
the Under Secretary of Defense for Acquisition, Technology, and

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GAO-16-390 F-35 Joint Strike Fighter

Logistics issued an Acquisition Decision Memorandum directing the F-35
program office to manage Block 4 development under the existing F-35
acquisition program baseline and not as a separate incremental
acquisition program. As a result, DOD will not hold a Milestone B review
and will not establish a new baseline or business case. 14 Therefore, DOD
will not be required to separately account for cost, schedule and
performance progress to Congress with regular, formal reports.
In preparation for F-35 Block 4 modernization, DOD is currently
conducting activities typical of a program preparing to begin system
development—including requirements definition and preliminary design—
and is planning to award a new development contract for Block 4 in the
third quarter of fiscal year 2018. DOD policy indicates that the timing of
this contract award would usually initiate a Milestone B review for typical
programs of such magnitude. A Milestone B review would set in motion
oversight mechanisms including an acquisition program baseline; NunnMcCurdy unit cost growth thresholds; and periodic reporting of the
program’s cost, schedule, and performance progress. These mechanisms
form the basic business case and oversight framework to ensure that a
program is executable and that Congress and DOD decision makers are
informed about the program’s progress. Best practices recommend an
incremental approach in which new development efforts are structured
and managed as separate acquisition programs and that a business case
should match requirements with resources—proven technologies,
sufficient engineering capabilities, time, and funding—before undertaking
a new product development. Because DOD does not yet have approved
requirements and is not planning to hold a Milestone B review, its
approach for Block 4 modernization will not require the program to have
such important reporting and oversight mechanisms in place.
We are concerned with DOD’s approach largely because of a similar case
we reported on in March 2005. In that report we found that the Air Force
was managing its multi-billion dollar F-22 modernization efforts as part of
the program’s existing acquisition baseline and had not established a
knowledge-based business case. 15 We recommended that the Air Force

14

Milestone B is a key decision point in DOD acquisitions that formally initiates a system
development program and triggers key oversight mechanisms.

15

GAO, Tactical Aircraft: Air Force Still Needs Business Case to Support F/A-22
Quantities and Increased Capabilities, GAO-05-304 (Washington, D.C.: March 15, 2005).

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GAO-16-390 F-35 Joint Strike Fighter

structure and manage F-22 modernization as a separate acquisition
program with its own business case—matching requirements with
resources—and acquisition program baseline. However, the F-22
baseline and schedule were not immediately adjusted to reflect the new
timeframes and additional costs and funding of the baseline development
and modernization effort were comingled. As a result, the content, scope,
and phasing of capabilities changed over time and it appeared that the F22 program was fraught with schedule delays and cost overruns. The
comingling of cost and schedule information reduced transparency and
Congress could not distinguish between increased costs associated with
the original baseline funding and increased costs associated with
modernization funding. As shown in table 2, the F-22 modernization
program was less complex than the proposed F-35 Block 4 development
but the F-22 program’s approach still resulted in poor acquisition
outcomes. Eventually, the department separated the F-22 modernization
program from the baseline program with a Milestone B review, in line with
our recommendation, which increased transparency and better facilitated
oversight. The department has the opportunity to apply similar lessons
learned to the F-35 Block 4 program.
Table 2: Comparison of the New Capabilities and Weapons of the F-22
Modernization and F-35 Joint Strike Fighter Block 4 Modernization
System

Capabilities

Weapons

F-22

8

3

F-35

80

17

Source: GAO analysis of DOD data.| GAO-16-390

Proposed Future
Procurement Plan Has
Benefits and Risks

In an effort to reduce procurement costs, the F-35 program office has
begun exploring the potential benefits and risks of using what the
program has called a block buy contracting approach. Currently, the
program purchases aircraft under separate annual contracts that are
negotiated on an annual basis. Program officials stated they are
considering seeking specific legal authority from Congress that would
enable them to enter into a 3 year contract to purchase three lots of

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GAO-16-390 F-35 Joint Strike Fighter

aircraft, although funding would still be authorized and appropriated by
Congress annually. 16
The F-35 block buy contracting approach under consideration does have
a number of potential benefits. For example, block buy contracting would
allow the program to purchase parts for all three lots of aircraft at the
same time, which could result in cost savings. By purchasing supplies in
economic quantities, Lockheed Martin and Pratt & Whitney estimate that
8 percent and 2.3 percent cost savings, respectively, could be achievable.
Program officials believe that block buy contracting can also enhance
program and supply chain stability by providing assurance that quantities
and the program’s ramp-up is nearing and steady work will continue. This
stability could help address the supply base’s delivery issues.
While the F-35 block buy contracting approach could result in cost
savings and other benefits, it can present oversight challenges. Our
analysis of the Navy’s block buy contract for the Littoral Combat Ship
(LCS) indicates that the contract could affect Congress’s funding
flexibility. For example, the LCS contract states that a failure to fully fund
the purchase in a given year would mean that the contract is subject to
renegotiation. This could result in the government paying more for the
remaining ships. The F-35 block buy plan is still under consideration and
the specific terms and conditions of the contract are not yet defined, nor
has the specific statutory authority the program might seek been enacted.
However, if the F-35 block buy contract contains similar provisions to
those in the LCS contract, Congress’s ability to make funding changes
could be similarly affected. Program officials noted that they are
examining prior block buys, like the LCS, to identify lessons learned and
looking for ways to reduce risk to the government.
Reducing costs for a program of the F-35’s size is clearly desirable.
However, adding an F-35 block buy to DOD’s portfolio of contracts with
explicit or potential long-term commitments could further affect
Congress’s funding flexibility. As can be seen in figure 11, long-term
contracts, such as block buys and multiyear contracts, will consume 30

16
This approach would differ from multi-year contracting under 2306b and 2306c of Title
10, U.S. Code. Sections 2306b and 2306c authorize the military departments to obligate
current appropriations to enter a multiyear contract for the acquisition of property and
services for the bona fide needs of up to five fiscal years, provided certain criteria set out
in the statute are met.

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GAO-16-390 F-35 Joint Strike Fighter

percent of DOD’s fiscal year 2016 budget and if the F-35 block buy
contract was included as a long-term agreement, such agreements would
comprise nearly half of DOD’s budget.
Figure 11: Percentage of Multiyear and Non Multiyear Contracts in Department of
Defense’s Fiscal Year 2016 Major Defense Acquisition Program Procurement
Budget

Conclusions

The F-35 development program is nearing completion and aircraft
manufacturing continues to improve. While much of the remaining
developmental flight testing will be challenging, and some additional
discoveries are likely, the program has mitigated many of the technical
risks that we have reported on over the past several years. However, the
program is not without risks. Performance issues with ALIS and new
issues with the ejection seat and F-35C wing structures pose ongoing
risks. Going forward, the program will continue to experience affordability
and oversight challenges. DOD still expects that beginning in 2022 it will
need more than $14 billion a year on average for a decade to procure
aircraft. It is unlikely that the program will be able to receive and sustain
such a high level of funding over this extended period, especially given
DOD’s competing resources such as the long range strike bomber and
KC-46A tanker. While a block buy can offer savings and stability, how the

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GAO-16-390 F-35 Joint Strike Fighter

contract terms are developed will be an important consideration so as not
to affect congressional funding flexibility, especially when considering that
nearly a third of DOD’s acquisition budget is already covered by multiyear
commitments. Further congressional oversight challenges are presented
because of DOD’s plan to manage Block 4 under the current acquisition
program baseline and because key reporting requirements and oversight
mechanisms will not be initiated. Best practices recommend an
incremental approach in which new development efforts are structured
and managed as separate acquisition programs with their own
requirements and acquisition program baselines. Without an acquisition
program baseline and regular reporting on progress, it will be difficult for
Congress to hold DOD accountable for achieving F-35 Block 4 cost,
schedule, and performance goals.

Matter for
Congressional
Consideration

To enhance program oversight and accountability given that DOD does
not plan to modify its acquisition strategy and hold a Milestone B decision
review for the F-35 follow-on modernization program, Congress should
consider directing the Secretary of Defense to hold a Milestone B review
and manage F-35 Block 4 as its own separate and distinct major defense
acquisition program with its own acquisition baseline and regular cost,
schedule, and performance report to Congress.

Recommendations for
Executive Action

In order to ensure that proper statutory and regulatory oversight
mechanisms are in place and to increase transparency into a major new
investment in the F-35 program, we recommend that the Secretary of
Defense hold a Milestone B review and manage F-35 Block 4 as a
separate and distinct Major Defense Acquisition Program with its own
acquisition program baseline and regular cost, schedule, and
performance reports to the Congress.

Agency Comments
and Our Evaluation

DOD provided us with written comments on a draft of this report. DOD’s
comments are reprinted in appendix II. DOD also provided technical
comments, which were incorporated as appropriate.
DOD did not concur with our recommendation to hold a Milestone B
review and manage F-35 Block 4 follow-on modernization as a separate
and distinct major defense acquisition program. DOD stated that it views
Block 4 as a continuation of the existing F-35 acquisition program, which
it believes is the department’s most closely managed system. DOD went
on to explain that it plans to use existing F-35 oversight mechanisms like
regularly scheduled high-level acquisition reviews to manage its Block 4

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GAO-16-390 F-35 Joint Strike Fighter

efforts. In addition, the department noted that it is exploring ways to
provide further transparency into the cost, schedule, and performance
progress of Block 4, like establishing separate Block 4 budget lines,
instituting contract cost performance reporting, and developing an
independent cost estimate.
While we recognize that DOD policy provides flexibility to manage
programs in different ways, and we would encourage DOD to manage
Block 4 efficiently, the management approach should not sacrifice
transparency or oversight. As noted in this report, DOD is currently
conducting activities typical of a program preparing to begin system
development including requirements definition and preliminary design,
and expects to award a new development contract for Block 4 in fiscal
year 2018. DOD expects Block 4 modernization to develop and deliver 80
new capabilities and 17 weapons that were not part of the program’s
original acquisition baseline. In its fiscal year 2017 budget request, DOD
has identified the need for nearly $3 billion over the next 6 years for
development of these new capabilities. We continue to believe that a
development effort of this magnitude should be established as a major
defense acquisition program—as defined in statute and DOD policy—with
a Milestone B review and a separate and distinct business case and
acquisition program baseline. This would make the new program subject
to key statutory oversight mechanisms—including Nunn-McCurdy unit
cost growth thresholds—and DOD would be required to provide regular
cost, schedule, and performance reports to Congress. If Block 4 is
managed as a distinct program with a separate baseline, it would be
easier for Congress and DOD decision makers to track program-specific
cost and schedule progress. A hypothetical $1 billion cost increase in
Block 4 illustrates the difference in cost reporting and oversight. While a
$1 billion cost increase is significant, it would represent growth of less
than 1 percent if tracked against the current F-35 program baseline,
which is currently about $400 billion. That same cost increase, if tracked
against the $3 billion funding estimate reflected in DOD’s budget request
for Block 4, would be more visible, representing a 33 percent cost
increase. This is not the first time DOD has been faced with a decision
like this. As noted in this report, the Air Force’s F-22 modernization
program began in a similar situation. However, the Air Force eventually
chose to hold a Milestone B review for F-22 modernization and manage it
as a separate and distinct acquisition program, which increased
transparency and better facilitated oversight. Therefore, we continue to
believe that our recommendation is valid and as such are making a
matter for congressional consideration.

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GAO-16-390 F-35 Joint Strike Fighter

We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, and Under Secretary of Defense
for Acquisition, Technology, and Logistics. In addition, the report is
available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or sullivanm@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix IV.

Michael J. Sullivan
Director, Acquisition and Sourcing Management

Page 27

GAO-16-390 F-35 Joint Strike Fighter

List of Committees
The Honorable John McCain
Chairman
The Honorable Jack Reed
Ranking Member
Committee on Armed Services
United States Senate
The Honorable Thad Cochran
Chairman
The Honorable Richard J. Durbin
Ranking Member
Subcommittee on Defense
Committee on Appropriations
United States Senate
The Honorable Mac Thornberry
Chairman
The Honorable Adam Smith
Ranking Member
Committee on Armed Services
House of Representatives
The Honorable Rodney P. Frelinghuysen
Chairman
The Honorable Pete Visclosky
Ranking Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives

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GAO-16-390 F-35 Joint Strike Fighter

Appendix I: Prior GAO Reports on F-35 Joint
Strike Fighter and Department of Defense
(DOD) Responses and Subsequent Actions
Appendix I: Prior GAO Reports on F-35 Joint
Strike Fighter and Department of Defense
(DOD) Responses and Subsequent Actions

GAO report

Estimated
Development
Costs
Development
Length
Aircraft unit cost Key program event

Primary GAO
Conclusions/Recommendation

DOD response and
actions

2001
GAO-02-39

$34.4 Billion
10 years
$69 Million

Start of system
development and
demonstration approved.

Critical technologies needed for
DOD did not delay start of
key aircraft performance elements system development and
are not mature. Program should
demonstration stating
delay start of system
technologies were at
acceptable maturity levels
development until critical
technologies are mature to
and stated it will manage
risks in development.
acceptable levels.

2005
GAO-05-271

$44.8 Billion
12 years
$82 Million

The program undergoes replan to address higher than
expected design weight,
which added $7 billion and
18 months to development
schedule.

We recommended that the
program reduce risks and
establish executable business
case that is knowledge-based
with an evolutionary acquisition
strategy.

DOD partially concurred
but did not adjust strategy,
believing that its approach
was balanced between
cost, schedule and
technical risk.

2006
GAO-06-356

$45.7 Billion
12 years
$86 Million

Program sets in motion
plan to enter production in
2007 shortly after first flight
of the non-production
representative aircraft.

The program was entering
production with less than 1
percent of testing complete. We
recommended the program delay
investing in production until flight
testing shows that the Joint Strike
Fighter performs as expected.

DOD partially concurred
but did not delay start of
production because it
believed the risk level was
appropriate.

2007
GAO-07-360

$44.5 Billion
12 years
$104 Million

Congress reduced funding
for first two low-rate
production buys thereby
slowing the ramp-up of
production.

Progress was being made but
DOD did not concur and
concerns remained about undue stated that the program
overlap in testing and production. had an acceptable level of
We recommended limits to annual concurrency and an
production quantities to 24 a year appropriate acquisition
until flying quantities were
strategy.
demonstrated.

2008
GAO-08-388

$44.2 Billion
12 years
$104 Million

DOD implemented a MidWe found the new plan increased
course Risk Reduction Plan risks and DOD should revise it to
to replenish management
address concerns about testing,
reserves from about $400
management reserves, and
million to about $1 billion by manufacturing. We determined
reducing test resources.
that the cost estimate was not
reliable and recommended the
need for a new cost estimate and
schedule risk assessment.

GAO report

Estimated
Key program event
development costs
Development
length
aircraft unit cost

Page 29

Primary GAO
Conclusion/Recommendation

DOD did not revise the risk
plan or restore testing
resources, stating that they
will monitor the new plan
and adjust it if necessary.
Consistent with a report
recommendation, a new
cost estimate was
prepared, but DOD did not
conduct a risk and
uncertainty analysis.
DOD response and actions

GAO-16-390 F-35 Joint Strike Fighter

Appendix I: Prior GAO Reports on F-35 Joint
Strike Fighter and Department of Defense
(DOD) Responses and Subsequent Actions

2009
GAO-09-303

$44.4 Billion
13 years
$104 Million

The program increased the
cost estimate and added a
year to development but
accelerated the production
ramp-up. An independent
DOD cost estimate (JET I)
projected even higher costs
and further delays.

We concluded that moving
DOD agreed to report its
forward with an accelerated
contracting strategy and
procurement plan and use of cost plans to Congress and
reimbursement contracts was very conduct a schedule risk
risky. We recommended the
analysis. The program
program report on the risks and
reported completing the
mitigation strategy for this
first schedule risk
approach.
assessment with plans to
update semi-annually. The
Department announced a
major program reducing
procurement and moving
to fixed-price contracts.

2010
GAO-10-382

$49.3 Billion
15 years
$112 Million

The program was
restructured to reflect
findings from a recent
independent cost team
(JET II) and independent
manufacturing review team.
As a result, development
funds increased, test
aircraft were added, the
schedule was extended,
and the early production
rate decreased.

Costs and schedule delays
inhibited the program’s ability to
meet needs on time. We
recommended the program
complete a full comprehensive
cost estimate and assess
warfighter and IOC requirements.
We suggested that Congress
require DOD to tie annual
procurement requests to
demonstrated progress.

2011
GAO-11-325

$51.8 Billion
16 years
$133 Million

Restructuring continued
We concluded that the
DOD concurred with all
with additional development restructuring actions were positive three of the
cost increases, schedule
and if implemented properly,
recommendations. DOD
growth, further reduction in should lead to more achievable
lifted STOVL probation
near-term procurement
and predictable outcomes.
citing improved
Concurrency of development, test, performance.
quantities, and decreased
and production was substantial
Subsequently, DOD further
the rate for future
production. The Secretary and provided risk to the program. reduced procurement
We recommended DOD maintain quantities, decreasing
of Defense placed the
funding requirements
funding levels as budgeted;
Short-takeoff Vertical
through 2016. The initial
establish criteria for STOVL
Landing variant on a twoindependent software
year probation; decoupled probation; and conduct an
assessment began and
independent review of software
STOVL from the other
development, integration, and test ongoing reviews were
variants; and reduced
STOVL production plans for processes.
planned to continue
fiscal years 2011 to 2013.
through 2012.

Page 30

DOD continued
restructuring, increasing
test resources and
lowering the production
rate. Independent review
teams evaluated aircraft
and engine manufacturing
processes. Cost increases
later resulted in a NunnMcCurdy breach. Military
services are currently
reviewing capability
requirements as we
recommended.

GAO-16-390 F-35 Joint Strike Fighter

Appendix I: Prior GAO Reports on F-35 Joint
Strike Fighter and Department of Defense
(DOD) Responses and Subsequent Actions

2012
GAO-12-437

$55.2 Billion
18 years
$137 Million

The program established a
new acquisition program
baseline and approved the
continuation of system
development, increasing
costs for development and
procurements and
extending the period of
planned procurements by 2
years.

Extensive restructuring placed the
program on a more achievable
course. Most of the program’s
instability continued to be
concurrency of development, test,
and production. We
recommended that the Cost
Assessment Program Evaluation
office conduct an analysis on the
impact of lower annual funding
levels; and the program office
conduct an assessment of the
supply chain and transportation
network.

2013
GAO-13-309

$55.2 Billion
18 years
$137 Million

The program continued to
move forward following a
new acquisition program
baseline in 2012. In doing
so, the program
incorporated positive and
more realistic restructuring
actions taken since 2010
including more time and
funding for development
and deferred procurement
of more than 400 aircraft to
future years.

The program was moving in the
DOD agreed with GAO’s
right direction but must fully
observations.
validate design and operational
performance and at the same time
make the system affordable. We
did not make recommendations to
DOD in this report.

2014
GAO-14-322

$55.2 Billion
18 years
$135 Million

The services established
initial operational
capabilities dates in 2013.
The Marine Corps and Air
Force are planning to field
initial operational
capabilities in 2015 and
2016, respectively, and the
Navy plans to field its initial
capability in 2018.

Delays in developmental flight
testing of the F-35’s critical
software may hinder delivery of
the warfighting capabilities to the
military services. We
recommended DOD conduct an
assessment of the specific
capabilities that can be delivered
and those that will not likely be
delivered to each of the services
by their established initial
operational capability dates.

Page 31

DOD partially concurred
with conducting an
analysis on the impact of
lower annual funding levels
and concurred with
assessing the supply chain
and transportation network.

DOD concurred with our
recommendation and
officials stated they are in
the process of conducting
the assessment.

GAO-16-390 F-35 Joint Strike Fighter

Appendix I: Prior GAO Reports on F-35 Joint
Strike Fighter and Department of Defense
(DOD) Responses and Subsequent Actions

2014
GAO-14-778

Not reported

DOD was developing
several plans and analyses
that will make up its overall
F-35 sustainment strategy,
which was expected to be
complete in fiscal year
2019.

The annual F-35 operating and
support costs were estimated to
be considerably higher than the
combined annual costs of several
legacy aircraft. DOD had not fully
addressed several issues that
have an effect on affordability and
operational readiness. Operating
and support cost estimates may
not be fully reliable. GAO
recommended that DOD develop
better informed affordability
constraints; address three risks
that could affect sustainment,
affordability, and operational
readiness; and take steps to
improve the reliability of its cost
estimates.

DOD concurred with all but
one recommendation and
partially concurred with the
recommendation to
conduct uncertainty
analysis on one of its cost
estimates, stating it already
conducts a form of
uncertainty analysis.

2015
GAO-15-364

$54.9 billion
18 years
$136 million

Since the 2012 rebaselining, DOD has made
changes to its F-35
procurement plans on an
annual basis. The program
also competed with other
high priority DOD programs
for funding. In 2013 and
2014 DOD deferred a
number of aircraft,
extending the length of the
program, and increasing
funding liability in the
future.

The consistent changes in F-35
procurement plans indicate that
the analysis done to support the
program’s 2012 baseline did not
accurately account for future
technical risks or funding realities.
We recommended DOD conduct
an affordability analysis of the
current procurement plan that
reflects various assumptions
about technical progress and
funding availability.

DOD concurred with the
recommendation and
stated that it accomplishes
an analysis of the
program’s current
procurement plans with
various assumptions about
technical progress and
funding availability every
year as it conducts reviews
for the budget process.

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GAO-16-390 F-35 Joint Strike Fighter

Appendix II: Scope and Methodology
Appendix II: Scope and Methodology

To assess the program’s cost and affordability, we reviewed total program
funding requirements using the December 2015 Selected Acquisition
Report. We used these data to project annual funding requirements
through the expected end of the F-35 acquisition in 2038. We also
compared the December 2015 Selected Acquisition Report to prior
Selected Acquisition Reports to identify changes in cost and quantity. We
obtained life-cycle operating and support cost through the program’s 2015
Selected Acquisition Report and projections made by the Cost Analysis
and Program Evaluation office.
To assess the program’s remaining development and testing we
interviewed officials from the program office, contractors, Lockheed
Martin and Pratt & Whitney. We obtained and analyzed data on flights
and test points, both planned and accomplished during 2015. We
compared test progress against the total program plans to complete. In
addition, we interviewed officials from the F-35 program office, Lockheed
Martin, Pratt & Whitney, and the Director, Operational Test and
Evaluation office to discuss development test plans, achievements, and
test discoveries. We also collected relevant information from the program
office, Lockheed Martin, Pratt & Whitney, and Department of Defense test
pilots regarding the program’s technical risks including the helmet
mounted display, autonomic logistics information system, carrier arresting
hook, structural durability, ejection seat, and engine.
To assess ongoing manufacturing and supply chain performance we
obtained and analyzed data related to aircraft delivery rates and work
performance data through the end of calendar year 2015. These data
were compared to program objectives identified in these areas and used
to identify trends. We reviewed data and briefings provided by the
program office, Lockheed Martin, Pratt & Whitney, and the Defense
Contract Management Agency in order to identify issues in manufacturing
processes. We discussed reasons for delivery delays and plans for
improvement with Lockheed Martin and Pratt & Whitney. We also toured
Lockheed Martin’s manufacturing facility in Ft. Worth, Texas and Pratt &
Whitney’s manufacturing facility in Middletown, Connecticut. We collected
and analyzed data related to aircraft quality through December 2015. We
collected and analyzed supply chain performance data and discussed
steps taken to improve quality and deliveries with Lockheed Martin and
Pratt & Whitney. We also analyzed reliability and maintainability data and
discussed these issues with program and contractor officials.
To assess future modernization and procurement plans, we discussed
cost and manufacturing efficiency initiatives, such as the block buy

Page 33

GAO-16-390 F-35 Joint Strike Fighter

Appendix II: Scope and Methodology

approach, with contractor and program office officials to understand
potential cost savings and plans. To assess the program’s follow-on
modernization plans we discussed the program’s plans and with program
office officials. We reviewed the fiscal year 2016 and fiscal year 2017
budget requests to identify costs associated with the effort. We collected
and analyzed information regarding capability and oversight plans for the
development effort. We also reviewed and analyzed best practices
identified by GAO and reviewed relevant DOD policies and statutes.
We assessed the reliability of DOD and contractor data by reviewing
existing information about the data, and interviewing agency officials
knowledgeable about the data. We determined that the data were
sufficiently reliable for the purposes of this report. We conducted this
performance audit from June 2015 to April 2016 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.

Page 34

GAO-16-390 F-35 Joint Strike Fighter

Appendix III: Comments from the
Department of Defense
Appendix III: Comments from the Department
of Defense

Page 35

GAO-16-390 F-35 Joint Strike Fighter

Appendix III: Comments from the Department
of Defense

Page 36

GAO-16-390 F-35 Joint Strike Fighter

Appendix IV: GAO Contact and Staff
Acknowledgments
Appendix IV: GAO Contact and Staff
Acknowledgments

GAO Contact

Michael J. Sullivan (202) 512 – 4841 or sullivanm@gao.gov

Staff
Acknowledgments

In addition to the contact name above, the following staff members made
key contributions to this report: Travis Masters, Assistant Director; Peter
Anderson, Kurt Gurka, Kristine Hassinger, Jillena Roberts, Megan Setser,
and Roxanna Sun.

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GAO-16-390 F-35 Joint Strike Fighter

Related GAO Products
Related GAO Products

F-35 Sustainment: DOD Needs a Plan to Address Risks Related to its
Central Logistics System. GAO-16-439. Washington, D.C.: April 14, 2016.
F-35 Joint Strike Fighter: Preliminary Observations on Program Progress.
GAO-16-489T. Washington, D.C.: March 23, 2016.
F-35 Joint Strike Fighter: Assessment Needed to Address Affordability
Challenges. GAO-15-364. Washington, D.C.: April 14, 2015.
F-35 Sustainment: Need for Affordable Strategy, Greater Attention to
Risks, and Improved Cost Estimates. GAO-14-778. Washington, D.C.:
September 23, 2014.
F-35 Joint Strike Fighter: Slower Than Expected Progress in Software
Testing May Limit Initial Warfighting Capabilities. GAO-14-468T.
Washington, D.C.: March 26 2014.
F-35 Joint Strike Fighter: Problems Completing Software Testing May
Hinder Delivery of Expected Warfighting Capabilities. GAO-14-322.
Washington, D.C.: March 24, 2014.
F-35 Joint Strike Fighter: Restructuring Has Improved the Program, but
Affordability Challenges and Other Risks Remain. GAO-13-690T.
Washington, D.C.: June 19, 2013.
F-35 Joint Strike Fighter: Program Has Improved in Some Areas, but
Affordability Challenges and Other Risks Remain. GAO-13-500T.
Washington, D.C.: April 17, 2013.
F-35 Joint Strike Fighter: Current Outlook Is Improved, but Long-Term
Affordability Is a Major Concern. GAO-13-309. Washington, D.C.: March
11, 2013.
Fighter Aircraft: Better Cost Estimates Needed for Extending the Service
Life of Selected F-16s and F/A-18s. GAO-13-51. Washington, D.C.:
November 15, 2012
Joint Strike Fighter: DOD Actions Needed to Further Enhance
Restructuring and Address Affordability Risks. GAO-12-437. Washington,
D.C.: June 14, 2012.
Defense Acquisitions: Assessments of Selected Weapon Programs.
GAO-12-400SP. Washington, D.C.: March 29, 2012.

Page 38

GAO-16-390 F-35 Joint Strike Fighter

Related GAO Products

Joint Strike Fighter: Restructuring Added Resources and Reduced Risk,
but Concurrency Is Still a Major Concern. GAO-12-525T. Washington,
D.C.: March 20, 2012.
Joint Strike Fighter: Implications of Program Restructuring and Other
Recent Developments on Key Aspects of DOD’s Prior Alternate Engine
Analyses. GAO-11-903R. Washington, D.C.: September 14, 2011.
Joint Strike Fighter: Restructuring Places Program on Firmer Footing, but
Progress Is Still Lagging. GAO-11-677T. Washington, D.C.: May 19,
2011.
Joint Strike Fighter: Restructuring Places Program on Firmer Footing, but
Progress Still Lags. GAO-11-325. Washington, D.C.: April 7, 2011.
Joint Strike Fighter: Restructuring Should Improve Outcomes, but
Progress Is Still Lagging Overall. GAO-11-450T. Washington, D.C.:
March 15, 2011.
Tactical Aircraft: Air Force Fighter Force Structure Reports Generally
Addressed Congressional Mandates, but Reflected Dated Plans and
Guidance, and Limited Analyses. GAO-11-323R. Washington, D.C.:
February 24, 2011.
Defense Management: DOD Needs to Monitor and Assess Corrective
Actions Resulting from Its Corrosion Study of the F-35 Joint Strike
Fighter. GAO-11-171R. Washington D.C.: December 16, 2010.
Joint Strike Fighter: Assessment of DOD’s Funding Projection for the
F136 Alternate Engine. GAO-10-1020R. Washington, D.C.: September
15, 2010.
Tactical Aircraft: DOD’s Ability to Meet Future Requirements is Uncertain,
with Key Analyses Needed to Inform Upcoming Investment Decisions.
GAO-10-789. Washington, D.C.: July 29, 2010.
Defense Acquisitions: Assessments of Selected Weapon Programs.
GAO-10-388SP. Washington, D.C.: March 30, 2010.
Joint Strike Fighter: Significant Challenges and Decisions Ahead.
GAO-10-478T. Washington, D.C.: March 24, 2010.

Page 39

GAO-16-390 F-35 Joint Strike Fighter

Related GAO Products

Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting
Warfighter Requirements on Time. GAO-10-382. Washington, D.C.:
March 19, 2010.
Joint Strike Fighter: Significant Challenges Remain as DOD Restructures
Program. GAO-10-520T. Washington, D.C.: March 11, 2010.
Joint Strike Fighter: Strong Risk Management Essential as Program
Enters Most Challenging Phase. GAO-09-711T. Washington, D.C.: May
20, 2009.
Defense Acquisitions: Assessments of Selected Weapon Programs.
GAO-09-326SP. Washington, D.C.: March 30, 2009.
Joint Strike Fighter: Accelerating Procurement before Completing
Development Increases the Government’s Financial Risk. GAO-09-303.
Washington D.C.: March 12, 2009.
Defense Acquisitions: Better Weapon Program Outcomes Require
Discipline, Accountability, and Fundamental Changes in the Acquisition
Environment. GAO-08-782T. Washington, D.C.: June 3, 2008.
Defense Acquisitions: Assessments of Selected Weapon Programs.
GAO-08-467SP. Washington, D.C.: March 31, 2008.
Joint Strike Fighter: Impact of Recent Decisions on Program Risks.
GAO-08-569T. Washington, D.C.: March 11, 2008.
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.
GAO-08-388. Washington, D.C.: March 11, 2008.
Tactical Aircraft: DOD Needs a Joint and Integrated Investment Strategy.
GAO-07-415. Washington, D.C.: April 2, 2007.
Defense Acquisitions: Analysis of Costs for the Joint Strike Fighter Engine
Program. GAO-07-656T. Washington, D.C.: March 22, 2007.
Joint Strike Fighter: Progress Made and Challenges Remain.
GAO-07-360. Washington, D.C.: March 15, 2007.
Tactical Aircraft: DOD’s Cancellation of the Joint Strike Fighter Alternate
Engine Program Was Not Based on a Comprehensive Analysis.
GAO-06-717R. Washington, D.C.: May 22, 2006.

Page 40

GAO-16-390 F-35 Joint Strike Fighter

Related GAO Products

Defense Acquisitions: Major Weapon Systems Continue to Experience
Cost and Schedule Problems under DOD’s Revised Policy. GAO-06-368.
Washington, D.C.: April 13, 2006.
Defense Acquisitions: Actions Needed to Get Better Results on Weapons
Systems Investments. GAO-06-585T. Washington, D.C.: April 5, 2006.
Tactical Aircraft: Recapitalization Goals Are Not Supported by
Knowledge-Based F-22A and JSF Business Cases. GAO-06-487T.
Washington, D.C.: March 16, 2006.
Joint Strike Fighter: DOD Plans to Enter Production before Testing
Demonstrates Acceptable Performance. GAO-06-356. Washington, D.C.:
March 15, 2006.
Joint Strike Fighter: Management of the Technology Transfer Process.
GAO-06-364. Washington, D.C.: March 14, 2006.
Tactical Aircraft: F/A-22 and JSF Acquisition Plans and Implications for
Tactical Aircraft Modernization. GAO-05-519T. Washington, D.C: April 6,
2005.
Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike Fighter
Program with Different Acquisition Strategy. GAO-05-271. Washington,
D.C.: March 15, 2005.

(100138)

Page 41

GAO-16-390 F-35 Joint Strike Fighter

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