From Marine Corps Times

 

Audit: Buying, flying JSF to cost $1 trillion

By Richard Lardner - The Associated Press

Posted : Wednesday Mar 12, 2008 14:55:31 EDT

 

WASHINGTON — The cost of buying and operating a new fleet of jet fighters for the U.S. military is nearing $1 trillion, according to a congressional audit that found the program dogged by delays, manufacturing inefficiencies and price increases.

 

Released Tuesday, the report from the Government Accountability Office offers a sobering assessment of the ambitious effort to deliver a modern series of aircraft known as the F-35 Lightning II to the Navy, Air Force and Marine Corps.

 

Tasked by Congress to conduct an annual assessment of the program, the GAO said costs have gone up by $23 billion since last year alone.

 

Close to $300 billion is needed to acquire 2,458 aircraft for the three services and another $650 billion will be needed to operate and maintain the fighters that are expected to be flying well into the 21st century, the report said.

 

Operating costs, projected at $346 billion just a few years ago, have been driven upward by changes in repair plans, revised costs for depot maintenance, higher fuel costs and increased fuel consumption.

 

The GAO’s auditors said they expect development and procurement costs “to increase substantially and schedule pressures to worsen based on performance to date.”

 

Lockheed Martin Aeronautics Co. of Fort Worth, Texas, is the prime contractor for the Lightning II, also known as the Joint Strike Fighter.

 

The GAO, the investigative arm of Congress, also sees many of the problems as self-inflicted.

 

“The contractor has extended manufacturing schedules several times, but test aircraft delivery dates continue to slip,” the report said. “The flight test program has barely begun, but faces substantial risks with reduced assets as design and manufacturing problems continue to cause delays that further compress the time available to complete development.”

 

Auditors criticized both the military and the contractor for pressing into the jet’s development’s phase before key technologies were mature, manufacturing test aircraft before designs were stable, and moving to production before flight tests showed the aircraft was ready.

 

“We do not know the basis for the GAO estimates and, until we receive and analyze their data, we will be unable to comment on them,” Lockheed spokesman John Smith said in an e-mailed statement.

 

Smith, however, said the company has been careful stewards of U.S. tax dollars by trimming costs wherever possible.

 

“We continue to apply the same kind of oversight, budget alignment and lean thinking to the program,” he said.

 

Production of the Lightning II has begun and the Defense Department is scheduled to buy the aircraft through 2034. U.S. allies are also buying hundreds of the jets and are contributing $4.8 billion in development costs.

 

The Lightning II is being produced in several different models tailored to the needs of each service. The new jet will replace the Air Forces F-16 Falcon and the A-10 Warthog aircraft. A short takeoff and vertical landing version will replace the Marine Corps F/A-18C/D and AV-8B Harrier aircraft. And the Navy is buying a model designed for taking off and landing on aircraft carriers.

From Defense Aerospace

 

Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks (edited)

(Source: U.S. Government Accountability Office (GAO); issued March 11, 2008)

 

The Joint Strike Fighter (JSF) program seeks to produce and field three aircraft variants for the Air Force, Navy, Marine Corps, and eight international partners. The estimated total investment for JSF now approaches $1 trillion to acquire and maintain 2,458 aircraft.

 

Under congressional mandate, GAO has annually reviewed the JSF program since 2005. GAO's prior reviews have identified a number of issues and recommended actions for reducing risks and improving the program's outcomes.

 

This report, the fourth under the mandate, focuses on the program's progress in meeting cost, schedule, and performance goals; plans and risks in development and test activities; the program's cost-estimating methods; and future challenges facing the program.

 

-- Since last year's report, the JSF program office estimates that total acquisition costs increased by more than $23 billion, primarily because of higher estimated procurement costs. The JSF development cost estimate stayed about the same. Development costs were held constant by reducing requirements, eliminating the alternate engine program, and spending management reserve faster than budgeted.

 

-- Facing a probable contract cost overrun, DOD implemented a Mid-Course Risk Reduction Plan to replenish management reserves from about $400 million to about $1 billion by reducing test resources.

 

-- Progress has been reported in several important areas, including partner agreements, first flights of a JSF prototype and test bed, and a more realistic procurement schedule.

 

-- The midcourse plan carries the risk of design and performance problems not being discovered until late in the operational testing and production phases, when it is significantly more costly to address such problems. The plan also fails to address the production and schedule concerns that depleted management reserves.

 

-- Cost and schedule pressures are mounting. Two-thirds of budgeted funding for JSF development has been spent, but only about one-half of the work has been completed.

 

-- The contractor is on its third, soon to be fourth, manufacturing schedule, but test aircraft in manufacturing are still behind, the continuing impacts of late designs, delayed delivery of parts, and manufacturing inefficiencies.

 

-- We believe that JSF costs will likely be much higher than reported. The estimates do not include all costs, including about $6.8 billion for the alternate engine program. In addition, some assumptions are overly optimistic and not well-documented.

 

Three independent defense offices separately concluded that program cost estimates are understated by as much as $38 billion and that the development schedule is likely to slip from 12 to 27 months. Discrepancies in cost estimates add to program risks and hinder congressional oversight. (Emphasis added—Ed.)

 

Even so, DOD does not plan for another fully documented, independent total program life-cycle cost estimate until 2013.

 

-- As JSF finalizes the three designs, matures manufacturing processes, conducts flight tests, and ramps up production, it faces significant challenges. JSF's goal--to develop and field an affordable, highly common family of strike aircraft--is threatened by rising unit procurement prices and lower commonality than expected.

 

-- The program also makes unprecedented funding demands--an average of $11 billion annually for two decades--and must compete with other defense and non-defense priorities for the shrinking federal discretionary dollar.

 

-- Further, expected cost per flight hour now exceeds that of the F-16 legacy fighter, one of the aircraft it is intended to replace.

 

With almost 90 percent (in terms of dollars) of the acquisition program still ahead, it is important to address these challenges, effectively manage future risks, and move forward with a successful program that meets our and our allies' needs.

 

Click here for the full report on JSF (58 pages in PDF format) on the GAO website.

 

Click here for related testimony before the Committee on Armed Services, House of Representatives (22 pages in PDF format) on the GAO website. (ends)