oversight

Tactical Aircraft: Status of the F/A-22 Program

Published by the Government Accountability Office on 2003-04-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Subcommittee on Tactical Air
                            and Land Forces, Committee on Armed
                            Services, House of Representatives

For Release on Delivery
Expected at 2:00 p.m. EST
Wednesday, April 2, 2003    TACTICAL AIRCRAFT
                            Status of the F/A-22
                            Program
                            Statement of Allen Li, Director
                            Acquisition and Sourcing Management




GAO-03-603T
                                                  April 2, 2003


                                                  TACTICAL AIRCRAFT

                                                  Status of the F/A-22 Program
Highlights of GAO-03-603T, a testimony
before the Subcommittee on Tactical Air
and Land Forces, House Committee on
Armed Services




The Air Force is developing the                   In the past several years, we have reported on a range of problems affecting
F/A-22 aircraft to replace its fleet of           the development of F/A-22. Specifically:
F-15 air superiority aircraft. The
F/A-22 is designed to be superior to              •   F/A-22 estimated performance in the areas of supercruise, acceleration,
the F-15 by being capable of flying                   maneuverability, radar observability, combat radius, and range in
at higher speeds for longer
distances, less detectable, and able
                                                      searching targets have so far been met or exceeded. However, problems
to provide the pilot with                             have surfaced related to overheating during high-speed flight-testing,
substantially improved awareness                      reliability, avionics that perform radar, communication, navigation,
of the surrounding situation.                         identification and electronic warfare functions as well as excess
                                                      movement of the vertical tails. Modifications are being made to some
The National Defense                                  test aircraft to address some of these problems. For now, however,
Authorization Act for Fiscal Year                     testing in some areas is restricted.
1998 requires us to annually assess
the F/A-22 development program                    •   Each year since 1998, we have reported that assembly of the test aircraft
and determine whether the                             was requiring more time than planned and that this was causing the test
program is meeting key                                aircraft to be delivered late to the test center for flight-testing. We have
performance, schedule, and cost
goals. We have issued six of these
                                                      also reported annually since 2000 that flight-test program efficiency—the
annual reports to Congress. We                        amount of flight-testing accomplished—has been less than planned.
have also reported on F/A-22
production program costs over the                 •   Cost increases have plagued the F/A-22 program since development
last 3 years. Most recently, we                       began in 1991. Since 1997, the Air Force’s estimated cost to develop the
reported on F/A-22 production and                     F/A-22 has increased by $3.2 billion bringing the total estimate to $21.9
development in February and                           billion. In addition, over the last 6 years, DOD has identified about $18
March 2003 respectively.                              billion in estimated production cost growth bringing the total
                                                      estimate to $42.2 billion---which exceeds the congressionally
This testimony summarizes our
work on the F/A-22 program,
                                                      mandated production cost limit of $36.8 billion. Further,
covering performance, cost, and                       modernization costs have increased dramatically in recent years.
scheduling issues.                                    Actions to offset estimated cost growth have had mixed success.

                                                  These problems have dramatically affected the F/A-22 program. Cost
                                                  increases, in part, have forced the Air Force to substantially decrease the
                                                  number of aircraft to be purchased—from 648 to 276. Delays in testing also
                                                  have significant consequences. Continuing to acquire aircraft before
GAO is not making                                 adequate testing is a high-risk strategy that could serve to further increase
recommendations in this                           production costs.
testimony. However,
recommendations in several prior
GAO reports have stressed the
                                                  Moreover, F/A-22 problems have limited DOD’s ability to upgrade its aging
need for the Air Force to not                     tactical aircraft fleet. If the F/A-22 program had met its original goals, the
increase annual production rates                  Air Force could have been replacing older aircraft with F/A-22 aircraft over 7
until greater knowledge is achieved               years ago. Now, however, it will not begin replacing aircraft until late 2005
through the completion of testing.                at the earliest. The rate of replenishment will be substantially lower, due to
                                                  the decrease in the number of new aircraft to be purchased. As a result,
www.gao.gov/cgi-bin/getrpt?GAO-03-603T.
                                                  DOD will have to continue to use tactical aircraft that contribute to
To view the full testimony, click on the link     increased operating and support costs and it will have to wait longer than
above.                                            anticipated to have access to the advanced capabilities to be offered by the
For more information, contact Allen Li at (202)
512-4841 or Lia@gao.gov.                          F/A-22.
Chairman Weldon, Ranking Member Abercrombie, and Members of the
Subcommittee:

I am pleased to be here today to discuss our work on the F/A-22
development and production programs. Today’s hearing occurs at a
critical time—with the Department of Defense (DOD) conducting
operations overseas while seeking to respond to changes in security
threats and still meeting the challenge of transforming the military. DOD is
spending an average of $150 billion annually on acquisition to support its
current missions and to invest in future capabilities. The magnitude of this
investment, combined with fiscal pressures across the government and the
public’s growing expectations for demonstrable results, clearly requires
DOD to be as efficient and effective as possible in obtaining new weapons
systems.

The F/A-22 Raptor, designed to be superior to any known or projected
adversary aircraft, is a key component in DOD’s modernization strategy as
it is designed to replace the F-15 fighter. As you know, the Air Force
started developing the F/A-22 in 1991. While it plans to complete
development in July 2004, important operational test and evaluation
activities have yet to be completed. Low-rate production was approved in
August 2001, and the Air Force plans to procure a minimum of 276 aircraft
for $42.2 billion.

As requested, I will discuss our past and recent findings related to the F/A-
22 program. Specifically, I will highlight the Air Force’s progress in (1)
addressing performance issues and the status of actions to address them,
(2) resolving delays in flight-testing and (3) dealing with cost growth. I will
also identify risks in the Air Force’s acquisition plan. Problems in these
areas have dramatically affected the program. For example, cost increases
have been a factor in the Air Force substantially decreasing the number of
aircraft to be purchased—from 648 to 276. Performance problems, which
are now being addressed, have limited the Air Force’s ability to test the
aircraft. Delays in testing have significant consequences. Continuing to
acquire aircraft before adequate testing is a high-risk strategy that could
serve to further increase production costs.

Together, these problems have rippling effects on DOD’s ability to upgrade
its aging tactical aircraft fleet. If the F/A-22 program had met its original
goals, the Air Force could have been replacing older aircraft with F/A-22
aircraft over 7 years ago. Now, however, it will not begin replacing aircraft
until late 2005 at the earliest. Moreover, the rate of replenishment will be
substantially lower, due to the decrease in the number of new aircraft to

Page 1                                   GAO-03-603T Status of the F/A-22 Program
             be purchased. As a result, DOD will have to continue to use tactical
             aircraft that contribute to increased operating and support costs and it will
             have to wait longer than anticipated to have access to the advanced
             capabilities offered by the F/A-22.


             The Air Force is developing the F/A-221 aircraft to replace its fleet of F-15
Background   air superiority aircraft. The F/A-22 is designed to be superior to the F-15 by
             being capable of flying at higher speeds for longer distances, less
             detectable, and able to provide the pilot with substantially improved
             awareness of the surrounding situation.

             The National Defense Authorization Act for Fiscal Year 19982 requires us
             to annually assess the F/A-22 development program and determine
             whether the program is meeting key performance, schedule, and cost
             goals. We have issued six of these annual reports to Congress. We have
             also reported on F/A-22 production program costs over the last 3 years.
             Most recently, we reported on F/A-22 production and development in
             February and March 2003, respectively.3

             Following a history of increasing cost estimates to complete the
             development phase of the F/A-22 program, the National Defense
             Authorization Act for Fiscal Year 1998 established a cost limitation for
             both the development and production programs.4 Subsequently, the
             National Defense Authorization Act for Fiscal Year 2002 eliminated the
             cost limitation for the development program but left the cost limit for
             production in place.5 The production program is now limited to $36.8




             1
              “F/A” stands for fighter/attack aircraft. The Air Force changed the designation from F-22
             to F/A-22 in September 2002 to reflect the aircraft’s air-to-surface attack capability.
             2
                 P.L. 105-85, section 217, Nov. 18, 1997.
             3
               See U.S. General Accounting Office, Tactical Aircraft: DOD Needs to Better Inform
             Congress about Implications of Continuing F/A-22 Cost Growth, GAO-03-280
             (Washington D.C.: Feb. 28, 2003) and Tactical Aircraft: DOD Should Reconsider Decision
             to Increase F/A-22 Production Rates While Development Risks Continue, GAO-03-431
             (Washington, D.C.: Mar. 14, 2003).
             4
                 P.L. 105-85, section 217, Nov. 18, 1997.
             5
                 P.L. 107-107, section 213, Dec. 28, 2001.



             Page 2                                          GAO-03-603T Status of the F/A-22 Program
                         billion.6 The current cost estimate of the development program is $21.9
                         billion.


                         In the past several years, we have reported on a range of performance
Performance Issues       issues that have arisen during the development of the F/A-22. F/A-22
                         estimated performance in the areas of supercruise, acceleration,
                         maneuverability, radar observability, combat radius, and radar range in
                         searching targets have so far been met or exceeded. However, problems
                         have surfaced related to some overheating concerns during high-speed
                         flight-testing, reliability, avionics that perform radar, communication,
                         navigation, identification and electronic warfare functions as well as
                         excess movement of the vertical tails. Modifications are being made to
                         some test aircraft to address some of these problems. For now, however,
                         testing in some areas is restricted.

                         In 2001, we reported on continuing increases in aircraft weight and that
                         more frequent maintenance than planned on the aircraft was being
                         required. We also reported on structural inadequacies in the aft (rear)
                         fuselage and on problems with the separation of some materials within the
                         horizontal tail section and cracking of the clear section of the canopy. In
                         2002, we again reported that the F/A-22’s performance could be affected by
                         increased aircraft weight and maintenance needs as well as a potential
                         problem with “buffeting”, or excessive movement, of the aircraft’s vertical
                         tails. We also continued to report on problems with the separation of
                         materials within the horizontal tail section and cracking of the clear
                         section of the canopy.

                         We reported last month that the F/A-22 developmental program did not
                         meet key performance goals established for fiscal year 2002 and continues
                         to confront numerous technical challenges, specifically:

                     •   Avionics instability: Software instability has hampered efforts to integrate
                         advanced avionics capabilities into the F/A-22 system. Avionics control
                         and integrated airborne electronics and sensors are designed to provide an
                         increased awareness of the situation around the pilot. The Air Force told
                         us avionics have failed or shut down during numerous tests of F/A-22
                         aircraft due to software problems. The shutdowns have occurred when the
                         pilot attempts to use the radar, communication, navigation, identification,



                         6
                             The cost limitation, before adjustment under the act’s provisions, was $43.4 billon.



                         Page 3                                            GAO-03-603T Status of the F/A-22 Program
    and electronic warfare systems concurrently. Although the plane can still
    be flown after the avionics have failed, the pilot is unable to successfully
    demonstrate the performance of the avionics. Therefore, the Air Force has
    had to extend the test program schedule.

    The Air Force has recognized that the avionics problems pose a high
    technical risk to the F/A-22 program, and in June 2002 the Air Force
    convened a special team to address the problem. According to the team,
    the unpredictable nature of the shutdowns was not surprising considering
    the complexity of the avionics system. The team recommended that the
    software be stabilized in the laboratory before releasing it to flight-testing.
    The team further recommended conducting a stress test on the software
    system architecture to reduce problems and ensure it is operating
    properly. The Air Force implemented these recommendations. Further, the
    Air Force extended the avionics schedule to accommodate avionics
    stability testing and it now plans to complete avionics testing in the first
    quarter of 2005. However, Air Force officials stated they do not yet
    understand the problems associated with the instability of the avionics
    software well enough to predict when they will be able to resolve this
    problem.

•   Vertical fin buffeting: Under some circumstances, the F/A-22 experiences
    violent movement, or buffeting, of the vertical fins in the tail section of the
    aircraft. Buffeting occurs as air, moving first over the body and the wings
    of the aircraft, places unequal pressures on the vertical fins and rudders.
    The buffeting problem has restricted the testing of aerial maneuvers of the
    aircraft. In addition, unless the violent movement is resolved or the fins
    strengthened, the fins will break over time because the pressures
    experienced exceed the strength limits of the fins. This could have an
    impact on the expected structural life of the aircraft. Lockheed Martin has
    developed several modifications to strengthen the vertical fins.

•   Overheating concerns: Overheating in the rear portions of the aircraft has
    significantly restricted the duration of high-speed flight-testing. As the F/A-
    22 flies, heat builds up inside several areas in the rear of the aircraft.
    Continued exposure to high temperatures would weaken these areas. For
    example, a portion of the airframe that sits between the engines’ exhausts
    experiences the highest temperatures. This intense heat could weaken or
    damage the airframe. To prevent this heat buildup during flight-testing, the
    aircraft is restricted to flying just over 500 miles per hour, about the same




    Page 4                                   GAO-03-603T Status of the F/A-22 Program
    speed as a modern jet liner, and significantly below the supercruise7
    requirement. Currently, the F/A-22 flies with temperature sensors in those
    areas of the aircraft and slows down whenever the temperature
    approaches a certain level. The Air Force may incorporate a modification
    that adds copper sheets to the rear of the aircraft to alleviate the problem.
    The Air Force began these modifications in January 2003 and plans to
    complete them by July 2003.

•   Horizontal tail material separations: F/A-22 aircraft have experienced
    separations of materials in the horizontal tail and the shaft, which allow
    the tail to pivot. Because the separations reduce tail strength, the Air
    Force restricted flight-testing of some aircraft until it had determined that
    this problem would not affect flight safety during testing. The Air Force
    and the contractor initially believed that improvements to the aircraft’s
    manufacturing process would solve this problem. However, the Air Force
    has determined that it could only solve this problem by redesigning the
    aircraft’s tail. The Air Force plans to conduct flight-testing of the
    redesigned tail between February 2004 and April 2004.

•   Airlift support requirements: The Air Force estimates it will not meet the
    F/A-22 airlift support requirement—a key performance parameter.8 The
    airlift support requirement is that 8 C-141 aircraft or their equivalents
    would be sufficient to deploy a squadron of 24 F/A-22s for 30 days without
    resupply. Today, the Air Force estimates that 8.8 C-141 equivalents will be
    necessary.

•   Impact of maintenance needs on performance: The F/A-22’s performance
    may also be affected by maintenance needs that exceed established
    objectives. The Air Force estimates that the F/A-22 should, at this point in
    its development, be able to complete 1.67 flying hours between
    maintenance actions and 1.95 flying hours by the end of development.
    However, aircraft are requiring five times the maintenance actions
    expected at this point in development. As of November 2002, the
    development test aircraft have been completing only .29 flying hours
    between maintenance actions. Therefore, the development test aircraft are
    spending more time than planned on the ground undergoing maintenance.



    7
     Supercruise is the aircraft’s ability to travel at high speeds for long ranges. The F/A-22’s
    supercruise requirement is approximately 1,000 miles per hour.
    8
     U.S. General Accounting Office, Tactical Aircraft: F-22 Delays Indicate Initial
    Production Rates Should Be Lower to Reduce Risks, GAO-02-298 (Washington, D.C.: Mar.
    5, 2002).



    Page 5                                           GAO-03-603T Status of the F/A-22 Program
                       Testing is instrumental to gauging the progress being made when an idea
Flight Test Schedule   or a concept is translated into an actual product that people use. DOD
Delays                 divides testing into two categories: developmental and operational. The
                       goal of developmental tests is to determine whether the weapon system
                       meets the technical specifications of the contract. The goal of operational
                       testing is to evaluate the effectiveness and suitability of the weapon
                       system in realistic combat conditions. Operational testing is managed by
                       different military test organizations that represent the customers, such as
                       the combat units that will use the weapons. The results of operational
                       tests are provided to Congress as well as the Secretary of Defense and
                       senior service officials.

                       Our reviews over the years have underscored the importance of not
                       delaying tests too late in development—when it is more difficult, costly,
                       and time consuming to fix any problems discovered. Yet, we have been
                       reporting on delays of flight tests for the F/A-22 and that these delays have
                       contributed to scheduling and cost problems affecting the program.

                       F/A-22 flight-testing began in late 1997. Each year since 1998, we have
                       reported that assembly of the test aircraft was requiring more time than
                       planned and that this was causing the test aircraft to be delivered late to
                       the test center for flight-testing. We have also reported annually since 2000
                       that the flight-test program efficiency—the amount of flight-testing
                       accomplished—has been less than planned.

                       In March 2003, we reported that F/A-22 flight-testing was slower than
                       expected in 2002 in all test areas according to Office of the Secretary of
                       Defense (OSD) testing officials. Consequently, the Air Force extended
                       flight test schedules and reduced the number of flight tests. Many tasks
                       originally planned for 2002 were rescheduled for 2003. Further, the Air
                       Force now plans to conduct more developmental flight-testing
                       concurrently with operational testing.

                       Continuing technical problems were the primary reasons for the most
                       recent delay in flight-testing. In addition, late delivery of development
                       aircraft to the flight-test center continued to be a contributing problem.
                       Late deliveries were due not only to technical problems but also to
                       ongoing problems associated with the manufacture and assembly of
                       development aircraft by the prime contractor.

                       With the new schedule, the Air Force delayed the beginning of operational
                       testing for 4 months, until the portion of developmental testing required to
                       begin operational testing could be completed. Operational testing is now

                       Page 6                                  GAO-03-603T Status of the F/A-22 Program
                    planned to begin in August 2003. Table 1 shows the changes in key F/A-22
                    schedule events.

                    Table 1: Schedule Changes for Key F/A-22 Test Program Events

                                                                               Revised       Change in
                     Key Events                          Prior Schedule       Schedule         months
                     Completion of development flight
                     testing necessary prior to
                     operational testing                     Apr. 2003        Aug. 2003               4
                     Start of operational testing            Apr. 2003        Aug. 2003               4
                     Completion of operational testing       Dec. 2003         Jul. 2004              7
                     High-rate production decision           Mar. 2004        Mar. 2004               0
                    Source: U.S. Air Force.



                    Further, according to OSD officials involved in operational testing, there is
                    a high risk of not completing an adequate amount of development flight-
                    testing before operational testing is scheduled to begin. Indeed, we believe
                    that it is unlikely that the Air Force will be able to complete all necessary
                    avionics flight-testing prior to the planned start of operational testing.
                    Based on F/A-22 flight test accomplishment data and current flight test
                    plans, we project that the start of operational testing might be delayed
                    until January 2004. As a result, operational testing could be delayed by
                    several months beyond the current planned date of August 2003.


                    Cost increases have plagued the F/A-22 program since it began in 1991.
Cost Increases      They have spurred Congress to impose spending limits and have forced
                    the Air Force to scale back production. Nevertheless, the Air Force is still
                    contending with cost increases in three principal areas: development,
                    production, and modernization.


Development Costs   Since 1997, the Air Force’s estimated cost to develop the F/A-22 has
                    increased by $3.2 billion. Figure 1 highlights development cost limitation
                    and estimate increases during the past 6 years.




                    Page 7                                      GAO-03-603T Status of the F/A-22 Program
Figure 1: Development Cost Limitation and Estimate Increases Since 1997




Increases prior to 1998 have prompted limitations on spending from
Congress. While the Air Force held the position that these limitations
could be met until recently, our reviews showed that there was a potential
for additional increases because of delays. Table 2 presents a time line of
congressional limitations, our findings and DOD’s positions.




Page 8                                   GAO-03-603T Status of the F/A-22 Program
Table 2: Chronology of Development Cost Growth




a
    Adjusted to reflect conferee direction and reduced effect of inflation.
b
    Adjusted for inflation.



The initial congressional limitation of $18.688 billion established in 1997
followed an Air Force team’s review of estimated development and
production costs. That team concluded in 1997 that additional time would
be required to complete the development program and estimated that
costs would increase from $17.4 billion to $18.688 billion. The team
recommended several changes to the development program’s schedule,
including slower manufacturing than planned for a more efficient
transition from development to low-rate initial production and an
additional 12 months to complete avionics development.

Page 9                                                                        GAO-03-603T Status of the F/A-22 Program
                         The National Defense Authorization Act for Fiscal Year 1998 then
                         established this $18.688 billion amount as a cost limitation for the
                         development program.9 Congressional direction in fiscal year 2000
                         legislation shifted six production representative test aircraft to the
                         development program and caused the cost limitation to be adjusted
                         upward to $20.4 billion. In September 2001, DOD acknowledged that the
                         cost to complete the development program would exceed the cost
                         limitation by $557 million. This increase brought the development cost
                         estimate to $21 billion. Subsequently, in December 2001, the National
                         Defense Authorization Act for fiscal year 2002 eliminated the development
                         cost limitation.

                         In March 2003, we reported that the Air Force estimated that development
                         costs had increased by $876 million, bringing total development cost to
                         $21.9 billion. This increase was due to the technical problems and
                         schedule delays related to avionics and vertical fin buffeting discussed
                         earlier.


Production Cost Growth   Over the last 6 years, DOD has identified about $18 billion in estimated
                         production cost growth during the course of two DOD program reviews.
                         As a result, the estimated cost of the production program currently
                         exceeds the congressional cost limit. The Air Force has implemented cost
                         reduction plans designed to offset a significant amount of this estimated
                         cost growth. But the effectiveness of these cost reduction plans has varied.

                         During a 1997 review, the Air Force estimated cost growth of $13.1
                         billion.10 The major contributing factors to this cost growth were inflation,
                         increased estimates of labor costs and materials associated with the
                         airframe and engine, and engineering changes to the airframe and engine.
                         These factors made up about 75 percent of the cost growth identified in
                         1997.

                         In August 2001, DOD estimated an additional $5.4 billion in cost growth for
                         the production of the F/A-22, bringing total estimated production cost to
                         $43 billion. The major contributing factors to this cost growth were again
                         due to increased labor costs and airframe and engine costs. These factors
                         totaled almost 70 percent of the cost growth. According to program


                         9
                             P.L. 105-85, section 217, Nov. 18, 1997.
                         10
                              Based on a plan to procure 438 aircraft.



                         Page 10                                         GAO-03-603T Status of the F/A-22 Program
                          officials, major contractors’ and suppliers’ inability to achieve the
                          expected reductions in labor costs throughout the building of the
                          development and early production aircraft has been the primary reason for
                          estimating this additional cost growth.

Mixed Success With Cost   The Air Force was able to implement cost reduction plans and offset cost
Reduction Plans           growth by nearly $2 billion in the first four production contracts awarded.
                          As shown in table 2, the total offsets for these contracts slightly exceeded
                          earlier projections by about $.5 million.

                          Table 3: Comparison of Planned Versus Implemented Cost Reduction Offsets for
                          Awarded Production Contracts

                           (Dollars in millions)
                                                                    Planned        Implemented
                           Production lot                            offsets            offsets           Difference
                           Fiscal Year 1999 (2 aircraft)              $199.0             $200.5                  $1.5
                           Fiscal Year 2000 (6 aircraft)              $329.3             $336.4                  $7.1
                           Fiscal Year 2001 (10 aircraft)             $580.2             $611.1                $30.9
                           Fiscal Year 2002 (13 aircraft)             $827.2             $788.2               $(39.0)
                           Total                                    $1,935.7           $1,936.2                   $.5
                          Source: Air Force.



                          Cost reduction plans exist but have not yet been implemented for
                          subsequent production lots planned for fiscal years 2003 through 2010
                          because contracts for these production lots have not yet been awarded. If
                          implemented successfully, the Air Force expects these cost reduction
                          plans to achieve billions of dollars in offsets to estimated cost growth and
                          to allow the production program to be completed within the current
                          production cost estimate of $43 billion.11 However, this amount exceeds
                          the production cost limit of $36.8 billion.

                          In addition, while the Air Force has been attempting to offset costs
                          through production improvement programs (PIP), recent funding cutbacks
                          for PIPs may reduce their effectiveness. PIPs focus specifically on
                          improving production processes to realize savings by using an initial
                          government investment. The earlier the Air Force implements PIPs, the
                          greater the impact on the cost of production. Examples of PIPs previously


                          11
                            The F/A-22 President’s budget for fiscal year 2004 would transfer $876 million in
                          production funding to help fund estimated cost increases in development. As a result, the
                          current production cost estimate is $42.2 billion.



                          Page 11                                        GAO-03-603T Status of the F/A-22 Program
implemented by the Air Force include manufacturing process
improvements for avionics, improvements in fabrication and assembly
processes for the airframe, and redesign of several components to enable
lower production costs.

As shown in figure 2, the Air Force reduced the funding available for
investment in PIPs by $61 million for lot 1 and $26 million for lot 2 to cover
cost growth in production lots 1 and 2.12 As a result, it is unlikely that PIPs
covering these two lots will be able to offset cost growth as planned.

Figure 2: Planned Versus Actual F/A-22 Production Improvement Program
Investment for Production Lots 1 (Fiscal Year 2001) and 2 (Fiscal Year 2002)




Figure 3 shows the remaining planned investment in PIPs through fiscal
year 2006 and the $3.7 billion in estimated cost growth that can potentially
be offset through fiscal year 2010 if the Air Force invests as planned in
these PIPs.




12
   Production lot 1 was awarded in fiscal year 2001 and production lot 2 was awarded in
fiscal year 2002.



Page 12                                        GAO-03-603T Status of the F/A-22 Program
                     Figure 3: Planned Offsets to Cost Growth From Investing in and Implementing PIPs




                     In the past, Congress has been concerned about the Air Force’s practice of
                     requesting fiscal year funding for these PIPs but then using part of that
                     funding for F/A-22 airframe cost increases. 13 Recently, Congress directed
                     the Air Force to submit a request if it plans to use PIP funds for an
                     alternate purpose.


Modernization Cost   Modernization costs have increased dramatically in recent years. In fiscal
Increases            year 2001, the Air Force plan was to spend a total of $166 million for
                     upgrades to enhance the operational capabilities of the F/A-22. Currently,
                     Air Force plans in 2004 call for spending almost $3 billion through fiscal
                     year 2009 for modernization projects. (See fig. 4). Most of the recent
                     increase in modernization funding is necessary to provide increased
                     ground attack capability. Other modernization projects include upgrading
                     avionics software, adding an improved short-range missile capability,
                     upgrading instrumentation for testing, and incorporating a classified
                     project.




                     13
                          Report 107-298, Nov. 19, 2001.



                     Page 13                                  GAO-03-603T Status of the F/A-22 Program
                          Figure 4: Planned Modernization Funding Increases, Fiscal Year President’s
                          budgets for 2001-2004




Broader Effects of Cost   The cost increases experienced by the F/A-22 program have, in part,
Increases                 forced the Air Force to reduce its planned procurement over time by more
                          than half (see fig. 5). Such a decrease, in turn, has jeopardized the Air
                          Force’s ability to modernize its fleet of tactical aircraft.

                          In late 2001, in the face of a significant cost overrun in the estimated cost
                          to produce the F/A-22, the total aircraft to be produced was reduced. At
                          the same time, DOD requested that Congress remove the production cost
                          limit. While the congressional limit on production costs remains in effect,
                          DOD transferred production funding to help offset $876 million in
                          development cost growth. The net effect was another decrease in total
                          aircraft to be produced—now estimated at 276.

                          This reduction may have a negative effect on Air Force plans to modernize
                          its tactical aircraft fleet. The F/A-22 is designed to be a replacement for the
                          F-15 aircraft, but the F/A-22 quantity reductions that have occurred since
                          1991 tend to exacerbate the increasing trend in the average age of current
                          Air Force fighter aircraft. In 2001, we reported that the average age of Air
                          Force tactical fighters would continue to increase until the fleet reached
                          an average age of 21 years in 2011. This is almost twice the average age


                          Page 14                                   GAO-03-603T Status of the F/A-22 Program
                      goal of the Air Force. Aging equipment contributes significantly to
                      increased operating and support costs.

                      Figure 5: Aircraft Quantity Reduction Since 1991




                      Despite continuing development problems and challenges, the Air Force
Risks in the F/A-22   plans to continue acquiring production aircraft at increasing annual rates.
Acquisition Plan      For example, the Air Force plans to acquire 20 aircraft during 2003, rather
                      than the maximum of 16 Congress allowed without DOD’s submittal of a
                      risk assessment and certification.14 Since 2001, we have reported that this
                      is a very risky strategy because the Air Force runs the chance of higher
                      production costs by acquiring significant quantities of aircraft before
                      adequate testing is complete. Late testing could identify problems
                      requiring costly modifications to achieve satisfactory performance.

                      As shown in figure 6, the Air Force is committed to acquiring 73
                      production aircraft (26 percent) before operational and development
                      testing is complete. We believe that this is an overly optimistic strategy
                      given the remaining F/A-22 technical problems and the current status of
                      testing. As we have noted, acquiring aircraft before completing adequate
                      testing to resolve significant technical problems increases the risk of
                      costly modifications later. If F/A-22 testing schedules slip further—as we
                      believe is likely—even more aircraft will be acquired before development



                      14
                        DOD justified this strategy in the December 2002 risk assessment and certification it
                      submitted to Congress.



                      Page 15                                        GAO-03-603T Status of the F/A-22 Program
                                         and operational testing is complete, and the risk of costly modifications
                                         will increase still more.

Figure 6: Number of Production Aircraft on Contract Prior to Completion of Operational Testing




                                         The F/A-22 has the potential for being the most advanced air superiority
Conclusions                              aircraft ever to join the Air Force’s inventory—using several advanced
                                         technologies and capabilities. But performance problems, schedule delays,
                                         and cost overruns threaten the program’s success as well as DOD’s ability
                                         to modernize its tactical aircraft fleet. Moreover, uncertainties about some
                                         of the performance capabilities have increased the risk that the Air Force
                                         will have to modify a larger quantity of aircraft after they are built. For
                                         these reasons, our recommendations have stressed the need for the Air
                                         Force to (1) avail itself of all opportunities for gaining manufacturing
                                         efficiencies during production, (2) find ways to fund cost reduction plans
                                         that require initial government investment instead of using funding to
                                         cover cost growth in earlier aircraft lots, and (3) reconsider its decision to
                                         increase the annual production rate beyond 16 until greater knowledge on
                                         any need for modifications is established through operational testing.
                                         Moreover, we have also recommended, in light of the high risk nature of
                                         the program, that Congress be informed about the amount of cost
                                         reduction plans identified to offset cost growth, the potential cost of
                                         production if cost reduction plans are not as effective as planned, or the
                                         quantity of aircraft that can be produced within the cost limit. Congress
                                         would be able to use this information to help exercise proper program
                                         oversight.




                                         Page 16                                    GAO-03-603T Status of the F/A-22 Program
           Mr. Chairman, that concludes my statement. I will be happy to respond to
           any questions you or other Members of the Subcommittee may have.

           Contacts and Acknowledgements

           For future questions regarding this testimony, please contact Allen Li,
           (202) 512-4841. Individuals making key contributions include Marvin E.
           Bonner, Edward Browning, Cristina Chaplain, Gary Middleton, Sameena
           Nooruddin, Don M. Springman, and Ralph White.




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