United States General Accounting Office GAO Report to Congressional Committees August 1997 B-2 Bomber Cost and Operational Issues GAO/NSIAD-97-181 United States GAO General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-275493 August 14, 1997 Congressional Committees The conference report on the National Defense Authorization Act for Fiscal Year 1994 requires us to report to the congressional defense committees at regular intervals on the total acquisition costs of the B-2 bomber through the completion of the production program. The Air Force is currently testing the B-2 and plans to complete the production program, including planned block 30 modifications, by July 2000. This, our fourth report,1 provides the current status of cost and operational issues. B-2 operational requirements specify that the weapon system have Background “low-observable” (stealth) characteristics and sufficient range and payload capability to deliver precision-guided conventional or nuclear weapons anywhere in the world with enhanced survivability. The B-2 combines conventional and state-of-the-art technology, such as special shaping and radar-absorbing materials, to achieve low-observability characteristics, high aerodynamic efficiency, and a large payload capacity. The blending of these technologies makes the aircraft complex and costly to develop, produce, and in some respects maintain. In the early 1990s, the number of B-2s to be acquired was reduced from 132 to 20 operational aircraft. The 20 aircraft include 15 production aircraft and 5 of 6 test aircraft that are to be modified to a fully capable operational configuration. In March 1996, the President directed that the one remaining test aircraft be upgraded to a fully capable operational configuration, bringing the total operational B-2s to be acquired to 21. B-2 development started in 1981. Production of long lead-time aircraft components began in 1986 and flight testing was initiated in 1989. The lengthy development and test program, which has been implemented concurrently with the production program for about 11 years, required the Air Force to devise a mechanism for initially accepting partially capable aircraft until their full capability could be demonstrated in the test program. Therefore, the Air Force agreed to accept the 15 production aircraft in 3 configurations—10 in a training configuration, 3 in an interim configuration, and 2 in the fully capable configuration known as block 30. The block 30 configuration is planned to be the first fully capable 1 The three prior reports are listed at the end of this report. Page 1 GAO/NSIAD-97-181 B-2 Bomber B-275493 configuration that would meet all the essential employment capabilities2 defined by the Air Force. All aircraft not delivered in the block 30 configuration, including test aircraft, have to be modified extensively to make them fully capable. Some of the aircraft in a training configuration have been modified to an interim configuration. The modification efforts began in 1995 and are scheduled to be complete in July 2000. The total production period for the 21 aircraft, including modifications to bring all B-2s into the fully capable configuration, is expected to be about 14 years. Flight testing was planned to take 4 years but has taken about 8 years and is not yet completed. The Air Force extended the estimated completion of flight testing from July 1997 to March 1998. The total cost of the B-2 appears to have stabilized. The Air Force has Results in Brief reported that the total estimated B-2 acquisition costs (development, procurement, and military construction) decreased from $44,946 million in early 1995 to $44,754 million in early 1997. The estimated cost declined even though Congress added new requirements to the B-2 program and provided additional funds of $734 million in fiscal years 1995, 1996, and 1997. Air Force officials advised us that the $44,754 million in cost reported to Congress was understated by $89 million. They said that the impact of the understatement would be that two of the test aircraft would not be fully upgraded to block 30 (making them less than fully capable). Through fiscal year 1997, Congress appropriated funds for about 96 percent of the estimated total cost of $44,754 million. Although the cost estimate has not changed substantially since 1995, costs could increase if (1) the flight test program is extended beyond March 1998, (2) more performance deficiencies than predicted are identified during the remaining portions of the acquisition program, and (3) unplanned development and procurement activities become necessary to better maintain the low-observable features of the B-2s. The Air Force declared on April 1, 1997, that the B-2s in an interim configuration had achieved initial operational capability. However, the Air Force decided it was unrealistic to plan on deploying the interim aircraft to forward operating locations because of difficulties being experienced in maintaining low-observable characteristics at the B-2’s main operating 2 Essential employment capabilities are the characteristics and capabilities required by the Air Force to satisfy the full operational spectrum of the B-2. Page 2 GAO/NSIAD-97-181 B-2 Bomber B-275493 base. The Air Force is reviewing specific B-2 deployment requirements and working to resolve deployment-related problems by the time the B-2s are scheduled to be fully capable in 1999. The Air Force’s estimate of the total program cost for the B-2 program has Total Cost of the B-2 changed less than 1 percent since 1994; however, the estimate has been Appears to Have affected by changes made by both Congress and the Air Force. Table 1.1 Stabilized shows the Air Force’s 1994-96 cost estimates for the development, procurement, and military construction of the B-2 as reported in annual selected acquisition reports. Through fiscal year 1997, the Air Force was appropriated $43,178 million, or 96 percent, of the $44,754 million total program estimate. This leaves $1,576 million to be appropriated for fiscal years 1998-2004. Table 1.1: Estimated B-2 Acquisition Costs Then-year dollars in millions Development Total Total program and Military acquisition unit Operational procurement construction program acquisition Selected acquisition report aircraft quantity estimate estimate estimate cost Dec. 1994 20 $44,390 $556 $44,946 $2,247 Dec. 1995 20 $44,760 $550 $45,310 $2,265 Dec. 1996 21 $44,200 $554 $44,754 $2,131 Note: Details of the fiscal year 1998 President’s budget for the B-2 are included in appendix 1. Source: B-2 Selected Acquisition Reports. The December 1996 estimate included costs to complete the program for 20 operational B-2s and other changes in the program. In the last 3 fiscal years, Congress added $734 million to the B-2 program—$125 million to preserve the B-2 industrial base, $493 million to upgrade the first test aircraft to operational status, and $116 million to enhance the block 30 capabilities. Enhanced capabilities include making the B-2 capable of launching the Joint Stand Off Weapon and a near-precision conventional penetrating bomb. The Air Force changes decreased various elements of the estimated development and procurement costs. Those decreases exceeded congressional additions, resulting in the overall net reduction in the total B-2 cost estimate. For example, between fiscal year 1997 and 1998, Page 3 GAO/NSIAD-97-181 B-2 Bomber B-275493 estimates for B-2 spares, support, and nonrecurring air vehicle cost decreased over $900 million. Spare parts estimates were reduced by $358 million because the Air Force now plans to fly fewer and shorter aircraft sorties and because the methodology for computing spare parts requirements changed. Interim contractor support estimates were also reduced by $142 million because parts reliability, according to the Air Force, has been better than anticipated. Other support decreases totaling $170 million covered peculiar support equipment, data, and training items. In addition to changes in the B-2 support estimate, the Air Force decreased its estimate for nonrecurring air vehicle cost by $237 million. According to the Air Force, the estimate of development cost reported in the December 1996 B-2 Selected Acquisition Report (included in table 1.1) and the fiscal year 1998 President’s budget (app. I) is understated by $89 million. Air Force officials said that without these funds, two of the test aircraft would not be upgraded to fully capable aircraft, leaving only 19 fully capable B-2s. B-2 estimated costs could increase if (1) the flight test program is B-2 Cost Increases extended beyond March 1998, (2) more B-2 performance deficiencies are Are Possible identified during the time remaining in the acquisition program, and (3) additional development and procurement activities are initiated to better maintain the low-observable features of the B-2s. Extending the Flight Test The flight test program was not fully completed as scheduled on July 1, Program 1997, and the Air Force plans to extend flight testing with one test aircraft through March 1998. The Air Force is currently defining detailed testing that will be required and has included $28 million in the fiscal year 1998 budget to cover the extended flight test program. Any additional extension of testing, however, could increase the estimated B-2 cost. Some of the areas to be further tested are • terrain-following/terrain-avoidance radar performance in the rain, • mission effectiveness tests of the low-observable features, • ground and flight tests of the environmental control system and auxiliary power units, and • certain tests of the defensive management system. We plan to report on the results of B-2 testing after the Air Force issues reports scheduled for late 1997 and early 1998. Page 4 GAO/NSIAD-97-181 B-2 Bomber B-275493 Other Deficiencies Working on flight tests, aircraft production, and modifications concurrently has created the need for further corrections of deficiencies after fully capable aircraft are delivered and could cause development costs to increase. As of May 1997, the Air Force officials had identified 13 corrections that cannot be incorporated into up to nine aircraft during production or during the modification process. They estimate another 60 deficiencies could be identified that could impact the B-2s. These officials added that new corrections that cannot be incorporated during the modification process would be incorporated by retrofitting the aircraft at some future time. The cost estimate for production includes over $500 million in reserves (fiscal year 1993 and prior year funds) that are available for cost overruns and other anticipated costs. However, the development estimate includes only $12 million in reserves to correct deficiencies in the test aircraft. Air Force officials said that if significantly more or costly deficiencies are identified, development costs could increase. Deployment and The Air Force has concluded it could not effectively deploy B-2s to Low-Observable forward operating locations without sheltering the aircraft to preserve and Maintenance maintain its low-observable features. Accordingly, if permanent or temporary shelters must be developed and built at selected forward operation locations or additional support equipment must be acquired to meet deployment and maintenance requirements, additional costs will be incurred. According to the Air Force, the B-2 achieved initial operational capability Initial Operating on April 1, 1997, with interim aircraft capable of flying nuclear and limited Capability Achieved, conventional missions. The interim B-2 is supposed to be capable of but B-2 Cannot Be participating in nuclear or conventional warfare either from its main operating base at Whiteman Air Force Base, Missouri, or from a forward Deployed as Planned operating location outside the continental United States. While the B-2’s performance met requirements for initial operations, the aircraft are unable to meet intended deployment requirements because some low-observable features require substantial maintenance and the aircraft are more sensitive to climate and moisture than expected. As a result, the Air Force has eliminated the deployment requirement for interim aircraft and is evaluating potential actions to allow deployment when fully capable aircraft are delivered. Full operational capability of the B-2 is planned to be achieved in 1999. Page 5 GAO/NSIAD-97-181 B-2 Bomber B-275493 Initial Operational The Air Force demonstrated that interim B-2 aircraft can carry and deliver Capabilities Demonstrated unguided Mk 84 bombs or the precision-guided Global Positioning System (GPS) aided munition (GAM) in the conventional role or B-83/B-61 nuclear weapons in the nuclear role. Reports of flight tests and demonstrations indicated the GAM to be an effective all-weather weapon in attacking fixed targets with near-precision accuracy. In one demonstration, 3 B-2s destroyed 16 targets using 16 GAMs dropped from over 40,000 feet. In addition, the interim aircraft have automatic terrain-following capability as low as 600 feet and some of the capabilities of the planned defensive management system. According to Air Force officials, the demonstrated capabilities are more than adequate to perform the mission defined for the interim configuration when operating from Whiteman Air Force Base, the B-2’s main operating base. B-2s Cannot Be Deployed The Air Force decided it was unrealistic to deploy the B-2 without shelters, as Planned as planned, because some low-observable materials are not as durable as expected and require lengthy maintenance, some in an environmentally controlled shelter after each flight. In addition, B-2s must be kept in shelters because of their sensitivity to moisture, water, and other severe climatic conditions. Air Force operational requirements for the B-2 intended for both the interim and fully capable B-2s to be capable of deploying to forward operating locations, without shelters, in all types of weather and climates. The Air Force is reviewing specific B-2 deployment requirements and working to resolve deployment-related problems by the time the B-2s are scheduled to be fully capable in 1999. The operational test report for the interim aircraft stated the aircraft need frequent and lengthy maintenance and are sensitive to extreme climates and moisture. Tests showed that some low-observable materials on the aircraft were damaged each time the aircraft flew and that repair of those materials accounted for 39 percent of the 80 maintenance man-hours per flight hour experienced by the B-2 during flight testing. This is about three times greater than the next largest contributor to maintenance man-hours, which was aircraft structures. The current goal for total maintenance man-hours per flying hour is 60 hours, and the ultimate goal is 50 hours. The actual B-2 maintenance man-hours per flying hour at Whiteman Air Force Base averaged 124 hours over 12 months ending in March 1997. A major factor in maintenance of low-observable materials is the long time required to repair the damaged materials and aircraft surfaces. During operational testing of the interim configuration, low-observable materials took from 30 to 80 hours to repair and cure, and the processes require a Page 6 GAO/NSIAD-97-181 B-2 Bomber B-275493 shelter with a temperature and humidity controlled environment for proper curing. Problems with low-observable materials have also affected the percentage of time the B-2 was partially or fully capable of completing a mission, which was significantly less when low observability was considered. When low observability was not considered, the mission-capable rate was 66 percent for a 12-month period ending March 1997. However, when low-observability problems were considered for the same period of time, the rate dropped significantly to 26 percent. Testing indicated that B-2s are also sensitive to extreme climates, water, and humidity—exposure to water or moisture can damage some of the low-observable enhancing surfaces on the aircraft. Further, exposure to water or moisture that causes water to accumulate in aircraft compartments, ducts, and valves can cause systems to malfunction. If accumulated water freezes, it can take up to 24 hours to thaw and drain. Air Force officials said it is unlikely that the aircraft’s sensitivity to moisture and climates or the need for controlled environments to fix low-observability problems will ever be fully resolved, even with improved materials and repair processes. Therefore, if B-2s are to be deployed, some form of aircraft sheltering at a forward operating location will likely become a requirement in the future. Air Force test officials stated that maintenance of low-observable features is an issue that requires significant further study and that the percentage of maintenance hours required to repair low-observable materials would increase even more before there are reductions. They said technological improvements in materials and repair processes will be required. Air Combat Command considers low-observable maintainability to be its number one supportability issue, and the Air Force has efforts underway to develop new materials, procedures, and support equipment. It is currently changing some of the materials on the aircraft to improve durability and reduce repair times. It has also established procedures to monitor conditions of low-observable materials on the operational aircraft and developed a model that characterizes the operational impacts of material degradations so that repairs can be prioritized relative to the operational requirements of the B-2s. In commenting on a draft of this report, the Department of Defense Agency Comments generally agreed with the report. The Department’s comments are Page 7 GAO/NSIAD-97-181 B-2 Bomber B-275493 presented in their entirety in appendix II, along with our evaluation of them. To identify cost issues, we reviewed annual cost and budgetary estimates, Scope and financial and management reports, contract cost reports, program Methodology schedules and plans, and other documents. We compared annual estimates from 1995 to 1997, identifying increases and decreases and the basis for the changes. We interviewed Air Force, Defense Contract Management Command, and contractor financial and technical mangers to obtain explanations and information on cost issues and risks remaining in the B-2 program that were not included in the official reports and documents reviewed. To identify operational issues, we reviewed Air Force B-2 contract and operational requirements documents and operational test reports. We discussed deficiencies and planned development and corrective actions with Air Force B-2 Program, Test, and Operational Command officials to determine the nature and extent of problems, the impact of problems on operations, and schedules for achieving full capability. We performed our review from November 1996 through July 1997 in accordance with generally accepted government auditing standards. We are sending copies of this report to the Secretaries of Defense and the Air Force, the Director of the Office of Management and Budget, and other interested parties. We will make copies available to others upon request. Page 8 GAO/NSIAD-97-181 B-2 Bomber B-275493 Please contract me on (202) 512-4841 if you or your staff have any questions concerning this report. Major contributors to this report are listed in appendix III. Louis J. Rodrigues Director, Defense Acquisitions Issues Page 9 GAO/NSIAD-97-181 B-2 Bomber B-275493 List of Congressional Committees The Honorable Strom Thurmond Chairman The Honorable Carl Levin Ranking Minority Member Committee on Armed Services United States Senate The Honorable Ted Stevens Chairman The Honorable Daniel K. Inouye Ranking Minority Member Subcommittee on Defense Committee on Appropriations United States Senate The Honorable Floyd Spence Chairman The Honorable Ronald V. Dellums Ranking Minority Member Committee on National Security House of Representatives The Honorable C. W. Bill Young Chairman The Honorable John P. Murtha Ranking Minority Member Subcommittee on National Security Committee on Appropriations House of Representatives Page 10 GAO/NSIAD-97-181 B-2 Bomber Page 11 GAO/NSIAD-97-181 B-2 Bomber Contents Letter 1 Appendix I 14 B-2 Program Fiscal Year 1998 President’s Budget Appendix II 15 Comments From the Department of Defense Appendix III 19 Major Contributors to This Report Related GAO Products 20 Table Table 1.1: Estimated B-2 Acquisition Costs 3 Abbreviations DOD Department of Defense GAM GPS aided munition GPS Global Positioning System Page 12 GAO/NSIAD-97-181 B-2 Bomber Page 13 GAO/NSIAD-97-181 B-2 Bomber Appendix I B-2 Program Fiscal Year 1998 President’s Budget Then-year dollars in millions Fiscal year 1996/prior 1997 1998 1999 2000 2001/04 Total Development program Northrop $20,268.9 $489.1 $286.5 $15.8 $183.4 $51.8 $21,295.6 GE Engines 564.0 4.9 0 0 0 0 568.9 Armament 121.2 3.6 0 0 0 0 124.7 Aircrew training 561.2 0.2 0 0 0 0 561.4 Mission planning 252.6 21.6 18.8 8.2 0 0 301.2 Government test 732.7 36.8 28.1 12.2 13.0 40.4 863.0 Other government tests 573.7 2.3 1.4 0.5 0.5 0.1 579.5 Engineering changes 0 9.8 14.9 2.4 5.0 2.2 34.3 Direct release 316.1 27.2 5.9 6.1 7.6 4.9 367.7 Development total $23,391.4 $595.5 $355.8 $44.9 $209.5 $99.3 $24,696.3 Procurement program Air vehicle $15,276.8 $38.8 $33.3 $24.3 $49.0 $54.1 $15,476.3 Equipment/data/training 1,418.3 24.7 26.0 9.9 2.1 1.9 1,482.9 Interim contractor support 154.6 4.5 44.0 45.6 47.6 10.0 306.3 Spares 961.4 35.0 67.9 27.5 26.0 12.7 1,130.5 Retrofit 105.5 6.1 13.8 16.3 22.2 44.1 208.0 Other government costs 90.4 7.1 17.2 17.1 15.4 0.6 147.8 Software support 400.2 1.1 42.4 127.4 0 0 570.9 Mission support 12.3 15.1 11.5 11.2 9.4 9.4 68.9 Facilities 108.9 3.6 0 0 0 0 112.5 Procurement total $18,528.4 $136.0 $255.9 $279.3 $171.7 $132.8 $19,504.1 Military construction total $526.5 0 $27.1 0 0 0 $553.6 B-2 program total $42,446.3 $731.5 $638.8 $324.2 $381.2 $232.1 $44,754.0 Source: Air Force B-2 Program Office. Page 14 GAO/NSIAD-97-181 B-2 Bomber Appendix II Comments From the Department of Defense Note: GAO comments supplementing those in the report text appear at the end of this appendix. Page 15 GAO/NSIAD-97-181 B-2 Bomber Appendix II Comments From the Department of Defense Now on p. 4. See comment 1. Now on p. 4. See comment 2. Now on p. 5. See comment 3. Page 16 GAO/NSIAD-97-181 B-2 Bomber Appendix II Comments From the Department of Defense Now on p. 6. See comment 4. Page 17 GAO/NSIAD-97-181 B-2 Bomber Appendix II Comments From the Department of Defense The following are GAO’s comments on the Department of Defense’s (DOD) letter, dated July 14, 1997. 1. DOD officials told us they plan to address the funding shortfall during the GAO Comments fiscal year 1999 DOD planning and budgeting process, which is incomplete at this time. 2. Cost growth risks will continue until the extent of changes needed as a result of the remaining test effort has been defined by the Air Force and it has some assurance that needed changes can be completed with existing program resources. 3. DOD’s comments addressed 13 deficiencies already identified but did not address the potential impact of an additional 60 deficiencies that DOD suggested could occur. Although the cost estimate for development and production includes some provisions for correcting deficiencies that have not yet been defined, the amounts included are intended to accommodate corrections of deficiencies that are relatively minor. If the Air Force identifies any deficiencies that involve significant costs to correct, cost estimates could increase. 4. Design requirements for the B-2 include provisions for the B-2 aircraft to be deployed, without shelters, in all types of temperatures and climates. The operational test report for the interim B-2 concluded the B-2 must be sheltered or exposed only to the most benign environments (low humidity, no precipitation, moderate temperatures). According to B-2 Combined Test Force officials, permanent shelters at deployed locations are required. Therefore, while DOD commented that it is possible to deploy the B-2, it appears that effective operations from a forward operation location will require additional facilities and equipment not included in the original plan. The Air Force is still working to identify these additional requirements. Page 18 GAO/NSIAD-97-181 B-2 Bomber Appendix III Major Contributors to This Report David E. Cooper National Security and Robert D. Murphy International Affairs Division, Washington, D.C. Michael J. Hazard Chicago Field Office James R. Wilson Joseph E. Dewechter Los Angeles Field Office Page 19 GAO/NSIAD-97-181 B-2 Bomber Related GAO Products B-2 Bomber: Status of Efforts to Acquire 21 Operational Aircraft (GAO/NSIAD-97-11, Oct. 2, 1996). B-2 Bomber: Status of Cost, Development, and Production (GAO/NSIAD-95-164, Aug. 4, 1995). B-2 Bomber: Cost to Complete 20 Aircraft Is Uncertain (GAO/NSIAD-94-217, Sept. 8, 1994). (707202) Page 20 GAO/NSIAD-97-181 B-2 Bomber Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. For information on how to access GAO reports on the INTERNET, send an e-mail message with "info" in the body to: firstname.lastname@example.org or visit GAO’s World Wide Web Home Page at: http://www.gao.gov PRINTED ON RECYCLED PAPER United States Bulk Rate General Accounting Office Postage & Fees Paid Washington, D.C. 20548-0001 GAO Permit No. G100 Official Business Penalty for Private Use $300 Address Correction Requested
B-2 Bomber: Cost and Operational Issues
Published by the Government Accountability Office on 1997-08-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)