Joint Strike Fighter. Recent Decisions by DOD Add to Program Risks

The JSF total acquisition cost estimate increased by more than 23 billion since our March 2007 report due to changes in procurement costs. Principal driving factors were 1 increased unit costs from extending the procurement period seven years at lower annual rates and 2 increased future price estimates based on contractor proposals for the first production lot. The official cost estimate for development remained about the same in total as it has since the program was restructured in 2004. However, this was largely achieved by reducing requirements, not fully program, and spending management reserves much faster than budgeted. Facing a probable contract cost overrun, DOD officials decided not to request additional funding and time for development, opting instead to reduce test resources in order to replenish management reserves from 400 million to 1 billion. During the last year, DOD and the contractor also reported progress in several important areas, including international partner agreements, first flights of a JSF prototype and test bed, and a more realistic procurement schedule. The recent decision to replenish management reserves by reducing test resources, known as the Mid-Course Risk Reduction Plan, significantly increases the risks of not completing development testing on time and not finding and fixing design and performance problems until late into operational testing and production, when it is more expensive and disruptive to do so. The plan also does not directly address and correct the continuing production and schedule concerns that depleted management reserves. We expect program development and procurement costs to increase substantially and schedule pressures to worsen based on performance to date and the conditions that gave rise to the risk reduction plan. Two-thirds of budgeted funding for the JSF has been spent on the prime development contract, but only about one-half of the work has been completed.