F-35 Joint Strike Fighter: Assessment Needed to Address Affordability
Challenges
(Source: US Government Accountability Office; issued April 14, 2015)
http://www.defense-aerospace.com/article-view/release/162777/gao-wants-assessment-of-f_35-affordability.html

The F-35 Joint Strike Fighter program had to make unexpected changes to its
development and test plans over the last year, largely in response to a
structural failure on a durability test aircraft, an engine failure, and
software challenges. At the same time, engine reliability is poor and has a
long way to go to meet program goals. With nearly 2 years and 40 percent of
developmental testing to go, more technical problems are likely. Addressing
new problems and improving engine reliability may require additional design
changes and retrofits.

Meanwhile, the Department of Defense (DOD) has plans to increase annual
aircraft procurement from 38 to 90 over the next 5 years. As GAO has
previously reported, increasing production while concurrently developing and
testing creates risk and could result in additional cost growth and schedule
delays in the future.

Cost and affordability challenges remain. DOD plans to significantly
increase annual F-35 funding from around $8 billion to nearly $12 billion
over the next 5 years (see figure) reaching $14 billion in 2022 and
remaining between $14 and $15 billion for nearly a decade. Over the last
year, DOD reduced near-term aircraft procurement by 4 aircraft, largely due
to budget constraints. While these deferrals may lower annual near-term
funding needs, they will likely increase the cost of aircraft procured in
that time frame and may increase funding liability in the future.

It is unlikely the program will be able to sustain such a high level of
annual funding and if required funding levels are not reached, the program’s
procurement plan may not be affordable.

DOD policy requires affordability analyses to inform long-term investment
decisions. The consistent changes in F-35 procurement plans indicate that
DOD’s prior analyses did not adequately account for future technical and
funding uncertainty.

Manufacturing progress continued despite mixed supplier performance. The
aircraft contractor delivered 36 aircraft as planned in 2014, despite a
fleet grounding, added inspections, and software delays. In contrast, the
labor hours needed to manufacture an aircraft and the number of major design
changes have continued to decline over time. Because supplier performance
has been mixed, late aircraft and engine part deliveries could pose a risk
to the program's plans to increase production. The contractors are taking
steps to address these issues.

Click here for the full statement (43 PDF pages) on the GAO website.
http://www.gao.gov/products/GAO-15-364
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