JSF: Accelerating Procurement before Completing Development Increases the Government’s Financial Risk (summary)
(Source: US Government Accountability Office; issued March 12, 2009)
(Emphasis added in bold typeface below--Ed.)
JSF development will cost more and take longer than reported to the Congress last year, and DOD wants to accelerate procurement. Two recent estimates project additional costs ranging from $2.4 billion to $7.4 billion and 1 to 3 more years to complete development.

Despite cost and schedule troubles, DOD wants to accelerate JSF procurement by 169 aircraft from fiscal years 2010 through 2015; this could require up to $33.4 billion in additional procurement funding for those 6 years. DOD plans to procure hundreds of aircraft on cost-reimbursement contracts, magnifying the financial risk to the government.

Ongoing manufacturing inefficiencies and parts problems have significantly delayed the delivery of test assets. The prime contractor has extended manufacturing schedules three times and delivered 2 of 13 test aircraft. The program is still recovering from earlier problems that resulted in design changes, late parts deliveries, and inefficient manufacturing. The contractor is taking positive steps to improve operations, the supplier base, and schedule management. Schedule risk analyses could further enhance management insight into problem areas and inform corrective actions.

Officials expect to deliver all test aircraft and fix many problems by 2010. By then, DOD plans to have purchased 62 operational aircraft and will be ramping up procurement. Procuring large numbers of production jets while still working to deliver test jets and mature manufacturing processes does not seem prudent, and looming plans to accelerate procurement will be difficult to achieve cost effectively.

DOD’s revised test plan adds a year to the schedule, better aligns resources and availability dates, and lessens the overlap between development and operational testing, but it still allows little time for error discovery and rework. DOD’s decision late in 2007 to reduce test aircraft and flight tests adds to risks while any additional delays in delivering test aircraft will further compress the schedule.

The revised plan relies on state-of-the-art simulation labs, a flying test bed, and desk studies to verify nearly 83 percent of JSF capabilities. Only 17 percent is to be verified through flight testing. Despite advances, the ability to so extensively substitute for flight testing has not yet been demonstrated.

Significant overlap of development, test, and procurement results in DOD making substantial investments before flight testing proves that the JSF will perform as expected.

Under the accelerated procurement plan, DOD may procure 360 aircraft costing an estimated $57 billion before completing development flight testing.


Click here for the full report (51 pages in PDF format) hosted by defense-aerospace.com.

(ends)



DoD May Pay $57 Billion for 360 JSF Aircraft Before Completing Testing
(Source: Project On Government Oversight; issued March 12, 2009)
The title of the Government Accountability Office's (GAO) latest report says it all: Joint Strike Fighter: Accelerating Procurement before Completing Development Increases the Government's Financial Risk. Still, an excerpt to get you to go read the whole thing:

“Significant overlap of development, test, and production schedules results in DOD making substantial investments before flight testing proves that the JSF will perform as expected. Under the accelerated procurement plan, DOD may procure 360 aircraft costing an estimated $57 billion before completing development flight testing. Acquiring large numbers of aircraft before testing successfully demonstrates that the design is mature, meets performance requirements, and is suitable could result in substantial future cost growth to correct deficiencies found during testing. (emphasis POGO's)


UPDATE: It’s also worth noting the risks that come with using cost reimbursement contracts--a risky contracting vehicle--to procure those 360 aircraft:

Procuring up to 360 production aircraft on cost reimbursement contracts--nearly 15 percent of the total DOD program--seems to be a tacit acknowledgment by DOD and the contractor that knowledge on JSF design, production processes, and costs for labor and material is not yet sufficiently mature, and that pricing information is not exact enough, for the contractor to assume the risk under a fixed-price contract. (again, emphasis POGO's).

-ends-


prev next