Joint Strike Fighter — Introduction into Service and Sustainment Planning
Australian National Audit Office
Auditor-General Report No. 14 2018 / ISSN 1036–7632 (Print
Dec. 05, 2018
The Department of Defence (Defence) anticipates the arrival in Australia of the first two of 72 F-35A Joint Strike Fighter (JSF) aircraft in December 2018. The JSF aircraft will replace the Royal Australian Air Force’s ageing F/A-18 A/B Classic Hornet aircraft. Defence expects to declare final operational capability of its new JSF aircraft in 2023.

2.) Defence has established multiple programs and projects to acquire, further develop, and support Australia’s new air combat capability. The principal program is AIR 6000 and the primary phase, Phase 2A/2B, represents the major purchase of the JSF aircraft and associated support systems, and is the focus of this ANAO performance audit. The total acquisition budget for AIR 6000 Phase 2A/2B is some $15.5 billion with government approving a further $4.6 billion in 2014 for operating and support costs until 2024–25.1


6.) The Department of Defence’s preparations to date for the introduction and sustainment of the Joint Strike Fighter (JSF) aircraft into Australian service have been effective with the exception of arrangements for sustainment of JSF aircraft under the Global Support Solution. JSF sustainment cannot be fully costed until the Global Support Solution further matures.

7.) Defence has established effective strategic and project governance arrangements to date for the introduction of the JSF into Australian service and its sustainment. These arrangements include:
-- plans addressing the transition from the Classic Hornets to the JSF;
-- sustainment arrangements;
-- infrastructure requirements;
-- workforce planning and training;
-- project governance arrangements and procedures for regular engagement with the international JSF Program; and
-- procedures for regular monitoring and reporting on risk, cost and schedule to governance bodies, senior Defence leaders and Defence Ministers.

Defence has not, however, provided all of the annual updates to Government that Government required in its approval of the project.

8.) Defence has undertaken effective planning for its JSF related infrastructure, workforce and training system, and is achieving progress against relevant plans. Defence has identified and managed risks relating to these operational enablers. Necessary works have been undertaken at the JSF’s main base (Royal Australian Air Force Base Williamtown), but works at other bases have been deferred or delayed to manage pressures on the infrastructure budget.

9.) Defence has planned for and made progress in implementing the arrangements for the ongoing sustainment of the JSF. The effective implementation of Defence’s ongoing sustainment arrangements depends largely on the United States Department of Defense delivering the Global Support Solution, which is still maturing. Defence is managing risks associated with the developmental nature of the JSF supporting systems as well as cost pressures related to establishing Australia as a regional maintenance and warehousing hub for JSF aircraft.

Selected excerpts by

-- Defence informed the ANAO in October 2018 that where contracted performance requirements are not met, the F-35 JPO has the option of withholding payment from the contractor. Defence further advised that Australia does not have the option of withholding payment from the F-35 JPO.

-- Defence expects that as ‘the GSS reaches a steady state, the JSF enterprise will be able to capture actual costs, rather than using predicted or forecasted costs that should reduce the likelihood of unexpected cost increases’. 35

-- Consequently, Defence’s planning for the implementation of JSF sustainment is dependent on the planning and implementation of the GSS by the F-35 JPO, and the effectiveness of Defence’s provision of sustainment is dependent on the effectiveness of the GSS as a whole.

-- An internal review, completed in mid-2018, of Defence’s management controls for transitioning the JSF aircraft into Australian service, identified a lack of confidence within Defence about the global support arrangements in the short term for JSF aircraft based outside of the United States of America.

-- Further, Defence noted that the immaturity of the GSS is a JSF Program-wide risk that is being managed by the F-35 JPO. In October 2017, the United States GAO reported on five key sustainment challenges for the United States Department of Defense’s JSF aircraft.41 Defence’s concerns about the immaturity of the GSS are consistent with the findings of this 2017 United States GAO report.

-- To sustain its JSF aircraft, Defence is dependent on a spare parts supply system that is not fully developed, and is currently experiencing shortages due to competition for parts as the global JSF aircraft fleet increases. Defence expects that these shortages will continue beyond the transition of JSF Aircraft into Australian service. Defence has recognised that supply shortages are a risk to the JSF aircraft’s introduction into Australian service, and is largely dependent on the solutions the F-35 JPO is putting in place to increase the availability of spare parts for the global JSF aircraft fleet.

-- Defence has some concerns about the security of Australian data within ALIS and has been working with the F-35 JPO to develop a solution. In August 2018, Defence informed the ANAO that an interim solution is now in place to support the ferry of the first two JSF aircraft to Australia in December 2018. In October 2018, Defence further advised the ANAO that ‘this interim solution will remain in place until an acceptable solution can be introduced, prior to Initial Operational Capability’.

-- The developmental nature of the international JSF Program means that Defence does not yet know the final purchase price of future Australian JSF aircraft, or their whole-of-life operating and support costs.

-- The progress of the Australian JSF Program through second pass approval on the basis of rough-order-of-magnitude sustainment costs is contrary to Defence’s guidance for the planning and approval of major capital equipment projects 59, the findings and recommendations of numerous external reviews60, and audits undertaken in Defence over the past two decades.61 The history of Defence acquisitions in Australia demonstrates that inadequate sustainment cost estimates at project approval have led to cost implications once the platform is in service.

In 2016, the United States GAO described sustainment as the most significant cost driver for the program. In 2016, Defence informed the Australian Government that estimated support costs for the JSF aircraft ‘remain high and the economies of scale were not yet evident’, and in November 2018, Defence informed the ANAO that this advice remains current.

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