F-35 Block 4 Upgrade is Two Years Late, $1.5 Bn More Expensive: GAO
(Source: Defense-Aerospace.com; posted May 13, 2020)
The GAO found that the development cost of the F-35’s Block 4 upgrade had increased by $1.5 billion in the past year, to $12.1 billion, while adding acquisition will boost total cost to $13.9 billion, plus $6 billion to retrofit Block 4 to aircraft already delivered. (GAO graphic)
PARIS --- The cost of developing the F-35’s Block 4 upgrade has grown by $1.5 billion in the past year, and has now reached $12.1 billion despite Joint Program Office attempts to understate it, the Government Accountability Office (GAO) said in its latest annual report on the program released Tuesday.

The GAO also reported that Block 4 development will take two years longer than planned, and that despite promises of improvement the delivery of Block 4 capabilities will not be completed until 2026, instead of 2024.

In addition, “the fielded aircraft, over 500 so far, do not meet the program’s reliability and maintainability goals,” notably because “only about 3,000 of the over 10,000 [Lockheed Martin] manufacturing key processes meet predefined design standards for ensuring product quality.”

“The program is not delivering aircraft at the level of quality expected,” GAO added.

Below are selected quotes from the report.

Block 4 capabilities delayed, cost increases by $1.5 billion

In its May 2019 Block 4 report to Congress, DOD reported that the total cost to develop 66 Block 4 capabilities—both hardware and software—would be $10.6 billion for activities planned from fiscal years 2018 to 2024.

The report also included the F-35 program office estimate of an additional $6.4 billion in fiscal year 2018 through 2024 funding to retrofit aircraft from the baseline F-35 configuration to a full Block 4 configuration.

However, GAO “found that reported Block 4 costs did not include all Block 4 costs…and did not include Block 4 costs the program incurred prior to 2018, or that it will incur after 2024,” as the F-35 program office has chosen to exclude the past and future costs in the Block 4 cost estimate it reported to Congress. This decision understates the true cost of Block 4.

The updated cost estimate reflects that the program office will be fielding Block 4 capabilities into fiscal year 2026. This new schedule adds 2 years analysis of DOD’s updated cost estimate indicates the total cost of Block 4 development grew by $1.5 billion to a total of $12.1 billion for activities in fiscal years 2018 through 2026.

Furthermore, in addition to the Block 4 development costs, the program also estimates it will need another $2.9 billion to develop other capabilities, such as upgrades to ALIS.

“Ultimately, without a complete understanding of Block 4 costs, the program could face additional cost growth, which will be hard to track without a complete cost baseline,” GAO says. “The lack of a complete cost baseline hinders insight and oversight into the program’s costs, plans, and progress to date and going forward.”

Block 4 capabilities delivered late

Lockheed Martin only delivered one Block 4 capability (the auto ground-collision avoidance system) in 2019, instead of eight as planned. According to program officials, the development of the other capabilities is taking longer than planned and, as a result, the program pushed their delivery schedule into 2020.

Development and delivery of the capabilities within the Block 4 effort are complex, and the program does not consider development complete until the products for all elements of the F-35 air system are ready.

The program is also discovering issues during Block 4 testing, causing the testing to take longer than anticipated. According to a DOT&E official, Block 4 software changes caused issues with functionality of F-35 baseline aircraft capabilities that worked before the program installed new Block 4 software onto the aircraft.

The program discovered issues with each new software version during flight testing and has been working to fix these issues in subsequent software updates. Testing and DOD officials stated that the contractor had not performed adequate testing of the software before delivering it to the test fleet as the reason for these issues. Contractor representatives acknowledged these issues and stated that they will conduct additional lab testing for future software releases to avoid such problems going forward.

91% of engines delivered late

In 2019, 91 percent of engines delivered were late. In addition, the average number of quality notifications per engine—production defects indicating a quality issue—has increased by 16 percent in 2019, to 1,090 per delivered engine.

Late parts delivery increase ten-fold

According to program officials, some suppliers for the F-35 struggled to meet increased production demands in 2019 and, as a result, the program witnessed increased rates of late deliveries or parts shortages. In particular, the number of parts delivered late to the airframe contractor, as well as parts shortages, have grown steadily over the past 2 years.

According to the Defense Contract Management Agency:

• Between August 2017 and July 2019, the number of parts delivered late increased from under 2,000 to more than 10,000.

• Between July 2018 and July 2019, the parts shortages per month increased from 875 to over 8,000. According to contractor representatives, roughly 60 percent of parts shortages are attributable to 20 suppliers.

Turkey to continue part production until 2022

“We found that Turkey’s recent suspension from the F-35 program is likely to compound these existing supply chain issues.

“In July 2019, Turkey was suspended from the F-35 program. In particular, the Under Secretary of Defense for Acquisition and Sustainment directed that the F-35 program establish alternative sources and to stop placing orders from Turkish suppliers after March 2020.

“According to an official with that office, Turkish suppliers will provide parts through the end of lot 14 deliveries (scheduled to take place through 2022), in part, to avoid disruptions to aircraft deliveries and additional cost growth from standing up new suppliers.

“The F-35 program office identified that Turkish companies supplied 1,005 parts for the F-35 airframe and engine and some of these parts have been provided by only one supplier.

“As of December 2019, the program has identified new suppliers for all of these parts, but it still needs to bring roughly 15 parts currently produced in Turkey up to the current production rate.”

Click here for the full report (68 PDF pages, on the GAO website.


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