Finalizing the baseline software configuration for the F-35 Joint Strike Fighter could take a year longer than planned, cost nearly $2 billion more than is budgeted and threaten the Navy declaring the jet operational, according the Government Accountability Office (GAO).

In its annual report on the $400 billion acquisition program, GAO asserts that the F-35 Joint Program Office (JPO) estimates for completing system development and demonstration (SDD) developmental testing for the 3F software configuration are overly optimistic based on historical precedent.

“Cascading F-35 testing delays could cost the Department of Defense (DOD) over a billion dollars more than currently budgeted to complete development of the F-35 baseline program,” GAO says in a report released April 24. “These delays could affect the start of the F-35’s initial operational test and evaluation, postpone the Navy’s initial operational capability, and delay the program’s full rate production decision, currently planned for April 2019.”

An F-35A, tail number AF-2, fires a burst of rounds down range at the Gun Harmonizing Range at Edwards AFB.
An F-35A, tail number AF-2, fires a burst of rounds down range at the Gun Harmonizing Range at Edwards AFB.

GAO recommends that the JPO recalculate its cost and schedule estimates based on historical data instead of anticipated test-point achievement. As it routinely does, the JPO and its chief, Air Force Lt. Gen. Christopher Bogdan, quickly issued a statement responding to and providing context for the GAO’s conclusions. In his retort, Bogdan stuck by the JPO schedule and cost estimates.

“The Department of Defense already completed a comprehensive assessment of the cost and time needed to complete developmental testing in the System Development and Demonstration (SDD) phase, and so far the testing remains on track to complete in February 2018. This assessment considered historical data and the recommendations from multiple DoD organizations.”

Program officials anticipate a five-month delay in SDD completion for 3F at a cost of $532 million. GAO’s analysis – based on previous flight-test data – estimates a 12-month delay that could cost “more than $1.7 billion,” of which $1.3 billion will be needed in fiscal 2018.

“We do not agree with the GAO’s assessment that an additional billion dollars will be needed to complete SDD,” Bogdan says. “The remaining cost to complete the F-35’s $55 billion development program is estimated to be $2.3 billion – money which was already budgeted for the program. If there is a delay to the completion of SDD, the Department has directed the JPO to maintain the resources necessary to continue SDD flight testing to May 2018.”

If a delay to May 2018 is necessary, the JPO is prepared to hold back $100 million budgeted for follow-on modernization – also called Block 4 – to cover the difference, he says.  

The F-35 program is likely to request up to $1.3 billion in the coming fiscal year for two major program elements. About half that amount would go toward Block 4 upgrades. Because program officials plan to release a request for Block 4 development proposals before Block 3F developmental testing will be completed, GAO recommends delaying the Request for Proposal (RFP).

“Until Block 3F testing is complete, DOD will not have the knowledge it needs to present a sound business case for Block 4,” GAO says.

Bogdan strenuously disagrees with the GAO recommendation, saying the upgrade program will be managed “with complete transparency” as a direct continuation of the current development and acquisition program.

“Waiting until developmental testing is fully complete to release the RFP for Block 4 development will introduce undue delay and negatively impact the warfighter’s ability to counter a wide spectrum of current and evolving Surface-to-Air Missile threats, Integrated Air Defense Systems, as well as current and emerging advanced fighter threats across 12 mission areas identified in the Block 4 Capability Development Document,” Bogdan says.

The remaining $650 million of the JPO’s likely fiscal 2018 request is for a block buy of aircraft in low-rate initial production lots 12, 13 and 14, which takes the program out to fiscal year 2020. GAO recommends the JPO finalize the “economic order quantity” or EOQ, in fiscal 2018 and report to Congress on the cost and benefits of the plan.

Bogdan and the JPO partly agreed with that recommendation, saying it intends to submit a proposal to Congress to authorize the EOQ purchase along with the fiscal 2018 budget request.

The EOQ “gives the F-35 parents and [foreign military sales] customers the flexibility ot procure all aircraft and engines in a single contracting action” and achieves savings for all buyers through economies of scale, Bogdan says.

Buying a total 440 aircraft for the three U.S. military services through the planned block buy will save about $2 billion compared to the Lot 11 annual procurement price, according to the JPO.

“We thank the GAO for its support and feedback as we remain focused on developing, delivering and sustaining this next-generation stealth fighter for the warfighter,” Bogdan says. “There were no surprises in GAO’s independent review of the F-35 program. All of the issues mentioned are well known to the JPO, the U.S. services, international partners and our industry team. The JPO continues to provide the GAO with our full cooperation and unfettered access to information. While nearing completion, the F-35 is still in development and technical challenges are to be expected.”

Lockheed Martin [LMT] is the prime contractor for the F-35.