F-35 Joint Strike Fighter: Actions Needed to Address Manufacturing and Modernization Risks
Fast Facts
The F-35 program produced more aircraft and negotiated lower prices in 2019. However, the program is not meeting standards aimed at ensuring consistent, high-quality products, and fielded aircraft do not meet reliability goals.
Also, the cost to modernize aircraft systems went up about $1.5 billion (14%) since the program’s May 2019 annual report to Congress. Due to development delays, this reporting requirement will expire before the effort is complete. We suggest Congress consider extending it.
We made 5 recommendations, including some to help the Defense Department make its modernization cost estimate more comprehensive and credible.
An F-35B Exercising Its Short Takeoff and Vertical Landing Capability on the USS America
Fighter jet
Highlights
What GAO Found
The F-35 program is at risk of missing its test schedule and not meeting manufacturing leading practices. In 2019, the F-35 program conducted much of its planned operational testing but extended the schedule by 9 months, which delays the program's full-rate production decision to between September 2020 and March 2021. Over that time, the program will continue to deliver aircraft.
In addition, while the F-35 program has increased the production rate and negotiated lower aircraft prices, it is not meeting manufacturing leading practices identified by GAO. Specifically, only about 3,000 of the over 10,000 airframe contractor's manufacturing key processes meet predefined design standards for ensuring product quality. Also, the fielded aircraft, over 500 so far, do not meet the program's reliability and maintainability goals. Although the contractor is changing manufacturing processes to address problems and improve efficiency, more remains to be done. Unless the program office evaluates the risks of not meeting these leading practices, the military services and international partners are at risk of not receiving the quality aircraft they purchased.
An F-35 in Flight over Edwards Air Force Base
In addition, the July 2019 suspension of Turkey from the F-35 program—due to security concerns after its acquisition of Russian defense equipment—is likely to compound production risks. The program has identified new sources for 1,005 parts produced by Turkish suppliers, but the program is assessing the effect of 15 key parts not currently being produced at the needed production rate.
In 2019, estimated development costs to modernize the F-35's hardware and software systems—known as Block 4—increased by over $1.5 billion. The cost increase puts estimated Block 4 development costs at $12.1 billion. However, the cost estimate did not fully adhere to leading practices, such as including all life cycle costs. In addition, while development will continue through 2026, reports on Block 4 that the program submits to Congress are slated to end in 2023. Without continued Block 4 reporting through the development phase, Congress will lack important oversight information.
Why GAO Did This Study
The acquisition cost for the F-35 program increased substantially in 2019, partially due to the program's addition of estimated costs for modernization of hardware and software systems, referred to as its Block 4 efforts.
This is the fifth report under the provision that Congress included in statute for GAO to review the F-35 program annually until the program reaches full-rate production. This is also the first report under another provision in statute to review the program's production and Block 4 progress annually through 2024. Among other objectives, this report assesses (1) the program's production performance and (2) the program's modernization cost estimate and development progress. GAO reviewed Department of Defense (DOD) and contractor documentation and interviewed DOD officials and contractor representatives.
Recommendations
Congress should consider extending DOD's reporting requirement for Block 4 modernization beyond 2023. GAO is also making five recommendations to DOD. While DOD did not concur with two of these recommendations—including to evaluate production risks and update its Block 4 cost estimate with a program-level plan, it identified actions that, if implemented, will meet the intent of these recommendations. DOD concurred with GAO's three other recommendations.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should consider revising Section 224(d) of the National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-328, to extend DOD's Block 4 reporting requirement until all Block 4 capabilities are fielded to ensure that Congress is aware of cost and schedule growth beyond 2023. (Matter for Consideration 1) | Congress took action in Section 225(a) of the FY24 NDAA stating that the Secretary of Defense shall designate all Block 4 and Technical Refresh-3 elements of the F-35 aircraft acquisition program, collectively, as a single major subprogram of the F-35 aircraft acquisition program. This action meets the intent of our recommendation. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The OUSD (A&S) should direct the F-35 program office to provide information that is similar to that which is statutorily required after the milestone C review to Congress ahead of the milestone C review (full-rate production decision). This submission should include an evaluation of the production risks associated with critical production processes that are not in control, reliability and maintainability (R&M) targets that are not met, and supplier readiness—particularly for those replacing Turkish suppliers, along with the steps it is taking to address those risks. (Recommendation 1) |
Although DOD did not concur with this recommendation, in March 2024, as part of its Milestone C documentation that it uses to signal it is ready for higher rates of production, the F-35 program provided a report to Congress that includes details about production risks and steps it is taking to address those risks. This action meets the intent of our recommendation.
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| Department of Defense | The OUSD (A&S) should direct the F-35 program office to establish a Block 4 cost estimate baseline that includes all Block 4 costs, including incurred costs and future costs in its reports to Congress as required by the NDAA for Fiscal Year 2017, so that Congress has a complete understanding of all Block 4 costs and can compare this baseline to future cost estimates and performance. (Recommendation 2) |
DOD concurred with this recommendation. In response to our report, DOD stated that future reports to Congress will include prior and future costs, outside of the Future Years Defense Program costs. The program office updated the Block 4 cost estimate in May 2020 to reflect cost data for all years of Block 4 development, instead of the more limited cost estimates DOD had previously reported to Congress. For example, in the September 2020 Block 4 report to Congress, the program reported a total cost of $14.4 billion for Block 4, which reflects not only earlier incurred costs but also an additional 3 years of Block 4 development.
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| Department of Defense | The OUSD (A&S) should direct the F-35 program office to complete a program office level, product-oriented work breakdown structure for the next update to its Block 4 cost estimate to ensure that the estimate meets the comprehensive leading practices. (Recommendation 3) |
Though DOD did not concur with this recommendation, in response to this report, DOD agreed to evaluate moving to a program-level, product-oriented work breakdown structure in 2021. As of March 2024, DOD was planning to update the Block 4 cost estimate in September 2024. We will continue to monitor DOD's progress in this area.
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| Department of Defense | The OUSD (A&S) should direct the F-35 program office to conduct risk and uncertainty analyses for the next update to its Block 4 cost estimate to ensure that the estimate meets the credible leading practices. (Recommendation 4) |
DOD concurred with this recommendation. In response to this report, DOD stated that the F-35 program office estimate is aligned with the DOD's Cost Assessment and Program Evaluation's approach and methodology for performing development cost estimates. However, DOD did not identify specific actions it plans to take to include risk and uncertainty into its next Block 4 cost estimate update. In March 2024, DOD planned to include the results of a risk and uncertainty analysis in the next Block 4 cost estimate update, scheduled for September 2024. We will continue to monitor DOD's progress in this area.
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| Department of Defense | The OUSD (A&S) should direct the F-35 program office to consider the results of its future technology readiness assessment of all Block 4 technologies and incorporate the cost and schedule risks of developing those technologies in the next update to its Block 4 cost estimate to ensure that the estimate meets the comprehensive leading practices. (Recommendation 5) |
DOD concurred with this recommendation. In response to this report, DOD stated that it continues to evaluate technology readiness levels for Block 4. It noted that Office of the Under Secretary of Defense for Research and Engineering would conduct an independent technology readiness assessment of the Block 4 effort, which the program would use to inform future cost estimates. As of March 2024, the program continues to evaluate Technology Readiness Levels (TRLs) for Block 4 hardware and capabilities and incorporate that information into the Block 4 cost estimate as appropriate. According to program officials, the next Block 4 cost estimate is planned for September 2024. We will continue to monitor DOD's efforts to address this recommendation.
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