Tactical Aircraft:

DOD Needs to Better Inform Congress about Implications of Continuing F/A-22 Cost Growth

GAO-03-280: Published: Feb 28, 2003. Publicly Released: Mar 13, 2003.

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In 1991, the Air Force began developing the F/A-22 aircraft with advanced features to make it less detectable to adversaries and capable of high speeds for long distances. After a history of program cost increases, Congress limited the cost of F/A-22 production to $37.5 billion in 1997. Congress has remained interested in the potential cost of production. As requested, we (1) identified the latest production cost estimate and assessed the planned offsets from cost reduction plans, (2) identified areas where additional cost growth is likely to occur, and (3) determined the extent that DOD has informed Congress about production costs.

The Department of Defense (DOD) has identified about $18 billion in estimated production cost growth over the last 6 years. Even though the Air Force has designed cost reduction plans to offset a significant amount of this estimated cost growth, DOD still estimates that the cost of production will exceed the cost limit established by Congress in 1997. Furthermore, the Air Force has not fully funded certain cost reduction plans called production improvement programs (PIPs), and as a result, these PIPs may not achieve their estimated $3.7 billion in offsets to cost growth. In addition to the cost growth estimated by DOD, GAO identified areas where, in the future, F/A-22 production cost growth is likely to occur. First, the Office of the Secretary of Defense's current production cost estimate does not include about $1.3 billion in costs that should be considered in future cost estimates. Second, schedule delays in developmental testing could delay the start of a multiyear contract designed to control costs. These delays could also result in additional costs owing to the expiration of an Air Force agreement with the contractor designed to help control production costs in fiscal year 2005. Last, other risk factors may increase future production costs, including the dependency of certain cost reduction plans on the availability of funding and a reduction in funding for support costs. DOD has not fully informed Congress (1) about what the total cost of the production program could be if cost reduction plans do not offset cost growth as planned or (2) about the aircraft quantity that can be procured within the production cost limit. If the cost limit is maintained and estimated production costs continue to rise, the Air Force will likely have to procure fewer F/A-22s.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD did not concur with this recommendation because they believe this recommendation would create redundancy since they are already required to submit a request to the Congressional Appropriations Committee for reprogramming to use PIP funds for alternate purposes. Further, DOD believes that there is no reason for the Air Force and the Secretary of Defense to provide reports that contain essentially identical information. Consequently, they do not plan to implement this recommendation.

    Recommendation: To ensure proper congressional oversight of the F/A-22 program, the Secretary of Defense should provide Congress with documentation reflecting the potential cost of F/A-22 production if cost reduction plans do not offset cost growth as planned.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD did not concur with this recommendation because it would be redundant to their normal funding approval process.

    Recommendation: To ensure proper congressional oversight of the F/A-22 program, the Secretary of Defense should provide Congress with documenation showing that funding for PIPs is being invested at the planned level each fiscal year, and if not, explaining the reasons why and the potential consequences of not fully investing and potentially not offsetting cost growth as planned.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD did not concur with this recommendation because there is no evidence to support it and its implementation would therefore not be prudent. They stated that PIP investments in general are a good idea, and PIPs should be funded based upon expected return-on-investment criteria. However, there is no evidence to show the DOD plans to implement this recommendation. In December 2004, DOD reduced the F/A-22 budget, terminating production after fiscal year 2008. This decision make this recommendation obsolete as only limited production remains and there can be no significnat savings.

    Recommendation: For the Air Force to achieve planned offsets to estimated cost growth, the Secretary of the Air Force should make the funding of PIPs at the planned level a priority.

    Agency Affected: Department of Defense: Department of the Air Force

  4. Status: Closed - Implemented

    Comments: On April 23, 2003, the House Committee on Government Reform, Subcommittee on National Security, Emerging Threats, and International Affairs issued a letter to the Secretary of Defense requesting an estimate of the number of F-22 aircraft that could be bought within the production cost cap. The Committee letter was based on an April 11, 2003, hearing at which Mr. Walker testified on the problems in the F-22 program and this report to this committee, which was issued in February 2003. On June 30, 2003, the Secretary responded to the committee request and reported that only 216 to 218 F-22 aircraft could be bought within the current production cap. The response included some of the assumptions used by DOD to estimate the restricted buy quantity.

    Recommendation: To ensure proper congressional oversight of the F/A-22 program, the Secretary of Defense should provide Congress with documentation reflecting the quantity of aircraft DOD believes can be procured with the existing production cost limit.

    Agency Affected: Department of Defense

 

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