Joint Strike Fighter Acquisition:

Cooperative Program Needs Greater Oversight to Ensure Goals Are Met

GAO-03-775: Published: Jul 21, 2003. Publicly Released: Jul 21, 2003.

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The Joint Strike Fighter (JSF) is a cooperative program between the Department of Defense (DOD) and U.S. allies for developing and producing next generation fighter aircraft to replace aging inventories. As currently planned, the JSF program is DOD's most expensive aircraft program to date, costing an estimated $200 billion to procure about 2,600 aircraft and related support equipment. Many in DOD consider JSF to be a model for future cooperative programs. To determine the implications of the JSF international program structure, GAO identified JSF program relationships and expected benefits and assessed how DOD is managing cost sharing, technology transfer, and partner expectations for industrial return.

The JSF international program structure is based on a complex set of relationships involving both government and industry from the United States and eight partner countries. The program is expected to benefit the United States by reducing its share of program costs, giving it access to foreign industrial capabilities, and improving interoperability with allied militaries. Partner governments expect to benefit from defined influence over aircraft requirements, improved relationships with U.S. aerospace companies, and access to JSF program data. Yet international participation also presents a number of challenges. For example, while international partners can choose to share any future program cost increases, they are not required to do so under the terms of negotiated agreements. Therefore, the burden of any future increases may fall almost entirely on the United States. Technology transfer also presents challenges. The large number of export authorizations needed to share project information, solicit bids from partner suppliers, and execute contracts must be submitted and resolved in a timely manner to ensure that partner industry has the opportunity to compete for subcontracts and key contracts can be executed on schedule. Transfers of sensitive U.S. military technologies--which are needed to achieve aircraft commonality goals--will push the boundaries of U.S. disclosure policy. While actions have been taken in an attempt to address these challenges, additional actions are needed to control costs and manage technology transfer. Finally, if partners' return-on-investment expectations are not met, support within their countries could deteriorate. To realize this return-on-investment, partners expect their industry to win JSF contracts through competition--a departure from other cooperative programs, which directly link contract awards to financial contributions. If the prime contractor's efforts to meet these expectations come into conflict with program cost, schedule, and performance goals, the program office will have to make decisions that balance these potentially competing interests.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that the JSF Program Office will ensure that the prime contractor's international industrial plan is continually reviewed for technology transfer, export control, and risk mitigation issues. In 2003, the JSF program office instructed the prime contractor to complete an international industrial plan. According to the prime contractor, the plan provides a roadmap that represents potential licensing activities as a subset of the program schedule. Specifically, the plan identifies the need for a license to transfer certain technologies to foreign industry. It provides a mechanism for the prime contractor to anticipate "need" dates for receiving export licenses and provides a mechanism for identifying issues that may arise concerning the releasability of information, technologies, or systems so that early action can be taken to determine if an exception to the National Disclosure Policy or an appropriate committee review should be pursued. Requesting an exemption to National Disclosure Policy is one mechanism that would allow the program to move forward in the face of an initially unfavorable licensing decision.

    Recommendation: To provide greater knowledge, which anticipates decisions needed as the JSF program matures, the Secretary of Defense should direct the JSF Program Office to ensure that the Lockheed Martin international industrial plan develops alternatives to mitigate those risks, such as using U.S. suppliers.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that the JSF Program Office will ensure that the prime contractor's international industrial plan is continually reviewed for technology transfer, export control, and risk mitigation issues. In 2003, the JSF program office instructed the prime contractor to complete an international industrial plan. According to the prime contractor, the plan provides a roadmap that represents potential licensing activities as a subset of the program schedule. Specifically, the plan identifies the need for a license to transfer certain technologies to foreign industry. It provides a mechanism for the prime contractor to anticipate "need" dates for receiving export licenses and provides a mechanism for identifying issues related to the releasability of information, technologies, or systems that could result in unfavroable export decisions so that early action can be taken to determine if an exception to the National Disclosure Policy or an appropriate committee review should be pursued.

    Recommendation: To provide greater knowledge, which anticipates decisions needed as the JSF program matures, the Secretary of Defense should direct the JSF Program Office to ensure that the Lockheed Martin international industrial plan evaluates the risks that unfavorable export decisions could pose for the program.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that the JSF Program Office will ensure that the prime contractor's international industrial plan is continually reviewed for technology transfer, export control, and risk mitigation issues. In December 2004 DOD added a section in its acquisition guidance stating that a new Technology Release Roadmap should be completed for all acquisition programs with substantial international industry involvement. The roadmap is expected to provide early planning for the proposed technology releases to foreign industry consistent with National Disclosure Policy, higher level technical reviews and approvals needed in support of proposed technology releases to foreign industry, and detailed export license approval processes to meet critical program and contract timelines. The JSF prime contractor is currently using this plan to manage foreign suppliers.

    Recommendation: To provide greater knowledge, which anticipates decisions needed as the JSF program matures, the Secretary of Defense should direct the JSF Program Office to ensure that the Lockheed Martin international industrial plan identifies current and potential contracts involving the transfer of sensitive data and technology to partner suppliers.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that the JSF Program Office would work closely with the prime contractor to achieve effective program oversight when it comes to partner expectations and program goals, but did not originally specify how it planned to collect and monitor this information. In follow-up to this recommendation, DOD indicated that meetings with senior DOD, Program Office, international partner, and contractor personnel are held to provide oversight to the JSF program office regarding partner expectations, program goals, and problem resolution.

    Recommendation: The Secretary should direct the JSF Program Office to ensure that information concerning the prime contractor's selection and management of suppliers be collected, closely monitored, and used for program oversight. This oversight should include identifying potential conflicts between partner expectations and program goals, developing focus letters that encourage Lockheed Martin to resolve these conflicts, and making award fee determinations accordingly.

    Agency Affected: Department of Defense

 

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