GAO Finds F-35 Block 4 Costs Increase Again As Schedule Slides Two Years

F-35 Joint Strike Fighter: Actions Needed to Address Manufacturing and Modernization Risks

(Source: Government Accountability Office; issued May 12, 2020)

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.

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.

What GAO Recommends

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.

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

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‘Agile’ Strategy Fails to Deliver As F-35 Upgrade Two Years Late and Cost Rise $1.5bn (excerpt)

(Source: FlightGlobal; posted May 13, 2020)

By Garrett Reim

The Lockheed Martin F-35 Lightning II’s modernisation is two years behind schedule and its cost has risen by $1.5 billion.

The Block 4 upgrade - a modernisation of the relatively new stealth fighter’s software and hardware - was initially to be delivered by 2024, but now will not be handed over until 2026, according to a report released by the Government Accountability Office (GAO) on 12 May.

Problems with the programme also pushed up the cost on the modernisation effort to an estimated $12.1 billion, says GAO. What’s more, the government agency says that estimate doesn’t fully account for the total cost of the initiative as the Department of Defense (DoD) has excluded spending prior to 2018 and projected spending after 2024 in its count.

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

Click here for the full story, on the FlightGlobal website.

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F-35 Part Shortage Grows as GAO Flags Risk of Turkey’s Exit (excerpt)

(Source: Bloomberg News; published May 12, 2020)

By Anthony Capaccio

Lockheed Martin Corp’s F-35 program was hampered last year by growing parts shortages from its supply chain that “increased significantly” and could be further complicated by the U.S decision to expel Turkey from the program, according to congressional investigators.

The Government Accountability Office, in its latest annual report on the $428 billion F-35 program, cited progress in reducing outstanding deficiencies, exceeding 2019 aircraft delivery goals, reducing per-aircraft costs and changing the production process for the warplane to improve efficiency.

Still “more needs to be done,” investigators wrote in the report on the production of the next-generation stealthy fighter that was published Tuesday. “The program is at risk of missing its test schedule and not meeting manufacturing leading practices.”

Among key issues that need improvement as the program approaches a full-rate production decision in 2021: Aircraft reliability, which remains below target; on-time delivery and better quality of Pratt & Whitney-built engines; and supply chain parts shortages, the GAO said.

“F-35 aircraft in the field have not met standards for reliability and maintainability, indicating that the program is not delivering aircraft at the level of quality expected,” according to the report. (end of excerpt)

Click here for the full story, on the Bloomberg website.

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Turkey's F-35 Removal 'Likely to Compound' Program Woes (excerpt)

(Source: Anadolu Agency; published May 12, 2020)

By Michael Hernandez

WASHINGTON --- The US decision to expel Turkey from the F-35 program will likely compound its already beleaguered manufacturing process, a congressional watchdog warned Tuesday.

The Government Accountability Office (GAO) determined that while the program has made progress in lowering prices and increasing production, about 7,000 of its more than 10,000 airframe contractors' "key processes" do not "meet predefined design standards for ensuring product quality," and it continues to face supply shortages that are likely to be exacerbated by Turkey's removal.

The Trump administration's July 2019 decision to expel Turkey from the F-35 program because of its acquisition of an advanced Russian air defense system "is likely to compound production risks," the GAO said.

"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," it said.

The GAO cited data from the Pentagon's Defense Contract Management Agency that said at the time of Turkey's removal, the program was facing increasing levels of late deliveries of aircraft parts and parts shortages. (end of excerpt)

Click here for the full story, on the Anadolu Agency website.

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