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Military


US House Armed Services Committee

STATEMENT BY
DEPARTMENT OF THE AIR FORCE
LT GEN JOHN D.W. CORLEY
PRINCIPAL DEPUTY, ASSISTANT SECRETARY OF THE AIR FORCE (ACQUISITION)

BEFORE THE
SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES
HOUSE ARMED SERVICE COMMITTEE
UNITED STATES HOUSE OF REPRESENTATIVES

CONCERNING
F/A-22

APRIL 2, 2003

 

Mr. Chairman and members of the Subcommittee, thank you for the opportunity to appear before you to discuss the Air Force's F/A-22 program.  I'm pleased to provide an update on the progress of the F/A-22 Air Dominance Fighter program.  The program has made significant progress toward completion of the development program, validation of aircraft performance, delivery of production aircraft, and initiation of pilot and maintainer training.  Joining me today is Brig Gen Rick Lewis, the Air Force's Program Executive Officer (PEO) for fighter and bomber programs.  Rick will lead the program through its remaining challenges, and toward a full rate production decision and declaration of Initial Operational Capability (IOC).

My comments today will underscore the joint F/A-22 operational requirements to include the long-term roadmap and how the Raptor transforms air dominance.  I'll also discuss the program's history through the Lot 2 award, with an emphasis on how shifting production quantities have affected affordability.  Next, I'll provide a comprehensive status of both the development and production program, including the recent Lot 3 approval.  Finally, I intend to address issues raised by the two recent GAO reports, specifically, why the Air Force non-concurred with the GAO's recommendations and findings.  My comments will hopefully address your advance questions.  Let me first begin by providing a high-level sight picture of F/A-22 themes and "take-aways."

EXECUTIVE SUMMARY

America needs the F/A-22 for 21st century Air Dominance.  It is a key enabler in the Air Force's Global Strike Concept of Operations and the cornerstone of the Air Force's on-going transformation.  The aircraft is demonstrating transformational capabilities essential to the Joint Force Commander's ability to fight and win our Nation's wars.  If we hobble this program, the best strike aircraft in the world later this decade will be F-15s and F-16s owned by other countries. 

F/A-22 performance to date has been outstanding.  Recent F/A-22 flight test activity has been highly successful.  This is a complex weapon system for a complex era-some 'unknown-unknowns' only become apparent as a test program matures.  We will fix the avionics stability issue-just like we've resolved other development challenges.

Due to the need to extend the EMD schedule, USAF leadership directed the F/A-22 program to increase its EMD budget by $876M.  This increase in the EMD estimate-at-completion is not a reflection the airplane isn't performing and is not expected to be an architectural issue, as validated by an independent OSD assessment team.  The aircraft structure is validated and robust.  Static testing is complete and we've found no issues.  The 1st lifetime fatigue testing is complete (2nd lifetime 38% complete)-again, no issues. 

Production cost control and affordability have long been F/A-22 priorities.  Our cost reduction program covers the gamut of cost reduction initiatives.  We are investing $475M in direct Production Improvement Plans (PIPs).

Production stability is vital to achieving future program affordability goals.  F/A-22 investments today are on the "critical path" for achieving aggressive JSF goals.      

Like all programs, transitioning from building EMD aircraft to production aircraft has been a challenge, but Lockheed Martin aircraft production is showing significant improvement, as recent production metrics and aircraft deliveries clearly show.  In fact, the Air Force has recently taken delivery of the first three production aircraft.  The F/A-22 program is gaining significant momentum-we can't let up now!

OPERATIONAL REQUIREMENT

To ensure national security, the United States must dissuade potential adversaries from developing threatening forces or ambitions while we seek to shape the future military environment in our favor.  Assuring our friends and allies of our capability and intent and thereby deterring conflict is an important pillar of the new defense strategy.  If deterrence fails, we must have the means to swiftly and decisively defeat any enemy.  These imperatives require US armed forces to wield overwhelming air, land, sea, and space power seamlessly to counter threats against American forces, interests, and allies.  If necessary, we must leverage our interoperable  asymmetric advantages to overwhelm an adversary at the time, place, and manner of our choosing.

American military forces should be organized, trained, and equipped using operational concepts to defend the homeland of the United States while simultaneously deterring forward in four critical areas of the world.  We must have a joint, networked force able to swiftly defeat aggression in two of those areas, in overlapping time frames, should deterrence fail.  A decisive victory in one of those areas, to include regime change or occupation, is the final goal of our defense strategy.  We must have sufficient forces to conduct smaller concurrent contingencies in other areas of the world, while maintaining sufficient reinforcements, mobility assets, and strategic reserves.

Air superiority, and subsequently air dominance, is the first priority of a joint or coalition combatant commander in any theater.  Advanced radar guided surface-to-air missile (SAM) systems and air-to-air missile (AAM) systems represent a potential threat to our legacy aircraft and will have a substantial negative impact on our ability to gain and maintain air dominance.  Such a threat could have detrimental implications for US security.

Air Force Concept of Operations: A Notional Scenario

The cornerstone-and first element-of the Air Force's on-going transformation is the development and implementation of the Global Strike Concept of Operations (CONOPS).  Through the Global Strike CONOPS, the Air Force projects air power, rapidly and at great distances, to counter threats designed to deny access to our joint follow-on forces, while denying the enemy sanctuary.  Global Strike CONOPS provides effective information and space operations, while facilitating all other ground, naval, and air forces.

In a notional scenario requiring the United States to swiftly defeat the efforts of an adversary, establishing air dominance may necessitate overcoming anti-access threats (e.g., advanced SAM networks, enemy aircraft) without the use of coalition partner bases.  In such a contingency, the need to accomplish our most challenging tasks come at the outset of the operation.  Once air dominance is established, follow-on forces must be capable of persistent battlespace presence for precision strikes against mobile time-critical targets via integrated use of intelligence, surveillance and reconnaissance assets.  As the Army's Objective Force enters enemy territory and naval forces advance into the littoral regions, the Air Force must provide situational awareness through its penetrating, persistent ISR capability.  Ground forces in enemy territory may require sustained close air support and re-supply to achieve their objectives.  Responsive, survivable Air Force assets, fully connected with our joint partners will fill this need.  Combat tested Air Force combat controllers along with Army and Special Operations units on the ground, armed with advanced data link equipment, will communicate directly with aircrews to respond almost instantly to the Joint Force Commander's needs.  Continued Air Force suppression and destruction of enemy air defenses enable coalition aircraft to complete the systematic defeat of enemy forces.  This support is required 24 hours a day when the battlespace must be accessed and air corridors kept clear for re-supply by vulnerable cargo aircraft. 

The F/A-22's Roles in the Global Strike CONOPS

The F/A-22 program has transformed itself over the course of its development.  It's more than the stealthy air superiority jet designed to counter enemy air threats envisaged during the Cold War.  Rather, it retains all the air-to-air capabilities of the original design, while incorporating leap-ahead technologies that will combine air dominance, precision attack, and joint close air support functionality into a single platform to "kick down the door" in an anti-access region.  For this reason, the Air Force re-designated the aircraft the F/A-22.  All aspect stealth, and the ability to supercruise at greater than Mach 1.5 are unique aspects of the Raptor.  These characteristics combined with extraordinary maneuverability make the F/A-22 vastly superior to any fielded or development aircraft.  Its package of capabilities compliment and increase the effectiveness of the JSF as a persistent stealth asset.  The F/A-22 is the linchpin for all follow-on forces and therefore resides at the heart of the Global Strike CONOPS. 

The F/A-22's combination of stealth, supercruise, maneuverability, and integrated avionics distances it from legacy fighter platforms and allows for, for the first time, the full realization of the operational concepts of the 21st century.  These characteristics will give US military forces unprecedented access to enemy areas of vulnerability without exposing those same forces to unacceptable losses. It radically changes the way an adversary must think about and prepare for conflict in ways no other system can.  The F/A-22's all-aspect stealth allows penetration deep into enemy territory and destruction of the next two generations of double-digit surface-to-air missile systems using GPS-aided bombs.  It brings stealth "into the day" by protecting the F-117 and the B-2 around-the-clock as they counter enemy attempts to deny access to vital target centers.  Avionics enhancements in the F/A-22 fire control system enable it to engage mobile ground targets anytime, in any weather, deep within enemy territory.  The F/A-22's internal weapons storage reduces drag and radar reflection and so provides increased range and maneuverability.  Incorporation of the Small Diameter Bomb will quadruple its precision weapons capacity and increase the number of targets serviced per sortie.  It will engage emerging threats to deployed forces, including cruise missiles possibly equipped with chemical or biological warheads.  The F/A-22 enables the joint fight by gaining and maintaining air dominance, and by providing ground, naval, and special operations forces unimpeded access to their targets.

In a future joint operation, when the Combatant Commander needs access and requests an F/A-22 squadron in theater, it will take less than half the current airlift requirements of just one F-15C squadron.  In the near term that same Combatant Commander would have required not only additional airlift, but also F-117's and more support aircraft and still would not have achieved the same effects the F/A-22 brings to the theater.  In short, that Combatant Commander might be forced to accept losses to gain access.  With the F/A-22 in theater, the Combatant Commander will have a 45% reduction in aircraft turn times, 53% less manpower than an F-15C squadron, and a 37% reduction in maintenance man-hours per flight hour, enabling the persistent joint warfight with a smaller footprint.  The expected demands for the F/A-22 capabilities in a joint warfight could easily result in a low density/high demand (LD/HD) asset.   

To summarize, America needs the F/A-22 in sufficient numbers for 21st century Air Dominance-this aircraft is the key enabler in the Air Force's Global Strike CONOPS.  The F/A-22 is the only aircraft capable of countering anti-access threats--advanced SAMs, cruise missiles, fighter aircraft, theater ballistic missile and weapons of mass destruction sites--from Day 1.  Its unrivaled response makes it a key element for homeland security and force protection abroad.  The F/A-22 will allow joint and coalition forces to operate with impunity 24 hours a day, to include around-the-clock employment of all other current and future stealth platforms.  The F/A-22 is vital to our national interests.

PROGRAM HISTORY
 

Before discussing the current status of the development and production programs, we need to review the program's production profile history, particularly how changes in total production quantities have affected affordability.

Average Unit Fly-Away Cost ($BY03)

Pre-1999 Quantity Changes

In 1985, at the beginning of the Advanced Tactical Fighter Demonstration/Validation phase, the Air Force planned to procure 750 aircraft at a rate of 72 per year.  Production years spanned 1992 to 2005.  Following the 1990 Major Aircraft Review, the DoD reduced the aircraft production rate from 72 to 48 per year.  In 1991, at the start of the Engineering and Manufacturing Development (EMD) phase, the Defense Acquisition Board (DAB) again reduced the total F/A-22 procurement to 648, with production scheduled to occur between 1996 and 2012.

Then as part of the 1994 Department of Defense Bottom-Up Review, the F/A-22 procurement program was further reduced to 442 aircraft.  In June of 1996, the Air Force chartered a Joint Cost Estimate Team (JET) to review F/A-22 program costs, both development and production.  The JET recommended a restructured production program to offset the costs associated with a nine-month extension of the F/A-22 EMD program.  The production ramp rate was reduced and four Pre-Production Verification (PPV) aircraft were deleted, thereby reducing the total procurement to 438 aircraft.  The PPV aircraft were to be used solely for Operational Test and Evaluation (OT&E).  As a cost savings measure, the Air Force deleted these four aircraft and elected to use two EMD aircraft and the first two production aircraft to satisfy OT&E aircraft requirements.

As the JET recommendations were being finalized, the 1997 Quadrennial Defense Review (QDR) emerged with a new F/A-22 production quantity.  The QDR reduced F/A-22 procurement from 438 to 339 aircraft, reduced the Low Rate Initial Production (LRIP) ramp rate by 12 aircraft, and reduced the maximum production rate from 48 to 36 per year.  Collectively, these quantity changes represent a 48% reduction in production quantities since the start of F/A-22 EMD.  The reduced quantity has been the most dominant factor in increased F/A-22 production unit costs.  Cost estimate models indicated that changing a total procurement of 750 aircraft at a rate of 72 aircraft per year to 339 aircraft at a rate of 36 aircraft per year resulted in a 52% increase in the aircraft fly-away cost.  It is reasonable to expect that further reductions will have a negative impact on future aircraft lot proposals and negotiated settlements.

Production Representative Test Vehicles

In December 1998, the Air Force awarded contracts to fully fund two post-EMD aircraft and to initiate long lead for the next six aircraft.  The first two aircraft were originally designated Lot 1 but later re-named Production Representative Test Vehicles (PRTV) aircraft.  These two PRTV aircraft were produced (and have been delivered) to support Dedicated Initial Operational Test and Evaluation (DIOT&E).  Following DIOT&E, these two PRTV aircraft will be delivered to the Air Combat Command (ACC) at Nellis Air Force Base, Nevada.

After the PRTV aircraft contract was awarded in December 1998, the Department of Defense (DoD) planned a Low Rate Initial Production (LRIP) decision for November 1999.  The acquisition strategy approved by the Air Force Service Acquisition Executive (SAE) was to approve full production of six F/A-22 aircraft (then-production Lot 1) and initiate long lead funding for the next ten F/A-22 aircraft (then-production Lot 2).

The Fiscal Year (FY) 2000 Appropriations Act directed a funding appropriation change for the second annual procurement of post-EMD aircraft.  The appropriation was changed from procurement funds to Research, Development, Testing, and Evaluation (RDT&E) funds.  The lot nomenclature for the six aircraft was also changed from Lot 1 to Production Representative Test Vehicle II (PRTV II).  This action was taken in lieu of an LRIP decision in November 1999.  The result allowed procurement of six additional test aircraft to meet the ACC requirement for F/A-22 Force Development Evaluation (FDE) at Nellis AFB.  Combining the two PRTV lots fulfills the requirement for eight FDE aircraft at Nellis AFB.  This also maintained F/A-22 development and production schedules and preserved the acquisition strategy designed to meet program affordability objectives.

In December 1999, within the guidelines established by the Fiscal Year (FY) 2000 Appropriations Act, the Under Secretary of Defense (Acquisition and Technology) approved full contract award for the six additional PRTV II aircraft and Advanced Buy for ten Lot 1 aircraft.  This acquisition strategy balanced risk associated with concurrent EMD and production with the risk of program cost increases caused by a break in manufacturing for both prime contractors and subcontractors.  

Low Rate Initial Production (LRIP)

The next planning date for the LRIP Defense Acquisition Board (DAB) was December 2000 and was intended to authorize full funding of 10 Lot 1 aircraft and Advanced Buy for 16 Lot 2 aircraft.  The LRIP DAB was delayed pending completion of two EMD exit criteria. 

Also in December 2000, the Air Force completed an update to the Service Cost Position (SCP) and determined the program exceeded the Congressional production cost cap by $2B.  To address this issue, the Air Force revised the production acquisition plan to reduce aircraft quantities in the LRIP lots, while maintaining the total 339 aircraft buy within the existing cost cap.  This revised acquisition strategy realigned the LRIP lot buy quantities as follows:  Lot 2 was adjusted from 16 to 13, Lot 3 from 24 to 23, Lot 4 from 36 to 27, and Lot 5 from 36 to 32.  Full Rate Production Lots (Lots 6-10) were also adjusted by increasing the ramp rate from 36 to 38 in each of these years, and Lot 11 was adjusted from 29 to 38.

All exit criteria were completed on 6 February 2001, but because the Defense strategic review had been initiated, the Secretary of Defense elected to further delay the LRIP DAB.  To avoid a break in production resulting from a delayed LRIP decision, the DoD requested and received Congressional approval to extend the Lot 1 Advanced Buy contract.  This Lot 1 extension was funded by re-programming FY 2001 Lot 1 procurement funds into the Lot 1 Advanced Buy account.  Congress released funds necessary to extend the funded period of performance through September 2001.

The Under Secretary of Defense (Acquisition, Technology, and Logistics) convened a DAB on 14 August 2001 and determined the program was ready to enter Low Rate Initial Production.  In a 14 September 2001 Acquisition Decision Memorandums (ADM), he documented LRIP approval, and granted authority for Lot 1 full award and Lot 2 Advanced Buy.

The DAE also reviewed the program on 18 October 2001 and approved Lot 2 full award, Advanced Buy for Lot 3, and exit criteria for Lot 3 full award and Lot 4 Advanced Buy.  Based on OSD/CAIG estimates, the program baseline was established at 297 production aircraft.  However, the Air Force requested authority to procure additional aircraft above the baseline within available and projected funding.  A 19 October 2001 ADM approved this "Buy-to-Budget" strategy in order to maintain the Air Force's production ramp rate to an objective quantity of 339 aircraft.

Initial preparations for the Lot 3 and Lot 4 Advanced Buy DAB (originally scheduled for October 2002) were initiated in early Summer 2002 by an OSD-directed Defense Planning Guidance (DPG) study to determine the correct number of F/A-22's required to fulfill mission requirements.  In the midst of the instabilities created by this latest round of total quantity discussions and studies, the prime contractor and suppliers began building their proposals for Lot 3 full award and Lot 4 Advanced Buy.

PROGRAM STATUS

Engineering and Manufacturing Development (EMD)

The F/A-22 EMD program formally began in August 1991, with a sole-source contract award to Lockheed-Martin.  The EMD program has been very successful in fulfilling the warfighter's most stringent requirements.  The progress we've made is often forgotten by the "recency effect," whereby we over-inflate the challenges of today relative to the whole of the program.  In reality, we've overcome multiple development challenges and have delivered a set of capabilities some thought impossible.  Before discussing the EMD program's recent cost estimate-at-completion (EAC) increase and remaining hurdle-avionics software stability-I'd like to express just how well this aircraft is performing.

The aircraft performance-to-date has been nothing short of outstanding.  In fact, the F/A-22 is meeting or exceeding all eight aircraft performance-related Key Performance Parameters (KPPs).  KPPs represent the select subset of requirements the warfighter is simply not willing to fight without or trade-off to save cost or schedule.  These KPPs derive directly from the F/A-22s key attributes of stealth, supercruise, advanced maneuverability, and integrated avionics.   Flight testing-to-date demonstrates that these key attributes, when combined, create the unmatched set of capabilities needed to implement the Global Strike CONOPS and to overcome anti-access environments.

All-aspect stealth reduces the enemy's ability to find, track, and target; and allows access to areas inaccessible to non-stealth platforms.  The F/A-22 radar cross section has now been verified on three airframes.  In all three cases, the measured radar cross section is better than the requirement.  Supercruise, defined as the ability to fly in excess of 1.5 Mach without the use of fuel-consuming after-burner, dramatically increases battlefield access and control, reduces exposure to threats, and increases weapons delivery ranges.  Supercruise is not about "going fast"; rather it is about the battlespace effects of "going fast".  The F/A-22's supercruise performance exceeds the warfighter's requirement by 12%.  Advanced maneuverability assures a distinct advantage in a within-visual-range engagement.  Flight test data shows the F/A-22's airframe design, in combination with its pioneering thrust-vectoring engine exhaust nozzles, meets the stringent maneuverability requirement.  The F/A-22's integrated avionics--again, being done for the first time by this program--tasks, processes, de-conflicts, and displays multiple sensor inputs for the pilot.  Integrated avionics gives the pilot unprecedented and instantaneous situational awareness that allows him to manage the air battle rather than interpreting multiple sensor inputs.  Though we're working to increase the integrated avionics software run-time (a topic I will return to momentarily), between software re-starts the performance of the integrated avionics package, to include the underlying radar, communication, navigation, and identification (CNI), and electronic warfare (EW) sensors and sub-systems, meets the warfighter's requirements.  All the Raptor avionics sub-systems are working very well.

The remaining three Key Performance Parameters are related to supportability and are defined to be system maturity KPPs, meaning the warfighter expects these parameters to be achieved by 100,000 flight hours.  (The Raptor flight test program is currently at 3,000 flight hours.)  To assess progress toward the supportability KPPs, the F/A-22 program office runs an analytical model that requires numerous inputs and assumptions.  According to the model, we are currently meeting two of the three supportability KPPs (the independent airlift KPP is estimated to be 8.8 C-141 equivalents per aircraft squadron, vice the requirement of 8.0).  The model lags changes we make to how we support the aircraft (e.g., parallel tasks), and therefore requires frequent updates.  We fully anticipate we will meet the airlift KPP by system maturity.

In addition to strong performance on the KPPs, the EMD program also successfully completed every calendar year 2002 development exit criteria.  In particular, we finished the year with two highly successful end-to-end guided missile shots, one a supercuise AMRAAM shot and the other a supersonic AIM-9 shot.

Though the EMD program continues to make strong progress, it has not been without cost growth.  The EMD program has been forced to resolve and pay for unplanned development-related issues, and past decisions to assume risk in order to cut costs.  The most prominent development-related issues include properly characterizing the F/A-22's fin buffet response, and resolving avionics instability.  The net effect of these issues is cost growth driven by schedule extensions that extend the completion of EMD to November 2005 (from March 2004).  The schedule extension affords more time to complete flight envelope expansion (which was slowed while we conducted fin buffet response testing), and avionics development and flight testing.

We completed all fin buffet response testing above 10,000 feet, resulting in only minor structural modifications to the tails (replacement of composite vertical fin rear spar with Titanium and strengthening of a rudder fastener).  We incorporated these modifications into the production line for Lot 2 and are incorporating low cost retrofits on all prior aircraft ($2M).  The aircraft has no flight envelope restrictions in the fin buffet region above 10,000 feet.  Fin buffet response testing for the region below 10,000 feet will begin in May 2003, in conjunction with planned <10,000 feet envelope expansion testing.  Based on analysis of the fin buffet region below 10,000 feet, we currently predict no need for further modifications.

In response to the additional costs incurred to resolve these issues, in August 2002 the F/A-22 program office completed a bottom-up 50% confidence cost estimate review of the remaining EMD work and concluded that the EMD budget required an additional $690M.  Senior Air Force leadership then chartered an independent "Red Team" to investigate both the existence and magnitude of EMD cost growth.  In December 2002, the Red Team outbrief confirmed an increase in the EMD in the range of $700M to $1B.  To regain confidence in the program, senior Air Force leadership directed the F/A-22 program to increase the F/A-22 budget by $876M.  They also directed that the $876M be sourced from within the F/A-22 overall budget.  Shortly thereafter (also in December 2002), the Air Force briefed the Professional Staff Members (PSMs) from the Defense Committees of the EMD EAC increase.  As a result, the FY04 President's Budget (PB) submittal reflects $113M sourced from the F/A-22 post-EMD modernization RDT&E account and $763M sourced from the F/A-22 aircraft production account.  With the additional $876M, the F/A-22 EMD total program budget stands at $20.3B (then-year dollars); a 4.5% increase.

Part of the $876M pays for infrastructure previously declined in order to reduce costs (i.e., the adage "you can pay me now or pay me later" rings true).  For example, early in the program we opted not to fund a second Avionics Integration Laboratory (AIL).  We are now standing up a second laboratory in Marietta, Georgia in order to alleviate the software burden at the AIL in Seattle.   The Marietta AIL (formally called the Raptor AIL, or RAIL) will allow the Seattle AIL to focus efforts on improving software stability.

It is important to recognize that the EMD cost growth does not indicate a concern regarding aircraft performance, nor does it represent an increase in retrofit risk.  As already stated, the EMD program is making significant strides toward completion of all development requirements, the aircraft is performing well, developmental issues are being resolved, and past cost-cutting "sins" are now being funded.  In short, the Air Force will complete the EMD program to deliver an ORD-compliant aircraft to the warfighter.

Looking ahead, the next major program milestone is entry into DIOT&E.  Consistent with the F/A-22 program philosophy, DIOT&E is an event-driven milestone-we will not begin DIOT&E until we are ready to succeed.  Accordingly, because the EMD program is taking longer, we moved the projected start date for DIOT&E from August 2003 to October 2003.  To fully understand the move, we need to review our four prerequisites for entry into DIOT&E.  First, we must complete Logistics preparations to include Technical Order Data (TOD) deliveries, maintainer training, and maturation of the Integrated Maintenance Information System (IMIS).  All these logistics items are on-track and are going well.  TOD deliveries are ahead of previous jets at this phase of development.  Currently, 91% of all aircraft procedural tasks are completed.  The IMIS software recently completed a very successful integration test to ensure it interfaces with the overarching Air Force logistics management system called the Core Automated Maintenance System (CAMS).  Maintainer training at Nellis AFB, Nevada, has already begun.  We expect no logistics issues in meeting an October 2003 DIOT&E start date.

Second, in order to execute DIOT&E, the Air Force Operation Test and Evaluation Center (AFOTEC) requires four production representative jets, and one spare.  Aircraft #4008-4011 are allocated for that purpose and have already been delivered to the government.  Because these jets were placed on contract concurrent with the EMD development, changes resulting from EMD must be folded into these jets to ensure they are production representative.  These modifications are nearing completion at Palmdale, California.  These four jets will be used to train the OT pilots, and, in fact, OT familiarization pilot training has already commenced using other EMD jets.  OT pilot training will ramp-up in earnest soon and we expect it to last approximately six months.

Third, we must release the DIOT&E flight envelope.  In July 2002, we dramatically changed the way we execute flight envelope testing.  Since then, we've experienced a 2 1/2 fold increase in the rate of test point execution and project that the DIOT&E flight envelope will be cleared by mid-September 2003, giving sufficient time prior to the start of DIOT&E.

Finally, we must to deliver a stable and fully-tested version of 3.1.2 (the nomenclature "3.1.2" simply denotes a specific level of required functionality) avionics software to the OT testers before DIOT&E can begin.  This prerequisite represents the F/A-22 program's key challenge.  As previously stated, when the avionics software is up and running, the performance of the weapon system is outstanding.  The issue is not how well it performs; rather it is how long it runs.  Since December 2002, we have been successful in improving avionics run-time in the AIL.  We must find a way to translate these improvements to the flight test jets.  Current software run-times in the flight test jets sit at 1.3 hours Mean Time Between Instability Events (MTBIE).  Our efforts to resolve software instability is another contributor to the EMD EAC increase because we have had to release additional unplanned software builds and the software instabilities affect how efficiently we conduct flight test.

In December 2002, Secretary Aldridge chartered the OSD Avionics Advisory Team (AAT), an independent team made up of software experts from DoD, industry, and academia to assess the state of the current F/A-22 avionics software and assist in the resolution of stability issues.  The AAT effort is already providing benefits to the F/A-22 program.  The team offered recommendations in the areas of tooling and testing methodologies to assist in determining and correcting the root causes of the software instabilities.  The F/A-22 program office is currently implementing the AAT recommendations and the revised program schedule supports 60 days in which to incorporate the AAT recommendations and get back on track.  The difficulties with avionics software are the main driver for slipping DIOT&E start to October 2003.

To summarize the state of the avionics instability issue, we have an OSD/Air Force joint plan to improve software run-time, the plan is based on sound systems engineering principles and the advice of recognized industry experts, and the plan is executable within the re-baselined EMD cost and schedule parameters.  The software integration techniques we're employing on the Raptor are quite complex.  Though we are the first program doing this level of integration, we are already not alone.  We are the pathfinder.  Other programs, like JSF, will leverage our efforts.  There are engineering lessons to be learned, as well as exposure to the types of problems associated with an integrated avionics application.  Furthermore, providing this capability to the warfighter will help crystallize what is desired on the JSF.

Production

The FY 1998 Defense Authorization Act implemented a $43.4B production cost cap and instructed that this cost cap be adjusted annually for inflation.  The current cost cap value sits at $36.8B ($FY03), after adjusting for annual inflation effects and subtracting the cost of the six PRTV II aircraft paid for using RDT&E funds. 

In a 14 September 2001 Acquisition Decision Memorandum (ADM), the Defense Acquisition Executive, Secretary Aldridge, approved a revised program baseline and acquisition strategy that added $2.0B to LRIP and $3.4B to full rate production (total of $5.4B), and directed the Air Force to fully-fund the production program accordingly.  This action established a threshold quantity of 297 production aircraft (includes the two PRTV I jets), and incentivized the Air Force to strive for an objective quantity of 333 aircraft.  This ADM instilled the "Buy-to-Budget" acquisition strategy, which is still in effect today.  "Buy-to-Budget" means the Air Force can maximize aircraft quantity within the OSD-approved $43B budget cap.

Of note, the OSD-approved budget cap exceeds the current inflation-adjusted Congressional production cost cap.  In recognition of that fact, Secretary Aldridge sent a 13 September 2001 memorandum to the defense committees that relayed his approval of the new acquisition strategy and revised production cost baseline, and requested Congress remove the Congressional production cost cap.

In the FY03 PB, the DoD submitted an F/A-22 production program budget consistent with the $43B OSD-approved budget cap, in accordance with the "Buy-to-Budget" strategy and 14 September 2001 ADM.  This means that cost savings initiative return multiples, learning curves, savings from a future Multi-Year procurement contract, and ultimately, total aircraft quantity are all predicated on a total production budget of $43B.  At the current buy profile, the F/A-22 program will not eclipse the $36.8B Congressional production cost cap until FY09.  Therefore, the apparent disconnect between the Congressional production cost cap and the OSD-approved budget cap is not yet an issue.  That said, before the program can enter into an Economic Order Quantity (EOQ) and Multi-Year Procurement (MYP) agreement, currently planned for FY 2006 and FY 2007 respectively, the Air Force will need relief from the Congressional production cost cap.  Predicated on successful completion of DIOT&E and a positive full rate production decision, we will formally seek relief from the Congressional production cost cap via language in the FY 2005 Defense Authorization Act.  Securing FY 2005 language provides adequate time to proactively plan for a FY 2006 EOQ.

Based on OSD and Air Force leadership direction, the F/A-22 production program sourced $763M of the EMD EAC increase.  Consistent with that direction, the DoD submitted an FY04 PB that reflects an F/A-22 production total budget of $42.2B ($43B minus $763M).  In summary, it is my hope that this explanation clears up much of the confusion surrounding why there are three different production budget figures.  Please note that all my comments from here forward are with respect to the FY04 PB production position of $42.2B.

As I mentioned under the discussions on 'Program History,' Lockheed and the suppliers were building their proposals for Lot 3 full award and Lot 4 Advanced Buy right at the same time the program was experiencing external production quantity discussions.

With that as a background, the Lot 3 and 4 quantities now stand at 20 and 22 (vice 23 and 27 as documented in the FY03 PB).  These reductions in both lots are due to two factors:  the transfer of production funds to the EMD account to source the EMD EAC increase, and the higher-than-expected Lot 3 and 4 Advanced Buy negotiated price (i.e., aircraft affordability).

At this point in the program, we can model price performance-to-date and predict a total aircraft quantity within the $42.2B budget with confidence.  Our current estimate is that we will be able to procure 276 total F/A-22s.  This estimate is based on a number of conservative assumptions that get to the heart of why the DoD non-concurred with the GAO's recommendations and findings.  Simply stated, this revised estimate already includes the factors annotated by the GAO.  Further, in their independent cost estimate, the OSD/CAIG predicted that for $42.2B, the Air Force can procure 270 F/A-22s, which is within 3% of the Air Force estimate.  This is remarkable; in the past the OSD/CAIG and Air Force production estimates differed by as much 11%.  The gap has closed because, with three lots plus PRTV jets on contract (51 jets total), we now have a better understanding of production costs and assumptions for future expected production savings.

At the 27 March 03 DAB, Secretary Aldridge approved the Lot 3 full award contract and the program office subsequently finalized the Lot 3 contract for 20 aircraft.  Hence, the current state of the program has LRIP Lots 1 -3 on contract, and Lot 4 Advanced Buy on contract.

It is worth noting that, though the aircraft affordability is not what we initially hoped, and contrary to many misconceptions, the aircraft are getting cheaper.  At this point, we expected to be following an 85% learning curve, when actual performance shows us closer to an 88% learning curve. 

With that as an understanding of the current state and estimate for total quantity, let me say I am not satisfied with the estimate of 276--and we are taking steps to increase it.  Maximizing final quantity involves two key elements.

The first key element is production stability.  I believe the Summer 2002 DPG Study, as well as all the quantity discussions that continue to surround the program, had a direct negative impact on the Lot 3 proposals and eventual Lot 3 contract settlement.  Any program office is at a disadvantage during negotiations whenever the contractor and suppliers perceive uncertainty and lack of long-term commitment.  Now would be the worst time to decrement production funds; we're at a critical stage in the production ramp and the affordability learning curve.  The tools, training, and people are in place for an orderly ramp up to max rate production.  Let me spend a few minutes sharing our progress in getting up to max rate.

The operation on the production floor at Marietta is rapidly gaining momentum.  As expected in any production program in its infancy, we've had growing pains.  These growing pains are best evidenced by the number of months aircraft are delivered late.  To address these late deliveries, Lockheed-Martin and the Air Force have been working together to implement initiatives in the areas of manpower, lean manufacturing, Producibility Improvement Plans (PIPs), parts availability, quality assurance, facilities, and management systems.  Our efforts are paying dividends.  We track key production metrics to ensure these initiatives translate to decreased costs.  Some of these metrics include span time (amount of work days required from the first final assembly station to aircraft delivery), parts shortages (number of parts not available when they are needed), and out-of-station work hours (number of hours performing manufacturing tasks that should have been performed at a previous station).  For all three metrics, we've made significant decreases just in the last six months.  Between aircraft #4010 (delivered October 2002) and #4012 (delivered December 2002), we've reduced span time by 11%.  Since September 2002, we've reduced parts shortages by 72%.  And, since November 2002, out-of-station work hours are down 56%.  Of course, the real proof is in aircraft deliveries.  During calendar year 2002, Lockheed reduced late aircraft deliveries from 12 months late to 7 months late.  At the current rate of improvement, we expect aircraft deliveries to be back on contract schedule by July 2004, at aircraft #4035.

The Air Force has now taken delivery of the first three production Raptors, the third being the first Raptor for Air Combat Command (#4012).  With the arrival of #4012 at Nellis Air Force Base, we formally stood up the first operational Raptor squadron, on 17 January 2003. 

It is important to recognize lessons learned from the C-17; we can never fully recover lost efficiencies in that program.  Cutting the C-17 total quantity from 210 down to 40 and then increasing it back again to 180 cost the DoD 79% more per aircraft, or over $22B total.  Supplier confidence is a key element to a program success.  In the case of the F/A-22, 65% of the aircraft cost is wrapped up in the supplier base.  In addition, our investments today in the F/A-22 program are on the "critical path" for achieving aggressive JSF goals.

The second key element for maximizing final aircraft quantity is something the program office and contractor team have much more explicit control over:  Production Cost Reduction Projects (PCRPs).  Because this is an area emphasized within this year's GAO reports, I need to discuss the genesis and current status of the overall PCRP program, and its categories.

Production cost control and affordability have long been critical focus priorities for the F/A-22 team.  In June 1996, the Air Force Assistant Secretary for Acquisition commissioned a joint government/contractor team of experts, the F/A-22 Joint Cost Estimating Team (JET).  The team was chartered to develop the most probable F/A-22 production cost and identify realistic initiatives to promote lower production costs.  When the JET presented their findings and results in 1997, the initial estimate for F/A-22 production of 339 aircraft, without the benefit of the PCRP, was $61.0 billion.  Leveraging JET recommendations to reduce production costs, the Air Force and contractor team initiated a comprehensive cost reduction program in 1997.  To meet the production program affordability goals, the Air Force and contractor team identified a set of PCRPs to lower production costs.

The initial PCRPs included initiatives in areas of producibility improvements, process changes, adoption of new manufacturing techniques, and implementation of Acquisition Reform principles.  The airframe and engine contractors have on-going programs to identify additional cost savings initiatives.  The F/A-22 team (government and contractor) manages the PCRP program using jointly-developed contractor-executed tracking and measurement procedures.  In addition, the results are briefed quarterly to Secretary Aldridge.  To facilitate tracking of PCRPs, the contractor developed a computer database, which provides the team on-line access to get immediate and accurate status of any given PCRP effort.  We have several categories of PCRPs.

  •  Producibility Improvement Projects (PIPs):  PIPs are investments to improve manufacturing processes or incorporate new technology to reduce costs, and are key to the long-term affordability of the F/A-22.  PIPs require up-front investments to bring down the unit cost of the system.  The tables below compare the actual F/A-22 PIP investments to the original plan.  In Fiscal Years 2001 and 2003, we funded PIPs at a higher level than the original plan, while in Fiscal Year 2002, we funded PIPs below the original plan.  However, in the aggregate, we have funded PIPs at the originally planned total level.

It is important to note that PIP return multiples range in "quality."  For example, our PIP for implementing a new forging process that reduces the amount of raw titanium and machining time for four bulkheads has a return multiple of 55.  With an investment of $1.3M, this forging PIP will save over $70M.  Of course, we do not expect all PIPs to bear that amount of fruit; hence, we rack and stack expected PIP performance and fund those PIPs with the largest expected pay-off.   Our current estimate of 276 aircraft is based on full PIP funding and a conservative average return multiple for all past and planned future PIPs.   We believe this is a prudent approach.

  • Lean Enterprise:  The application of Lean principles optimizes process flows, improves quality, and reduces cycle times and inventories.  Lean application uses the "Lean tool kit" developed by academia and industry to focus all involved personnel on the elimination of waste at three levels within the F/A-22 Program: on the factory floor, above the factory floor (office and engineering improvements), and at the suppliers. Lean training has and continues to encourage idea generation at all levels within the program.  An example of one of our Lean initiatives involved improving the process sequence for coating the wing stub lower access panel.  We were able to reduce the cycle time for this process from 608 to 341 hours.

  • Diminishing Manufacturing Sources (DMS):  As parts are no longer produced (also referred to as an out of production part or OPP), a strategy on redesign rather than remanufacture has the potential to reduce recurring unit costs through the utilization of newer, improved technology.

  • Material Efficiencies:  Utilizing improved buying strategies and supplier alliances are lowering the cost of raw material and purchased parts (e.g., team-wide and company-wide raw material and hardware procurements).

  •  Performance Based Contracting (PBC):  PBC flows down acquisition reform principles into subcontractor business arrangements.  Examples include Modified Requirements Contracting, Partnership Analysis and Source Selection processes, selective use of financial incentives to motivate cost management, and effective use of Single Process Initiatives.  Since the majority of F/A-22 work is done via subcontractors, acquisition reform flowed down to subcontractors is an important part of the F/A-22 affordability strategy.

  • Multi-year Procurement (MYP):  Permitting the acquisition of known requirements for more than one year allows the contractor to conduct production and capitalization planning in a more efficient manner, even though total funds required for subsequent lots are not available at the time of contract award.  We currently plan to enter in a MYP contract in FY 2007, for Lots 7-11.  This represents a delay in our original plan of one year; the delay is necessary, commensurate with a delay in completing DIOT&E and securing a positive full rate production decision.  The savings lost from delaying the MYP are already included in the new quantity estimate of 276 aircraft.

  • Rate Savings Due to Joint Strike Fighter (JSF):  The increased business base at the prime site and at the suppliers due to the procurement of the JSF will result in savings to both programs through reductions in manufacturing and general and administrative overhead rates.  Additionally, the commonality in parts and processes will offer savings to both programs.  These savings are captured in Forward Pricing Rate Agreements (FPRA) used to price out cost estimates.  Since these savings are embedded within our estimates, there is no separate break-out of cost savings due to JSF.  The most current expected savings due to concurrent F/A-22 and JSF workload are already included in the new quantity estimate of 276 aircraft.

The process of defining PCRPs has been on-going since the JET program review.  With the criticality of PCRPs to meet program affordability objectives, the F/A-22 team built an efficient management structure to jointly oversee the development and implementation of PCRP projects.  The management effort includes an on-line interactive database that allows real time reporting of PCRP status spanning idea generation, approval, implementation and tracking.  We will continue to aggressively manage the PCRP program, to include fully funding the originally planned PIP program.

ISSUES RAISED BY GAO REPORTS

The GAO published two reports in 2003 related to the F/A-22.  These reports were GAO-03-280 "DoD Needs to Better Inform Congress about the Implications of Continuing F/A-22 Cost Growth" and GAO-03-431 "DoD Should Reconsider Decision to Increase F/A-22 Production Rates While Development Risks Continue."  The DoD formally non-concurred with both of these reports; however, I'd like to take this opportunity to provide the Air Force perspective.

GAO-03-280:  Recommendations and Air Force Position

  1. Secretary of the Air Force make funding of PIPs at the planned level a priority

    Air Force Position    :  The SECAF has committed to funding $475M in PIP investments, consistent with the originally planned level.  These investments were fully funded in FY03 and are fully funded in the FY04 budget submission.
     

  2. SECDEF provide Congress with documentation showing PIPs are being funded at the planned level, reflecting the potential cost of F/A-22 production if cost reductions do not offset cost growth as planned, and reflecting the quantity of aircraft DoD believes can be procured with the existing production cost limit

    Air Force Position    :  the Air Force is committed to full disclosure with the Congress.  We have consistently provided updates to Congress on the status of our production program, planned investments, and projected returns on those investments.

GAO-03-280:  Air Force Comments on other Findings

  • DoD still estimates that the cost of production will exceed the cost limit established by Congress

  • Air Force Position:  The Defense Acquisition Board, in Aug 01, approved the Air Force to plan and program for a $43B production program.  The Air Force recognizes that this program exceeds the Congressional Cost Cap by ~$5.4B.  The Air Force has informed the Defense Committees of this plan and is working with OSD and the Congress to get relief from the existing cap; however, the USAF recognizes that relief must be granted prior to exceeding the Congressional cap.

  • The Air Force has not fully funded certain cost reductions plans called PIPs

  • Air Force Position:  As of FY03, the Air Force has fully funded all planned PIPs.  The GAO is correct in that the Air Force did defer some PIP investments in FY02; however, those investments were funded in FY03.  The FY04 PB submission also fully funds PIPs.

  • The OSD current production estimate does not include about $1.3 billion in costs that should be considered in future cost estimates and lists several contributing factors (delayed multiyear, inflation increases due to the new ramp, revised JSF savings, and change in avionics subcontractor)

  • Air Force Position:  This assertion is incorrect; the GAO's assessment is based on an old program estimate.  The latest 276 aircraft program office estimate, as documented in the FY04 PB, includes all of these factors.

  • Schedule delays in developmental testing could delay the start of multiyear.

  • Air Force Position:  The Air Force recognizes multiyear may well be impacted by delays in the start of DIOT&E and has accounted for these delays in the latest program estimate.

GAO-03-431:  Recommendations and Air Force Position

  1. SECDEF reconsider the decision to increase the annual production rate beyond 16 aircraft until greater knowledge of any need for modifications is established through completion of operational testing

     Air Force Position:  The Air Force fully supports the OSD position in this regard.  Based on the cost analysis performed in support of the DoD's certification to the Congressional defense committees, in December 2002, we believe the costs associated with reducing the annual production rate to 16 aircraft would exceed the retrofit costs for these aircraft. 
     

  2. SECDEF update the 2002 risk assessment and certification with sufficient detail to allow verification of the conclusions

    Air Force Position:      The Air Force does not believe there is justification for updating the risk assessment and certification.  The Air Force believes the current risk for retrofit on the F/A-22 program is low.  F/A-22 systems having retrofit potential (structures and air vehicle subsystems) are tested and mature.  Static testing and 1st lifetime fatigue testing are complete; in fact, we are currently 38% complete on the 2nd lifetime fatigue test.  To date, we've identified no significant structural issues.  For fin buffet, we've incorporated minor structural modifications to the tails (replacement of composite vertical fin rear spar with Titanium and strengthening of a rudder fastener).  These modifications were folded into the production line for Lot 2 and we are incorporating low cost retrofits on all prior aircraft ($2M).  Our highest risk (software stability) does not drive a retrofit risk; incorporation of stability fixes is anticipated to be a software-only issue.

GAO-03-431:  Other Air Force Comments

Recent flight test activity has been extremely successful; the aircraft is meeting or exceeding all key performance parameters, except airlift, which is not required until system maturity at 100,000 hours.  We also believe the GAO fails to adequately document the impacts of their recommendation in terms of increased F/A-22 program costs: inefficient ramp rate (learning curve), decreased supplier confidence (cost initiatives), inflationary penalties (delayed procurement), increased O&S costs due to delayed F-15 replacement (F/A-22 is 28% cheaper to operate than F-15), and increased operational risk (due to decreased combat capability caused by delayed fielding of F/A-22's revolutionary capabilities).

The GAO has essentially made the same recommendation relative to delaying F/A-22 production since March 2000.  In March 2000, the GAO recommended decreasing Lot 1 production from 10 aircraft to 6 aircraft.  The rationale was increased retrofit risk due to delayed testing.  In March 2001, the GAO recommended decreasing Lot 2 production from 13 aircraft to 10 aircraft.  The rationale at that time was increased retrofit risk due to the fact static and fatigue testing were not complete.  In addition, the GAO highlighted horizontal tail disbonds and canopy cracks as contributory factors.  In March 2002, the GAO recommended decreasing Lot 3 from 23 aircraft to 16 aircraft.  The rationale at that time was that 1st lifetime fatigue testing was not complete.  GAO identified fin buffet as an additional potential risk.  The key takeaway is that despite the GAO recommendations, the program has successfully progressed through and resolved all the risk areas identified by the GAO since March 2000.  There is no reason to believe this will not also be the case for the issues and risks identified in the March 2003 report.

SUMMARY

So we don't lose sight of the big-picture, this nation needs the F/A-22!  I'll close my comments by summarizing the tremendous progress this program has made just in the last 6-9 months.  We accelerated our envelope expansion test point burn down rate 2 1/2 times - the Raptor is now cleared to train pilots and will be cleared to conduct DIOT&E by mid-September.  The development program has resolved several development issues that were once large areas of concern.  Now we need to finish our work and 'slug out' the software instability issue the same way.  The F/A-22 fleet just eclipsed 3,000 hour cumulative flying time, and during that time has demonstrated revolutionary performance.  We've got seven aircraft flying almost daily at Edward Air Force Base and have completed 16 missile shots, 4 of them guided.  The production program is ramping up nicely, production metrics are improving dramatically, and we're now delivering production Raptors to ACC, with the stand-up of our first operational site at Nellis Air Force Base.

The Raptor will propagate the American standard of Air Dominance for decades to come.  Future Joint Force Commanders (JFCs) demand this aircraft to be available to them--the Air Force is working diligently to deliver to that expectation.  Indeed, this is the only new US aircraft that will put a weapon on a target this decade.

I'd like to echo previous commitments to maintain an open dialog with this and all the defense committees.  Thank you for this opportunity to provide you with an update on the F/A-22 program, and I look forward to your questions.

House Armed Services Committee
2120 Rayburn House Office Building
Washington, D.C. 20515



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