F-35 Joint Strike Fighter (JSF) Lightning II Program

2005

By early 2005 increased program costs, delayed schedules, and reduced quantities had diluted DoD's buying power and made the original JSF business case unexecutable. Program instability at that time made the development of a new and viable business case difficult to prepare. The cost estimate to fully develop the JSF had increased by more than 80 percent. Development costs were originally estimated at roughly $25 billion. By the 2001 system development decision, these costs increased almost $10 billion, and by 2004, costs increased an additional $10 billion, pushing total development cost estimates to nearly $45 billion. As of early 2005 estimates for the program acquisition unit cost were about $100 million, a 23 percent increase since 2001. Ongoing OSD cost reviews could result in further increases to the estimated program cost. At the same time, since 1996 procurement quantities have been reduced by 535 aircraft and the delivery of operational aircraft had been delayed.

As of early 2005 estimates for the program acquisition unit cost were about $100 million, and the total estimated cost to own an aircraft over its life cycle was $240 million, an increase of 23 percent and 11 percent, respectively.

In 1996, the program established unit flyaway cost goals for each variant. Unit flyaway costs included the recurring costs to produce the basic aircraft, propulsion system, and mission systems. It was expected that the variants would have a high degree of commonality and would be built on a common production line. However, commonality among the variants had decreased, and the cost to produce the aircraft had increased. By early 2005 the unit flyaway cost for the conventional takeoff and landing variant had increased by 42 percent, the cost for the short takeoff and vertical landing variant by a range of 37 to 55 percent, and the cost for the carrier variant by a range of 29 to 43 percent. According to program data, a large part of the cost increase since the start of development could be attributed to labor costs for building the airframe and to the costs for producing the complex mission systems.

The timely delivery of the JSF to replace aging legacy aircraft was cited as a critical need by the warfighter at the program start. When the program was initiated, in 1996, it planned to deliver initial operational capabilities to the warfighter in 2010. However, largely because of technical challenges, the program delayed the delivery of operational aircraft, and early 2005 estimates put delivery at 2012 to 2013. Because of these delays, the services would likely have to operate legacy aircraft longer than expected. These challenges have also delayed interim milestones such as the start of system development, design reviews, and production decisions.

Program officials recognized that JSF's development schedule was aggressive and as of early 2005 were examining ways to reduce program requirements while keeping costs and schedules constant. Design and software teams found greater complexity and less efficiency as they developed the 17 million lines of software needed for the system. Program analysis also indicated that some aircraft capabilities would have to be deferred to stay within cost and schedule constraints. As a result, the program office was working with the warfighters to determine what capabilities could be deferred to later in the development program or to follow on development efforts while still meeting the warfighter's basic needs. Many of these capabilities are related to the software-intensive mission systems suite. They also examined the content and schedule of the planned 7-year, 10,000-hour flight test program. According to the program office, the test program was already considered aggressive, and program changes had only increased the risks of completing it on time.

As of early 2005, between 2007 (the start of low-rate production) and 2013 (the scheduled start of full-rate production) DoD planned to buy nearly 500 JSF aircraft, 20 percent of its planned total buys, at a cost of roughly $50 billion. Under the program's preliminary plan, DoD expected to increase low-rate production from 5 aircraft a year to 143 aircraft a year, significantly increasing the financial investment after production begins. Between 2007 and 2009, the program planned to increase low-rate production spending from about $100 million a month to more than $500 million a month, and before development had ended and an integrated aircraft had undergone operational evaluations, DoD expected to spend nearly $1 billion a month.

In its FY06 budget submission, DoD reduced the planned procurement quantities for the US by 38 aircraft through FY11. This included planned quantities for the United Kingdom of 2 aircraft in FY09, 4 aircraft in FY10, 9 aircraft in FY11, 9 aircraft in FY12, and 10 aircraft in FY13. To achieve its production rate, the program would invest significantly in tooling, facilities, and personnel. According to contractor officials, an additional $1.2 billion in tooling alone would be needed to ramp up the production rate to 143 aircraft a year. Over half of this increase would be needed by 2009, more than 2 years before operational flight testing begins.

In 2002 total program costs had been estimated at $175.6 billion in constant 2002 dollars, and $231.0 billion in then year dollars, for 2,866 aircraft. By September 2005, with a reduction in 408 aircraft, to a total of 2,458, program costs had grown to $192.519 billion in constant 2002 dollars $256.617 billion in then year dollars.