F/A-22 Further in the Red
Christopher Hellman, Senior Analyst, chellman@cdi.org
Last fall the Air Force announced that its F/A-22 "Raptor" fighter aircraft, already plagued by numerous delays and cost overruns, was an additional $690 million over budget for the engineering, manufacturing and development phase of the program (it was later determined that actual cost growth was $867 million). Now a report by the General Accounting Office (GAO) indicates that the Defense Department failed to identify further cost growth in the program totaling $1.3 billion, and that existing factors will likely push the total cost of the program even higher.
In 1997 the Pentagon announced that the F-22 (which was redesignated the F/A-22 in Sept. 2002 to highlight the aircraft’s ground attack capability) had experienced $13.1 billion in cost overruns. In a 2001 analysis, the Defense Department identified a further $5.4 billion in cost growth. According to the GAO, in addition to the newly identified $1.3 billion increase, further overruns are likely. One factor driving further increases, according to the GAO report, are continuing delays in developmental testing of the aircraft.
A second, and more important, likely source of cost growth results from the Air Force’s failure to fund what are known as "production improvement programs" (PIPs). PIPs are initiatives where additional expenditures result in future net savings. Some examples of PIPs identified by GAO as previously implemented by the Air Force in the F/A-22 program include improvements in the manufacturing process for the aircraft’s avionics and in the fabrication and assembly processes for its airframe. The GAO also noted that the earlier such changes are made in the production process, the greater the net savings.
According to the GAO report, the Air Force has been using money allocated by Congress for investment in additional changes in future production to cover cost overruns that occurred earlier. As a result, projected future cost savings will not occur, resulting in further overruns.
When preparing its reports, GAO allows the federal agency in question to view a draft in order to identify inaccuracies and to have the opportunity to dissent or concur with any recommendations presented in the report. These responses are included in the final version. In responding to the GAO’s concerns regarding the reallocation of funds intended for PIPs, the Defense Department wrote that GAO "failed to provide credible evidence that investments in [PIPs] reduce costs," and that therefore they would not allocate the funds as directed.
As a result of these rising costs the number of aircraft that the Pentagon estimates it can purchase without violating a congressionally mandated cap on the total cost of the program set in 1997, is diminishing. The Defense Department estimated in 1997 that it could afford to purchase 438 aircraft. That number sank to 333 in 2001. And in a letter last October to Rep. John Tierney (D-Mass.), who requested the new GAO report, the Pentagon reported that only 224 aircraft could be purchased with the expected funding. This assessment does not reflect the further reductions that might result from the $2 billion in recently identified cost growth, nor the impact of any further overruns.
Ironically, the same day that Rep. Tierney released the GAO report, Lockheed Martin – the contractor developing the F/A-22 – received a contract from the Pentagon to upgrade the aircraft. According to the internet publication SpaceWar (Mar. 13), the contract was to "upgrade the fighter planes to US Defense Department specifications." Total value of the contract could be as high as $6 billion.
At the time of this writing the report "Tactical Aircraft: DoD Needs to Better Inform Congress About Implications of Continuing F/A-22Cost Growth" (GAO-03-280), February 28, 2003, was not yet available in electronic format.
| 
WEEKLY DEFENSE MONITOR HOME 
