Index

 

Statement of Rep. Christopher Shays

June 15, 2000

 

Last year the Air Force’s F-22 air superiority fighter encountered unexpected turbulence when House appropriators questioned the ability of the program to stay within congressionally mandated caps on design and development costs. In December, we were assured those expenses were being rigorously monitored and successfully controlled.

 

But looming over the horizon even then were unacceptably high cost projections for the next, more expensive phase of the program: aircraft production. So we asked the General Accounting Office (GAO) to evaluate production cost control plans being relied upon to meet critical F-22 affordability goals.

The results of their review indicate the Department of Defense (DOD), the Air Force and F-22 contractors have made some progress, but have yet to tame the persistent cost growth that has long plagued the program. GAO finds some planned cost control strategies unlikely to yield any real savings.

According to DOD, $21 billion in cost reductions will be needed to keep F-22 production spending below the $37 billion ceiling. To achieve savings on that scale, hundreds of cost reduction plans have been formulated by F-22 airframe and engine manufacturers.

But assessments of the impact of those plans vary widely in both methodology and outcome. One estimate by the Office of the Secretary of Defense concludes the program could exceed congressional production cost caps by more than $8 billion. The Air Force estimate conforms neatly with the cost cap, assuming almost complete success in trimming expenses while pushing the risk of cost growth to the out-years.

 

While reaching very different conclusions, the two estimates appear to share common flaws. Both include speculative savings and potential cost shifts. Significant savings are assumed from multi-year procurements that may not be approved. Additional savings are seen flowing from manufacturing efficiencies once the Joint Strike Fighter (JSF) begins production. But Air Force support for the JSF may be waning. Savings attributed to contractor-provided maintenance may only defer, not avoid, depot costs later in the program.

Real savings are critical to the success of the Air Force’s premier tactical air modernization effort. If high-end estimates prove true, and the program is to remain within budget, the total F-22 purchase would have to be reduced by 85 planes, nearly one quarter of the planned production run of 339 aircraft. That would endanger the military utility and the fiscal viability of the F-22.

Our goal this morning is a clearer understanding how the Air Force can achieve, not just plan, the ambitious F-22 production cost reduction program.

We welcome our witnesses and look forward to their testimony.