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B-2 Bomber: Status of Cost, Development, and Production (Letter Report,
08/95, GAO/NSIAD-95-164).

Pursuant to a legislative requirement, GAO reviewed the status of the
B-2 bomber program, focusing on the Air Force's: (1) progress in
acquiring 20 operational B-2 aircraft; and (2) flight testing,
production, and modification efforts.

GAO found that: (1) the Air Force estimated that 20 operational B-2
aircraft would cost about $44.4 million, 91 percent of which has been
appropriated through fiscal year 1995; (2) although ground and flight
tests have demonstrated the structural integrity, flying qualities, and
aerodynamic performance of the B-2 flying wing design, there are still
many factors that can impact the ultimate cost and completion of the 20
operational aircraft; (3) after 14 years of development and 6 years of
flight testing, the Air Force has yet to demonstrate that the B-2 design
will meet mission requirements; (4) the test program is planned for
completion in July 1997, but as much as 55 additional test months may be
needed to complete test objectives; (5) the late delivery of B-2
integration software has been a source of its development problems; (6)
the change in emphasis from nuclear to conventional missions increases
the need to integrate precision conventional weapons into the aircraft;
(7) the prime B-2 contractor has experienced difficulties in delivering
aircraft that can meet the Air Force's operational requirements; and (8)
in February 1995, the Department of Defense concluded a lengthy effort
to define a depot support plan, which includes a mix of contractor and
organic support for defined functions and components.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-164
     TITLE:  B-2 Bomber: Status of Cost, Development, and Production
      DATE:  08/01/95
   SUBJECT:  Bomber aircraft
             Air Force procurement
             Advanced weapons systems
             Defense cost control
             Advance appropriations
             Appropriated funds
             Testing
             Cost analysis
             Computer software
             Research and development
IDENTIFIER:  B-2 Aircraft
             Joint Direct Attack Weapon
             GPS Aided Targeting System/GPS Aided Munition
             Tri-Service Standoff Attack Missile
             
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Cover
================================================================ COVER


Report to Congressional Committees

August 1995

B-2 BOMBER - STATUS OF COST,
DEVELOPMENT, AND PRODUCTION

GAO/NSIAD-95-164

B-2 Bomber


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  GAM - GPS Aided Munition
  GPS - Global Positioning System
  JDAM - Joint Direct Attack Munition
  MILSTAR - Military Strategic Tactical Relay Program
  OT&E - operational test and evaluation
  RDT&E - research, development, test, and evaluation
  TF/TA - terrain-following/terrain-avoidance

Letter
=============================================================== LETTER


B-261736

August 4, 1995

Congressional Committees

The conference report on the National Defense Authorization Act for
fiscal year 1994 called for us to report to the congressional defense
committees at regular intervals on the total acquisition costs of the
B-2 bomber program through the completion of the production program. 
Our first report was issued on September 8, 1994.\1 This, our second
report, discusses (1) the Air Force's progress in acquiring 20
operational B-2 aircraft\2 within cost limitations set by the
Congress and (2) the extent of the progress achieved in flight
testing, production, and modification efforts. 


--------------------
\1 B-2 Bomber:  Cost to Complete 20 Aircraft Is Uncertain
(GAO/NSIAD-94-217, Sept.  8, 1994). 

\2 This includes 5 test aircraft to be reworked to an operational
configuration and 15 production aircraft. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The 1994 Defense Authorization Act limits B-2 program acquisition
costs to $28,968 million, expressed in fiscal year 1981 constant
dollars.  A recent Air Force cost estimate indicates the final cost
for 20 operational aircraft will be about $28,820 million in fiscal
year 1981 constant dollars, or
99.5 percent of the legislated amount.  Expressed in then-year
dollars, the current estimated cost totals $44,389 million; 91
percent of this amount has been appropriated through fiscal year
1995.  Appendix II shows more detailed funding information. 

Although ground and flight tests have demonstrated the structural
integrity, flying qualities, and aerodynamic performance of the B-2's
flying wing design, our review of the program's progress indicates
that there are many important events yet to be completed.  Many risks
can impact the ultimate cost and completion of the 20 operational B-2
aircraft.  For example, the flight test program is only about half
complete, and modification efforts required to deliver 20 fully
operational B-2s did not begin until July 1995.  The completion of
flight tests and the modification efforts are scheduled concurrently,
and deficiencies that are operationally important or costly to
correct could be identified before the test program is completed. 

After 14 years of development and evolving mission requirements,
including 6 years of flight testing, the Air Force has yet to
demonstrate that the B-2 design will meet some of its most important
mission requirements.  As of May 31, 1995, the B-2 had completed
about 44 percent of the flight test hours planned for meeting test
objectives. 

Test progress has been slower than planned.  The test program is
planned for completion in July 1997, but our analysis of the tests to
be completed and the time that may be needed to complete them
indicates that completion by July 1997 is optimistic.  Our analysis
of the Air Force's planned efficiency in completing flight testing
shows that the Air Force might need an additional 55 aircraft test
months\3 to complete test program objectives as currently planned. 

The Department of Defense (DOD) believes that the test program will
be completed by July 1997, as currently planned.  To provide
additional test time, the Air Force is considering extending the time
that test aircraft will remain in the active flight test program.  It
is also exploring ways to consolidate flight tests or reduce them to
ensure flight test objectives will be completed by the planned date. 
The Air Force expects to complete an assessment of the test program
in August 1995 but could not provide details of its assessment at the
time we completed our review. 

The flight test program depends on timely delivery of effective
integration software to bring together the functions of the various
B-2 subsystems so that the aircraft and crew can perform the planned
military functions.  In the past, B-2 integration software was
delivered late, without all the planned capabilities, and with
deficiencies that significantly affected the Air Force's ability to
complete flight testing on schedule.  Software has been a source of
development problems on other aircraft such as the B-1 and C-17. 

The change in emphasis on the B-2 mission from nuclear to
conventional increased the need to integrate precision conventional
weapons into the B-2 aircraft.  The B-2 is to be equipped with an
interim precision weapon, Global Positioning System (GPS) Aided
Munition (GAM), and finally with the Joint Direct Attack Munition
(JDAM).  An important precision weapon recently canceled was the
Tri-Service Standoff Attack Missile.  Funding to integrate that
missile with the B-2 was included in the B-2 cost limitation. 
Depending on when design information is available, integration costs
for a replacement weapon, and any other new weapons, may be funded
separately and may not be counted as part of the B-2 cost limitation. 

After 9 years of producing and assembling aircraft, Northrop Grumman,
the prime contractor, continues to experience difficulties in
delivering B-2s that can meet Air Force operational requirements. 
For the most part, aircraft have been delivered late and with
significant deviations and waivers.  All corrections are scheduled to
be incorporated into B-2 aircraft during planned modification
programs scheduled for completion in July 2000.  Incorporation of
precision strike capabilities is also to be completed as part of the
planned modification program. 

DOD, in February 1995, concluded a lengthy effort to define a depot
support plan.  The plan includes a mix of contractor and organic
support for defined functions and components. 

More detailed information on these issues is included in appendix I. 


--------------------
\3 An aircraft test month is the availability of one test aircraft
for 1 month.  It equates to about 20 gross flight test hours. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :2

DOD partially agreed with the findings in this report.  DOD agreed
that significant events needed to deliver 20 fully operational B-2s
have yet to be completed, but it did not believe our report
adequately addressed the progress and successes achieved in the B-2
program.  DOD emphasized that approval of the depot support plan was
a major accomplishment and restated several accomplishments that we
believe were adequately covered by the report.  DOD stated that it
expects to complete the B-2 development and test program within
established budgets and the overall limitation established by the
Congress.  The DOD response and our comments are included in appendix
III. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

We reviewed available documents and records and interviewed officials
at the B-2 program office, Wright-Patterson Air Force Base, Ohio; the
Combined B-2 Test Force, Edwards Air Force Base, California; the Air
Combat Command, Langley Air Force Base, Virginia; the 509th Bomb
Wing, Whiteman Air Force Base, Missouri; DOD and the Department of
the Air Force, Washington D.C.; and the Northrop B-2 Division, Pico
Rivera and Palmdale, California.  Documents included cost estimates,
financial and program management reports, test schedules and plans,
delivery acceptance reports, and many others that allowed us to
assess the current status of the B-2 program.  Interviews with Air
Force and contractor financial and technical managers provided
information on issues not included in formal reports. 

We performed our review from September 1994 through July 1995 in
accordance with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :3.1

We are sending copies of this report to the Secretaries of Defense
and the Air Force; the Director of the Office of Management and
Budget; and other interested parties.  We will make copies available
to others upon request. 

Please contact me on (202) 512-4841 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix IV. 

Louis J.  Rodrigues
Director, Systems Development
 and Production Issues

List of Congressional Committees

The Honorable Strom Thurmond
Chairman
The Honorable Sam Nunn
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel K.  Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Floyd Spence
Chairman
The Honorable Ronald V.  Dellums
Ranking Minority Member
Committee on National Security
House of Representatives

The Honorable C.  W.  Bill Young
Chairman
The Honorable John P.  Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House of Representatives


STATUS OF EFFORTS TO COMPLETE THE
B-2 PROGRAM
=========================================================== Appendix I


   HISTORY OF THE B-2 PROGRAM
--------------------------------------------------------- Appendix I:1

The B-2 development program was initiated in 1981 and was followed by
approval in 1987 to procure B-2 aircraft concurrently with
development and testing.  The Air Force's early plans were to acquire
132 operational aircraft; however, the number was reduced in the
early 1990s to
20 operational aircraft.  At about the same time, the B-2's mission
emphasis was changed from being principally a strategic bomber
capable of delivering nuclear weapons to a conventional bomber
capable of delivering precision-guided munitions. 

B-2 operational requirements specify that the B-2 weapon system have
low observable characteristics and sufficient range and payload to
deliver nuclear weapons or precision-guided conventional weapons
anywhere in the world with enhanced survivability.  The B-2 combines
conventional and state-of-the-art aircraft technology, such as
special shaping and radar absorbing materials, to achieve low
observability (stealth) characteristics, high aerodynamic efficiency,
and large payload capacity.  The blending of these technologies makes
it a complex and costly aircraft to develop and produce. 

The Air Force plans to initially accept the 15 B-2 production
aircraft in three configuration blocks:  the first 10 in a block 10
configuration, the next 3 in a block 20 configuration, and the last 2
in a block 30 configuration.  The configurations are to be based on
capabilities that are to be demonstrated during the flight test
program.  Air Force officials said the block 10 configuration, for
which testing has been essentially completed, basically provides a
training aircraft with limited combat capability.  Block
20-configured aircraft are intended to have an interim precision
strike capability that does not exist in block 10.  Aircraft to be
delivered in a block 30 configuration, after completion of all
development and operational tests, are planned to be fully effective
for conventional as well as nuclear operations.  Test aircraft, which
have been modified to incorporate most block 20 and block 30
features, are being flown in the ongoing flight test program to
demonstrate these capabilities.  Initial delivery of all aircraft is
scheduled to be completed by January 1998. 

To enhance the capability of the aircraft initially accepted in block
10 and block 20 configurations, the Air Force has developed
modification programs.  As a near-term interim capability
enhancement, the Air Force plans to upgrade five block 10-configured
aircraft to a block 20 configuration by March 1997.  It also plans to
modify all block 10 and block 20 aircraft to the block 30
configuration and to rework five test aircraft into a block 30
configuration by July 2000.  Figure I.1 shows the concurrency in the
B-2 development, production, and modification programs. 

   Figure I.1:  Overlap in B-2
   Flight Testing, Production, and
   Modification Efforts

   (See figure in printed
   edition.)

The Department of Defense (DOD), in February 1995, announced its plan
for providing depot support for the B-2.  The plan includes a mix of
commercial and organic sources for providing various functions and/or
maintaining various components.  For example, the engines are to be
maintained by the Air Force, software support is to be provided by
commercial sources, and airframe maintenance is to be provided by
Northrop Grumman at Palmdale, California. 

As of January 1995, about 50 percent of the B-2 supplier base for raw
materials and standard parts was inactive.  In addition, major
subcontractors had completed delivery of major aircraft subsections
needed for assembling the B-2 weapon system.  For fiscal year 1995,
the Congress appropriated $125 million to protect the option to
produce additional B-2s for 1 year.  These funds are in addition to
the congressional cost limitation. 

On February 9, 1995, the Air Force awarded a contract to Northrop
Grumman, the prime contractor, for $92.8 million to reestablish
critical industrial base capabilities to support a potential
subsequent purchase of additional B-2s.  The contract includes an
effort for a base period valued at $50.4 million and four contract
options to extend the period of performance.  Efforts to be
accomplished include (1) establishing source or capabilities for
critical unavailable or out-of-production parts, (2) updating work
orders and manufacturing plans, (3) restoring selected facilities,
and (4) providing and validating tooling for production. 
Participants include Northrop Grumman, major subcontractors, and
other vendors that have either completed or will soon complete B-2
program activities. 


   AIR FORCE ESTIMATES B-2 COSTS
   WILL BE LESS THAN THE
   CONGRESSIONAL LIMITATION
--------------------------------------------------------- Appendix I:2

The Air Force estimates that acquisition of the B-2s can be completed
for $28,820 million (1981 dollars), which is about 99.5 percent of
the congressional limitation in fiscal year 1981 constant dollars. 
In then-year dollars, the Air Force's estimate is $44,389 million,
which includes $24,808 million for development and $19,581 million
for procurement.  As shown in table I.1, the estimate includes about
$1,324 million for contingencies and other reserves. 



                          Table I.1
           
            Amounts Included in Cost Estimate for
             Defined Requirements, Contingencies,
               Reserves, and Undefined Efforts

               (Then-year dollars in millions)

Cost category
------------------------------------  ------  ------  ------
Defined requirements                                  $43,06
                                                           5
Undefined efforts:
Potential contract cost overruns                $206
Contract contingencies:
Delivery incentives                      $63
Ozone depletion liability                  1
Environmental and health                  62
Rate adjustments                         125
Idle facilities                          130
Total contract contingencies                     381
Management reserve:
Procurement                             $463
Development                              274
============================================================
Total undefined efforts                         $737
Total contingencies and undefined                      1,324
 efforts
============================================================
Total estimated cost                                  $44,38
                                                           9
------------------------------------------------------------
The Air Force's cost estimate to complete the B-2 program included
$43,065 million for defined requirements and amounts for potential
costs.  The amount shown for potential contract cost overruns is
related to the Northrop production contract and is in addition to the
estimated cost at completion of the contract as shown in the B-2
Selected Acquisition Report as of December 31, 1994.  Including such
amounts in the cost estimate indicates that the Air Force may be
expecting further schedule delays and cost difficulties in completing
the contract. 

DOD commented that it believed the use of contingent liabilities and
management reserves represented prudent steps to deliver B-2
capabilities and remain within the cost limitation.  Although we
agree that such actions may be prudent, we nevertheless continue to
believe that including such large amounts for a potential cost
overrun in the cost estimate indicates the expectation that such an
event is a reasonable possibility. 


      UNIT COSTS OF B-2S
------------------------------------------------------- Appendix I:2.1

The unit costs for B-2s, expressed in different categories, are shown
in table I.2.  These cost categories are consistent with categories
the Air Force used to explain projected costs of 20 additional B-2s
proposed by Northrop Grumman.  Costs included in each category were
(1) recurring flyaway costs incurred for the manufacture of each
aircraft; (2) total aircraft flyaway costs, which included recurring
flyaway costs and certain nonrecurring costs; (3) procurement costs,
which included flyaway costs and support costs; and (4) program
acquisition costs, which included procurement costs as well as
development and military construction costs. 



                          Table I.2
           
            Estimated Unit Costs of B-2 Bombers in
           Constant Year 1995 and Then-year Dollars

                    (Dollars in millions)

                                                       Then-
                                            Constant    year
                                                1995  dollar
Category                                     dollars       s
--------------------------------------  ------------  ------
Recurring flyaway cost\a                        $965    $907
Aircraft flyaway cost\a                        1,086   1,027
Procurement cost\a                             1,362   1,305
Program acquisition cost\b                     2,517   2,247
------------------------------------------------------------
\a Unit flyaway and procurement costs were based on production of 15
B-2 bombers. 

\b Since 5 test aircraft are to be modified into operational aircraft
as part of the development program, the program acquisition unit cost
is based on 20 B-2 bombers. 


   MOST B-2 FUNDS HAVE BEEN
   APPROPRIATED
--------------------------------------------------------- Appendix I:3

Almost 91 percent of the $44,389 million total estimated cost to
complete the B-2 program has been provided to the Air Force through
fiscal year 1995.  The Air Force's cost estimate included $3,988.1
million in research, development, test, and evaluation (RDT&E) and
procurement funding that remains to be appropriated from fiscal years
1996 through 2004.  Appendix II shows more detailed funding
information for this period. 

Major efforts remaining within the RDT&E program are flight testing
and modifications to the five test aircraft to make them fully
operational.  The major efforts still to be funded in the procurement
appropriation involve procuring spares, software support, and other
support. 


   STATUS OF B-2 FLIGHT TESTING
--------------------------------------------------------- Appendix I:4

Significant flight testing remains to validate performance of key B-2
subsystems as well as to demonstrate the full operational capability
of the B-2 weapon system.  As of May 31, 1995, almost 6 years after
the flight test program began, the Air Force had completed about 44
percent of flight test point hours planned to meet objectives. 
Achieving test objectives has been hampered primarily by software
problems and late aircraft deliveries.  Because significant amounts
of testing remain to be completed by the scheduled July 1997
completion date, the Air Force has been reassessing schedule and
content of the test program. 


      MOST OPERATIONAL
      EFFECTIVENESS TESTING FOR
      BLOCK 20 AND BLOCK 30
      CONFIGURATIONS HAS NOT BEEN
      DONE
------------------------------------------------------- Appendix I:4.1

The remaining testing creates the potential that further deficiencies
that are operationally important and/or costly to correct could be
identified.  Although test points, including structural integrity,
flying qualities, and handling are essentially complete, critical
flight testing to demonstrate the operational effectiveness of block
20 and block 30 configurations remains.  Of 4,503 test points planned
to be demonstrated for block 20 and block 30 configurations, about
1,270, or about 28 percent, had been completed as of February 1995. 
Some significant B-2 features to be tested did not have approved test
points or procedures as of February 1995. 

Significant testing is planned to demonstrate that the B-2 meets its
essential employment capabilities for block 20 and block
30-configured aircraft as defined by the Air Force.  Meeting the
essential employment capabilities requires demonstration of the (1)
radar and other aircraft signatures to ensure low detectability, (2)
defensive avionics system to permit B-2 crews to respond to adversary
defenses, (3) terrain-following and terrain-avoidance (TF/TA) system
to permit low level flight, (4) radar and navigation systems to
ensure safe and accurate navigation and targeting, and (5)
integration of weapon systems to ensure accurate and effective
destruction of targets.  Table I.3 shows some of the test points
planned to demonstrate that the block 20 and block 30 configurations
can effectively meet the essential employment capabilities and the
number of test points completed as of February 28, 1995.  Test points
are considered complete when flight test aircraft have flown the test
points and an analysis indicates that appropriate and sufficient data
were collected. 



                     Table I.3. Status of Block 20 and Block
                         30 Flight Testing for Essential
                            Employment Capabilities\a


                                            Test  Percen            Test  Percen
                                          points       t          points       t
                                    Test  comple  comple    Test  comple  comple
Essential employment capability   points     ted      te  points     ted      te
--------------------------------  ------  ------  ------  ------  ------  ------
Signature                             NA      NA      NA   1,241     149      12
Mission effectiveness                591      59      10     284       0       0
TF/TA system                          35      29      83     542     120      22
Radar                                214      20       9     286      22       8
Navigation                            16       8      50       4       0       0
Fixed target effectiveness           269     189      70     127      69      54
Command and control                    2       2     100       0      NA      NA
Air refueling                          2       0       0      14      10      71
All weather/flying qualities         864     593      69      NA      NA      NA
Mission planning                       6       0       0       6       0       0
================================================================================
Total                              1,999     900      45   2,504     370      15
--------------------------------------------------------------------------------
\a The Air Force provided updated test point data as of May 31, 1995,
that had a net increase of 3,134 test points.  This increase has not
been reviewed or verified and is therefore not included in this
table. 

In late June 1995, the Air Force provided updated test point
information through May 31, 1995, that showed a net increase in test
points of 3,134 for block 20 and block 30 aircraft.  This increase
makes the total test points 7,637.  Most of the test points added
(3,524) were in the all weather/flying qualities category of
essential employment capabilities and were shown as completed at the
time they were added.  The addition of this significant number of
completed test points has changed the percent complete for the
identified block 20 and block 30 test points from 28 percent to 62
percent.  We did not review the new test point information to
ascertain its accuracy or basis for being added. 

Some critical tests have not been planned and/or approved.  These
tests include dedicated operational test and evaluation (OT&E) flight
testing, as well as

  some functions of the defensive avionics system,

  the interface and operability with the Joint Direct Attack Munition
     (JDAM),

  some features of a subsystem integration effort called GPS Aided
     Targeting System,

  the interface with Military Strategic Tactical Relay Program
     (MILSTAR),

  the contrail management system, and

  the interface and operability of MK-82 and MK-62/M117 weapons. 


      PROGRESS AND ISSUES IN
      REMAINING TEST EFFORTS
------------------------------------------------------- Appendix I:4.2

Achieving test objectives on the planned schedule has been hampered
by late delivery of test aircraft, modifications to correct problems,
software problems, changes to the B-2 primary mission, and other
factors.  Selected test issues and test progress in some critical
operational features are described below.  Test progress measures
discussed below represent only the completion of test points for
block 20 and block 30 capabilities and do not include the significant
amount of flight testing completed for the block 10 capabilities. 


         RADAR SIGNATURE
----------------------------------------------------- Appendix I:4.2.1

Achieving acceptable radar signatures, the most critical stealth
feature needed for B-2 operational effectiveness, has been a problem. 
Of 1,241 test points defined for block 20 and block 30
configurations, 149 (12 percent) had been completed as of February
1995.  Difficulties in achieving the planned radar signatures in
early B-2 flight tests resulted in intense follow-on tests, modeling
of corrective designs, modifications to test aircraft, and
substantial retesting.  Temporary, but achievable, radar signatures
were defined by the Air Force for acceptance of block 10-configured
aircraft; however, the block 10 radar signature does not fully meet
the contract specifications or essential employment capability
defined for a block 30 conventional precision strike mission. 

The planned block 30 configuration is to include changes to achieve
the final planned radar signatures for both conventional and nuclear
operations.  However, testing of the changes on a block 30-configured
aircraft cannot begin until August 1995, when modifications are
scheduled to be completed on a test aircraft.  The planned block 30
radar signature will not conform to all parameters of the original
contract radar signature specifications; however, the block 30
signature has been determined to meet operational requirements and be
as operationally effective as the original signature specifications. 


         MISSION EFFECTIVENESS
----------------------------------------------------- Appendix I:4.2.2

Planned demonstration of mission effectiveness includes tests to
evaluate the B-2's survivability.  Of 875 planned test points, 59 (7
percent) had been completed as of February 1995.  Test categories
include detection and survivability testing, defensive avionics
testing, and dedicated OT&E. 

The purpose of detection and survivability testing is to evaluate
whether an adversary's defenses can detect the B-2 and determine the
degree of survivability of the B-2 against simulated or real threat
systems.  This testing started in December 1994 with a B-2 test
aircraft that had not been modified to the planned block 30 radar
signature.  The Air Force has declined to discuss test results until
the testing is completed.  More operationally realistic survivability
testing will be done with a B-2 test aircraft that has been modified
with the block 30 radar signature. 

Defensive avionics are important for providing the crew accurate and
timely information on the locations of adversary weapon systems that
may be a threat to the aircraft.  However, no defensive avionics are
included in the block 10 configuration.  In our September 1994
report, we noted that flight testing of the defensive avionics was
stopped in April 1994 because two of four frequency bands were too
easily overloaded, making them inoperable.  A more complete design of
the defensive system software is supposed to correct the overload
problem and provide the capability that is to be incorporated in the
block 20 configuration by July 1996.  Although testing resumed in
March 1995, it is too early to determine if testing will be completed
on schedule. 

Dedicated OT&E for the block 20 configuration is scheduled for March
and April 1996 and for the block 30 configuration in July 1997. 
However, the Air Force has not approved test plans for the block 30
configuration. 


         TF/TA SUBSYSTEM
----------------------------------------------------- Appendix I:4.2.3

The TF/TA subsystem has encountered numerous problems in testing.  Of
577 TF/TA test points planned, 149 (26 percent) had been completed as
of February 1995.  Our September 1994 report pointed out that
subsystem testing below 600 feet had been delayed from May 1994 to
June 1995 because of the immaturity in radar software and other radar
problems.  According to Air Force officials, the most critical radar
milestone remaining for this subsystem is the radar failsafe
analysis, which is needed to begin TF/TA flight testing below 600
feet and is scheduled for June 1995.  As of July 19, 1995, the
failsafe analysis was not complete, but Air Force officials said it
would be complete by August 1995. 

Additional problems were identified in 1995.  For example, problems
with the phased array radar antenna delayed TF/TA testing and could
be a reliability issue in the future.  Further, Air Force officials
told us the TF/TA mode of the B-2 radar cannot distinguish rain from
other obstacles, making the subsystem inoperable in the rain.  These
officials said they were trying to find a solution to these problems. 


         FIXED TARGET
         EFFECTIVENESS
----------------------------------------------------- Appendix I:4.2.4

B-2 flight testing is to evaluate the integration of munitions and
precision weapons with the B-2.  Of 396 planned test points, 258 (65
percent) had been completed as of February 1995.  GPS Aided Munition
(GAM), which is the first and an interim munition with enhanced
accuracy, began B-2 flight testing in April 1995, and it is scheduled
to be certified for use by June 1996.  JDAM will replace GAM and is
scheduled to complete testing by July 1997. 

Other precision weapons for the B-2 have not been identified and will
probably not be integrated until after the initial program is
completed.  For example, the Tri-Service Standoff Attack Missile,
which was to have provided an important standoff capability for the
B-2, was to be integrated within the program's cost limitation. 
Integration costs for its replacement, and any other new weapons, may
require funds in addition to the B-2 cost limitation, depending on
when the replacement or new weapons are available. 


      TEST SCHEDULE AND CONTENT
      BEING REASSESSED
------------------------------------------------------- Appendix I:4.3

The Air Force will find it difficult to complete the test program by
July 1997 as currently planned.  As of May 31, 1995, the Air Force
had flown 2,690 hours, or 61 percent, of the estimated 4,400 flight
test hours required.  The 4,400 test hours includes flight time to a
test area, refueling time, and other non-productive flight time.  The
Air Force has only been able to complete 1,189, or 44 percent, of the
estimated 2,720 test point hours (or flight test hours actually
available to conduct detailed tests) needed to satisfy specific test
objectives. 

Our analysis of the Air Force's planned efficiency in completing test
requirements and the amount of testing required to complete the test
objectives shows that the Air Force might need an additional 55
aircraft test months.  Air Force officials pointed out they are
capable of exceeding planned efficiency rates for flight testing
during selected and short periods of actual testing.  However, they
have not been able to sustain this level of performance over time. 
They said they are considering extending the amount of time that test
aircraft will remain in the active test program, which will require
the Air Force to change the schedules for upgrading the test aircraft
to the block 30 configuration. 

Air Force officials are concerned about the amount of flight tests
that remain and intend to complete the test program as currently
scheduled (July 1997).  To ensure the planned schedule can be
achieved, the Air Force has been analyzing the content and schedule
of remaining flight tests.  Air Force officials are also considering
ways to reduce or consolidate tests or improve test efficiencies. 
For example, the Air Force is considering limiting tests to those
necessary to demonstrate essential employment capabilities instead of
requiring completion of all specification tests, which in some cases
would be more demanding and time-consuming and, according to Air
Force officials, may not be necessary to demonstrate current B-2
mission requirements. 

The flight test program depends on integration software to bring
together the functions of the various B-2 subsystems so that the
aircraft and crew can operate as a military weapon system. 
Integration software is required for subsystems such as offensive and
defensive avionics, the TF/TA subsystem, navigation subsystem, flight
controls, and crew/cockpit instrumentation.  In the past, B-2
integration software was delivered late, without all the planned
capabilities, and with deficiencies that had an adverse impact on the
Air Force's ability to complete flight testing on schedule. 
Additional deliveries of integration software are scheduled for
September 1995 through January 1997 to support the flight test
program.  The past delays in delivering effective software contribute
to the Air Force's concern that the current flight test schedule
might not be achievable. 

At the time of our review, the Air Force's analysis of the test
program content and schedule and development of a plan to complete
block 20 and block 30 testing and delivery had been ongoing for
several months and was not complete.  Details as to how the test
program will change were not available. 


   B-2 DELIVERIES ARE BEHIND
   SCHEDULE
--------------------------------------------------------- Appendix I:5

As of June 30, 1995, 6 flight test aircraft and 7 of 15 production
aircraft had been delivered.  The first seven production aircraft
were delivered, on average, 57 days behind schedule and had major
deviations and waivers.  Actions to correct deviations and waivers
are to be included in the block 30 modification program. 

The Air Force has provided financial incentives for Northrop Grumman
to deliver both production and block 30 modified aircraft earlier
than the contract schedule.  Northrop Grumman, however, was not able
to deliver the first seven aircraft at the accelerated schedule
dates.  For these and other reasons, the Air Force and Northrop
Grumman are developing a delivery schedule that more closely
represents the contract schedule. 


      LATE DELIVERIES OF AIRCRAFT
      HAVING NUMEROUS DEFICIENCIES
------------------------------------------------------- Appendix I:5.1

Northrop Grumman has delivered seven production block 10 aircraft
with an average of 65 major deviations and waivers.  Of the first
seven aircraft delivered, two were delivered on time in accordance
with the contract schedule.  Table I.4 shows the delays in delivery
based on the contract. 



                          Table I.4
           
            B-2 Delivery Performance through June
                           30, 1995

                                                       Major
                        Actual    Contract         deviation
                      delivery    delivery   Days         s/
Aircraft                  date        date   late    waivers
------------------  ----------  ----------  -----  ---------
8                     12/11/93    12/17/93     -6         57
9                     08/16/94    03/30/94    139         61
7                     08/29/94    08/29/94      0         58
11                    10/27/94    10/18/94      9         61
10                    12/29/94    07/25/94    157         75
12                    02/16/95    01/20/95     27         66
13                    06/26/95    04/14/95     73         79
------------------------------------------------------------
A principal cause for these delays was unacceptable performance
discovered during production flight acceptance testing.  In
particular, these delays reflect the problems that Northrop continues
to have in manufacturing aircraft with an acceptable radar signature. 
Because of the problems, additional time was required to investigate
anomalies, fix or repair problems, and do several more acceptance
flight tests than planned. 

The delivery delays would have been even greater had the Air Force
not accepted those aircraft with several deviations and waivers to
the specification.  Some of these were expected at the time of
delivery because of the overlap of production with developmental
flight testing.  Others, however, represented manufacturing problems. 

The average number of major deviations and waivers on the seven
delivered production aircraft was 65, but the total number has
increased on the more recent of these seven deliveries.  For example,
the first production aircraft was delivered with 57 major deviations
and waivers.  The seventh production aircraft was delivered with
79--34 of which were identical to ones on the first aircraft.  These
deviations and waivers do not preclude the aircraft from being used
for training, but they do affect the aircraft's capability and
restrict how the aircraft will be flown.  Also, in a few cases, some
deviations, such as nonconforming tailpipe coatings and deficient
high frequency radio performance, preclude the B-2 from having the
minimum level of mission capability. 

Deviations and waivers included radar signature performance that did
not meet operational requirements, incomplete offensive and defensive
avionics capabilities, and aircraft structures that did not meet
design requirements--radar radome, elevons, rudder, and aft deck. 
Some of these deviations have reduced the way the B-2 can be used. 
For example, the B-2 wing receives a special coating to protect it
from rain damage when flying through a rain storm.  The coating
applied during production was discovered to be inadequate when flown
in moderate to heavy rain, resulting in damage to delivered aircraft. 
The Air Force restricted flying these aircraft in rain until this
coating could be replaced with one that meets design requirements. 


      ACCELERATED SCHEDULE BEING
      REASSESSED
------------------------------------------------------- Appendix I:5.2

In December 1993, Northrop Grumman adopted an internal plan to
accelerate deliveries of the last two production aircraft and of
block 30-modified aircraft.  Northrop believed an accelerated
schedule would provide a higher probability of achieving contract
schedule and offer significant cost savings.  The Air Force concurred
and agreed to pay Northrop a maximum award fee of $50 million if it
met the accelerated schedule and accomplished certain other
management actions. 

Although the contract provides for an incentive to accelerate
delivery, the Air Combat Command is not able to support aircraft
delivered in accordance with the contract schedule.  This Command
reports it has shortages in B-2 operations and maintenance funds
totaling $249 million for fiscal years 1997 through 1999.  According
to Command officials, the expected funding will not support the
contract schedule and the accelerated schedule would make the funding
shortage worse.  In addition, the accelerated schedule could result
in (1) aircraft being delivered that were less complete than
previously planned and (2) insufficiently trained crews and staff
that would be needed to effectively operate more B-2s.  The Air Force
and Northrop Grumman are reassessing the accelerated schedule. 


   MODIFICATION PROGRAM PLANS
   STILL EVOLVING
--------------------------------------------------------- Appendix I:6

Modifications, which began in July 1995, are scheduled to be complete
in July 2000 and are scheduled to require 15 to 30 months per
aircraft over this 5-year period.  The modifications are scheduled to
be done concurrently with the remaining flight testing of critical
subsystems and overall demonstrations of operational capability. 
These modifications are necessary, in part, as a result of (1)
assembling aircraft before the design problems and limitations were
discovered in development tests, (2) deferring actions to correct
manufacturing-related problems, and (3) changing the mission emphasis
from nuclear to conventional. 

Northrop estimates the price of the modification programs, excluding
conventional mission improvements, to be $820 million.  However, this
estimate is subject to change since the scope of the block 20 and
block 30 modification programs continues to evolve and will likely
continue to change as flight testing and manufacturing, which will be
concurrent, uncover new problems.  If this results in aircraft being
delivered with limited operational capability and in post-delivery
modifications, as did the overlap between initial production and
flight testing, then modifications beyond block 30 may be needed,
which will increase costs.  Until the details of the new schedule are
defined and agreed upon and the scope of effort is more defined, the
schedule risks and costs associated with the block 20 and block 30
modifications cannot be fully assessed.  Further, estimated costs for
the block 30 modification program were based on an assumption that
deliveries would be accomplished on Northrop's accelerated schedule,
which caused the estimate to be lower than if the estimate were based
on the more realistic contract schedule.  If Northrop fails to
achieve the accelerated schedule, the estimated cost of the
modification program is likely to increase. 


B-2 PROGRAM FISCAL YEAR 1996
PRESIDENT'S BUDGET
========================================================== Appendix II



   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Department of Defense's (DOD)
letter dated July 25, 1995. 

GAO COMMENTS

1.  Additional information concerning this matter has been added to
the body of the report. 

2.  DOD's comment and our evaluation are included in the body of the
report. 

3.  The applicable section of the report was modified to recognize
that the structural, flying qualities, and aerodynamic performance
tests were essentially complete. 

4.  The purpose of our analysis was to show the amount of testing
remaining to be completed to demonstrate the essential capabilities
of a conventional conflict capable B-2 (block 20 and 30 aircraft). 
DOD did not provide an alternative method or data for measuring the
testing remaining to be accomplished. 

5.  Although development of a replacement weapon for the Tri-Service
Standoff Attack Missile is currently under consideration, the Air
Force has received no direction concerning integration of the
potential replacement weapon with the B-2. 

6.  DOD officials told us they believe the test program will be
completed by July 1997 as currently planned, but recognize that
certain planned tests that are no longer needed will be eliminated. 
Air Force officials noted that an evaluation of the test program is
near conclusion and is to be reported to the Deputy Assistant
Secretary of the Air Force in August 1995. 

7.  The form DD250 acceptance document lists both major and minor
deviations and waivers.  Our report--table I.4--shows only the major
deviations and waivers; however, DOD counted all deviations and
waivers as major when preparing its response to our report. 

8.  This section of the report was revised to reflect the DOD
comments that the operational impacts of the schedules are being
continually reassessed.  We note that the DOD comments did not refute
the position taken by the Air Combat Command that earlier delivery of
block 30 aircraft could not be accommodated with existing operations
budgets. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Robert D.  Murphy

CINCINNATI REGIONAL OFFICE

Michael J.  Hazard
Jeffrey T.  Hunter

LOS ANGELES REGIONAL OFFICE

James F.  Dinwiddie