Pentagon acquisition czar Ashton Carter recertified the embattled Lockheed Martin Joint Strike Fighter program to move forward after a major cost increase, but defense officials are now saying the total acquisition price of the multinational, triservice aircraft has increased by yet another $54.2 billion.
Carter sent his Nunn-McCurdy recertification letter to Congress on June 1. This recertification was widely expected, as Pentagon officials since last fall have been working to restructure the single-engine, stealthy fighter program through a series of rigorous reviews in anticipation of the cost breach. But the recertification documentation includes more detail about the extent of problems leading up to the most recent cost spike.
Since December, Pentagon officials anticipated the per-unit cost including the price of development to be $112 million; it is now expected to be $155.6 million. The number most closely associated with flyaway pricing was estimated at $92.4 million only a few months ago; it is now at $133 million. Earlier this year, development was extended from Fiscal 2012 to Fiscal 2016 in an effort to reduce schedule risk and concurrency between testing and production.
The increased price is a result of new estimates for developing a verification simulation capability, tooling needed for production and military construction requirements for introducing the aircraft into service, according to Carter’s documentation.
The Air Force and Navy will be required to “take necessary actions to fund the program” and the additional overrun and the money will likely start to shift in the Fiscal 2012 budget request, due to Congress in February 2011, according to Carter’s documents.
Cultural issues during the program’s history also contributed to a climate that allowed cost to grow unchecked. A section of the document labeled “root cause analysis and assessment” acknowledges “flawed programmatic and technological assumptions at program inception and a series of execution actions which hindered the overall government/contractor management’s ability to address these problems as they were encountered.” Carter also points out that there was a “general intolerance for failing to meet externally driven schedule goals” and a “general reluctance to accept unfavorable information” in the program.
Delays in reaching developmental milestones account for 26% of the cost increase. Another 23% is from correcting airframe weight estimates that were low, incorrect escalation rates and an incorrect use of a cost model in the earlier acquisition strategy. Five percentage points account for the extension of production.
Carter certifies that the management structure is adequate to manage cost, but he includes a list of actions required to improve oversight of the program. The government is providing expertise to JSF prime contractor Lockheed to improve the company’s compliance with the Defense Department’s Earned Value Management System (EVMS), which is a method used to allow the department to audit and track progress on major elements of the program. The corporation has been deemed “non compliant” with EVMS standards. The situation is “disappointing and unacceptable,” Carter says.
A corrective action plan is being implemented, and Carter directs completion by June 30. Furthermore, he directs that a compliance review be successfully completed by the second quarter of Fiscal 2011, which ends next March.
Carter has established a review process to rectify differing risk-management approaches by Lockheed and government managers. Also, an Independent Manufacturing Review Team will reassess the program’s risk-management planning and global supply chain in the fall (the IMRT’s first set of recommendations were already included in the restructuring).
The JSF program executive officer is crafting a plan to address 42 “areas of concern” in the flight test plan. Those areas are not identified in the documentation.
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