[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
            CONTROLLING COSTS IN TACTICAL AIRCRAFT PROGRAMS

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                   EMERGING THREATS AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 11, 2003

                               __________

                           Serial No. 108-47

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                    http://www.house.gov/reform





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                     COMMITTEE ON GOVERNMENT REFORM


                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

 Subcommittee on National Security, Emerging Threats and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman

MICHAEL R. TURNER, Ohio
DAN BURTON, Indiana                  DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio           TOM LANTOS, California
RON LEWIS, Kentucky                  BERNARD SANDERS, Vermont
TODD RUSSELL PLATTS, Pennsylvania    STEPHEN F. LYNCH, Massachusetts
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York
EDWARD L. SCHROCK, Virginia          LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. ``DUTCH'' RUPPERSBERGER, 
TIM MURPHY, Pennsylvania                 Maryland
WILLIAM J. JANKLOW, South Dakota     CHRIS BELL, Texas
                                     JOHN F. TIERNEY, Massachusetts

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
                  J.Vincent Chase, Chief Investigator
                        Robert A. Briggs, Clerk
                    David Rapallo, Minority Counsel





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 11, 2003...................................     1
Statement of:
    Miller, Eric, senior defense investigator, Project on 
      Government Oversight; Christopher Hellman, senior analyst, 
      Center for Defense Information; and Steven Ellis, vice 
      president of programs, Taxpayers for Common Sense..........   169
    Walker, David M., Comptroller General of the United States, 
      U.S. General Accounting Office, accompanied by Allen Li, 
      General Accounting Office..................................    31
    Wynne, Michael W., Principal Deputy Under Secretary of 
      Defense (Acquisition), Department of Defense; and Dr. 
      Marvin Sambur, Assistant Secretary of the Air Force 
      (Acquisition), Department of the Air Force, Department of 
      Defense....................................................    85
Letters, statements, etc., submitted for the record by:
    Ellis, Steven, vice president of programs, Taxpayers for 
      Common Sense, prepared statement of........................   183
    Hellman, Christopher, senior analyst, Center for Defense 
      Information, prepared statement of.........................   176
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................     4
    Miller, Eric, senior defense investigator, Project on 
      Government Oversight, prepared statement of................   171
    Sambur, Dr. Marvin, Assistant Secretary of the Air Force 
      (Acquisition), Department of the Air Force, Department of 
      Defense, prepared statement of.............................   108
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............    28
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............    12
    Walker, David M., Comptroller General of the United States, 
      U.S. General Accounting Office, prepared statement of......    35
    Wynne, Michael W., Principal Deputy Under Secretary of 
      Defense (Acquisition), Department of Defense:
        Information concerning the F/A-22 business plan..........   145
        Prepared statement of....................................    89


            CONTROLLING COSTS IN TACTICAL AIRCRAFT PROGRAMS

                              ----------                              


                         FRIDAY, APRIL 11, 2003

                  House of Representatives,
Subcommittee on National Security, Emerging Threats 
                       and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 210 Cannon House Office Building, Hon. Christopher Shays 
(chairman of the subcommittee) presiding.
    Present: Representatives Shays, Platts, Schrock, Duncan, 
Murphy, Kucinich, Maloney, Dutch, Ruppersberger, Bell, and 
Tierney.
    Staff present: Lawrence Halloran, staff director and 
counsel; J. Vincent Chase, chief investigator; Robert A. 
Briggs, clerk; David Rapallo, minority counsel; and Jean Gosa, 
minority assistant clerk.
    Mr. Shays. A quorum being present, the Subcommittee on 
National Security, Emerging Threats and International Relations 
hearing entitled, ``Controlling Costs and Tactical Aircraft 
Programs,'' is called to order.
    I would like to first thank the Budget Committee for 
allowing us to use their hearing room. I apologize for being a 
speck late. I am going to catch my breath by asking Mr. 
Kucinich to give his statement, then Mr. Tierney, and then I 
will recognize Mr. Schrock.
    Mr. Kucinich. I thank the chairman very much, and I promise 
you that my statement will not take your breath away.
    I want to thank Mr. Tierney for the excellent work that he 
has done on this issue, and we both, I know, appreciate the 
Chair calling this hearing on the F-22.
    If there is a single message this subcommittee can send to 
the Secretary of Defense at the conclusion of our work here 
today, let it be this: End this program. Let it be a resounding 
and unified statement to pull the plug on this ill-fated 
program before we waste billions and billions of dollars, which 
are hard earned dollars paid by the American taxpayers. I hope 
the Secretary has a chance to review the testimony of the head 
of the U.S. General Accounting Office.
    Mr. Walker, thank you for being here today. It's a pleasure 
to have you before our committee.
    I have reviewed Mr. Walker's statement, and I can say I 
have seldom seen a statement from the GAO that is so 
comprehensive, so thorough, and so damning as to the testimony 
he has provided to this committee. It highlights the F-22 
program as a prime example of how not to develop an aircraft. 
This program will end up being the poster child for a weapons 
development program gone awry.
    I hope the Secretary also listens to our independent 
experts in the final panel. They come from outside government 
and have no stake in this other than ensuring our defenses are 
strong and our taxpayers' dollars are not wasted. And I think 
that equation is very important for the American people, 
because there is some assumption that simply by spending a lot 
of money you are going to get a lot of defense. Sometimes 
spending a lot of money just means spending a lot of money.
    The people who are here who are the outside government 
experts are from the nonpartisan project on government 
oversight, the budget watchdog group, Taxpayers for Common 
Sense and the highly esteemed Center for Defense Information. I 
hope that the Secretary will listen to their unanimity 
expressed, and end this program. Listen to Colonel Everest 
Riccioni, one of the developers behind the F-16, who said: The 
cost of this aircraft are escalating to insane levels, so high, 
in fact that we will be able to afford only 100 to 175 planes. 
He says: This result is manifestly absurd because it will 
render our fleet impotent.
    Listen to him. End this program.
    Of course, everyone knows how badly the Air Force wants 
this aircraft, but production costs have increased nearly $20 
billion since 1996. The number of planes the Pentagon can 
afford has plummeted to less than a third of their original 
goal.
    I realize there are many devoted people working very 
diligently, both at the Pentagon and for the contractors trying 
to streamline this process and find production efficiencies. 
The fundamental issue, however, is the underlying program of 
cost and growth of cost that has never been addressed. Efforts 
to fund production improvement plans are an afterthought, a 
remedial effort to offset damage that has already been done and 
will continue far into the future. Judging from their actions, 
certain Air Force officials know they're trouble. They have 
lashed out, accusing the GAO of inaccurately portraying the 
state of the program.
    Even worse, the Air Force and Department have simply begun 
to disregard the Federal statute that governs the overall costs 
of this program. The Air Force has argued, justified, and spun 
this as best they can. Their latest effort is called buy to 
budget. Or, maybe considering the cost of this, it should be 
good-bye to budget. I don't know what their slogan signifies, 
but if it means ignoring the congressional cost cap, 
consistently underestimating production cost growth, and then 
denying that they have a problem, they are definitely 
succeeding.
    Mr. Chairman, I support the elimination of weapons systems 
like the F-22 that are spiraling out of control with no end in 
sight. I support the budget submitted by the Congressional 
Black Caucus and the Progressive Caucus, which cancels the F-22 
and replaces it with the increased procurement of the F-16. We 
can have a strong defense without having to spend and waste the 
kind of money that's being wasted.
    The Air Force will point out, correctly, that its fleet is 
aging rapidly and we need to replace hundreds of fighters. But 
buying fewer than 200 F-22s will do little to alleviate this 
problem. Instead, why not buy 500 F-16s and save the taxpayers 
$25 billion over the next 10 years?
    Mr. Chairman, again, I want to thank you for holding this 
hearing. I want to conclude my statement by urging the 
Secretary, in addition to listening to the chorus of voices 
coming from this committee today, to also listen to his own 
better judgment. This was what was told to him when he came to 
the Pentagon, and I think that this type of program which we 
are going through today is the kind that should be ended; and 
hopefully, the Secretary will agree with our assessment. Thank 
you, Mr. Chairman. Thank you, Mr. Tierney.
    Mr. Shays. I thank the gentleman.
    [The prepared statement of Hon. Dennis J. Kucinich 
follows:]
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[GRAPHIC] [TIFF OMITTED] 89243.003

[GRAPHIC] [TIFF OMITTED] 89243.004

[GRAPHIC] [TIFF OMITTED] 89243.005

    Mr. Shays. Mr. Tierney, if you are ready, I would love it 
if you would give your statement. I would just say that you 
have been a very active member of this committee in general and 
very clearly interested in this issue. This is the fourth 
hearing we've had, and I will say it's good to have 
institutional knowledge because we remember the three before.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman. Actually, I want to 
thank you. Under your leadership, this subcommittee has pursued 
our goal, and that is one of achieving the appropriate level of 
readiness to defend against and respond to the sophisticated 
threats that our Nation may be facing. As you said, over the 
past 4 years, and particularly on this issue, I think we have 
lived up to the oversight responsibility, aggressively 
monitoring waste, fraud, and abuse as it relates to the 
Pentagon's procurement process. I appreciate your convening 
this meeting, and I think this fourth meeting is going to be 
telling.
    At past hearings, we questioned the Air Force and Defense 
Department personnel on the skyrocketing costs, on anticipated 
production and development delays, and recurrent infrastructure 
problems of the F/A-22. In response, we received assurances 
that these problems were being aggressively managed as various 
initiatives were being implemented. Unfortunately, today, in 
light of the new report released by GAO, we are here to ask the 
same questions and demand some real answers.
    My skepticism about this program, Mr. Chairman, and the 
viability of the F/A-22 has grown exponentially. This program, 
which began over 15 years ago, has yet to yield the expected 
results. As far as I'm aware, there is no dispute that the F/A-
22 program has had $20 billion of unanticipated cost growth 
since 1996. In addition, the number of aircraft the Defense 
Department can purchase has plummeted from 648 to less than 
224. The program has also encountered critical testing 
programs, including buffeted vertical fins, weak horizontal 
tails, overheating, and persistent instability in the 
development of avionics. Last month, test planes were grounded 
because the landing gear on one aircraft collapsed after the 
weapons bay doors--under the weapons bay doors.
    Rather than addressing all these issues on their merits, 
the Air Force and the Defense Department have chosen a 
different path. It appears that they have been less than 
forthcoming with us and with you, Mr. Chairman, and with the 
investigative arm of Congress, the General Accounting Office.
    Let me give you just a few examples. Issued in February, 
the GAO report we are discussing today recommended that the 
Pentagon reconsider its plan to forge ahead prematurely with 
the production of additional aircraft, at least until testing 
problems were remedied. The Department of Defense appears to 
have rejected this recommendation. On March 28, a Washington 
Post article revealed that the Department of Defense's Defense 
Acquisition Board approve the purchase of 20 additional 
aircraft. In this report, GAO recommended that the Pentagon 
fully fund initiatives for production efficiencies, which was, 
after all, a program of production efficiencies proposed and 
planned by the Department and approved by Congress.
    Apparently, the Department of Defense no longer intends to 
follow this course. In a January 2003 letter, they inexplicably 
blame the General Accounting Office for not proving that these 
plans would actually save money when, as I mentioned, in fact, 
it was the Pentagon's origination of that plan, that emanated 
from the Defense Department.
    The General Accounting Office's report also recommended 
that the Pentagon provide Congress with information on 
additional cost growth that could occur if production 
efficiencies do not materialize. The Department of Defense 
wrote in that January letter to Mr. Allen Li of GAO that they 
found no reason to comply with GAO's recommendation. GAO 
recommended that the Pentagon provide Congress with information 
on precisely how many aircraft it can procure within current 
cost limitations. In this case, the DOD also found no reason to 
comply.
    Mr. Chairman, more than just turning a blind eye to 
suggested recommendations of the General Accounting Office, 
those in charge of this program have not strictly adhered to 
actions taken by Congress, nor have they been responsive to 
requests of Members. For instance, in the fiscal year 1998, 
Department of Defense authorization bill, Congress directed the 
Pentagon to adhere to a production cost cap. Rather than 
proceeding as directed, it appears the Pentagon has now begun 
using its own cost cap, which is more than $6 billion higher 
than the one Congress established.
    And, Mr. Chairman, in a letter to the Pentagon in August 
2001, you requested information on projections and 
methodologies for future cost savings. To my knowledge, the 
Department of Defense did not comply with your request, and you 
were forced to write to the Appropriations and Armed Services 
Committees complaining that the Pentagon was obstructing the 
committee's oversight work.
    In preparation for today's hearing, in a response to the 
GAO's February report, I wrote to Secretary Rumsfeld on March 
19 asking him for similar information: The number of aircraft 
they expect to be able to purchase within the cost cap, and the 
various risks of future cost growth, and I asked for that 
information by April 7. I received a late response, which I 
think can fairly be characterized as unresponsive to the 
questions that were specifically raised. Let me just quote, Mr. 
Chairman, the response from this letter: ``since the Department 
intends to seek legislation to increase the congressional cap 
on production, the Air Force does not estimate how many F/A-22 
aircraft can be procured within that figure.''
    Translated, it means: Since we have no intention of 
complying with Congress's cost cap, we are not going to answer 
your question, and we are going to just try to make sure we get 
the votes to get that jacked up again and continue on with this 
folly.
    Let me reiterate that this program has had $20 billion in 
cost growth since 1996, and the Department ultimately will 
procure less than one third of the amount of aircraft they 
originally planned.
    When will the Department be held accountable for a failing 
program, and how much longer are we going to allow costs to 
skyrocket uncontrollably? I sincerely hope, Mr. Chairman, that 
at today's hearing we get some honest answers, not empty 
assurances and equivocations; that we get them from all of our 
witnesses on these issues, so we can reevaluate this program 
and assess if there are wiser investments that we can make or 
not. We need straight talk from the Department today, because 
this issue has far-reaching effects. As we strive toward a 
leaner, more agile defense system, and in the midst of 
obligations in Iraq and Afghanistan and elsewhere, unabated 
deficits and many other urgent spending priorities, ultimately 
we have to make a decision in this program of whether it's 
worth it or not, whether it's worth the exorbitant funding, or 
whether we can put that to better military procurement or 
Homeland Security or other uses.
    I look forward to hearing from our witnesses, Mr. Chairman. 
And, again, I thank you for your good work on this issue and 
others.
    Mr. Shays. I thank the gentleman.
    [The prepared statement of Hon. John F. Tierney follows:]
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    Mr. Shays. At this time, we will recognize Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    This is deja vu all over again for me. For about 38 years, 
most of which was spent in the U.S. Navy, I have heard 
discussions like this on every air frame that's come down the 
pike. All we are doing is changing the date from those that I 
used to hear about when I was active duty Navy.
    We need to understand one thing. When you develop an air 
frame, it is going to cost a lot of money, it's going to take a 
lot of time. There are going to be a lot of changes, there are 
going to be a lot of unhappy people. Just use the C-17 as an 
example. Everybody thought that was a horrible waste of money, 
and we realize now it's been a workhorse in this conflict in 
Iraq, and we need more of them now. And it seems like we tinker 
with these programs so much, that's why we have today, that 
number tomorrow, and a week from now it will be another number.
    I don't agree at all as the first speaker said that we 
should pull the plug on this program. We are 4 minutes from the 
last of the fourth quarter, we are about to win this thing. I 
am going to ask the Comptroller General at some point on page 7 
of the GAO report it talks about the production improvement 
program. And you look at what it was in 2000, and you look at 
the incredible improvement it was in 2001. But I see nothing 
there for 2002. When I looked at my BlackBerry this morning, 
this is the fourth month of 2003; so I should certainly think 
that somewhere in this thing we should show what the 
improvements are for 2002, and I don't see that at all.
    We are putting young men and women in air frames that are 
falling out of the sky. I am not unconvinced that some of the 
crashes we've had in all of the services in the last year or so 
are because they are riding, they're flying in old air frames 
that simply have just outlived their usefulness. And if we are 
truly going to change that, we have got to get some new air 
frames in production. And the F-22 is clearly one of them. I 
have sat in the simulator of the F-22; I have gotten a good 
strong briefing on it, and I for one, based on my military 
experience, am convinced that this is the air frame of the 
future for the U.S. Air Force. It does things that no other air 
frame can do. And, based on the threat we are going to be 
facing in the decades ahead, it certainly is something that we 
have to take into consideration. There is--the tax dollars are 
not being wasted on this. It costs a lot of money to develop 
these air frames, and we need to continue doing that.
    Talk about institutional knowledge. I realize there is some 
institutional knowledge up here, but I would suggest that 38 
years of institutional knowledge on my part makes me somewhat 
knowledgeable on what these programs can do and what we need to 
do to make them work. And sure it's taken 15 years in 
development. But look at the history of a lot of other 
aircraft; it has taken a long, long time to get these in the 
fleet in the case of the Navy and with the Air Force and the 
Army and the other two services. But it takes a long time to 
make sure you get it right. And that is the purpose of testing, 
you know; sure you are going to have problems, but that is what 
testing is all about. If the attitude I have heard here this 
morning had prevailed 100 years ago, we would still be flying 
the Wright Flyer with Orville and Wilbur. And I think we need 
to change that, and we need to change that pretty quickly.
    So I for one am anxious to hear what the testimony says 
today, and--that the people are going to testify will say 
today, and I have some questions for them as well.
    So, Mr. Chairman, I just think when lives are at stake and 
when the future of our country is at stake, we cannot sit still 
and sit idly by and allow our folks to be flying in air frames 
that have simply outlived their usefulness. And I look forward 
to our hearing today. Thank you.
    Mr. Shays. I thank the gentleman.
    Mr. Murphy, I understand you don't have a statement.
    Mr. Murphy. No, sir.
    Mr. Shays. Thank you.
    I will just conclude, and then Mr. Walker, thank you for 
your statements. So we will swear you in then.
    Acquisition reform at the Department of Defense [DOD], 
remains a promise unfulfilled. Despite much heralded intentions 
to shed cold war inefficiencies and bad habits, the Pentagon is 
still falling prey to rampant cost growth and interminable 
schedule slippage in the development of multi million dollar 
weapon systems. The gulf between promise and practice has been 
apparent for some time. In tactical aircraft acquisitions, 
particularly the Air Force F/A-22 Raptor program. As in the 
past, we appear posed to spend far more than planned for far 
fewer aircraft. In three previous hearings before this 
subcommittee on F-22, development and production reforms, 
successive projections have stabilized costs and realistic 
timetables have proven at best--at best, optimistic, with 
projected production costs now $6.7 billion over the $36.8 
billion statutory cap, the magnitude and persistence of rosy 
but wrong estimates suggest problems far more fundamental than 
mere overconfidence.
    For some time the General Accounting Office [GAO], has been 
studying F-22 acquisition strategies and DOD adherence to 
commercial best practices. At the request of our subcommittee, 
colleague Congressman John Tierney, GAO also examined current 
production cost projections and the extent to which those costs 
are being accurately conveyed to Congress. Today, we also 
release the GAO report done at the subcommittee's request that 
finds substantial waste stemming from the failure to develop 
standardized rather than system specific aircraft tests and 
maintenance equipment.
    Unless aggressive cost controls and other acquisition 
reform strategies are embraced by F-22 program management, the 
aptly named Raptor is at risk of devouring itself.
    As we will hear in testimony today, findings and 
recommendations by GAO and others on tactical aircraft 
acquisitions aimed to stop the hemorrhaging of time and money 
in the F-22 program and prevent those problems and other major 
procurements critical to fighter fleet modernization as our 
witnesses bring important information and expertise to our 
discussion, and we look forward to their testimony. All our 
witnesses bring important information and expertise to our 
discussion, and we look forward to their testimony.
    We are particularly grateful to Comptroller General David 
Walker for his leadership of GAO on this issue, and we 
appreciate the continued and thoughtful work by Mr. Tierney on 
this oversight.
    [The prepared statement of Hon. Christopher Shays follows:]
    [GRAPHIC] [TIFF OMITTED] 89243.019
    
    [GRAPHIC] [TIFF OMITTED] 89243.020
    
    Mr. Shays. I understand we also have another Member who is 
on our side here on the left side of me here, I apologize, Mr. 
Ruppersberger of Maryland. And I welcome, if you have any 
statement.
    Mr. Ruppersberger. Yes. Thank you, Mr. Chairman, for 
calling this hearing on the F-22 Raptor and controlling costs 
in tactical aircraft programs.
    I hope today we can have an honest discussion of this 
aircraft. I hope this is a balanced discussion between alleged 
cost overruns with performance and benefit to national 
security. The GAO report claims this project's cost overrun is 
due to several factors, including the delayed start of a multi-
year production authorization contract, inflation increases as 
a result of a revised production rate, and because of the 
change in avionics suppliers for the F-22 Raptor.
    We have to remember that we live in a new age where threats 
can come from anywhere and anyone. Because of these unknown 
threats, we have to make sure that our military, our men and 
women who serve and fight for our freedoms, have the most 
modern and technological advanced weapons. The F-22 Raptor is 
such a weapon. I represent many of our country's defense 
contractors. In my district, we have two Army bases, a Coast 
Guard yard. In my district, we build the radar that is used for 
the F-22 Raptor.
    I am concerned about cost overruns in any endeavor, but we 
have to seek a balance. I understand that recent tests on 
performance of the Raptor has yielded remarkably successful 
results, both in terms of technical and operational 
requirements. The success of this aircraft seems clear to me. 
In fact, the Raptor is meeting or exceeding all eight aircraft 
performance-related key performance barometers. I hope that 
those issues are also remembered as we continue this hearing.
    Now, I know some have said that the F-22 Raptor was 
designed for a cold war threat. I would have to strongly 
disagree with that statement. The F-22 Raptor is much more. 
This aircraft has transformed itself. While maintaining all the 
air to air capabilities of the original design, the F-22 Raptor 
has also added technologies that will combine air dominance 
with precision attack capabilities and joint close air support 
for ground troops. Also, the F-22 will be vital to our national 
security interests in the 21st century. It is the only aircraft 
that will be capable of countering anti-access threats, 
advanced SAMs cruise missiles, fighter aircraft theater, 
ballistic missiles, weapons of mass destructionsites from day 
one.
    We have to remember that this was a project started almost 
20 years ago. Technology in the past 2 decades has jumped leaps 
and bounds ahead of what we could have imagined. Issues will 
rise, but they will solve them, and our Nation will be safer 
and our Armed Forces will be stronger for it.
    Also, we have to remember that this fighter is in 
cornerstone of the Air Force future capabilities. While we 
discuss the issues of the hearing, let's make sure that we do 
not inadvertently slow down this project, which in turn could 
hinder our Armed Forces capabilities. Now is the worst possible 
time to reduce production funds. The program is at a critical 
stage on the production ramp and learning curve. The tools, 
people, and training are in place for an orderly ramp-up to max 
rate production. Furthermore, reducing procurement at this 
point will severely damage supplier confidence, which will 
reflect in increased prices to the contractor.
    Currently, 65 percent of the cost of F-22 is in the 
supplier base. The resulting termination liability, increased 
supplier cost, and inflation impacts will further reduce the 
number of Raptors the Air Force will be able to procure. 
Delaying procurement will exacerbate the already critical 
logistics and operational impacts associated with retaining F-
15s well past their planned retirement age.
    Finally, the single greatest enabler for reducing 22 costs 
is program stability. Program stability leads to supplier 
confidence, which in turn yields increased supplier 
investments, increased program efficiencies, reduced production 
costs, and ultimately increased production quantity.
    Thank you, Mr. Chairman.
    Mr. Shays. Thank you, Mr. Ruppersberger. I appreciate your 
presence. I'm sorry I didn't notice that you were here earlier.
    Mr. Ruppersberger. I'm a little small. That's probably why.
    Mr. Shays. This is really an ideal kind of hearing. We have 
members who have expressed a variety of concerns at either end 
of this issue, and we have extraordinarily good documentation 
and we have wonderful witnesses. So we will hope that we will 
all find the best answers to the problems that face us.
    We have before us to start the Honorable David M. Walker, 
Comptroller General of the United States, the U.S. General 
Accounting Office. We appreciate, sir, that you are here. As 
you know, we swear in our witnesses, and I will ask you to 
stand.
    [Witness sworn.]
    Mr. Shays. Note for the record our witness has responded in 
the affirmative. I just will get one bit of housekeeping out of 
the way, and ask unanimous consent that all members of the 
subcommittee be permitted to place any opening statement in the 
record, and that the record remain open for 3 days for that 
purpose. Without objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record, 
and without objection, so ordered.
    I think what we will do is he'll have you give your 
testimony, and then I'm going to give 10 minutes to each 
witness--excuse me, each Member. We did go to bed at 3:30 last 
night, maybe a little later for some. At any rate, we will 
begin. Thank you, Mr. Walker.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL OF THE UNITED 
 STATES, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY ALLEN 
                 LI, GENERAL ACCOUNTING OFFICE

    Mr. Walker. Thank you, Mr. Chairman, Mr. Kucinich, and 
other members of the committee. It is a pleasure to be here to 
talk about DOD acquisition practices, and the F/A-22 as an 
illustration of some of the challenges associated with 
historical DOD acquisition practices.
    Let me also thank Mr. Schrock. At the outset on page 7 of 
the report that he refers to, he has found the one typo in that 
report. Those numbers for the graphs should be 2001 where it 
says 2000, it should be 2002 where it says 2001. And in fact, 
the text is correct, it just so happens that the graph contains 
a typo. And thank you for pointing that out. Normally, they 
don't happen in GAO products, but it did happen in this case, 
and I apologize for that.
    Mr. Schrock. Mr. Chairman, then I rest my case. There is 
major improvement being made. So I will let that be said for 
the record.
    Mr. Shays. I think the the amazing thing is this is the 
first time I have ever encountered this in the entire, 
whatever.
    Mr. Walker. Well, when it happens, we admit it, Mr. 
Chairman. And there is improvement, but there is still a gap. 
So, in any event.
    Mr. Shays. Let me just say, without any hesitation, the 
work of the GAO, and particularly under your leadership, has 
been extraordinary, and we all appreciate it, even when we 
don't like what your reports say.
    Mr. Walker. Thank you, Mr. Chairman. Sometimes people don't 
like the facts, as we all know.
    Before I begin to address the DOD acquisition process in 
general and the F/A-22 in particular, I think it is very 
important to provide a solid foundation and the broader context 
and why this is important. As you know, Mr. Chairman, and other 
members, GAO twice a year performs long-range budget 
simulations to project into the future and see what the future 
looks like. That latest simulation which was done in January 
shows that we face large and growing budget deficits due in 
large part to known demographic trends and rising health care 
costs. In addition, mandatory spending is far outpacing revenue 
growth.
    Without significant changes in mandated programs or 
significant tax increases, discretionary spending will come 
under growing pressure. DOD will ultimately feel this squeeze 
as well.
    When you take a look at discretionary spending, the largest 
accounts are in DOD. Weapons acquisitions alone account for 
$150 billion annually. Our weapons systems are far superior to 
any other nation, but DOD will continue to need to spend 
significant sums to maintain this advantage and to replace 
aging equipment. In doing so, it must consider needs versus 
wants along with overall affordability and sustainability 
issues. We must also keep in mind that it is not just the 
superiority of our platforms that count, it's the superiority 
of the people who man those platforms that counts.
    With regard to the F/A-22, it's obvious that we are going 
to produce the F/A-22; we're in limited production at the 
present point in time. So it's not a question of whether or not 
it will be built, but how many, when, with what capabilities, 
at what cost, and, very importantly, with what ripple 
implications to other Air Force systems and to DOD overall, 
including readiness.
    Given past experience and future challenges, in my opinion, 
Mr. Chairman, it is time for DOD to present a new business case 
as to how many F/A-22s are needed, why, at what cost, and with 
what ripple effect on other tactical air systems as well as 
other Air Force and DOD needs.
    The Air Force must move away from its historical ``plug'' 
approach to the quantity of F/A-22 Raptors. Whether and how 
many platforms to fund is a policy issue to be decided by the 
Congress, and irrespective of what Congress decides in that 
regard, it's important that any design, development, and 
production effort follow a best practices approach unless there 
is a clear and compelling national security reason not to. A 
clear and compelling threat to our national security should be 
the only reason that one should not follow that approach, in 
the opinion of the GAO.
    Our report shows that the Department has consistently made 
decisions with too little knowledge in connection within with 
the number of historical systems. That is, the DOD has started 
programs with immature technology and had to manage technology 
development at the time they should have focused on product 
development. At production start, they did not have mature 
designs or manufacturing processes in place.
    Our first chart on the far left, which is also in the 
testimony, demonstrates that under DOD's historical approach, 
including with the F/A-22, systems take longer than anticipated 
to deliver and require performance compromises and cost growth 
increases that far outstrip initial estimates. The F/A-22 is a 
case in point. The F-22 started in 1986, yes, in the middle of 
the cold war era. Costs have increased 128 percent and delivery 
time has increased 104 percent. In addition, planned 
acquisition quantities have dropped from the initial 648 to 276 
and still dropping.
    Had the Air Force used the second chart, which is also in 
the testimony, the so-called evolutionary approach rather than 
the big bang approach, they would have avoided many problems 
including significant cost increases and delays, and they would 
have been able to field earlier versions of the tactical 
aircraft fighter quicker to the troops to help modernize----
    Mr. Shays. Could you make that point again? I was just 
asking a question.
    Mr. Walker. Yes. Had the Air Force used an evolutionary 
approach rather than the big bang approach, they could have 
avoided many of the problems that they have experienced. 
Namely, they could have avoided the significant cost growth, 
the significant delays, and they could have fielded earlier 
versions of the aircraft or the platform much quicker to try to 
deal with the aging issue that has been mentioned before. 
Namely, the idea being spiral development, which I will come 
back to, which the Department is now embracing, where you try 
to develop versions and enhance those versions over time such 
that you are taking an evolutionary approach rather than a 
revolutionary approach, which is much more prudent, much more 
cost effective, must more consistent with best practices as we 
have reported.
    I have no doubt, and I am sure that none of you have any 
doubt, that the aircraft that is ultimately delivered will have 
a high level performance. It will be the best in the world. 
There won't be anything that's even close. In America, with 
enough time and enough money, anything is possible. However, 
inefficiencies in this program can only negatively impact other 
investment decisions the Department must make. There is a very 
real ripple effect on other TACAIR--Air Force systems and DOD 
needs, especially given the increasing budget pressures that 
are here and are only going to grow in the future.
    GAO's best practices reports in this area make 
recommendations to correct these problems, start programs with 
requirements that can be met with available resources, 
especially mature technologies, achieve design stability by 
critical design review, and achieve statistical process control 
by production. While the Department has largely accepted many 
of GAO's recommendations with regard to best practices, and in 
fact has incorporated these into their new updated policy 
manual--which is laudable and commendable--their application in 
practice to individual programs is not always consistent with 
policy. In other words, in design, it's there; in practice, 
it's not always there. It's uneven. They are getting better. 
It's obviously too late to adopt this for part of the F/A-22 
program, but at least hopefully from here on out, they can try 
to do that.
    The Department's recent emphasis on evolutionary 
acquisition, or as they refer to it spiral-development, is 
clearly a step in the right direction. That is, focusing on 
fielding some capability earlier, and better managing the 
unknowns by improving weapons systems incrementally such that 
you go from a series one to a series two to a series three is a 
very logical approach. And, by the way, that's the approach 
that technology companies take as we see every day. And as we 
know, the fact of the matter is, that's not the approach that 
the F/A-22 took. It was the big bang approach, and we are 
paying a big price because of it.
    Another challenge to effective acquisition of weapons 
systems in an efficient economical and meaningful way is the 
significant planned turnover or preprogrammed turnover in 
connection with key personnel responsible for the acquisitions 
effort.
    The far right chart, which is also in my written testimony, 
shows the typical number of key players that you would have 
within a life cycle of a major program. There is, frankly, just 
too much preplanned turnover in order to appropriately affix 
responsibility and assure accountability for these programs.
    In the final analysis, Mr. Chairman, there is no question 
that however many F-22s Congress decides to fund, this will be 
a superior weapons system. I have flown the simulator myself. 
It is very impressive. But we must, however, consider the 
ripple effect, and to focus on wants versus needs; and in that 
regard, we are happy to continue to work with the Congress in 
trying to provide information for your consideration in making 
the difficult choices that lie ahead.
    Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentlemen. I thank him very much.
    [Note.--The GAO report entitled, ``Tactical Aircraft, DOD 
Needs to Better Inform Congress about Implications of 
Continuing F/A-22 Cost Growth,'' may be found in subcommittee 
files.]
    [The prepared statement of Mr. Walker follows:]
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    Mr. Shays. We are joined by Mr. Duncan. Mr. Duncan, it's 
nice to have you here.
    I am going to start out with Mr. Tierney, and then I'm 
going to go to Mr. Schrock, and then I'm going to go to Mr. 
Ruppersberger, unless Mr. Kucinich gets back, and we'll just 
keep going back and forth. I think it's better to do the 10-
minute round of questioning and it will take us a little 
longer, but it's the best way to get information.
    So Mr. Tierney, you have the floor for 10 minutes.
    Mr. Tierney. Thank you.
    Thank you for your testimony, Mr. Walker, and for the work 
that was done on this report by you and your able staff.
    I want to just lay a little foundation here, if I could, on 
the issue of production cost growth. In your report, you said 
the Department established a joint estimating team in 1996 to 
examine production cost growth. In 1997, the team found $13.1 
billion in unanticipated cost growth. Is that fairly accurate?
    Mr. Walker. That's my understanding.
    Mr. Tierney. It seems to me that's a pretty astounding 
amount of unanticipated growth. But it didn't stop there. In 
2001, the Defense Acquisition Board reexamined the issue, and 
found another $5.4 billion in cost growth, if I'm not mistaken; 
Right?
    Mr. Walker. That's correct.
    Mr. Tierney. Another, I think, spectacular number, but it 
didn't stop there. In your report most recently, you identified 
yet another $1.29 billion in cost growth.
    Mr. Walker. That's correct.
    Mr. Tierney. Now, did the Air Force include that amount in 
its estimate?
    Mr. Walker. It is, but it also causes problems with regard 
to the current cap, as you noted before.
    Mr. Tierney. Right. It went right by it. Right? Now, the 
Office of the Secretary of Defense, did they include that 
amount in their estimate?
    Mr. Walker. No, they did not.
    Mr. Tierney. How do we explain that, that they didn't 
include it in theirs, and the Air Force had it in their 
estimate?
    Mr. Walker. You would have to ask the SecDef that.
    Mr. Tierney. OK.
    Mr. Shays. Could I just ask, if the gentlemen would yield?
    What's the significance of not including it?
    Mr. Walker. An unreconciled difference off the top of my 
head. If the Air Force, which is responsible for the program, 
is saying that this is what they think it's going to be, and 
then the Defense Department says no, they are going to go with 
a different number, you have to wonder why that gap exists, 
which is the more accurate number and what, if any, potential 
implication that can have on being able to stay within the cost 
cap? It's an unreconciled difference that needs to be 
explained. And I am saying maybe the Air Force can do that. I 
know you've got representatives of the DOD and the Air Force 
coming on after me.
    Mr. Shays. Thank you.
    Mr. Tierney. And part of it, Mr. Chairman, is that when you 
have the Air Force who is responsible for this system, telling 
us that they are $1 billion plus over and the Office of 
Secretary of Defense just ignoring that and going on, and then 
in response to our questions just basically telling us it 
doesn't matter what we had set as a cap as Congress or 
whatever, they are going to ask for more money anyway and they 
are just blowing on right by. I think it goes a little bit to 
the forthrightness or lack of that to this committee in terms 
of our estimates of how we are going to plan out a budget here 
in defense. But we can also carry a little bit of that over on 
into the issue of the number of planes that are going to be 
built.
    On your chart, you had six points of time; and during 1991 
the plan development was 648 aircraft; am I right?
    Mr. Walker. Correct.
    Mr. Tierney. In 1993, there was a bottom-up review done, 
and reduced that number to 442.
    Mr. Walker. That's correct.
    Mr. Tierney. In 1995, it was reduced to 438 as part of the 
preproduction verification phase. And then during the 1997 
Quadrennial Defense Review, it fell to 339.
    Mr. Walker. Correct.
    Mr. Tierney. And then I think they took six aircraft over 
into production, and so that really reduced it to 333. Now, in 
2001, Mr. Aldrich has written a letter to me. And if you 
extrapolate out amongst all the other jargon, it looks like the 
number now is 224 aircraft, while remaining--if they try to 
stay within the congressional cost cap.
    Mr. Walker. That's with the cap. That's correct, Mr. 
Tierney.
    Mr. Tierney. Right. So we are now down from the original 
648 aircraft down to 224 aircraft, and all of that the 
additional $1.29 billion in cost, production cost overgrowth. 
So we're in these charts going in opposite directions, the 
number of aircraft that are being built and the cost of the 
program going up. Were you able to determine just how much each 
one of these systems is going to cost, each plane is going to 
cost? My estimate is about $200 million a plane. Right?
    Mr. Walker. It's over $200 million.
    Mr. Tierney. Over $200 million. And if we reduced it by 
another $2 billion because of these overruns, it would mean 
another 10 or so less planes. So you are really down about 214 
if you keep them within the cost cap.
    Mr. Walker. It would be a reduction; correct.
    Mr. Tierney. So I think, just getting those numbers down, 
part of our inquiry from the Department and from the Air Force 
is going to have to be, as I think you stated quite well in 
your--what was the number that we need? What's the mission 
here? Is the mission anywhere still related to where it was 648 
that we originally need. And, if it isn't, how has it changed? 
Why is it now allowable that we can perform the same mission if 
we can with so few planes? What are the costs ultimately going 
to be? And, as you said, I think quite clearly, then what's the 
effect on all the other things that we think we need as we move 
forward in our defense posture?
    But let me finish by just saying, one of the major 
conclusions that I got out of your report, Mr. Walker, was 
simply the Pentagon has not been providing Congress with the 
information that we asked for, and with adequate information, 
really, to assess and evaluate this program. They are not 
telling Congress how much aircraft they can buy while staying 
within a production cost limit. And I'm just wondering, you 
know, what--describe for us, if you would--I think it would be 
interesting to put it on the record--what the congressional 
cost cap is, and, if you have an institutional memory, why we 
put that cost cap there.
    Mr. Walker. As I recall--and if you don't mind, Mr. 
Tierney, Mr. Chairman, I have Allen Li, who is head of our 
effort in this area. So he may supplement my efforts, if it's 
not a problem.
    Mr. Tierney. The chairman may want to swear him in then.
    Mr. Walker. But I'll go ahead and start.
    Mr. Tierney. Great. Thanks.
    Mr. Walker. Due to the significant increase in the 
estimated cost of this program, Congress was concerned with 
being able to maintain some type of control over it, and 
therefore ended up putting in a cost cap with regard to 
production as a means to try to control costs. Obviously, 
that's one way that you can end up determining that you are not 
going to spend more money, but it doesn't necessarily assure 
how many aircraft you are going to get if there is a continued 
escalation of what the cost is per aircraft.
    What has happened in the past, quite frankly, is that the 
Air Force has just generally plugged the numbers. Whatever 
amount of money you will give them, they will produce whatever 
they can produce with that amount of money.
    My personal opinion is, there have been huge subsequent 
events since 1986. And while you can clearly make a compelling 
business case for this platform in 1986, given the huge 
subsequent events since 1986 both as relates to the budget, our 
national security posture, the state of the world, etc., there 
is a need to fundamentally reassess the business case and find 
out what's the right number rather than what the ``plug'' is.
    Mr. Tierney. I think you've hit the crux of this hearing 
right on the head. And the idea is that we had set that cap, 
and it was up to them to determine how many they could make. 
But I'm not sure we've ever heard back any of the justification 
or explanation for how the mission may or may not have changed 
and the goals and the other issues and questions that follow 
from that.
    Mr. Walker. Well, as you know, Mr. Tierney, originally it 
was for air superiority, and now it's an F/A platform. So the 
Air Force is seeking to expand the mission and utilization of 
the F-22.
    Mr. Tierney. Right.
    Mr. Walker. That doesn't make it cheaper. I still think 
there is the need for the business case.
    Mr. Tierney. Have you ever had an adjustment in so-called 
business case----
    Mr. Shays. Will the gentleman suspend? I'll give him more 
time. Do we need to hear from Mr. Li? If so, I'll swear him in.
    Mr. Walker. Not yet. Well, we may, if it is all right, as a 
matter of caution.
    Mr. Shays. Then let's do that. If you would stand please.
    [Witness sworn.]
    Mr. Shays. Thank you.
    Just for the record, in the 9-years I have chaired 
hearings, the only person we didn't swear in was Mr. Byrd, 
because I chickened out. But I'm not going to have you get to 
that level.
    OK. Mr. Tierney, you have the floor.
    Mr. Tierney. Thanks.
    You know, I'm concerned obviously for the fact that we set 
a cap, and it appears to have been blown by without any prior 
discussion with Congress or conversation. But you also made a 
recommendation that the Pentagon tell Congress how many 
aircraft they can buy within that cap. And, as far as I can 
see, your recommendation was flat out rejected. Would there be 
some other interpretation you would to put on it?
    Mr. Walker. We haven't been provided that number nor have 
you.
    Mr. Tierney. All right. When I read the comments back, the 
information from the Department, seemed to think that they were 
indicating it would be redundant, and that they had already 
provided the information to Congress. Were you able to find 
anywhere that they provided that information to Congress?
    Mr. Walker. I'm not aware of that.
    Mr. Tierney. Now, I've since--I sent that letter in my 
opening remarks or whatever, and got a nonanswer back on that. 
But in their letter, they indicated that the Department, not 
Congress--the Department had approved the procurement budget 
higher than the congressional cap. Does that mean anything to 
you in terms of the legality situation? Is there some law that 
I'm missing that allows the Department to set a cap different 
from the cap that Congress has set.
    Mr. Walker. They can propose a cap in excess, but I don't 
see how in the world they're going to be able to spend the 
money.
    Mr. Tierney. You would think. Wouldn't you? When I compare 
that, their statement to Section 217 of the Public Law 105-85, 
it certainly looks to me as if they're actively and 
affirmatively violating the letter and intent of that Federal 
statute. I want to make that note to the chairman, because I 
think it's a fairly serious matter. You know, we go about 
trying to have some accountability in this Congress for large 
expenditures. We have a lot of security issues to deal with and 
we set a cap, and the next thing we get back is a letter saying 
that the Department--not Congress, but the Department approved 
a procurement budget higher than the congressional cap.
    It seems to me to be a direct contravention of public law, 
and I think that we ought to take that under consideration, and 
decide what we are going to do about that.
    Mr. Li. Mr. Tierney, can I clarify?
    Mr. Tierney. Yes, Mr. Li.
    Mr. Li. Can I clarify that, please?
    Mr. Tierney. Sure.
    Mr. Li. I'd like to clarify something relative to the cap. 
It is true what the Comptroller General said in terms of his 
explanation of the intent of the cap is financial discipline to 
ensure that the expectations are met. I should note to you that 
the DOD, in their statement to the subcommittee today, has 
identified the fact that they recognize that they will exceed 
the cap, but that they have not yet exceeded that cap but that 
they will exceed that cap in 2009. And, as a result, they feel 
that what they need to do is to request from the Congress 
relief from that particular cap. So I wanted to make sure that 
I clarified that point.
    Mr. Tierney. I appreciate your doing that. I'd just make 
the note that's not at all what they said in their letter. The 
letter clearly indicated--and this is a quotation--that the 
Department approved a procurement budget higher than the 
congressional cap.
    Mr. Li. And that's correct. And as a matter of fact, Mr. 
Tierney, a few years ago, Mr. Aldridge had identified the fact 
that he was recommending termination of the cap. However, the 
current language, which I have just read from the Department, 
indicates that they would ask for relief. You would have to ask 
them whether or not relief means termination or an increase in 
the threshold.
    Mr. Tierney. OK.
    Mr. Walker. Mr. Tierney, my experience has been is it's 
more the ``plug and pray'' approach. The plug is, you plug the 
quantities, and pray that you can get more money in order to 
increase the quantities. But you can ask the Air Force.
    Mr. Tierney. I shall. Thank you.
    Mr. Shays. Thank you.
    Mr. Schrock, you have the floor for 10 minutes.
    Mr. Schrock. Thank you, Mr. Chairman.
    And General Walker, Mr. Li, thank you for being here. You 
came on a good day. You've got us all at a disadvantage because 
none of us got any sleep last night, so we are probably going 
to be victimized. But that's all right; we are used to it.
    Mr. Walker, let me make just a couple comments on what you 
said, things I agreed with.
    Your comments on spiral development is absolutely right, 
and clearly a lot has happened since 1996. And I think that's 
the problem I have with any military platform, whether it's a 
plane, a ship, a tank, or whatever: By the time you get it into 
the fleet or into the air, is the threat still there. We need 
to tighten that at some point. And I agree with you that 
defense budget pressures are horrendous. For each dollar they 
spend, we have to make sure we spend each one of them 
economically. So I am really right on with that.
    Let me start by asking you, in your report titled, ``DOD 
Should Reconsider the Decision to Increase F/A-22 Production 
Rates while Development Risks Continue,'' you recommended 
limiting the productions from 22 to 16 aircraft. Now, I've read 
a lot of this stuff and I may not have seen it, but did you do 
a cost analysis, cost benefit analysis on that report? And, if 
you did, what did it say?
    Mr. Walker. Allen, could you cover that?
    Mr. Li. Yes, sir.
    A risk analysis, risk assessment was produced by DOD about 
the same time that we issued that report. And there, what our 
recommendation was, sir, was that they update that particular 
risk assessment. And we still stand by that. Then the reason 
why is, their analysis was on the basis of the 303 aircraft; 
and now that it's reduced down to 276, we believe that, 
following operational tests and evaluation and all of them 
showing that all problems have been fixed, I think it would be 
appropriate for them to revisit that risk assessment under 
those new conditions.
    Mr. Schrock. Did you mean 333 or 303?
    Mr. Li. It was down to the 303, because it was 295 plus----
    Mr. Schrock. OK. I see. I see. That's right. Did you 
quantify the risk of retrofits? Because that can be mighty 
costly as well.
    Mr. Li. Yes. And we recognize the fact that the cost would 
involve termination costs to their subcontractors. However, 
sir, the concern that we had expressed and that we have 
identified in several of our reports has been that it's more 
expensive to fix things after production. And it was a concern 
on our part that 73 aircraft would be on contract by the time 
operational tests and evaluation was completed. We thought that 
was a high risk.
    Mr. Walker. Our best practices work has clearly shown that 
the later you are in resolving these technology problems, you 
have an exponential growth in cost increases in order to solve 
those problems after the fact. And so that's the premise.
    Mr. Schrock. Did you assess the impacts of limiting 
production?
    Mr. Walker. It depends on what you mean by the impacts. The 
impacts on the contractor, or the impacts on our defense 
posture? Which aspect?
    Mr. Schrock. The cost estimate.
    Mr. Walker. Yes.
    Mr. Li. As I indicated, we looked at their risk assessment, 
and we believe that indeed, several of the factors that they 
identified are correct. I think that you would incur 
termination liability charges. However, the amount is one in 
which you would have to weigh that versus the cost of the 
retrofit. And I think that's the difference in opinions, sir. 
The DOD thinks that the changes that they are making now 
address the issues that we have previously indicated in terms 
of the fin buffet problem, overheating, and whatever. We think 
that it would be wiser to wait until operational tests and 
evaluation is completed before you know what those changes 
would be.
    Mr. Walker. Part of the difficulty, as you know, is that 
you know what the termination charge is, that's something that 
you can calculate. It's a certain amount. You don't know with 
certainty what the additional retrofit costs are going to be. 
But our experience leads us to believe that they would be 
higher. But you don't have the same degree of certainty, 
obviously, as you do in the contract termination charge.
    Mr. Schrock. Last year Congress authorized and appropriated 
funding for greater than 16 in lot No. 3 and lot No. 4. In 
fact, I believe the Defense Department recently approved lot 3 
to be 20 aircraft and lot 4 increased procurement for up to 24 
aircraft, if I have those figures right. What would the 
termination liability be by reducing those down to 16?
    Mr. Li. I don't know what that figure would be, sir. But I 
recognize the fact that there would be some if you were to--
that would only impact upon the long lead items that are under 
contract, not for the actual aircraft themselves, the long lead 
items for them.
    Mr. Schrock. There is no way to determine that figure.
    Mr. Walker. No. I would suggest that something that might 
be more appropriate for the DOD to do. We would be happy to 
take a look at it and comment on it independently, if you would 
like.
    Mr. Schrock. What about the inflationary impacts of 
delaying procurement?
    Mr. Walker. That's not the major driver of the cost. 
Inflation is not the major driver of the cost of this platform.
    Mr. Schrock. Did you assess the increasing O&S costs of 
retaining our legacy aircraft longer? That is a real concern to 
me because every year they're in life it's costing more and 
more money, so it's like throwing good money after bad.
    Mr. Li. No, we did not. However, we are aware of it. The 
fact of the matter is there is no guarantee that the F/A-22 
would be able to be in place to replace, for example, the F-15 
at that point in time.
    Mr. Schrock. Was consideration taken into account on what 
the impact to the young men and women flying these planes would 
be? What the impact would be on them by delaying this 
capability?
    As I said earlier, helicopters are falling out of the air 
at an alarming rate as far as I'm concerned. It happened a 
couple of times in Iraq. I'm wondering if it was from a hostile 
situation, a combat situation, or if the frames are just worn 
out and they had mechanical repairs that had been stretched to 
their limits.
    Mr. Walker. There is absolutely no question that the Air 
Forces faces a serious problem with regard to the aging of its 
airframes.
    At the same point in time, I would respectfully suggest 
that part of the business case analysis that I had recommended 
earlier needs to take that into consideration. It may or may 
not be that the F/A-22 is the answer to that. Clearly, you're 
going to have the F/A-22, but how many do you need? And to the 
extent that you end up deciding that is going to be a different 
number, it may end up freeing up more dollars to be able to get 
more platforms to our airmen and women quicker than otherwise 
would be the case with the F/A-22. So there are tradeoffs there 
I think.
    Mr. Li. If I could add to what the Comptroller General 
said, 2 years ago the General Accounting Office actually did an 
analysis on what the age of the fleet was; and we raised 
concerns to Secretary Rumsfeld in anticipation of the analysis 
that they would be doing for the Quadrennial Defense Review. We 
identified the fact that, even with the investments that they 
would be making in the F/A-22 and the JSF and the F/A-18 EF, 
that the average age of the tactical fleet was still going to 
be going up. As I'm sure you can recognize that's because the 
quantities, airplanes are costing more. So, therefore, the 
fleet is still aging.
    Mr. Schrock. By bringing something like the F-22 into the 
fleet, it's going to drop--they can decommission some of the 
old aircraft. It would certainly bring the average age of that 
life down dramatically--I would perceive, anyhow.
    Mr. Walker. The problem is the numbers. Yes, you're right. 
If you can bring in the F/A-22, that helps, because it's 
obviously brand new. On the other hand, these cost so much per 
copy that it really--as our report shows, it really is not 
going to help the average that much. It might help with regard 
to the F-15, but it's not going to help with regard to the 
overall issue. Because the quantities just aren't big enough, 
and they're getting smaller year by year.
    Mr. Schrock. I'm led to believe that the current Air Force 
estimate in the fiscal 2004 President's budget is for 276 
aircraft. Does the Air Force--does that current estimate 
account for your concerns?
    Mr. Walker. My view is, as I mentioned before, is I don't 
think that we should be plugging the numbers. I think a new 
business case is needed. A new business case is needed to say 
what is the right number, why, at what cost and what is the 
ripple effect. That was not done in coming up with that number 
is my understanding.
    Mr. Schrock. Could it be----
    Mr. Walker. Oh, clearly it can be done and I think it 
should be done.
    Mr. Schrock. OK. My time is expired.
    Thank you very much, Mr. Chairman.
    Mr. Tierney. If the gentleman would yield for one question 
through you to the witness, if we could.
    One of the comments was made that the inflation wasn't the 
major driver of the cost of this aircraft. I'm wondering if you 
could ask the gentlemen if he could identify what is, in fact, 
is the major driver of cost to this aircraft or the one or 
other factors. Thank you.
    Mr. Li. I'm sorry. I don't quite understand the question, 
Mr. Tierney.
    Mr. Tierney. Mr. Walker indicated the major driver of cost 
to this aircraft was not inflation. What are the major drivers 
of cost to this?
    Mr. Li. I'm sorry. Now I understand. Initially, in the 
$13.1 billion increase, inflation was a significant portion of 
that. Air frame was the second most important. Then in the $5.4 
billion increase, the time when that occurred there was a flip-
flop, that actually air frame and labor costs were the ones 
that--where it's most important with inflation being second. So 
the Comptroller General is correct in that the second, it's 
becoming less of an issue. But the fact of the matter remains 
that a lot of that cost is because of the air frame and labor 
costs associated with it.
    Mr. Murphy. The gentleman's time has expired.
    Now recognize the gentleman from Maryland, Mr. 
Ruppersberger, for 10 minutes.
    Mr. Ruppersberger. That's why they call me Dutch. Either 
way.
    Mr. Murphy. We now recognize Dutch for 10 minutes.
    Mr. Ruppersberger. That's fine. That's great.
    By the way, as far as sleep is concerned, it's been said 
sometimes that sleep is just a waste of time. So we should be 
OK with that.
    Getting back to the subject matter first thing, Mr. 
Tierney, I think that you've--I praise you for bringing this 
issue to the table. Accountability is always important, 
especially when it deals with cost and especially what is 
happening with our economy.
    Now the Defense Department is doing a tremendous job, in my 
opinion, with respect to the war. We're winning this war 
because of our technology, because of our military and our 
training of our men and women; and we want to be superior in 
this realm so we can have our freedoms.
    But after hearing the testimony and what is happening here 
today, it seems to me that more--if we were more honest, if the 
Defense Department was more honest about cost and time 
estimates, these programs could be a lot more cost effective so 
that we all know what the ground rules are. If in fact there is 
a problem and we have to move forward because of development 
issues or whatever, then we lay that on the table. We come 
back. But we do have oversight. That's what makes this country 
so great. We cannot keep spending forever; and we have to 
understand where the programs are, how effective they are, and 
what the costs are and whether we can afford them.
    Now, let me ask you this question. We talked about the GAO 
studies, that inflation is a factor in the cost overruns. Maybe 
we should give Chairman Greenspan credit for that since 
inflation hasn't grown as high in the last 10 years. But how 
about the issue of cost of technology in the advancement of 
technology? Has that increased the overruns as we're going 
through the process, the development process? And then 
technology is changing forever. Has that in any way increased 
the cost?
    Mr. Walker. Obviously, the cost of trying to deal with some 
of the technology problems, avionics, etc., has been a 
significant contributor to some of the additional costs in this 
program. But, as you know, generally, over time, as we have 
seen in the private sector, that once that technology has 
been--has matured, that over time advances in technology tend 
to drive costs down, not up. It's the development part, the 
research part.
    Mr. Ruppersberger. But it can go both ways. It depends on 
where----
    Mr. Walker. It depends on where you are in the cycle.
    Mr. Ruppersberger. Sure. The knowledge-based product 
development process has to show that it can be manufactured 
within cost schedule and quality targets. Did the manufacturers 
of the Raptor demonstrate that?
    Mr. Li. I don't believe that has been done sufficiently. 
One of the concerns that we had expressed as part of our 
reviews has been--for example, the stability of the statistical 
process was not demonstrated. Earlier in the program, we had 
concerns about the stability in terms--and the proxy being how 
many of the drawings--engineering drawings themselves were 
completed at a certain time. Those would be indicative of a 
program that was ready to be produced in large quantities.
    Mr. Ruppersberger. In your testimony, you state that, 
because DOD did not follow the steps, that, ``a cascade of 
negative effects became magnified.'' You continue by adding, 
these led to acquisition outcomes that included significant 
cost increases and scheduled delays, poor quality and 
reliability. Is it your contention that the F-22 is a bad, 
unreliable product?
    Mr. Walker. No, that's not what we're saying.
    Mr. Ruppersberger. That's why I asked the question.
    Mr. Walker. That's correct.
    Mr. Ruppersberger. Do you think if DOD applied knowledge-
based product development process it would stop or kill the 
Raptor program?
    Mr. Walker. Well, you can't change history. You can try to 
learn from what has happened in the past to do two things: one, 
not make the same mistakes going forward with regard to the F/
A-22 with regard to additional production and funding 
decisions; and, No. 2, to make sure we don't make these 
mistakes on other weapon systems platforms such as the JSF, 
etc., going forward.
    Mr. Ruppersberger. A concern of mine, and I think this is a 
part of the issue on DOD, and you have the vendors, will it 
make contractors and vendors hesitate in developing the best 
product to reach these goals? That happens where we set a 
certain limitation and in order to get those goals we don't 
have the quality product. Do you feel that will have any 
impact?
    Mr. Walker. We strongly believe at GAO, that following 
commercial best practices is in the interest of the government, 
that is in the interest of the contractors, that is in the 
interest of the warfighter, and that is in the interest of the 
taxpayers. There is absolutely no question about that.
    Because when you have a situation such as the F/A-22 where 
you have delays, cost increases, compromised performance 
standards, nobody is a winner on that. All those parties are 
losers.
    So, again, I don't want to unduly pick on the F/A-22 
because we were asked to use that illustrative example, if you 
will, but there is no question that following commercial best 
practices is a win-win situation for everybody involved.
    Mr. Ruppersberger. In your testimony you also say that DOD 
is too rigid and because of that program managers are basically 
setting themselves up to fail. Now, do you think the most 
honest cost and time estimates--and you've really answered 
this--will make programs more cost effective?
    Mr. Walker. Partially what we need is a cultural 
transformation, quite frankly. I would describe historically 
that part of the pressures that DOD--and part of the culture 
has been get the money, spend the money, hit the milestones. 
That's basically what has happened. If you don't end up getting 
the money, spending the money, hitting the milestones, then 
there can be negative ramifications to one's career.
    There hasn't been a whole lot of positive reinforcement for 
individuals to make tough choices and enhance transparency when 
things are not going as you would like it to; and so I think, 
you know, there is a cultural issue here.
    I think part of the problem is what I put up before. If 
you're going to change program managers so frequently, you 
know, that's a fundamental problem in assuring a reasonable 
degree of continuity and an appropriate degree of 
accountability for positive outcomes over time.
    Mr. Ruppersberger. What you're really talking about is the 
management issue of accountability, and that accountability--
and yet I'll say this. My impression is, trying to change the 
culture of DOD at a time of war when we're hopefully all behind 
what--at least our military and what's going on to protect our 
freedom, that's going to be very difficult. That's why I praise 
Mr. Tierney for bringing up this issue on a very, very--a piece 
or era of F-22 that is something that's very important to our 
freedoms but yet it's something that seems to be totally lack 
of accountability.
    I would hope that we would somehow--this program would help 
us in that regard and also not send a chilling effect to the 
vendors, the manufacturers that are in a very difficult 
position because they have to move into an arena where they're 
told this is what we have to do and DOD says do what you have 
to do and you have Congress here trying to make them 
accountable.
    Mr. Walker. If I can, Mr. Chairman, I think you're right 
that you need some stability. You need some certainty. But I 
would respectfully suggest that the way you get that is by 
basing the decisions on what you're going to do, when you're 
going to do it, how many you're going to have based upon an up-
to-date business case and then, after you've done that, to 
employ these commercial best practices with regard to the 
execution on that number. Both of those things I think will 
help to provide increased certainty and stability which you 
talked about that the contracting community needs.
    I think if you talk about DOD--I have a son who is a 
company commander in Iraq right now with the Marines. There is 
no question that we are No. 1 in the world in fighting and 
winning armed conflicts. There's nobody even close. It's not 
just because of our platforms. It's because of our people and 
our technology. But the fact of the matter is DOD is a--they're 
an A in that, No. 1 in the world in effectiveness. They're a D 
in economy, efficiency and accountability. And with the budget 
pressures that we face, it's not in our collective interest or, 
frankly, in their interest not to deal with these issues.
    Mr. Ruppersberger. If it weren't for hearings like this, it 
might even get worse.
    Let me say one other issue I think needs to be addressed, 
too; and that is the issue of flexibility. Because we still do 
have--we talked about inflation, which you're saying right now 
doesn't have an impact, the advance in technology. We still 
need flexibility, but maybe that can be looked at on an annual 
or biannual basis.
    Thank you, Mr. Chairman.
    Mr. Murphy. Thank you.
    The Chair recognizes himself for 10 minutes. I just want to 
followup on some questions you were just asked.
    You referred to there is not real positive reinforcement. 
There's cultural issues which interfere. Could you elaborate on 
what you mean by what sort of positive reinforcement and 
cultural issues are not there that you need to have there?
    Mr. Walker. Well, the fact of the matter is, to the extent 
that you experience problems, human nature being what it is, 
you want to try to solve those problems. At the same point in 
time, if additional transparency associated with those problems 
could lead to reduced funding or could--then obviously there is 
a conflict there.
    My view is that for any system to work, you know, whether 
it's an acquisition system, you know, whether it's a health 
care system or a corporate governance system, you have to have 
three things: incentives for people to do the right thing, 
including knowing when to say no; two, reasonable transparency 
to provide some assurance that people will do the right thing 
because somebody is looking, and that's what oversight is all 
about, in part, and periodic reporting; and, third, appropriate 
accounting mechanisms if they don't do the right thing.
    Mr. Murphy. Do we have the first one?
    Mr. Walker. We don't have the right incentives, I don't 
believe. No, I don't believe that the incentives there right 
now are there for people to make tough choices, to say no in 
appropriate circumstances. Whether that be with regard to 
platforms, whether it be with regard to quantities, whether it 
be with regard to delay moving into the next stage because we 
don't have the technology, maturity, the right level. That's a 
victory. You get the money, you spend the money, and you don't 
really hit the milestone. In form you may hit the milestone, 
but in substance you don't. Everybody is a loser on that. I 
think people need to understand we need to move away from that.
    Allen, you're closer to it day to day.
    Mr. Li. I absolutely agree with the Comptroller General. 
The issue is there is obviously a disincentive to be able to 
tell your superiors that you have problems with your program 
because that might translate into reduced funding in the 
following year. When the evolutionary approach that we have 
identified in terms of making sure that we have the sort of 
technologies that would match those expectations and the 
resources, I think that would be the answer, sir.
    Mr. Murphy. So in practical terms, how do we do that? What 
is standing in the way of that implementation?
    Mr. Walker. One thing in--so much in government, we need to 
end up defining how do you measure success. You need to end up 
aligning institutional and individual performance measurement 
and reward systems with a modern definition of success.
    I will tell you there are dedicated professionals, both in 
uniform and civilians, working on this program and other DOD 
programs. They're not the problem. The problem is the system. 
The system and the process and the historical ways of measuring 
success. People are doing their best to try to make this system 
and others work. I have no doubt about that.
    Mr. Murphy. That's frustrating.
    Let me move to another area. Since the F/A-22 is still in 
development, why is it too late to adopt a knowledge-based 
acquisition approach? What is its impact upon the joint----
    Mr. Walker. It's not too late prospectively for what's 
left. It's obviously too late for the stages that we've been 
through.
    I think part of that has to do with the issue that was 
raised before. What type of quantity should we be producing at 
this point in time? What is the maturity of the technology and 
do we want to increase production rates?
    We should use the commercial best practices maturity of 
technology concept as part of that decisionmaking process, not 
as to whether you're going to produce but when and how many 
you're going to produce.
    Mr. Li. Mr. Chairman, the F/A-22 is both in development and 
in low-rate production. It has been in low-rate production 
since 2001. Development is about 95 percent complete. That is 
the reason why it is very difficult to apply those principles.
    Mr. Murphy. I guess when I look at the numbers of what was 
estimated that would first be developed of where we are now 
over time, how many do we really need then? Do we need 300, 
400, 500, 200? This is very frustrating to see these numbers 
floating all over.
    Mr. Walker. It's not our job. We're not in a position tell 
you how many we need. I think that's where the Department of 
Defense has to make a business case. I think they need to make 
that business case based upon today and tomorrow, not the past. 
What's the situation in the world today? What do we expect it 
to be in the future, to the best of our ability? What are the 
types of threats that we face? What type of capabilities do we 
need? To what extent does this address that threat, and at what 
cost and what ripple effect on the JSF, on the space systems, 
on, frankly, programs for other services as well?
    Mr. Murphy. One other category I want to ask about is the 
timeframe on production and development here. When I look at 
some of the numbers, look at inflation and change orders or 
whatever else is in there, I'm puzzled on this when we look at 
the cost overruns. Are those pretty clearly in the initial 
estimates of cost of production when it was set up years ago? 
There would be anticipation of this inflation, there would be 
anticipation of change orders, anticipation of technological 
changes?
    Mr. Li. Not the change orders.
    Mr. Walker. The change orders you wouldn't. The inflation 
you would. Obviously, you know, there's going to be some change 
orders. Honestly, change orders, you know, affect many 
different types of things, including, for example, the Capitol 
Visitors Center. There are change orders on the Capitol 
Visitors Center; and, therefore, that ends up costing more 
money.
    So it's a basic concept, but let's not go into that concept 
right now.
    Mr. Murphy. I just think of whether--and people may be 
watching this, may know nothing about these planes, recognize 
where they're adding a room on to their home and building a new 
school building in a local school district that very often one 
gets these estimates, and it sounds like--good and affordable, 
and inevitably there's changes that come through. So I'm 
wondering if that's part of what we ought to put into our 
initial estimates of where things are, to recognize that's an 
inevitable part of any production, instead of getting hopes up 
on the Department of Defense and Congress that we can build 
this many planes for this amount of money and this amount of 
time. I would think any business would be anticipating that is 
part of the cost of building production, that there will be 
those changes.
    Mr. Walker. Well, I would respectfully suggest there's a 
strategic level for this discussion and kind of a tactical 
level.
    On the strategic level, when you're talking about the 
platform itself, whatever platform it is, whether it's F/A-22 
or whatever it might be, you know, you have to say not what you 
want but what you need. I think to a certain extent one could 
debate whether or not this platform--it may have been a need in 
1986. It may or may not be a need now. It may be more of a 
want. I don't know. That's the business case. You've got to be 
able to develop a business case.
    So, as I said before, in America we can do anything with 
time and money. We can build all kinds of things, but we have 
limited resources. So we have to figure out what should we be 
doing based upon credible threats, what can we afford to do, 
what are the ripple implications of that.
    Mr. Murphy. Thank you. I yield back.
    Mr. Tierney. Ask the gentleman to yield so I don't have to 
ask for additional time. I will squeeze this in on that.
    One thing I wanted to make clear, however, in the original 
estimates of this program and others, people make predictions 
of some element of change. I mean, they understand there's 
going to be some change orders, some inflationary factors, 
whatever.
    We're talking here originally of some $13 billion plus of 
unaccountable, unforeseen expenses that should probably--some 
portion of those, not a great portion of those--should have 
been foreseen.
    Mr. Walker, has the Department of Defense or the Air Force 
ever indicated to the GAO any change in their plans for the 
number needed from the original plan? Have they ever said to 
you, we've made a determination that we're going to need a 
different number from that 600 and whatever it was in the 
beginning, and here is the reason why? Have they ever come 
forward with that?
    Mr. Walker. I haven't seen that; and, candidly, I haven't 
seen the business case that I talked about before.
    Mr. Tierney. So I guess we can follow right down the line. 
So they haven't indicated why they need those numbers, they 
haven't indicated what the cost per plane would be at that 
number, and then I guess we can assume that then there has 
never been any analysis done of what the effect of that final 
number would be on other plans for the Air Force or other plans 
for the Department of Defense systems and things of that 
nature. This would be a good area for us to start looking at 
here, from what I gather.
    Mr. Walker. We haven't seen it. But I will say this: The 
Department is making progress in many regards. There is no 
doubt about that. They're making progress not only with regard 
to the adoption of spiral development, they're also making 
progress with regard to trying to match the POM with the 
budget, the program planning with the budget.
    They're doing that. That's a positive step. But they're 
only looking out 1 and 2 years.
    The problem is, you need to consider longer-range 
implications and total life-cycle cost. So you can manage that 
for the next year or two, but the implications over the longer 
term are much greater on the ripple effect than the short term.
    Mr. Tierney. Has the Department of Defense or the Air Force 
ever indicated to the General Accounting Office if you made 
less of these F/A-22s with the money not spent on those what 
other platforms or systems could be increased and how that 
would effect the mission of the Air Force or the Department of 
Defense generally?
    Mr. Walker. They haven't, but I think it's something they 
need to do. Because there's a very real issue of aging 
platforms. There is no doubt about that.
    Mr. Tierney. Thank you.
    Mr. Murphy. Recognize Mr. Duncan for 10 minutes.
    Mr. Duncan. Thank you, Mr. Chairman.
    I was interested in, Mr. Walker, in your statement you 
said, the problem is the system, not the people, that you would 
give the Pentagon an A on the people and technology or 
something--and a D in efficiency, economy and accountability or 
something to that effect.
    I think, actually, there are many fiscal conservatives who 
would make that D and F when it comes to programs like this.
    I was told by staff that in 1991--they don't have the 
original cost estimate. The old shell game in Washington is to 
low-ball the cost of any program when it first starts and then 
allow all these cost overruns and add-ons and everything else--
that they said they don't have what the original estimate was 
in 1996. But in 1991 they estimated that these planes were to 
cost $93 million apiece, and now you said a few minutes ago 
it's now over $200 million. They tell me it's $257 million. Is 
that roughly correct?
    Mr. Walker. Allen.
    Mr. Li. Mr. Duncan, it's nice to see you again. A few years 
ago I testified before you on transportation issues.
    Mr. Duncan. I remember.
    Mr. Li. It's different now to talk about defense.
    But, switching gears to defense, they are different numbers 
because the Air Force in their explanation, for example, in 
today's statement identifies how it's decreased by lot. The 
figure that the Comptroller General gave to you is an average 
figure for the entire program.
    Mr. Duncan. That leads me into something else. You know, 
unfortunately, here in Washington it seems that too many people 
forget that $1 billion is a lot of money. $1 billion is a lot 
of money. What I have from the staff says the current 
production cost cap is $36.8 billion. Apparently, this is what 
was set by the Defense Authorization Act of 1998. The current 
production cost estimate is $42.2 billion, according to the Air 
Force, and $43.5 billion according to the GAO. Therefore, the 
project is $6.7 billion above the cap.
    I mean, that should be mind-boggling or shocking to most 
people. It doesn't seem to shock anybody around here, but it 
sure should.
    What is the difference--where is the $1.3 billion that the 
Air Force and the GAO disagree on? Do you know--even that 
should be considered a lot of money.
    Mr. Li. It wasn't a disagreement between the Air Force and 
GAO. As we identify in the report, the Air Force acquisition 
plan identified that figure of $1.3 billion. What we were 
indicating in the report was that the Office of the Secretary 
of Defense's number of $43 billion initially did not include 
that $1.3 billion. That's what we were pointing out, that were 
they to consider the full--all of the cost that came subsequent 
to their decision in August 2001 they would include that.
    In direct answer to your question, the $1.3 billion part of 
that, for example--and we heard about this earlier--is the 
change in subcontractor. For example, initially, a 
subcontractor, the avionics--one of the avionics subcontractors 
actually was part of Lockheed Martin. Subsequent to that, that 
particular subcontractor was sold. So the savings that they 
originally thought that they would get from somebody being 
within and not having to pay for profit, now they're having to 
incur that extra cost.
    Mr. Duncan. Well, you know, I love my children, but I'm 
always on to them about not wasting money. In the same way, 
I've always considered myself to be a pro-military type person. 
But that doesn't mean that I just want to sit back and watch 
the Pentagon waste billions and billions of dollars. It seems 
to me if we can justify this we can justify almost anything, I 
mean just anything. I know these companies are making obscene 
profits out of this, but this is wrong. This is just wrong to 
have these kinds of overruns.
    I know this is a time of great patriotism, and we're all 
proud of the job the troops have done, and there is certainly 
nothing against them, but this doesn't mean because everybody 
is pleased about the quick and decisive victory in Iraq that we 
should just sit around and justify billions and billions in 
cost overrun and that we can just sit back and cavalierly 
accept anything that happens in the Defense Department.
    Because when we just lose billions and billions of dollars 
it hurts poor and lower income and working families all over 
this country, and we seem to forget that.
    Then we talk about these change orders. You know, I guess 
some people would like to have a Rolls Royce, but maybe they 
have to settle for a Mercedes. And I think that's the way it is 
with some of these planes. We can buy a plane with every bell 
and whistle on the world on it, but we might be able to buy one 
for $100 million less that could would be just as safe and do 
just as good a job.
    I'm a low-tech person living in a high-tech world, but they 
tell me that a computer is obsolete on the day that it's placed 
on a desk. That's is how fast technology is moving.
    So if we're going to have research and development and then 
we start production and then 2 or 3 years down the road we come 
in with all these change orders because we've got some new 
high-tech gadget that somebody wants on there--I mean, where is 
it going to stop? What we're going to see in the future, we're 
going to see worse cost overrun and explosions in programs than 
what we're seeing here today. If we don't stop this, we're in 
bad trouble in the years ahead.
    Yes, sir, Mr. Walker.
    Mr. Walker. In fairness, Mr. Duncan, I think the DOD has 
adopted most of our recommendations with regard to their 
acquisition policy. They are moving to an evolutionary or 
spiral development approach. With regard to some of the newer 
systems--not the F/A-22--but with regard to some of the newer 
systems, we have definitely seen improvement.
    The biggest problem of late has been that sometimes they'll 
adopt a policy that embraces commercial best practices 
evolutionary development, rather than the big bang approach, 
etc., but in practice they don't always implement that policy. 
It's getting better.
    This amount of money--we can't afford it as a Nation. 
Frankly, DOD can't afford it. Because with the budget pressures 
that are coming it's going to have a very real effect. There 
are going to have to be tradeoffs. So they can't afford these 
kinds of overruns either, I would suggest.
    Mr. Duncan. You know, I'm for a strong national defense, 
but we're spending more on defense than just about all other 
nations in the world combined. It seems to me that if we're 
going to do all the other things that people want us to do we 
have to limit some way.
    I'm glad to hear that you're saying that things are 
improving or getting better.
    Mr. Li. I'll like to build on what the Comptroller General 
just said.
    In terms of the way that the program has recently been 
managed, DOD has itself--and I would assume that Dr. Sambur, 
when he comes on in a few minutes, he will tell you that he was 
not satisfied when he came on board when he found out that the 
development costs had increased by $876 million. They have made 
and they have told me they have made significant management 
changes both at the Air Force level and also insisted that 
occur at the contractor level. So the concern is there, and I 
think that's encouraging.
    Mr. Duncan. I'll tell you this, if people aren't concerned 
or upset or shocked about what's happening in this program, 
they've been in Washington too long.
    Thank you, Mr. Chairman.
    Mr. Murphy. Thank you, Mr. Duncan.
    The Chair recognizes Mrs. Maloney for 10 minutes.
    Mrs. Maloney. I thank the chairman for calling this 
important hearing.
    I would like to be identified with the comments of my 
colleague on the other side of the aisle, Mr. Duncan.
    But, first, I'd like to welcome Mr. Walker and all the 
panelists. I just came from the floor where I put into the 
record the entire GAO report that you did on the Royalty in-
Kind Program and how that is going to end up costing taxpayer 
dollars. So I congratulate you on the work that you've done to 
help us manage government better.
    If there was ever a program that needs to be managed 
better--this program was called the flagship of acquisition 
reform when it started. Now it looks like a disaster 
personified. You've done a good job in sort of pointing out 
what went wrong.
    I'd like to join with my colleagues on the other side of 
the aisle asking Mr. Walker to come forward with some 
suggestions on how we prevent this in the future. We obviously 
need stricter guidelines, more accountability and more honesty 
in contracting.
    One of the things that we did in New York City when I 
worked there when companies had huge overruns in the--we kept a 
record of it so that when they came back for city contracts 
they got demerits for poor performance, and their ability to 
get a future contract was diminished. So that contractors then 
tried to be more honest about how much it's going to cost.
    But going into a program where we're going to get 648 
planes--and I see one of my colleagues who was an officer in 
the military, Mr. Schrock, in the Navy before this, I know he 
must be outraged that we could--when we went in there we were 
going to get 648 planes. Now we can only get 224 because of the 
tremendous $20 billion cost overrun.
    My question is, how can we put more accountability into the 
cost overrun situation so that it doesn't get so out of hand?
    You know, granted, if the military comes in and says I want 
to redesign the plane, that's another thing, but when they 
happen--it's usually the contractor saying I need more money. 
So how do we put more government control or accountability or 
better planning on this? As Mr. Duncan said, we spend more than 
the whole world combined on our defense. We are ready for the 
next war. We are ready for any war. But we've got to get some 
control on this military spending or our deficits are going to 
go up and we're not going to have the money for education or 
for child care or for health care here at home.
    So, Mr. Walker, how do you----
    Mr. Walker. We have made a number of recommendations. Let 
me deal with it on several tiers just briefly.
    Mrs. Maloney. On cost overruns, how would you control the 
cost overruns?
    Mr. Walker. I think the primary way you do it is twofold. 
No. 1, you adopt the evolutionary best practices approach that 
we talked about, where you make sure that you're trying to use 
spiral development, which is what the Department is talking 
about, to mature the technologies, to develop certain levels of 
capability such that you can get some platforms delivered 
earlier. Then you end up upgrading over time as new 
technologies mature and as they become available to do that. I 
think that makes eminent good sense.
    That was not done in the case of the F/A-22. They're trying 
to adopt that practice with regard to other systems.
    I think, in addition to that, you have to look at your 
contracting terms. You have to make sure that your contracting 
terms provide for the appropriate incentives and accountability 
mechanisms to the contractors to make sure that, you know, if 
things go better than you thought, then somehow they will 
suffer--they will gain from that, if it goes better than you 
thought. If it doesn't go as well as you thought, they may have 
some penalty associated with that.
    Frankly, many of our contracts don't work that way. We need 
to make sure that we have an adequate amount of transparency in 
the interim to know how things are going so not only DOD can 
manage it better but the Congress can oversee it better in 
order to try to help intervene earlier rather than after it's 
too late to really do much about it.
    So those would be a few things off the top of my head.
    Mrs. Maloney. But how would you build the incentive in? It 
sounds good. Put incentives in that they perform better. 
Specifically, how would you do that? We're going to pay you 
more if you keep your contract or line or we're going to keep a 
record of your overruns and penalize you the next contract? How 
do you build in the carrot and the accountability?
    Mr. Walker. Well, frankly, this happens in a lot of 
different types of contracting arrangements, not just weapons 
systems. It can happen with regard to information technology 
systems. It can happen in a whole range of areas where you end 
up defining what you want. You define, you know, key success 
factors. You develop appropriate milestones. Cost, quality, 
timing and performance being other elements.
    To the extent that people end up exceeding those 
expectations, they may have some gain from it. To the extent 
they don't, they may suffer some penalty as a result of it.
    The problem is that many of the contracts, frankly, that we 
have at DOD are so complicated that it's almost impossible to 
understand, much less to administer. We could have days of 
hearings, I think, on this.
    But I'll be happy to visit with you individually on this, 
if you want.
    Mrs. Maloney. Thank you.
    Mr. Murphy. The Chair recognizes Mr. Shays for 10 minutes.
    Mr. Shays. Thank you, Mr. Walker, for being here. I thank 
my colleagues for the questions we asked.
    We had a hearing and December 7, 1999. The purpose of the 
hearing was to examine how the Air Force implemented cost 
control strategies and dealt with scheduled overruns in the F-
22 program.
    We had a hearing on June 15, 2000. The purpose of the 
hearing was to examine the status of the Air Force production 
cost reduction plans in the F-22 program.
    We had a hearing on August 2, 2001. The purpose of that 
hearing was to continue the subcommittee's examination of 
production cost reduction plans for the F-22 program and to 
determine why the DOD and the Air Force were projecting 
different production cost estimates.
    Nw we are having a hearing on April 11, 2003. I was 
thinking that we have kind of missed a gap here, but when I 
look at the hearing, we had the third hearing--it was August 2, 
2001. And something quite significant happened on September 11, 
2001.
    But this is a hugely important hearing. It's hugely 
important in my judgment for just the terms of what we can 
learn in the process and how we can see what happens in the 
future. And it's very important based on the actual program 
itself.
    I agree with my colleague, Mr. Schrock, that we need the 
plane. I also agree with Mr. Tierney that this is short of an 
outrage. To go from 750 planes in 1991 and make it 648 to 438 
in 1993, to 339 in 1997, to 333 in 1999, to 276 in 2002, to 
maybe 224 today and not get the same numbers from the Air Force 
and from DOD--and, frankly, the arrogance of not--their lack of 
willingness to tell us how many planes.
    For instance, I want to know from the Air Force how many 
planes can they build under the cap of $36.8 billion. That's 
what I want to know.
    The other thing I want to know is what we can do with 276 
or 224? What planes are they replacing? The F-15, Mr. Walker, 
is that the only plane that would be replaced by this?
    Mr. Li. Because of the age of the F-117s, the attack 
version of the F/A-22 would also enable them to replace the F-
117s.
    Mr. Shays. So am I to make an assumption, though, when 
we're doing--we have replaced all those planes with a number of 
224 or 276?
    Mr. Walker. No.
    Mr. Shays. So what am I to assume and what is the Air Force 
assuming?
    Mr. Walker. That's why I say I believe you need a business 
case. You need to demand a business case and to try to 
understand that.
    I think what's been happening is that the numbers have just 
been going down in order to fit whatever appropriation is 
there, and that is not the way to do it.
    Mr. Shays. I think that is fairly obvious. I just wanted 
that on the record.
    The challenge I have, Mr. Schrock, is coming to grips with 
the fact that we have an DOD and Air Force that is not 
cooperating with the committee or Congress in helping us sort 
out this mess. It has become a gigantic mess.
    In terms of process in general, I'm intrigued by the 
evolutionary approach versus the so-called revolutionary 
approach. And I'm interested that you make the claim evidently, 
Mr. Walker, that we would have had--we would have planes--some 
of the F-22s would be in operation today, that they would cost 
less, and we'd be able to buy more of them. That's really what 
you're saying to us. But I don't know how you get there.
    Mr. Walker. Well, basically, what it comes down to, Mr. 
Chairman, is I would characterize that what happened on the F-
22 is that in 1986 we were in a very different security 
environment. We faced very different adversaries. The Air Force 
decided that we needed to maintain air superiority over time 
and therefore developed this F-22 concept. The concept was, to 
a great extent, based upon wants rather than--not just needs; 
and there was some need--there's no question--but also wants. 
They wanted to design the Rolls Royce, as was mentioned. Why 
can't we do this? Wouldn't it be nice if we had this? And even 
when they came up with that, the definition of this evolved 
over time.
    My point is that spiral development says, what type of 
capabilities do you need versus what would you--what do you 
want, which you may not need. It says, determine what those 
capabilities are and start to build systems in an evolutionary 
approach where you end up, you know, maybe getting an 80 
percent solution for the first batch and then you end up--as 
technologies mature, you get a 90 percent solution for the 
second batch, and you get a 100 percent solution for the third 
batch.
    This is oversimplifying it, but that's basically the 
concept, rather than putting, you know, all your money and 
trying to build the Rolls Royce when technologies have not 
been, you know, have not matured, experiencing significant 
problems, having to deal with, you know, retrograde, retrofit 
and all these other issues, just not the way to do it. It's not 
the way it's done in best practices, not the way it should be 
done at DOD.
    Mr. Shays. One of the most instructive points that was made 
to me by a Congressman who is no longer here, but when I was a 
newer member he said, the decisions you make in defense--and he 
was saying that to me as a new Member, given that I was in a 
State House of Representatives and the one area that was 
totally new to me was defense expenditures. He said to me, 
whatever decision you make today will only have impact 10 years 
later. Or basically--not only--but in a sense he was saying 
what I do today is going to impact the military of 10 years and 
beyond.
    So in 1991 I was thinking--and we were fighting the Gulf 
war. I was thinking, thank gosh that people in the early 1980's 
and late 1970's made us look good in 1991. I'm a Member of 
Congress, but I had only been in for 4 years.
    He also told me something else. He told me our job in 
Congress is to make sure it's never a fair fight. That my job 
is to make sure when your son is in battle he has the best 
equipment and the best training. That's my job, and we never 
want it to be a fair fight.
    So what I'm thinking right now is we could keep the F-15, 
and we are still slightly superior. The Russians, that's the 
one area that they seem to do well, is make planes. The French 
make a pretty good plane. So I'm going through this kind of 
dialog, is this my--you know, a moment of truth for us? Is this 
what makes sure it's never a fair fight?
    But now, looking at the war right now, we control the air; 
and I'm wondering, so we didn't need fighter to fighter in this 
war. And I'm wondering when we'll need it. And so it strikes 
me, one, we have to monitor what other planes are being made.
    Sorry for this long introduction, but I believe in the 
concept of opportunity costs, which is what, you know, was 
drilled into me in graduate school. That was the clear concept 
that if you spend your money here you're not going to be able 
to spend it here.
    I would say to Mrs. Maloney it's not just an issue of 
opportunity costs in terms of education and so on, it's within 
DOD. They're going to have to make some really tough decisions.
    So it gets me to this question. In your judgment, Mr. 
Walker, are we so far along that it makes sense just--even if 
we can only make 224 planes, does it make sense for us to 
continue, given all the investment we've made? So the 
opportunity cost is--we have kind of already been at the 
opportunity cost level.
    Mr. Walker. Well, the opportunity cost is what I refer to 
as the ripple effect. If you have negative variances, what is 
the ripple effect of that negative variance? My personal view 
is--and we're already making the plane. We're in limited 
production right now. So we're going to have some F-22s.
    I think the real question is I believe the business case 
needs to be focused on how many do we need, for what purpose, 
at what cost, and with what ripple effect. Looking forward with 
regard to 10 years from now or more, what do we think we're 
going to face? That's what I think has to be done.
    How many that is, I don't know. I wouldn't want to 
speculate. But it should be based on a need, not a want and not 
a plug.
    Mr. Shays. But in one sense we should almost separate the 
cost out and have a very studied approach as to you are 
replacing some plane, how many planes are you needing to 
replace. So technically what number you need--it might even 
lead you potentially--I wouldn't make the assumption now--that 
you would rebuild a plane that we've made in the past at a 
lower cost and make the F-22. We don't know that, right?
    Mr. Walker. No, you could decide that you might make some 
adjusted number of the F/A-22 which is, you know, obviously the 
most advanced system that is on the drawing board right now and 
redeploy some of those dollars, keep it in defense and redeploy 
it to buy larger quantities of either existing systems that 
have been upgraded or the JSF or whatever.
    That's not my job. I can't do that. But that is part of the 
analysis that has to happen here.
    We can't look at these programs in isolation. We can't be 
wedded to what we wanted years ago and what we may or may not 
need today.
    Mr. Shays. Thank you.
    I notice we have another colleague.
    My time has run out. I do thank you for all your good work 
on this and other issues.
    I will say to you that I think that this committee will 
devote some time to the whole concept of--that is being done 
now, but examine it in other programs and maybe ask you to show 
us some cases that are working well in the evolutionary versus 
the revolutionary.
    Mr. Walker. We do have some of those, and I think it's 
important to note those for the record.
    I would like to thank you, Mr. Chairman, for allowing me to 
have Mr. Li here, who is on the point for our F-22 effort.
    Mr. Shays. Well, you have good people working for you; and 
he is one of them. Let me say it differently: You only look 
good because of your good people.
    Mr. Walker. We're only as good as our people, Mr. Chairman. 
We all know that.
    Mr. Shays. I have a great committee.
    Mr. Murphy. Thank you, Mr. Shays.
    The Chair recognizes Mr. Bell for 10 minutes.
    Mr. Bell. Thank you, Mr. Chair.
    I want to commend Chairman Shays and Ranking Member 
Kucinich for their leadership on this issue, as well as 
Representative Tierney, who I know has demonstrated a 
commitment over the years, too, on the issue.
    For just a moment I want to focus on the past--and 
sometimes it can be a good guide to the future--and, more 
specifically, some of the risk that GAO had identified several 
years back with the program, such as tactical problems. If you 
could, Mr. Walker, if you could tell us how those problems that 
were identified were addressed and tell us if it's fair to say 
that a lot of the problems that were pointed out by GAO were 
successfully addressed.
    Mr. Walker. We have pointed out a number of problems in the 
past. I'll answer briefly and then ask Mr. Li to provide some 
additional details since he has been involved with this a lot 
longer than I have.
    The basic problem that we've found is the failure to follow 
commercial best practices with regard to the maturity of 
technology before you move between different stages, design to 
development to limited production, for example. That's the 
basic problem. There have been avionics problems. There have 
been various aspects that I would ask Allen to get into as to 
what some of the details are there.
    Mr. Bell. Can you talk about how they are addressed?
    Mr. Li. Indeed, yes, sir. Thank you for your question.
    The Air Force in the previous reports that we identified--
we identified problems, for example, with their canopy, the 
fact that cracks were occurring in the canopy. That has since 
been resolved.
    We had identified--this year, we're identifying issues 
regarding the fin buffeting issue; and they have said that they 
have a fix to that. The fix that they have has been 
demonstrated above 10,000 feet. Under 10,000 feet has still not 
been demonstrated. So while that shows their commitment and 
their progress, they have not finished that.
    The last thing I would identify is avionics. We've 
identified that as an issue and a problem area for several 
years, and that still remains a problem. Dr. Sega and Dr. 
Sambur are in the midst right now of trying to resolve those 
problems. They think they have a fix to some of those avionics 
problems. It's going to take a few months for them to get that 
resolved.
    Mr. Bell. Looking back to the past for a guide and moving 
forward to the March 2003, report, do you think it's fair to 
say that, given the past response, that there will be a similar 
response to the problems identified in the 2003 report or are 
we talking about a different set of hurdles that simply can't 
be overcome?
    Mr. Li. I don't have a crystal ball to be able to identify 
whether or not in operational test and evaluation something 
will crop up. I am encouraged by the fact that the Air Force is 
responsive to the identification of problems and is trying to 
find solutions to them.
    Mr. Bell. Mr. Walker, I wanted to go back when you were 
talking about the question of how many and trying to determine 
how many will be needed. How would you recommend going about 
figuring that out and basing it on what?
    Mr. Walker. First, I think intellectually what we ought to 
be doing is figuring out--we ought to be looking at current and 
expected future threats, which presumably should be part of the 
national security strategy. That then should translate to the 
national military strategy. That should then translate to what 
type of capabilities do we think we'll need at what relative 
timeframes to be able to do that and also what relative 
quantities we think we'll need not just to replace what we 
have--because the number we have may not be what we need. The 
number that we have and had for the cold war era may not be the 
appropriate number that we need for the future.
    So my view is that there is a need to fundamentally step 
back and to say not what path we committed to in 1986 that 
we're still basically going down. The only difference is, how 
many of those are we going to buy and when are we going to get 
them? We need to take this point and look forward and say, what 
type of capabilities do we need and what relative quantities?
    If you assume that the Defense Department is going to have 
a budget cap, which I think is a reasonable assumption, given 
our long-range budget simulations, then for them to make more 
conscious tradeoffs as to what the long-term effect might be on 
JSF, what it might be on space systems and what the effect 
might be on other military services as well, I don't think that 
has happened.
    I don't think that's happened.
    Now, I will say for the record that the Defense Department 
is doing a better job on evolutionary development. I will also 
say they are doing a better job of matching the POM, which is 
the program planning, with the budget. But they are only 
looking out 2 years. You need to look much longer than 2 years, 
because the ripple effect on some of these things gets much 
greater over time.
    Mr. Bell. I was going to ask you that. How often do you 
think that assessment needs to be made in terms of how many? 
How often should we be coming back to that question? Because I 
think what you are recommending is a pretty large degree of 
flexibility based on what's going on.
    Mr. Walker. I would respectfully suggest that I'm not aware 
that it's been done in years, and so it would be good to start 
with one. Then after that I would suggest that we look at the 
changing environment. If there are material subsequent events 
in the global condition, in the security condition, in our 
budget situation or whatever, then it might make sense to 
relook at it. But we need to start with one.
    Mr. Bell. So when you say it hasn't ever been done, would 
you believe it was always done as far as fixing the number was 
always done in somewhat arbitrary fashion?
    Mr. Walker. I don't believe that it was arbitrary. I 
believe that it was a plug. It's not arbitrary. In fairness, 
now, this is not the only plug. I mean, I am the audit partner 
on the consolidated financial statements of the U.S. 
Government. There was a $17.1 billion plug in coming up with 
the last audited financial statements with the U.S. Government. 
So this is not the only plug that exists in government, and 
that's real money too.
    Mr. Bell. Thank you.
    Thank you, Mr. Chairman.
    Mr. Shays. Thank you. We have 11 minutes to go--I'm going 
to recognize Mr. Platts, but you probably won't want to use 
your full 10 minutes.
    Mr. Platts. Thank you, Mr. Chairman. Actually, I will be 
very brief. I appreciate the focus of the subcommittee on this 
issue. And thank goodness for C-SPAN radio. I was delayed 
because of the weather and a traffic accident in getting in 
here this morning. I got to hear most of the testimony from Mr. 
Walker and questions. So I appreciate that opportunity via the 
radio.
    Mr. Walker, I do have maybe just one question. I appreciate 
your testimony previously in the Subcommittee on Government 
Efficiency and Financial Management. And one of the things we 
talked about there is Chief Financial Officer, a career 
position, perhaps a 10-year term or so, to try to have some 
better direction. Would that type of position translate to a 
benefit in what some of the problems we saw here from the 
financial management side of the Raptor program if we had that 
type of position in place today?
    Mr. Walker. As you know, there's a level two position, the 
Under Secretary of Defense for Acquisitions. My personal view 
is, is that the importance of the acquisitions process and all 
related activities and the amounts of money involved clearly 
justify having a level two person focused full time on those 
issues. The position that you are referring to that we talked 
about a couple days ago was GAO has talked about the fact that 
we believe that it may be appropriate for the Department of 
Defense and certain selected other entities who have had years 
of problems in dealing with basic management infrastructure 
items, you know, things like financial management, information 
technology, knowledge management, these types of issues, 
procurement, to have a chief operating officer, chief 
management officials at the level two level who would be 
responsible for planning, integration, and execution of the--
dealing with the issues that frankly just don't get dealt with 
under our current structure.
    I mean, DOD has six of the high-risk areas on GAO's high 
risk list plus each one of the governmentwide areas they are 
subject to. I think you need to consider having somebody with 
proven experience and track record on that with something like 
a 7-year term with a performance contract who could stay 
focused on the things that need to be done, including the 
cultural transformation efforts which, based on my experience 
in the public and private sector, when you're talking about 
cultural transformation, it takes 7-plus years to make it work 
and make it stick. We don't have anybody that sticks around 
that long. And you know, with all the turnover on the 
acquisitions part that I showed before--and I'm not saying you 
need 7 years for a program manager, but for this kind of 
position, the chief operating officer, chief management 
official, I think it makes eminent good sense, and I think it 
would help tremendously at the Department of Defense to deal 
with a lot of these high-risk areas and help improve economy, 
efficiency, effectiveness, and accountability.
    Mr. Platts. Thank you, Mr. Walker, and, Mr. Chairman, thank 
you. And my hope is through some of the efforts of the 
Government Efficiency and Financial Management Subcommittee 
working with Chairman Shays that we will have that cultural 
change that will benefit not just the F/A-22 program and how 
that's going forward but DOD in total.
    Mr. Walker. And, Mr. Platts, as you know, you are familiar 
with the $17.1 billion plug that we talked about a couple of 
days ago, Right?
    Mr. Platts. We had a good discussion about that plug. And, 
as you said, it is real money, and trying to account for it is 
somewhat challenging apparently right now for the Treasury. So 
thank you.
    Mr. Shays. Thank the gentleman.
    Mr. Walker, we thank you for your testimony. You have made 
it very clear to us in other hearings where we dealt with cost 
overruns, programs, technology that isn't working and so on 
that we need a chief operating officer, chief management 
officers. They need to have continuity. I will just emphasize, 
as I've looked at this political process, that these are deputy 
positions, that sometimes they are not assigned when a 
President takes over for a year. They may take another year to 
go through the process. And so they are in office for about 2 
years, and Lord knows who is doing those positions during the 
transition.
    So we look forward to working with you on that issue in 
general.
    Let me just ask, is there anything you need to put on the 
record before we adjourn?
    Mr. Walker. No, Mr. Chairman, I don't.
    Mr. Shays. Before we recess, I'm sorry.
    Mr. Walker. No, there's not. But I would mention one thing. 
We do right now--as you know, at DOD you have two level two 
positions that I'm aware of. You have the Deputy Secretary and 
you have the Under Secretary for Acquisitions. I would 
respectfully suggest that they both have full-time jobs. And so 
what I'm talking about is another level two person who would be 
this chief operating officer or management official in order to 
deal with these basic infrastructure items.
    Thank you.
    Mr. Shays. Thank you for clarifying that.
    Let me say to our next panelists that we are going to 
expect from DOD and from the Air Force that they tell us, 
without any reluctance, how many planes they can build with the 
statutory cap of $36.8 billion. That is the least that this 
committee can expect to get from the Air Force and DOD, and so 
I hope that is forthcoming without even needing to ask that 
question.
    So we will duct empanel, our next panel as soon as we have 
this vote. I'm not sure, is it a one vote that we have? I don't 
see a clock. It's two votes. Thank you. So it probably is going 
to take us about 20 minutes, give or take.
    Thank you again, Mr. Walker and Mr. Li. We are recessing 
and will be back.
    [Recess.]
    Mr. Shays. We will call the hearing to order, and we will 
welcome Mr. Michael Wynne, Principal Deputy Under Secretary of 
Defense, Acquisitions, Department of Defense, and Dr. Marvin 
Sambur, Assistant Secretary of the Air Force, Acquisition, 
Department of the Air Force, Department of Defense.
    And to say that I know that Mr. Wynne in particular has an 
important meeting with some of our congressional colleagues at 
3, and we will definitely get you out of here 15 minutes before 
and, who knows, maybe sooner. If you give us all the right 
answers, you can be out of here real quick.
    And the right answers are just the honest answers. I don't 
mean that you wouldn't be honest. But in other words, if we can 
get right to the point, we will probably cover a lot.
    I need to swear both of you in, and if you would rise, 
please.
    [Witnesses sworn.]
    Mr. Shays. I would note before calling on you, Mr. Wynne, 
that this is an issue that basically goes from one 
administration to another administration to another 
administration. But ultimately right now both of you are in 
command of this program, have responsibilities. We are just 
trying to understand where we are, where we are going, and the 
logic to, you know, to both issues and to be clear as to what 
contribution our committee can make.
    So, Mr. Wynne, you have the floor.

    STATEMENTS OF MICHAEL W. WYNNE, PRINCIPAL DEPUTY UNDER 
SECRETARY OF DEFENSE (ACQUISITION), DEPARTMENT OF DEFENSE; AND 
    DR. MARVIN SAMBUR, ASSISTANT SECRETARY OF THE AIR FORCE 
   (ACQUISITION), DEPARTMENT OF THE AIR FORCE, DEPARTMENT OF 
                            DEFENSE

    Mr. Wynne. Thank you, Congressman Shays.
    Mr. Shays. Thank you.
    Mr. Wynne. Mr. Chairman, members of the committee, I am 
pleased to come before you today to talk about the F-22 
program, and the acquisition that is and has been managing the 
cost, schedule, and technical aspects that together make a 
program that has as its goal to bring to the defense of America 
the best tactical fighter aircraft that this country has ever 
produced. The aircraft, now designated the F/A-22, has 
characteristics to address the threats to our freedom for many 
years into the future. Though this aspect is not the direct 
thrust of this hearing, it is important to keep the purpose of 
the acquisition in mind as we progress.
    Secretary Aldridge set out five goals as we set out to 
improve the acquisition process in general, and the first among 
them was the restoration of the credibility in the budgeting 
process to gain your confidence that year after year cost 
increases on our weapons systems could in fact be minimized. 
This provided the opportunity for the inclusion of the 
independent cost estimate in the determination of annual and 
program budgets, reconciling differences and making informed 
judgment if there were variances between the independent cost 
estimate and the program budget. This policy has in fact led to 
dramatic reduction in cost driven changes and allowed some 
focus on stability in other areas that impact cost, such as 
technical risk and changes in quantity.
    The F/A-22 program, which has been in existence for some 
time prior to this policy, had in fact suffered from previous 
steps to manage cost using caps for R&D and caps for 
production. The cap for research and development had the 
program coping with inadequate test articles and a single 
consolidated avionics integration laboratory as well as a clear 
erosion in the area of systems engineering, which appeared on 
the surface to be redundant engineering on this highly 
integrated weapons system.
    During this same period, the acquisition work force was 
being steadily downsized. Program offices were directed to be 
of a certain size in attempting to comply with downsizing 
pressure, yet expected to retain the fiduciary, financial, and 
legal oversight. This led to a reduction in analytic 
engineering capability within the program offices in general 
and for in particular the F/A-22 program office in the area of 
systems engineering and integration. This pressure continues 
and has the potential to introduce yet more risk in the 
process. The areas that suffer are areas that seem redundant 
when things go well and then seem essential when things don't.
    Disciplined systems engineering is essential as software 
and integrated systems are becoming the vogue for defense. Two 
million lines of diversified distributed software code are 
being integrated for the F/A-22, and 6 million are forecast for 
the Joint Strike Fighter, and I believe triple that again for 
the Future Combat Systems in total.
    I have spoken out on the need for increased systems 
engineering in the community at large, and firmly believe that, 
as we have addressed the cost risk, we must also address 
technical risks by restoring and agreeing to pay for our 
supplier capability in this critical software skill area, and, 
within our own community, stop the erosion of our capability to 
be smart buyers.
    Here we have turned to another capable group, the federally 
funded research and development centers, to assist in reviewing 
the current crop of problems and advise us on a good path 
forward. Although their primary role is in research and not 
troubleshooting, they are also great sources for talented 
engineers who can and have helped. I would ask that as you 
deliberate the complex budget, that you consider them as yet 
another part of the engineering talent pool that the Department 
has to draw on and that has over time been reduced in numbers 
using the rubric of budgetary savings and often accused of 
being redundant to the Department work force.
    I digress to emphasize that we are here today talking about 
an effect, cost increase for a specific weapons systems, and 
recognize that to get at it in a systemic way, we must as well 
look at all the causes. For if we are blind to the causes, then 
we are destined to confront the same issues in another forum 
like this. As one author put it, ``History doesn't repeat 
itself, but it rhymes well.''
    Turning to the present situation with the F/A-22, we have a 
case where the airframe has proven to be superior in its 
characteristics while the software lags in development. The F/
A-22 is meeting or exceeding the key performance parameters 
regarding aircraft performance. Flight testing today 
demonstrates the capabilities that meet the requirements for 
the air combat warriors. Thus far, the structural fix with the 
titanium substitute for carbon graphite has in fact provided 
additional structural strength, reducing the risk of fin buffet 
for the aircraft that the GAO refers to in their report. And it 
appears to be an acceptable fix. Yes, testing in the harsher 
environment below the 10,000-foot altitude, currently scheduled 
for June, has not been accomplished, but it is not expected to 
change that outlook, according to the computer simulations that 
have been accomplished.
    From a technical risk perspective, this leaves as the 
highest risk area the integration of the software and the 
embedded instabilities being discovered in the avionics 
software. At our request and with great cooperation from the 
Air Force, the Director of Defense Research and Engineering 
formed the Avionics Advisory Team, made up of software experts 
from DOD, academia, and industry, to do two primary tasks: 
First, to identify underlying systemic flaws, and to advise OSD 
as to the likelihood of a fix requiring a major change to the 
avionics architecture and/or the flight weapons control 
computers. Second, they will identify impediments to resolving 
the issue and provide suggested approaches to the Air Force and 
contractor design teams.
    Let me address each in turn. First, the team reported that 
they have not uncovered any evidence that the architecture is 
fatally flawed, And they added that radical change to the 
architecture would likely make it harder, not easier, to 
resolve the underlying software integration issue in any kind 
of a timely manner.
    Second, the team identified systems engineering concerns 
which likely contributed to the problem and trouble shooting 
software tools that they suggested would help reduce the 
schedule for resolution.
    The F/A-22 has embraced the Avionics Advisory Team's 
recommendation in the areas of instrumentation and testing 
modalities to assist in detecting and correcting root causes 
for the software instabilities. The Air Force, as you will 
hear, has allocated 60 additional days to this resolution 
process. We want dedicated independent operational testing and 
evaluation to be event driven, not schedule driven, and have 
established some objective criteria representing the product we 
want for the air combat warrior. This includes a run time 
stability measure which will allow testing to be performed in 
an efficient manner.
    While we are encouraged by recent reports of progress, we 
remain concerned about meeting the criterion within the 
allocated 60 days. We have scheduled a review in mid-June to 
determine courses of action to best address all of our 
concerns, and we are following the F/A-22 design team's 
progress.
    I have been briefed recently on actions and progress which, 
if accomplished, should make a difference. That having been 
said, I have to be skeptical until hard metrics allow me to be 
otherwise.
    On behalf of all the men and women in uniform, I want to 
thank you for your support and encouragement, which led to the 
magnificent performance of our total force thus far. I am 
prepared to address your questions.
    Thank you.
    [The prepared statement of Mr. Wynne follows:]
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    Mr. Shays. Thank you, Mr. Wynne. At this time we will 
recognize Dr. Sambur.
    Dr. Sambur. Thank you. Good afternoon, Chairman Shays, 
Ranking Member Tierney, and Congressman Schrock. Thank you for 
this opportunity to discuss with you the Air Force's efforts 
and progress on acquisition reform. Mr. Wynne and I are proud 
to come before you today and discuss our acquisition reform 
policies to increase agility and provide credibility in the 
cost and schedule of our development programs. Our intent is 
not to make excuses for our performance of the past, but rather 
to spell out what we are doing to significantly improve our 
future performance.
    The Secretary and Chief of Staff of the Air Force gave me a 
mandate to improve the way we do business in delivering 
capabilities to the warfighter. From slipping development times 
to reducing deliveries to increased costs, programs have not 
met established baselines and goals. During this past year, I 
have been working to determine the root cause of these 
execution problems. The findings identify several factors that 
lead to poor performance, including unstable requirements, 
faulty cost estimates, lack of test community buy-in, 
inadequate systems engineering, and unstable funding. For the 
Air Force, these program execution problems result in the 
average cost growth of 30 percent and an average development 
time of nearly 10 years.
    Given the problems noted above and the resulting increases 
in program costs and delays in program schedules, I have 
formulated a series of policies to address the underlying 
causes. These policies, as they say, are in violent agreement 
with those you heard this morning from Mr. Walker.
    First, in order to overcome our inadequate requirements 
process, I have implemented an agile acquisition policy.
    Mr. Shays. Could you just make sure--you said ``violent 
agreement?''
    Mr. Walker. Agreement.
    Mr. Shays. A violent disagreement? Or----
    Dr. Sambur. A violent agreement, meaning I concur.
    Mr. Shays. OK.
    Dr. Sambur. I'm sorry if I said it incorrectly.
    Mr. Shays. Oh, no. You said it correctly; it's just the 
word ``violent'' is a word usually associated with 
disagreement. But in this case, that means that you are in 
strong agreement.
    Dr. Sambur. I agree with the policies for improvements for 
the future. In particular, in order to overcome our inadequate 
requirements process, I have implemented an agile acquisition 
policy that demands collaboration; that is, active, cooperative 
dialog between the warfighter, acquirers, engineers, and 
testers. This creates a team from the outset and throughout the 
requirements and development process. This team approach 
results in a true understanding and buy-in to the requirements 
and leads to a stable requirement foundation. As the policy 
states, it encourages spiral approach and is opposed to the big 
bang that you heard this morning.
    Second, not having test community buy-in created problems 
within the acquisition process. To resolve this issue, we are 
developing a seamless verification process to ensure that both 
the development tests and operation tests occur in a single 
process. If the operational testers are involved early in the 
process, then they can assess the operational value of 
development testing and reduce the duplication of effort.
    Third, we need to instill a strong systems engineering 
foundation within the acquisition process. I have implemented a 
process by which all future milestone decisional authorities 
will not sign out any future acquisition strategy plans that 
lack the necessary attention to systems engineering. 
Additionally, I am demanding that systems engineering 
performance be linked to contract award fees and to the 
incentive fee structure.
    Fourth, unstable funding is a constant problem, one that 
will be better managed by instituting a more disciplined 
program priority process and by insisting on the use of spiral 
development methods.
    We have had several successes based on these new policies 
and procedures. One such example is the Passive attack Weapon. 
This weapon was developed as a result of a 180-day quick 
reaction program at Air Combat Command. It was available to the 
warfighter at the 98-day mark. Other successes are detailed in 
my written statement.
    As the paramount reason for your subcommittee meeting is 
the poor performance of the F/A-22, I will also give you a 
status update on the program. Again, my intent is not to 
justify the programmatic performance, but rather to give you an 
appreciation of some of the changes we have made and the 
positive improvements that have resulted.
    It has been a busy year for both the development and 
production phases of the F/A-22 program, and I am pleased to 
let you know we have made tremendous strides in both. We have 
seven Raptors flying almost daily at Edwards Air Force Base. 
These jets have accumulated over 3,000 flying hours to date. In 
the summer of last year, we organized and we made changes so 
that we could execute the envelope expansion testing in order 
to clear the full 9-G point. We put a new plan in place and we 
have been executing a two and a half fold increase to our 
testing rate over the past 6 months. We have successfully fired 
16 missiles, 4 of which were guided. It is important to note 
that one of these shots was an AMRAAM shot at supercruise. In 
the future we will drop JDAM at supercruise.
    To prove the strength and durability of the airframe 
itself, we completed static and first lifetime of fatigue 
testing. These tests traditionally uncover potential redesign 
or retrofit issues, but very importantly we found no--let me 
repeat that--no major issues from either test.
    This program tackled technologies others have never faced, 
and we are getting it done. We are attacking avionics stability 
the same way. We've made fundamental changes in our avionic 
development effort, and I am confident, very confident that 
revolution of avionic stability will be resolved in the future.
    In our production program, we are also getting it right. 
The operation on the production floor at Marietta is rapidly 
gaining momentum. As expected in our production program, in its 
infancy we've had growing pains which have manifested 
themselves in late aircraft deliveries. To address these late 
deliveries, we have been working closely with Lockheed Martin 
to implement a number of initiatives for reducing bill cycle 
time. The changes we are putting in place are making very 
visible impacts. During calendar year 2002 alone, Lockheed 
reduced late aircraft deliveries from 12 months late to 7 
months late. At the current rate of improvement, we expect 
aircraft deliveries to be back on contract schedule by July 
2004 at Aircraft 4035.
    Cost is also important to us. That is why we are very 
focused on production affordability. One visible way we are 
striving for more is through the production cost reduction 
program. We have invested $475 million, including $85 million 
in fiscal year 2004, in producibility improvements. When we 
first established this program, we said we would invest $475 
million. We have not wavered from that commitment.
    I think it is important to recognize that the ground we are 
paving on the Raptor in many ways enables our future force. The 
F/A-22 is developing and implementing state-of-the-art 
technology, fusing leading edge capabilities and pioneering 
manufacturing techniques that will ultimately yield not only 
the world's greatest aircraft but will also establish an 
invaluable set of lessons learned for developing future complex 
weapons systems.
    The F/A-22's unique combination of capabilities complement 
and increase the effectiveness of the entire joint forces. The 
F/A-22 is the kick-down-the-door system. It establishes air 
dominance. It opens the door for follow-on persistence forces. 
It makes, as you said this morning, Chairman Shays, an unfair 
fight. The Raptor is the pathfinder. We have to get it right. 
The Raptor will propagate the American standard of air 
dominance for the decades to come.
    In summary, the Air Force remains focused on providing the 
necessary capabilities to the warfighter in order to win 
America's wars. These capabilities can only be achieved through 
effective and efficient management during the development, 
production, and fielding of systems. By incorporating a strong 
collaborative process, implementing spiral development, and 
infusing systems engineering in our acquisition process, we can 
overcome the tough challenges ahead.
    We are committed to pursuing these actions necessary to 
make transformation work. I appreciate the support provided by 
Congress, and I look forward to working with this committee to 
best satisfy our warfighters' needs in the future.
    Again, thank you for the opportunity to provide this 
statement, and I will be glad to answer any questions.
    [The prepared statement of Dr. Sambur follows:]
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    Mr. Shays. I thank both of you.
    I want to say we are going to be able to--there are just 
three committee members and the two of you. We are going to be 
able to really sort this out. So, you know, my point to you is 
that right now it's not sorted out for me, and I am a little 
disappointed with one aspect of your testimony. I had hoped 
that you would basically, either one or both of you, tell us 
what our $38.6 billion would buy if we had the cap. So--and Mr. 
Tierney was mentioning to me, in spite of our request to that, 
we are still not getting that. So you force me just to ask the 
question. I hoped you would voluntarily do it. So, Mr. Wynne, 
how many aircraft will we get for the $36.8 billion?
    Mr. Wynne. Sir, my estimate--and it is an estimate because 
we have only produced seven so far. And it does depend upon 
whether or not the predicted cost reduction projects come into 
being and impact these airplanes. And it does depend upon how 
such a lower, reduced quantity would be planned out, whether 
you would get more or less inflation, etc. But I estimate the 
impact to be between 225 and 235 airplanes would be achievable, 
again depending upon how the cost reductions would be impacted. 
I have not conducted a thorough review, but I have a lot of 
time in the world of estimating. This is not too bad.
    Mr. Shays. Thank you.
    Dr. Sambur, what would your estimate be?
    Dr. Sambur. I think Mr. Wynne is correct, about the 225 
range.
    Mr. Shays. Now, sort this out for me. First off, as I used 
to do in hearings, and I'll have to expose my ignorance. But I 
have forgotten as to--this is to replace the F-15, but is it 
also to replace some F-16s? Is this solely going to be Air 
Force?
    Dr. Sambur. I think by looking at it as a replacement jet, 
you're looking at it from the wrong way. This is basically a 
technology leap forward to encounter the threats we perceive 
and are actually happening right now in----
    Mr. Shays. Let me ask you this. Who is going to use the 
plane, Air Force or Navy or both?
    Dr. Sambur. Air Force.
    Mr. Shays. OK. So does the Air Force fly any F-16s?
    Dr. Sambur. The Air Force flies the F-16s.
    Mr. Shays. And the F-15s?
    Dr. Sambur. Yes, sir.
    Mr. Shays. So it is basically--and Navy does not fly 
either?
    Dr. Sambur. No. It flies the F-18.
    Mr. Wynne. It specifically flies the F-14s and the F-18s.
    Mr. Shays. Thank you.
    Mr. Wynne. Yes, sir.
    Mr. Shays. But when I look at the complement that we have 
now, we have approximately 1,600, give or take. What is going 
to replace those planes as they wear down? We are not going to 
go from 1,600 to 235, even taking your highest amount. What 
takes the place of that plane? Of both?
    Mr. Wynne. We have a fairly comprehensive look into the 
future on tactical aviation, and we are concerned, as you 
indicate, that the cost of replacement aircraft has caused us 
to reconsider our tactics, strategy, etc. Right now we are 
forecasting that we can extend the life of the F-18 as well as 
the F-15, F-16 until the Joint Strike Fighter comes aboard.
    You asked a great question, if I could follow on, sir, 
about what airplane does the F-22 replace. I would liken it to 
making sure that we have air dominance as we have achieved air 
dominance over every projected threat that we can see in the 
future. Right now it is not limited to the population of Iraq, 
as we were often accused of fighting the last war. We are 
actually in this case looking forward to the next war.
    That being the case, I would say that the F-117 is probably 
the most reflective of the capabilities we have, but it is not 
an air-to-air or an air-to-ground, it is--but it does do some 
of those missions.
    Mr. Shays. OK. I am still--it would strike me that almost 
any reasonable person would conclude--first off, since 
September 11, we have used these airframes in lots of different 
ways, the no-fly zone, north and south. We are using these 
planes to fly periodically over cities. These aircraft, both 
the F-15 and 16, have gotten a tremendous amount of use in the 
last few years, and I am told that it is much like a racecar. 
You bring an airliner in from overseas, it just turns around in 
a few hours and goes back, and it might come back again. It 
just is a real workhorse. It is high performance. But I'm told 
that our fighter aircraft are high performance and wear out 
quickly and parts have to be replaced quite often.
    So what I need to know is--maybe more from you, Mr. Wynne--
are we looking then at replacing the F-15 and F-16 with more of 
those planes? Building more of them? I mean, is that----
    Mr. Wynne. I think we are continuing to buy the F-15 and 
the F-16. I think they are planned to be in our fleet for many, 
many years to come, if not decades. As far as their capability 
is concerned, they are not anywhere close to being as capable 
as the F/A-22 or the Joint Strike Fighter when it comes on 
live. So longer term, I would say that they will be replaced, 
and they will be replaced with a combination of the F/A-22 and 
the Joint Strike Fighter.
    Mr. Shays. When we went down from 750 in 1991 to 648 in 
1993 to 438 in 1997 to 339 in 1999 to 333 in 2002 to 276, and 
while it's not certain that we would go at the cap, I mean, 
it's possible Congress will decide to increase the cap level. 
But if we went with a cap level of 235, what did we have in its 
place as we kept bringing these numbers down and the amount of 
time it took to build the F-22? What did we do? Did we just 
leave this gap, or?
    Dr. Sambur. Can I just have an opportunity to answer that? 
I would like to correct one of the things that Mr. Wynne said. 
We are not in the process of building F-15s and F-16s. We are 
doing some enhancements to them, but we are not in the process 
of doing that.
    Mr. Wynne. That's right.
    Dr. Sambur. Earlier this morning you heard a plea from Mr. 
Walker about a business plan. We have made that business plan. 
As you probably recognize, about several minutes ago there was 
a concern within the Department of Defense as to whether or not 
the F/A-22 was the right way to go, and they challenged the Air 
Force to actually prove the viability of this plane for the 
future, whether or not it was meeting the needs, whether or not 
we had an adequate plan forward.
    So we actually presented to the DOD a comprehensive 
business plan that included the requirements that we felt that 
this F/A-22 needed to meet, a business plan that talked about 
the aging assets of the F-15, and it was very comprehensive. 
And obviously some of it is classified, but some of the 
business aspects are open and you can obviously share that, and 
be happy to share those parts that are not classified with you.
    Mr. Shays. Thank you. The bottom line is, it's good that we 
have that business plan. It needs to be, I think, shared with 
the appropriate committees, including this committee as well.
    Let me just say to you both that you are certain both to 
appear before us again, because we are going to--we missed one 
step along the way after September 11, but we are going to be 
back monitoring this. We know that you all are newer to the 
program, but I think you can recognize there needs to be some, 
you know, sense of statements made and then an assessment of 
how we are doing on those.
    Dr. Sambur. Well, as you said at the beginning, the right 
way to testify is to tell the truth. We are telling you as we 
see it. We recognize the issues you have, and they are good 
issues. And as I said in my testimony, I'm not here to give you 
excuses for performance in the past, which has not been exactly 
great, to use that expression. And we are trying to make 
improvements for the future. And the point that we are trying 
to make here, at least from the Air Force's point of view, is 
that we have taken a comprehensive look at the need for this F-
22 and have balanced it with all of our other needs, and felt 
that this is the way to go forward. We are not happy with the 
number of 224 if the cap is not lifted or 276. You know, we 
feel that we need something in the order of 381. And as we see 
stability on this program and we get some of these processes in 
place, we hope to see improvement. And I will be very happy to 
appear before you in the future and really show you what we 
have done and be accountable if we have not been there.
    Mr. Shays. Fair enough. Let me say that in our third panel 
we have a witness who believes that the number to stay within 
the cap will be closer to 175, and the per unit cost of that 
almost becomes, in his words, manifestly absurd. It's very 
possible that--I mean, obviously in this business plan it will 
share with us if we build, say, 300, what the per unit cost 
would be. I mean, I would imagine that you are giving people, 
decisionmakers certain options as to----
    Dr. Sambur. Absolutely.
    Mr. Shays. And also what our number is regardless of the 
cost, what we need?
    Dr. Sambur. Let me say, Mr. Chairman, that the type of 
questioning that you are giving to me and to Mr. Wynne is not 
unheard of within the DOD itself. There is a tremendous amount 
of questionings associated with this program, and the Air Force 
has time and time again been asked to prove whether or not this 
is the right way forward. And we have had lots of exercises 
like this, a lot of data we have brought forward. And if I may, 
I would like to correct some of the impressions that you heard 
this morning on the GAO report with respect to the $1.3 
billion, which I think there was some confusion on that.
    Basically, the question was whether or not the Air Force 
has accounted for that in our latest numbers, and let me just 
make sure what those items are that were claimed to have been 
missing by the GAO. The first was whether or not we would get 
the multi-year procurement in a timely fashion as we have 
projected, because if you don't get a multi-year procurement 
your costs will go up. We actually were much more conservative. 
We assumed that we would not get a multi-year until 2007.
    The second concern in the GAO report was whether or not we 
would reap benefits from the JSF program, which had a lot of 
commonality with the F/A-22. We assumed a minimal amount. We 
actually were very conservative in that.
    There also was a claim about inflation, that we did not 
adequately put in enough for inflation due to some of the 
schedule moving forward. We also put that in. And proof of the 
fact that our estimates are now more conservative is that for 
the first time, almost first time ever, the CAIG, which is the 
independent cost group within the DOD, now substantiates the 
Air Force number. It is highly unusual when the CAIG actually 
comes in and says, yes, the services have actually done a good 
job in validating their number. And we had a chance to----
    Mr. Shays. I am going to admit my ignorance. I thank my 
colleagues for allowing me to go beyond my 10 minutes, and I 
will be very generous with their time as well. But just tell 
me, when you say CAIG?
    Dr. Sambur. CAIG, and that's the Cost Analysis Independent 
Group. It is a function within the DOD to give an independent 
look at the services' cost estimates. Historically, and almost 
every time, those estimates differ. In this case, they 
corroborated and agreed with our numbers. And we went through a 
very thorough exercise to make sure that we accounted for all 
the sources of potential problems in the past. As a matter of 
fact, what we tried to do is give what we call an 80/20 cost 
view. That means that 80 percent of the time you will be right 
and 20 percent be incorrect. Historically, the view is usually 
50/50, and we've tried to be more conservative. And one of the 
benefits of that is we are now experiencing this avionics 
stability. And you might have read about it.
    Mr. Shays. Let me do this, because I have really gone over 
my time. Let me make sure that you cover what you need to 
cover, but it's going a little beyond what I've asked.
    Dr. Sambur. Sure.
    Mr. Shays. We will go to Mr. Tierney for a very generous 10 
minutes plus.
    Mr. Tierney. Thank you, And thank you both for testifying.
    Mr. Wynne, what happened with the prior intent to use 
funding that you requested from Congress and got for production 
efficiencies?
    Mr. Wynne. Well, sir, I believe there was a chart provided 
to you by David Walker, the Chair, that we are starting to use 
it when the projects are coming into our attention span.
    Mr. Tierney. Started to use it is not quite the same as 
having told us sometime back that you needed additional funds 
so that you could use them. And, to my information, the GAO had 
not been implementing them to date, and in fact the indication 
to me was that you sort of indicated to GAO that they hadn't 
proved that in fact these efficiencies would be effective. And 
I thought that was sort of a bizarre approach, that the 
Department of Defense proposed this plan, and then when GAO 
came back and said, well, we haven't seen the plan implemented, 
haven't seen these savings from it, your comment back, DOD's 
comment was, well, you haven't proven that those things would 
be effective, seemed a little disingenuous. Could you explain 
that little byplay?
    Mr. Wynne. Sir, I think we are fairly straightforward on 
our plan. There were some suggestions that didn't have merit 
after they were investigated. It's always debatable as to what 
the forecasted impact would be, the returns on investment. 
Though we hope that they don't vary over time, some do. And 
there can be honest debates and disagreements in that area. But 
we do need the money to in fact conduct the cost reduction 
projects that we have identified.
    Mr. Tierney. Well, up until the time that GAO had filed its 
report, you hadn't used the money in that regard. Right?
    Mr. Wynne. We want to make sure they are high impact. Yes, 
sir.
    Dr. Sambur. May I have an opportunity to answer that 
question?
    Mr. Tierney. You can. I wasn't asking you because you 
weren't the one that gave me those conflicting answers. But if 
you want to get engaged, go ahead.
    Dr. Sambur. Well, having said it that way, the issue really 
is when you use money to improve efficiencies you don't really 
see the outcome of that until you actually start building.
    Mr. Tierney. The problem was, Dr. Sambur--not to interrupt 
you, because I'm on limited time--is they hadn't used the 
money. They promised Congress that this was what they needed 
the money for and said they were going to put the money into 
doing that and it was going to show savings down the line. On 
the review, they had not used the money for that, and then 
accused GAO of not being able to prove that they would be 
efficient. It was their plan--we were willing to agree that it 
might be efficient if implemented, and that was what the money 
was for. So that was my point. My point was they hadn't used 
the money and then they made some, I think, bizarre sort of 
approach that it was GAO's fault for not proving that the plan 
DOD had proposed would in fact be effective.
    Dr. Sambur. Are you aware of the fact that in 2003 we will 
be spending $207 million? In 2002, we did underspend in the 
plan, but we are----
    Mr. Tierney. That's what--I'm aware of that, and that's 
what my question was.
    Dr. Sambur. Yeah.
    Mr. Tierney. That up to that point in time that this report 
was done, you did not spend the money.
    Dr. Sambur. You are correct.
    Mr. Tierney. We can all agree that you have the best 
intentions going forward. If this hearing were just about going 
forward, you guys would be having a much easier day. The 
problem is that this is a lot about a huge cost overrun in the 
past to this date, and I don't think that we can let it go that 
you are going to come in here and start fresh and saying that, 
gee, you know, let's not even just talk about that. I mean, Mr. 
Wynne, you'd left 16--I think about six pages of 16-page 
testimony, whatever, and left out everything that dealt with 
the GAO. I mean, we needed--in the report. We need to know 
what's going on here.
    Let me approach it this way. I got a reply from the 
Department this week. It says: The Department has approved the 
procurement budget higher than the congressional cap.
    Now, Dr. Sambur, you said the Defense Acquisition Board 
approved the Air Force plan--the Air Force to plan a program 
for $43 billion production program. You also said that 
Secretary Aldridge approved the revised program baseline and 
directed the Air Force to fully fund the production program 
accordingly.
    So if you set a new baseline, gentlemen, you've approved 
the new procurement budget and you've planned a program under a 
higher estimate, tell me how you are not violating the law if 
Congress set a cap at $36.8 billion.
    Mr. Wynne. Let me first start, sir, by apologizing for the 
lateness of the letter. We did deliver it on April 8, and I 
realize that it was due on April 7, and I apologize for that.
    Mr. Tierney. Thank you.
    Mr. Wynne. We have a budgeting process inside the Pentagon, 
sir, that is independent of the budgeting process that you 
consider but does table up Presidential budgets that we did in 
2001, 2002, and 2003 that each showed that our intent was to go 
beyond the cap of the $36.5. When Secretary Aldridge----
    Mr. Tierney. How does that happen? You have a congressional 
cap of $36.8 billion, and then you have this whole system where 
you say, oh, we're going to disregard that. We are going to 
pull our own deal of $43-something.
    Mr. Wynne. Might I say, sir, with all due respect, we 
actually have a budgeting process within the Pentagon that 
tables up Presidential budgets, because all may not feel the 
same way that you do, sir, with due respect.
    Mr. Tierney. It's not a question of how I feel, sir; it's a 
question of how Congress already decided. So if they already 
decided--they didn't ask me how I felt. Congress as a body said 
it collectively felt and directed that the budget was going to 
be $36.8 billion. It's a little disturbing to hear now that 
you've got this other budget process that says that we don't 
agree and we think we're going to roll over that.
    Mr. Wynne. We recognize that is a subordinate budget 
process, sir, to the one that you and your fellow Members of 
Congress and the Senate agreed to. We do, however, have to plan 
a future that we think represents the best we can do for the 
defense of America.
    Mr. Tierney. Well, excuse me a second. I think your 
obligation is to provide a plan that comports with the law and 
what Congress decides, not what you decide you want Congress to 
do but didn't do for you. I mean, explain to me where it is 
that you just decide that your opinion circumvents Congress' 
opinion, and you don't like the $36.8 billion so you're going 
to decide what's best for everybody and just plan at $43 and 
assume at some point in time that you are going to have a 
convincing argument that's going to win the day.
    Mr. Wynne. Sir, since it is in the outyears, I believe 
that's planned for fiscal year 2006, and we did notify the 
Congress shortly after the Defense Acquisition Board as to when 
we thought we would schedule that and still intend to follow 
through with that.
    Mr. Tierney. Well, but what you don't intend to follow 
through with is with the congressional cap, and I guess that's 
my point. The existing law is a cap of $36.8 billion. You show 
no indications at all of even remotely entertaining the idea 
that you might stay within that cap, that your plans comport 
with it, everything you've got--it's all in this higher number 
that I guess the Department of Defense has just decided that's 
what they want to do.
    Mr. Wynne. Sir, if that's the direction that the Congress 
in fact continues to impose, then we will comply with the law.
    Mr. Tierney. Well, I would hope so. But it's taken us an 
extraordinarily long period of time just to find out that, 
assuming you comply with the law, how many planes you are going 
to be able to build. And that's been a long period of time just 
to get that answer, which leads me and others I think to 
believe that intention may not be as clear and firm as you 
indicate.
    I think the GAO today had some very good points about a 
business plan. Originally--can you explain, I think it's worth 
stating for the record. What was your original business plan 
for the F-22 when you first put it on the drawing board? Where 
were you going with it? How many planes did you say you needed? 
What specifically did you need them for? What characteristics 
did you need? And how many did you need to fit that?
    Mr. Wynne. I'd have to take that for the record, sir. It's 
research that I would have to go back and do from 1986, was the 
original business plan.
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    Mr. Tierney. You are not aware of what the original 
business plan was or what the original goal of this particular 
platform was?
    Mr. Wynne. Sir, I haven't gone back that far to take a 
look. I encountered this program and have studied it 
principally to effect my responsibilities going forward.
    Mr. Tierney. I will yield to chairman for the second.
    Mr. Shays. Dr. Sambur, wouldn't that show up in your 
business plan that you have developed now? Because in order to 
know where we need to go now, wouldn't we know what we needed 
in the past?
    Dr. Sambur. The business plan actually looks at all of 
those factors.
    Mr. Shays. So we should be able to find some of those 
answers in your business plan?
    Dr. Sambur. Yeah, we have that. And as you can recognize, 
since the early times, the CONOPS, or the concept of 
operations, for the Air Force has changed. We have now an Air 
Expeditionary Force quality. And based upon this Air 
Expeditionary Force new method of operating the Air Force, the 
number that we need is 381.
    Mr. Shays. Thank you.
    Mr. Tierney. Gentlemen, tell us now what your business plan 
is. What do you identify as the need for the F-22?
    Mr. Wynne. I believe the number that the Air Force has 
tabled up is 381, which would fill out all of the Air 
Expeditionary Forces and would allow them some overhead 
airplanes which, for remaintenance and for in-transit. We have 
introduced risk into the process, even at the additional 
funding level of $5.4 billion. We recognize that. We hope we 
don't get to a high usage, low density construct as we are with 
the F-117, as it has become so popular that we are wearing out 
pilots, airplanes, and crews. But we do understand that we have 
introduced some risk into the process. The Air Force every 
year, every year, stemming from the QDR down through the 
national security policy, has to reevaluate their best way to 
meet the national objectives.
    Mr. Tierney. When do you project that the JSF will be in 
production?
    Dr. Sambur. In around 2012, 2011.
    Mr. Tierney. And at the rate you are going now, how long do 
you think it will be before you have 381 F-22s operational?
    Dr. Sambur. We are not planning on 381. Our plan right now, 
with the budget constraints that have been given to us by the 
DOD, is 276. We have a plan on how we would utilize 276 and 
hopefully, if we can get the additional funds and the budget 
relief from Congress to go beyond that, the 381.
    Mr. Tierney. Within your plan for 276, what do you use to 
fulfill the balance of any need that you originally thought 
might have required a use of more of the F-22s? You'd use 
enhanced F-15s and F-16s? Do you use the F-117s?
    Dr. Sambur. It's a combination of all of those things. And 
for the record, if some of those aspects are not classified, I 
will be glad to share it with you.
    Mr. Tierney. And what did we meet in Iraq that we were 
unable to meet with any of the air platforms that we already 
have?
    Dr. Sambur. Well, I think the greatest picture--I saw a 
picture on CNN where they had long lines of the Marines ready 
to go in. Without air dominance, we could not have achieved 
that. There was nothing in Iraq that we see right now that 
would have prevented us. Unfortunately, there are 
proliferations of these surface-to-air missiles that were 
mentioned this morning by--I'm not sure if I'll pronounce his 
name right, but he said Dutch.
    Mr. Tierney. Nobody else does, but Mr. Ruppersberger.
    Dr. Sambur. Thank you. He indicated the surface-to-air 
missiles, the so-called double digit surface-to-air missiles 
which are proliferating. They are already in China. They're 
relatively easy to acquire in terms of money. There is no 
capability other than the F/A-22s that will be able to 
penetrate and give us air dominance. Without the air dominance, 
you cannot bring in the forces. In addition, cruise missile 
defense is a very important attribute of the F/A-22s which is 
vitally needed. So this takes a step forward. This is--you 
know, as the chairman mentioned this morning, this is the 
unfair fight that we want. I mean, the F/A-22 gives us that 
unfair fight for many, many years.
    Mr. Tierney. What does the enhanced F-15 and F-16 not do in 
those regards?
    Dr. Sambur. It doesn't give you stealth. The stealth is 
absolutely necessary to penetrate into these surface-to-air 
missiles, these double digits.
    Mr. Tierney. And we have no other stealth aircraft that 
does that?
    Dr. Sambur. No. Not with the supercruiser, not with the 
maneuverability of the projected F/A-22. And the important 
point to recognize, and I think Congressman Schrock said that, 
we're in the fourth quarter. I mean, we have already 
demonstrated all of these capabilities. I mean, the only thing 
that remains right now is avionics stability, and we are going 
to get there. So we are there. We are demonstrating that a 
plane meets all of these key performance parameters that will 
enable this country to basically maintain air dominance, and 
that's what we need. These surface-to-air missiles, these 
integrated air defense systems are here right now. They are not 
on the drawing board.
    Mr. Tierney. Is there something that the F/A-22 does that 
the JSF will not do?
    Dr. Sambur. Yes.
    Mr. Tierney. What's that?
    Dr. Sambur. Well, basically the supercruise, the 
maneuverability. All of these things are not part and parcel of 
the JSF. They complement each other, but the F/A-22 is a 
significant enhancement.
    Mr. Wynne. Congressman, just one thing. And that's the F-
117 is in fact the airplane we use now to surrogate for the F/
A-22 capabilities and the Joint Strike Fighter capabilities in 
the future. It is, if you will--that's why it's so heavily 
used; it is our stealthy airplane available to us.
    Mr. Tierney. I thought it had some stealth capabilities.
    Dr. Sambur. It doesn't have the maintainability or the 
stealth characteristics of the F/A-22.
    Mr. Shays. If I could just interrupt the gentleman, and 
then we need to get Mr. Schrock into this dialog. But when the 
F-22 began, it was basically air-to-air?
    Dr. Sambur. That's correct.
    Mr. Shays. And we then felt it had some air-to-land 
mission?
    Dr. Sambur. Right.
    Mr. Shays. But in the process of doing that, when we loaded 
up with certain weapons systems, it's not totally stealth, 
correct?
    Dr. Sambur. It is totally stealth.
    Mr. Shays. Totally stealth.
    Dr. Sambur. Yes.
    Mr. Shays. OK. When you add these weapons systems, will it 
stay stealth then?
    Dr. Sambur. Yes.
    Mr. Wynne. What you're referring to, sir, is whether it's 
inboard carriage or outboard carriage. I'm sure that 
Congressman Schrock could probably fill us all in on the aspect 
of this. But once I tuck the weaponry inside the airplane, then 
I am inside the platform and so I can have the same stealth 
characteristics. When I open the doors--for example, when the 
B-2 opens its doors to finally drop a bomb, then it becomes 
very briefly visible, and so also, when an F/A-22 opens its 
doors to drop a missile. Now, we've tried very hard to minimize 
its emergence into the light, if you will, but I believe you 
have to, just like a submarine has to come clean where it is 
when it fires a torpedo.
    Mr. Shays. Does the gentleman have another question before 
we go to Mr. Schrock?
    Mr. Tierney. I do. Thank you.
    Who, if anybody, has any technology even remotely close to 
the F-117?
    Dr. Sambur. Well, there are several aircraft that are being 
developed. France is developing one. I think China is 
developing that. But more importantly, if you look at our F-
16s, if you look at what's being developed in Korea and the 
UAE, our plane, if we just maintain what we have right now, 
would probably be the third or fourth most capable fighter 
plane in the world, and that's a pretty sad situation.
    Mr. Tierney. Thank you.
    Mr. Shays. I thank the gentleman.
    Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    That is a sad situation. We used to be the leader in all of 
that, and we are slowly losing that edge, and that is clearly 
something we have to change.
    Let me do a followup on your comments on what Secretary 
Wynne said, Dr. Sambur. The F-22 is going to replace the air-
to-air F-15s, while the Joint Strike Fighter is going to 
replace the F-16s. I did that for his benefit. He didn't hear 
it, I guess.
    Let me make a few comments on some of the things you have 
all said. First of all, I think this Defense Department 
suddenly realizes they have to change the way they do business, 
and I think that was the primary goal of Secretary Rumsfeld 
when he took that position. But of course after September 11, 
2001, a lot of the focus changed over there. But he is trying 
to get back to that now. And a lot of what the GAO folks said 
this morning, I was glad that--I think it was Dr. Sambur that 
said you agreed wholeheartedly with what the GAO said. And I 
was pleased to see that, because clearly some things have to 
change over there. There is no question about that. And I'm not 
sure I blame the Air Force and I'm not sure I blame the 
manufacturers. I think it's just the mindset that is so 
ingrained over there. It's a cancer in that place that at some 
point has to get chopped out of there or we're going to operate 
this way forever.
    And I know that mentality of those people who were there 
forever think well, the secretaries will leave. They think, ``I 
can outwait them, and the guys in uniform will get transferred 
and I can outwait them,'' and I think that's half the problem. 
So we're going to have to change some of that to make sure we 
don't have to have hearings like that eliminating problems that 
we are finding here. And I, you know, I have talked to the Air 
Force a lot about this, and I am convinced that the changes you 
talked about are being made. I think they realize they have 
some fundamental problems, and I see the curve going up to make 
sure that those changes are incorporated, and we will solve 
some of these problems, and I agree with the chairman too.
    We have to establish air dominance. I don't want a fair 
fight. I want us to be so far superior that nobody will think 
about coming at us, and I think we saw that the last couple of 
weeks in Iraq. And your comments about the 22 being stealthy, 
that is so important. That's going to save a lot of lives so 
that nobody can hone in on us, and I think that is one of the 
things that this platform offers that a lot don't. And I, you 
know, I think, I hope nobody here thinks that the Air Force is 
the only one going to use the joint strike fighter. The 1,760 
airframes they are going to build are going to be used by the 
Navy, the Air Force and Marine Corps.
    So I think that's a good bang for the buck as well. I've 
got two questions I'm going to ask, one of the secretary and 
one of Dr. Sambur. You know, you heard me ask the GAO about the 
cost risk assessment for increasing the production above the 15 
aircraft. And I think I read somewhere in a statement, your 
statement from the Department of Defense, that you performed an 
analysis. Is that true and if so, what did you find out? What 
were the conclusions you came to.
    Mr. Wynne. What we really looked at, sir, was whether the 
risk of retrofit, which is really the dominant thing that would 
affect the four airplane difference in production, would be. As 
I mentioned, we have produced thus far seven. This was actually 
the entering into a 36-month purchase, which gives you some--
also some opportunity to, for in line, install if you have a 
problem. So you look very hard at what is the risk of retrofit 
which means that, are you going to have these airplanes fully 
produced and then pull them over to the side and then install 
whatever the corrective action is.
    The risk of retrofit at the time was simply the twin tail 
flutter. And when we took a look at that and we noted that the 
Air Force had done quite a bit of testing and simulation on 
substituting titanium and had gotten themselves into an 
acceptable risk. We have had twin tail flutter with us, I think 
since the F-4, the F-111, the F-15, and now the F/A 22. So I'm 
sorry. F-18 as well.
    So it's not an unknown problem for us to solve. It is a 
question of can we get the right vibration analysis together so 
that we have an acceptable risk and we can then put the pilots, 
give them a flight policy, if you will, that they don't get to 
pull 10\1/2\ or 14 G's to introduce that concept. The only 
other risk that we saw was the integrated avionics risk. The 
integrated avionics risk is like your home computer going 
askew. This is unstable, and I mean, perhaps yours are all very 
stable. Mine tends to ground on me when I type in strange 
stuff. This is really debugging, and I will tell you that the 
aspects of systems engineering are important here because we 
have to understand how to look into the processors and look 
into this software development.
    Microsoft, bless their hearts. They have a lot of people 
that debug their software and not just people inside the 
company, but all of us who are users that get on to their 
scheme. We actually don't have that kind of capability because 
we don't let this out to all the universities and all of the 
public. So we must concentrate on how do you develop efficient 
tools to do 2 million lines of codes and debug them. When I 
looked at that I felt, as did my boss, Secretary Aldridge, that 
the risk there was actually very slight.
    But to put it in perspective, we did ask that the director 
of Defense Research and Engineering to conduct a review for us 
and give us a feeling as to whether the architecture was 
stable. If the architecture was not stable, then all bets are 
off, and now we have to go in and pull that, and that's very 
expensive and it takes a long time. Their comments back to us 
in their professional opinion, we would have introduced more 
problems than we currently have taking that action. I would 
love to get this system to be modular open systems 
architecture. We have all but mandated modular open systems 
architecture for our future weapons systems. This is sort of 
the last of a generation.
    Well, Comanche will probably be the same ilk. That having 
been said, the cost of retrofit is very inexpensive. For any 
problems that arise and we would see. It is the cost of 
duration of fix that we're now worried about. And that's what 
the review in June is the cost of the duration of fix. As I 
mentioned, Secretary Sambur has allocated 60 days additional 
for this problem to be resolved so we can meet our entry 
criteria. He's very optimistic. I must be skeptical.
    Mr. Schrock. Your comment about open architecture is 
important. I'm not sure the word retrofit bothers me that much. 
I realize it costs money, but when you figure that they first 
started drawing this thing in 1986, here we are in 2003, people 
have to understand that architecture and technology and all the 
fancy things that go into these planes change all the time. As 
you heard Congressman Duncan say, by the time he gets a brand 
new computer on his desk, it's old. And that has created a lot 
of this, I'm sure.
    So that's why I think, I wish we could tighten these, get 
these things designed, approved and built and close that gap. 
That might eliminate some of this sort of thing. Because I mean 
as we sit here, there are probably things that are going to 
change in the next few weeks that are going to want to put on 
the Raptor that's going to get everybody's ire up again. But 
the fact is we want the best that we can get.
    Mr. Wynne. Certainly if not in the next 2 weeks, sir, over 
the next decade.
    Mr. Schrock. Yes. That's exactly right. Dr. Sambur, the GAO 
highlighted in their reports a number of issues, especially 
with regard to the increased costs, and I think that's 
something that we're all concerned with, and I know I am 
because we're supposed to be good stewards of the taxpayers' 
dollars. Based on that, and based on what those reports said, 
do you really think, does the Navy--I was Navy. You can take 
the guy out of the Navy. You can't take the Navy out of the 
guy. Does the Air Force still think this is a bargain? This is 
a good thing to do based on all of the things that they have 
heard concerning costs that the GAO has brought up?
    Dr. Sambur. Well, I think to answer your question, let me 
just go back to what I said before. About my comment about 
looking at CNN. Technology, the unfair fight is what makes us 
secure as a Nation. If we do not understand the emerging 
threats and build planes that can basically dominate the air in 
spite of these emerging threats, it's a disservice to this 
country. We feel that this plane is absolutely needed. We think 
we have a handle on the cost. We think that once stability 
occurs in the program, once the vendors feel that this is a 
program that will go forward, we will see something, I think 
you said in your opening comments about the C-17 or one of the 
other Congressman, that program, once it achieved stability, 
the C-17 costs went down dramatically.
    Once you have stability and vendors feel comfortable, 
you'll see the cost reductions occurring. So once we get over 
this hurdle, once there is a feeling this program will be 
there, I think we'll have many more planes than the 276 that 
we're forecasting now. That happened with the C-17. The number 
that were forecasted almost grew by a factor of two, just based 
upon the stability factor.
    Mr. Schrock. So the answer is yes, the Air Force----
    Dr. Sambur. Yes we need it, and yes the cost will come 
down.
    Mr. Schrock. And let me reiterate again. I believe every 
platform, every air frame that has been created for the 
services in history, has had problems. I mean, it takes a while 
to stabilize things, and we're just going through that phase of 
this one right now. When we finally get it to the fleet, I 
think it is going to serve the same capabilities as, you know, 
as well as the C-17 is doing right now in Iraq.
    Dr. Sambur. But in fairness to the committee, the points 
are good points. You know, the panel here was in terms of 
controlling costs. As Mr. Walker said, a lot of the things in 
the F/A 22 are already in concrete and we can't do much about 
it. But we can learn from our past. We can institute some of 
these changes in terms of insisting upon systems engineering, 
insisting upon a spiral development process that basically eats 
the elephant one bite at a time as opposed to trying to gulp 
all these requirements in the so called big bang. So I think we 
can do better.
    We're committed to do better. The Air Force recognizes 
there were problems on this program. There's no attempt to 
apologize for it. There's only an attempt to try to do better 
for the future.
    Mr. Schrock. And I agree with that. And I agree with some 
of the frustrations that Mr. Tierney has expressed. I think we 
all feel that way. And you guys are clearly the new guys on the 
block now pretty much, and you've come in to try to turn this 
thing around, and I think that's good.
    Dr. Sambur. I mean, it is extremely disappointing to the 
Air Force to have a program in which we can only buy, given 
that we get relief from the cap of 276. That is not acceptable 
to us. And that's why the Chief and the Secretary of the Air 
Force are intimately involved in this program. Plus the CEOs of 
Lockheed Martin, Vance Kaufman, the CEO of Northrop Grumman, 
Ron Sugar, they're all involved in this program. I speak on a 
daily basis to these people to make sure that they are putting 
their best people, that they recognize how important it is and 
most importantly, they recognize that we don't have any 
credibility here.
    As the chairman said, you know, there's been a lot of these 
meetings like this. And I'm sure a lot of people like myself 
and Secretary Wynne have come up and made statements to you. 
Our credibility has run out. So we can't come up to this panel 
again and say don't worry, things are getting better. We have 
to perform. We have to do better. That message that you're 
taking to us is well received.
    Mr. Schrock. I thank you for that. Thank you, Mr. Chairman.
    Mr. Shays. Thank you. Before calling on Dutch 
Ruppersberger, I would like to just ask you, what is the cost 
of going above the cap and doing the 276?
    Dr. Sambur. It's the $5.2 billion over and above the cap. 
The number that Mr. Aldridge indicated in his memo. That's 
where our costs are based on, and that includes all of the 
issues I talked to you before about, the multi year procurement 
slippage, the JSF commonality, the inflation factors, all of 
those additional costs were baked in. There's even conservatism 
in the development program. We mentioned dedicated IOT&E the 
testing starting in October. We actually assumed in our 
estimates that it would occur 4 or 5 months later than that. So 
there is conservatism baked into the number. I talked to you 
about the 80/20 percent philosophy that we use in the costing.
    Mr. Wynne. Sir, I think the production number is $42.2 
billion, sir.
    Mr. Shays. OK. Thank you. Dutch Ruppersberger.
    Mr. Ruppersberger. That was perfect.
    Mr. Shays. I got the second one right. Give me credit here. 
Let me just say to the gentleman from Maryland he's an 
outstanding member of this committee, and we really enjoyed 
having him.
    Mr. Ruppersberger. Well, first, Dr. Sambur, and excuse me. 
I had to miss a little time. I don't want to be repetitive. I 
think your comments in the end are what we all believe, and 
that is accountability. We all want to do the best. We want to 
have the best. We need air superiority. We have a great 
military. We have great expertise in our business community, 
and the manufacturing community that works with you in 
partnership to develop this. But I think what the problem is, 
and I think it is a culture. You lose--and you mentioned this. 
And the credibility doesn't mean that you're lying. It is just 
credibility of a project generally, and of an institution, that 
DOD needs to be more honest about cost and time estimates. And 
that will--if you can do that.
    Now, if you make a mistake, if you feel when you get into 
the program, that you have underestimated the program, that--
and that there has to be a change, then immediately, that's the 
time when you see with the expertise and the contractors 
whoever get the bids, or whoever get the projects, that they 
will then come back because right now, the credibility isn't 
there.
    Everybody wants to do well. But that doesn't mean that 
you're going to do well. And there has to be some 
accountability. And that's what our jobs are about. So let me 
ask you just a couple of questions. First thing, I know--just 
about the Raptor itself. Where do you see it going from--and 
maybe Mr. Wynne too, either one of you. Where do you see the 
future combat capabilities based on the type of defense we will 
have in the future, including the issue of terrorism, 
including, you know, will we have an Iraq. We know where that 
is right now. And we always have to be ready for that.
    Mr. Wynne. Let me start, Marvin, and I'll be quick. When 
September 11 happened, no one in America relieved us of being 
aggressive to the outyear threat. It actually expanded and our 
requirements for defense of America. Whether it be missile 
defense, whether it be fighters, we want to have our unfair 
fight that Marv talked about. And I'll let him take it up 
there.
    Dr. Sambur. Yes. You mentioned----
    Mr. Ruppersberger. Is that because he's a doctor.
    Mr. Wynne. Yes, sir. I defer often.
    Dr. Sambur. I'll give him a couple of aspirins after this 
hearing. What we mentioned previously is the fact that the air 
defense systems that are coming into vogue, these surface-to-
air missiles are the newer ones are called double digit because 
of their increased capabilities. Right now, Iraq had an SA-3, I 
believe the single digit surface to air missiles that prevent 
the air systems from coming in. The newer systems that are 
under development right now are assets right now, the F-15s, 
the F-16s would have a very difficult time penetrating those. 
The F/A 22 will be able to kick the door down, which is the 
expression that our chief uses, enabling us to get it there and 
neutralize these air defense systems in a very effective 
manner.
    And being able to have air dominance allows us to do many, 
many things, which you see on the TV right now. Without that 
air dominance our Marines, our Army people could never come in 
with the limited amount of casualties that we're getting right 
now. You mentioned terrorism. One of the things that we're 
concerned about is cruise missiles. The F/A 22 because of its 
super cruise capability has the ability to basically protect us 
against cruise missiles. So there are many things that the F/A 
22 does for us. And that's why we need it. You had missed part 
of the earlier session, but there was a call this morning for a 
business plan, a business plan that would look at some of the 
economics balanced against the needs.
    We had to do that because if you recall during the summer 
period, the Department of Defense took another look at the F/A 
22 to really assess whether or not it was needed, just as 
they've done with a lot of programs, because there's a 
recognition as most of the people have indicated in this 
committee that there is other things that they'd like to do. 
There's opportunity costs. I think this was mentioned this 
morning. And whether or not the F/A 22 is a legitimate use of 
precious funds. The Department went through a complete analysis 
of that and determined that it was.
    Mr. Ruppersberger. Let me ask you this. I missed some of 
the testimony. I assumed you talked about retrofitting. I don't 
want to do that.
    Dr. Sambur. Yeah, the issue that came up this morning was 
there was a vague comment this morning about retrofits have an 
exponential nature, and I think someone asked them to clarify 
that and there wasn't a real answer. What we actually did, the 
Air Force was asked to justify why we should produce 20 as 
opposed to 16. We did a cost benefit analysis. We actually gave 
them what the cost of retrofitting some of these programs would 
be versus the cost of limiting the production from 20 to 16. 
That limitation caused termination costs. It caused costs 
associated with the eventual cost of the production because if 
you ramp slower the cost of the models later become more 
expensive.
    So we gave them a detailed business cost analysis. The cost 
associated with retrofit versus the benefits of going forward 
and Pete Aldridge, Secretary Aldridge analyzed that with his 
people and it was more beneficial on this business case 
analysis to go forward with producing 20 rather than limiting 
it to 16. And that's why the DAB gave us that ability.
    Mr. Ruppersberger. Are you familiar with the advanced 
amphibious assault vehicle?
    Dr. Sambur. No, I am not.
    Mr. Ruppersberger. Are you familiar, Mr. Wynne?
    Mr. Wynne. Yes, sir. I have enough to get into trouble.
    Mr. Ruppersberger. Well, I think GAO report mentioned that 
they came in under the projection, the cost projection.
    Mr. Wynne. Yes, sir, they did.
    Mr. Ruppersberger. The reason I bring it up is another Army 
base in my district, Aberdeen is very aggressively pursuing 
trying to get that to be made there. So that's just a side, but 
you have to be parochial sometimes.
    Mr. Wynne. Well, they did a great job partnering with the 
Marine Corps on that job.
    Mr. Ruppersberger. Right. Well, anyhow, that is a single 
systematic approach effect, correct?
    Mr. Wynne. Yes, sir.
    Mr. Ruppersberger. Now, what is your opinion, as far as 
systematic approach for all projects?
    Mr. Wynne. I have been on the hustings talking about 
systems engineering, and I think an integrated systems 
engineering approach really pays off. And it will, I think, in 
the----
    Mr. Ruppersberger. Do you want to define that for the 
panel?
    Mr. Wynne. Well, let me just describe it in the triple AV, 
which is the amphibious assault vehicle, where they did, in 
fact, integrate logistic. They integrated tests and they 
integrated the systems engineering for the entire vehicle, a 
very holistic design. And I think they ended up balancing 
weight, as you know, versus capability, and have a terrifically 
fine vehicle. But it is really systems engineering is 
addressing the entirety of the system in a holistic way so that 
one change here can actually be weighed against the benefit to 
the whole system.
    Mr. Ruppersberger. Because different projects take lives of 
their own.
    Mr. Wynne. Yes, sir, they do.
    Mr. Ruppersberger. Should we have one method or approach to 
developing our weapons systems.
    Mr. Wynne. I will tell you that the world of systems 
engineering does address that. But the specific aspects of each 
technical hurdle that you overcome is different. In the world 
of the triple AV, they had to overcome sea states. As you know, 
since it's coming in from so far off shore, that was the big 
technical hurdle. Here on the F/A-22, its integrated mission 
software and super cruise, that was the technical hurdles that 
they had to overcome. So there are differences. On the other 
hand, I think a systematic disciplined approach could be the 
overarching methodology, and it should be.
    Mr. Ruppersberger. Now, this might have been asked before. 
But I'll ask. If it has, I don't want to be repetitive. I know 
DOD already said the production cost for the program is $43 
billion. Concerns have been raised about overstepping the $36 
billion cap or congressional cap. I know DOD has budgeted $43 
billion. Now, would that be the total cost? Would it be 
undercost? Overcost? What is your feeling?
    Mr. Wynne. Right now, we estimate that we can get between 
276 and 290. The Air Force is trying to get way over 300. They 
have great plans for the cost reduction projects that are 
underway. And I think that Secretary Sambur is right. Once this 
program stabilizes, I think we are going to see remarkable 
progress. Right now all of the subcontractors are a little bit 
nervous as to whether or not they're going to get to produce or 
not get to produce. And so they're hedging their bets, if you 
will.
    Mr. Ruppersberger. Well, if you have some inconsistency 
that may scare everyone away, and we don't want to do that 
either. Let me ask you a final question. Assuming that you get 
the program under control, cost effectiveness you know where 
you are going to be, your estimates are correct and again, the 
cost estimates are just so important for credibility at this 
point, with the flexibility that you might need depending on 
what occurs in the future. If, in fact it is, where would you 
like to see the program go? What would you like to see based on 
understanding that we're in a very difficult economy right now, 
we're having historical deficits.
    I mean, there's a lot of issues within our economy. It is 
affecting education, it is affecting other issues on the home 
front. Based on that consideration, and if you get your program 
under control, where do you think we should go? How many of 
these airplanes do you think that we should really, really 
build for the future?
    Mr. Wynne. Right now from our perspective, sir, we have 
introduced at that--the budget cap of $43.4, I think you 
mentioned we've instituted for right now, by the budgets. But 
it does--which means that we would like to see 276 to 290 
approximately. We realize that this introduces some risk on the 
part of the Air Force. But it has a lot to do.
    Mr. Ruppersberger. Why risk on the part of the Air Force?
    Mr. Wynne. Well, because they wanted 381, which fills out 
their 10 air expeditionary forces. Now, it really does depend, 
though, on whether JSF, Joint Strike Fighter, stays to its 
schedule.
    Mr. Ruppersberger. All these acronyms. Remember, I just 
started.
    Mr. Wynne. Yes, sir, I know. The Joints Strike Fighter is 
the fighter that is coming along and it is doing very well by 
the way. And we hope to make it--I recognize that this was 
called the--a model. But we really do have to hope to make the 
Joint Strike Fighter a model. We have a lot of international 
people relying on our capability to produce this airplane, not 
just the Marine Corps and the Navy, but all of our Armed 
Forces. If it tends to slip and programs are very fragile in 
this regard, then we may extend the F/A 22 production. If it 
stays to its schedules, I think there's going to be a real 
debate.
    Mr. Ruppersberger. OK. Thank you.
    Mr. Shays. I had a question to ask at the end, but Mr. 
Tierney has a question, and I think Mr. Schrock's all set and 
then we will get to our next panel.
    Mr. Tierney. Thank you. We talked about why there is a 
credibility issue and the gentleman didn't want to talk about 
the past. But you know recently Air Force Secretary James Roach 
had this comment to make. ``If you use the KA of the cost 
analysis improvement group divisions you get 270 planes. I 
don't care what the hell ours is. It's 310. Who cares?'' And 
think it's that kind of dismissiveness that gets every body up 
here concerned and why you find us making some inquiry on that. 
But with that said, today we talked about the congressional cap 
as it exists now, $36.8 billion, and the testimony that you 
gave me was you think it's somewhere between 225 and 235 
aircraft for that amount.
    The interesting thing about that is, Mr. Aldridge told me 
back in 2001, that he could get just 224 airplanes then. If you 
could have gotten 225, 224 airplanes then, and now you think 
you get somewhere between 1 and 11 more, the 225 to 235, I 
don't understand how you get an increase if you stay at the cap 
of what it was in 2001 the costs haven't decreased in the past 
2 years. Labor hasn't become cheaper; schedules haven't been 
accelerated; all the avionics problems haven't been resolved. 
In fact, on all those things, just the opposite seems to be 
occurring. So it would seem to me that means fewer than 224 
planes. Fewer than Mr. Aldridge told us in 2001.
    Mr. Wynne. Sir, an estimate is an estimate. I defer, of 
course, to my superior knowledge of my boss. But an estimate is 
an estimate. 224 is certainly within the range that I 
expressed.
    Mr. Tierney. Well, let me tell you that since the 2001 
estimate, $763 million has been taken away from production and 
put toward development. Right.
    Dr. Sambur. $876.
    Mr. Tierney. $876. All right. Thank you. So I guess that 
would further reduce the number of planes.
    Dr. Sambur. That's already baked into the numbers that 
you're seeing now.
    Mr. Tierney. Not the 224 number though.
    Dr. Sambur. Well it would be because the 224 is based upon 
the reduction in the----
    Mr. Tierney. No, the 224 that Mr. Aldridge gave me in 2001 
preceded your taking the $876,000 and putting it over so----
    Dr. Sambur. Oh, that's correct.
    Mr. Tierney. So from that number in 2001 it would actually 
reduce it on that so----
    Dr. Sambur. You're right.
    Mr. Tierney. We just keep going around and around. But if 
that's the case, you're down below 224. And that's at the 
congressional cap. And so I just make that note on that, that 
this doesn't seem to be consistent. If you had to stay within 
the cap, the congressional cap, and you had 224 or somewhat 
fewer or somewhat more planes, how would you compensate for 
that. What would the rest of our force look like going forward?
    Dr. Sambur. You ask a question that is best answered by the 
people in the XO or operations. They would have to assess what 
could be done with 225 or more than that. You know, I'm not the 
right person to ask, so----
    Mr. Tierney. You didn't draw the plan, the game plan. The 
business plan? Somebody else did that?
    Dr. Sambur. There's two aspects of the plan. There is a 
business plan associated with costs; and then there is a 
requirements plan, the operations plan; and that's done by the 
warfighters.
    Mr. Tierney. Because I think it would be worth knowing 
whether or not--if the cap were maintained, whether it's worth 
proceeding, you know, whether or not the 224--unless there's 
something that does--serves the purpose. I think that's what 
Mr. Walker was getting at.
    What is your mission here? What do you want to do? And if 
it is not, what do you replace it with? And if it is worth 
going forward with, then if there is a difference between that 
224 and 276 or 381, what do you fill it up with and how is that 
going to serve us? And does it serve us less expensively and 
are we able to do other things militarily or homeland security 
or wherever else with the difference and are we better off in 
the long run having put our moneys in that regard?
    I think we would like an opportunity to see those two 
plans, or the two aspects of that plan; and I don't know quite 
how we are going to work that out if some parts of it are 
classified. But I would like you to get back to me and the 
committee on that, if you would, as to how we might get a 
hearing or at least have provided to us that plan and the two 
aspects of it, the operational aspect and the business aspect 
of it. Is that something we can do?
    Dr. Sambur. I'm not sure with respect--the Air Force has 
never looked at the 224 number. The Air Force has looked at the 
381, the 339 and the 276 number for a business plan.
    Mr. Tierney. And that's regardless of the fact that 
Congress set a cap at the other number.
    Dr. Sambur. Well, you have to understand two aspects--and 
I'm not apologizing because, you know, I understand the point 
that you're making here. I was not here when the DAB led by 
Secretary Aldridge told the Air Force to plan for an increased 
budget. We're not anticipating exceeding that budget until 
2006, so we haven't exceeded the budget. We've been planning, 
based upon our guidance from the acquisitions czar, and that's 
how we've been planning.
    Mr. Tierney. Well, if you would exceed the cap by $5.2 
billion just getting to the 276, are you able to tell us now 
how much would you exceed that cap if you went to 381?
    Dr. Sambur. I don't have the number. No. No, we would--you 
know, obviously, what we are hoping for--you know, your 
previous question talked about why do you see--what 
improvements would happen.
    Now one of the things that we used in our estimate right 
now is a certain learning curve--and I think you're familiar 
with the learning curve--which tells you as you build more how 
does your experience help you. Lockheed Martin, when they made 
the estimate, we asked them to be very conservative because we 
wanted to maintain credibility. We didn't want to go back to 
the well again. Lockheed has been arguing with us--basically, 
arguing is the wrong choice of words--but trying to give us 
evidence that as this program progresses that learning curve 
should improve significantly.
    In addition, the producability costs that we've been 
spending on this program, that investment, we assumed that our 
relationship--that we would get a 5.6 return on our investment. 
Some of the earlier projects have been achieving 18 to 1 or 
better. We took the more conservative view. Some--a lot of 
people in the group have forecasted significantly higher 
returns on the investment. But we've come back and given a 
lower number, again, because we want to maintain credibility 
and not go to the well again, so to speak, in terms of our 
estimates. So we're challenging everybody to do better, and 
we're putting processes in place to do better.
    But, you know, you've asked very fair questions.
    Mr. Tierney. Thank you.
    Earlier, you said that there--two of our allies, the 
European Union and South Korea, have airplanes or technology 
that may make us even third in terms of capability for 
fighters.
    Dr. Sambur. Actually, there's a program called Block 60 
which is being produced in the UAE with the F-16 plane.
    Mr. Tierney. The UAE.
    Dr. Sambur. UAE--United Arab Emirates.
    Mr. Tierney. OK. Another ally of ours, generally. I mean, 
we sell them military equipment day in and day out. I hope 
they're considered an ally or a friend.
    Dr. Sambur. I hope so, too.
    Mr. Tierney. And they're doing that partially with the 
technology, and some aspects of that come from us.
    Dr. Sambur. They're doing it with all of our technology. We 
gave them the ability.
    Mr. Tierney. So we have the UAE, European Union and South 
Korea all building new fighters that now make us believe that 
we have the capability that exceeds that so we will end up 
being further down the line here.
    Dr. Sambur. Well, the question, if I may turn it around a 
little bit, is not the issue of a fighter capability. The 
question is the air defense systems. When you come in and you 
basically try to establish air dominance, there's two things 
that you're worried about. First, you're worried about their 
integrated air defense systems, their radar and their surface 
to air missiles that basically recognize you and then send out 
missiles to kill you; and then you're also worried about the 
fighters that they have that can basically take you on as you 
defeat them.
    Mr. Tierney. Addressing that part of it, I think what you 
are saying is that those three countries at least, using our 
technology, may have----
    Dr. Sambur. But I am also telling you that in the 
integrated air defense systems, the surface to air missiles, 
the double digits will be proliferating to other countries that 
can--for example, if Iraq----
    Mr. Tierney. And how will they be proliferating to other 
countries?
    Dr. Sambur. Because they're being sold by Russia. China 
makes it. Russia is making it. They will sell these things to 
other countries, and the countries will buy that.
    Mr. Tierney. Is any of that technology ours at all?
    Dr. Sambur. No.
    Dr. Sambur. Congressman, I would say, not to debate the 
cataloging, but the real concerns are the Russians' so-called 
31, if you want to get the airframes, and that's also being 
exported to China. Russia cannot produce in quantity, I agree, 
but they are selling their advanced engineering products to 
India, Pakistan, China and others.
    Mr. Tierney. Thank you.
    Who do we expect that the United States is going to export 
its technology on the F-22 to?
    Mr. Wynne. There are no plans to export the F-22.
    Mr. Tierney. Are we putting a prohibition on it or are we 
just saying there's currently no plans?
    Mr. Wynne. There is no plan right now.
    Mr. Tierney. What about the JSF?
    Mr. Wynne. Joint Strike Fighter, I think there are 
currently eight international partners starting with the U.K., 
Australia. I'm not sure I can go down the list, but it ends 
with----
    Mr. Tierney. So, just following some of our logic, does 
that mean that, by virtue of that, the minute we get the JSF 
done and we start selling it all around the block that now we 
have to come up with something else because of that 
proliferation and where that might go from there?
    Mr. Wynne. I think we really do look at the so-called 31, 
rather than looking at confronting any of our allies. We do 
carefully analyze who we intend to partner with and when they 
get this airplane. But we do hope that our technology progress 
continues. We are an advanced engineering country and we will, 
I think, continue to push the envelope lest there be somebody 
out there.
    Mr. Tierney. Well, I guess my point is--and I think you 
have it--is that it might be one thing to be concerned about 
other people's technology, it's another thing to be giving them 
ours and have to be concerned that they have it.
    Mr. Wynne. Right.
    Mr. Tierney. Thank you.
    One last statement if I could. The Producability 
Improvement Projects, the so-called PIPs, I really just want to 
get a clear stand on where we are there. They were identified, 
Dr. Sambur, by you as investments to improve manufacturing 
processes or to incorporate new technologies to reduce costs.
    Dr. Sambur. Yes.
    Mr. Tierney. At one point, there was an indication that 
those were going to be used to save us costs. But another 
point, as I mentioned earlier, the GAO is accused of failing to 
provide credible evidence that these investments in PIPS would 
reduce costs. Could I ask both of you to tell me now, do we 
believe that the investments in PIPS do reduce costs or not and 
will they be used on this project or not?
    Dr. Sambur. The answer is yes, we are.
    Mr. Tierney. Do you agree, Mr. Wynne.
    Mr. Wynne. I certainly have seen great evidence of that, 
sir.
    Mr. Tierney. OK. Thank you.
    Mr. Shays. Before letting you go, Mr. Wynne, we'll get you 
out with the 10 minutes you wanted; and, hopefully, we can get 
you out with the 15 minutes that I wanted.
    Mr. Tierney had raised some questions, and I want to just 
nail this down on two areas: first, that the argument is we 
don't want to it be a fair fight. I do want to respond and say 
that part of the argument, as I heard it, was, with the F-16 in 
particular, that our allies are--the European market, European 
Union, South Korea and others--are going to be developing this 
same technology and surpassing us. But with the Joint Strike 
Fighter we clearly are going to be taking a much improved 
plane; and our allies, some of whom you have mentioned, you 
know, the European Union will have a good look at that plane as 
well. Obviously, we're building it with the Brits.
    What we've asked GAO to do is a tech transferability study 
on the implications of that. Because it does concern us and 
because we don't have that unfair fight in the sense of that 
technology is out there, and that becomes almost an absurdity. 
We'll keep making the argument our allies have it and others 
have it because we shared it with them.
    Dr. Sambur. If I may just interject for a second, Mr. 
Chairman. What we're saying is that these air defense systems--
again, these double-digit surface to air missiles--so-called 
double-digit SAMS are there now. They're basically 
proliferating. They're being made in China. They're 
proliferating throughout the Third World countries. For a 
limited investment these people can basically stymie a great 
deal of our capabilities in terms of air dominance.
    The F/A-22 is here right now, as Congressman Schrock so 
eloquently put it. We're in the fourth quarter right now. The 
F/A-22 is something real that will come out.
    The JSF is not going to be here----
    Mr. Shays. We're beyond the point of arguing whether we're 
going to have the plane. But the issue is understanding the 
logic, though, of what we're doing with the JSF in particular. 
You get the point. OK.
    But let me just ask you this other--because I really have 
trouble with these numbers. And you both have been, I think, 
very candid with us. I would have liked to have seen the 
business plan before the hearing, but you have been very candid 
with us, and I appreciate that. It is a good way to have a 
relationship, and we are all in same team. That is for sure.
    Dr. Sambur. That is for sure.
    Mr. Shays. But what I'm wrestling with now is that, in an 
attempt to help me, Mr. Wynne, you said to stay within the cap 
we could build 225 to 235 planes. If I take the higher number, 
the 235, that means to do the 276, which is your intention, 
that's 41 additional planes. When I subtract out the $36.8 
billion from the $42.2 billion--in other words, the additional 
$5.4 billion--you're saying that we can do 41 planes for $5.2 
billion, and if we use the lower number, 225, you're saying we 
can do 51 planes. I have a big disconnect, and I think you can 
understand why.
    Mr. Wynne. Sir, I haven't said that we can do those kind 
of--when you do large variances on small numbers or small 
variances on large numbers, estimating is fun to debate. But 
what I said was at the $43.4 I thought they could get between 
276 and 290 if things go well. Down at the lower end number, my 
estimate was 225 to 235. I make no insinuation as to whether 
that----
    Mr. Shays. I'm going to take the most conservative.
    Mr. Wynne. But, sir, an estimate is an estimate. I have no 
quarrel if you take a different estimate.
    Mr. Shays. No. Hold on a second.
    Mr. Wynne. Yes, sir.
    Mr. Shays. I appreciate estimates, and I understand what 
they are, but I'm talking--you gave me a range, and I am taking 
the lower of both. In other words, I'm taking--saying you're 
going to have 235 as the cost of the cap, and I'm saying not 
the 290 number. I am taking the 276, and that is 41 planes. 
You're basically saying that you, for $5.4 billion, in that 
marginal cost, are going to do 41 planes; and that strikes me 
as going to be difficult.
    Dr. Sambur. Mr. Chairman, may I just try to attempt to 
answer that? We've been talking about learning curves; and what 
learning curves tell you, basically, is that the first units 
cost significantly more than the latter units. The last bunch 
of planes are significantly less expensive than the first 
bunch.
    Mr. Shays. I agree with that.
    Dr. Sambur. And that's why you can get--basically, for that 
$5.4 billion, you can get significantly more planes.
    Mr. Shays. I'm just wanting to put it on the record that 
we're saying we can get, at the minimum, 41 planes with those 
estimates. And we could potentially--you're saying 51 or even, 
if I go to the 290 figure, my gosh, we could get, you know, in 
the 260's--excuse me--we could get in the 60's.
    It's leaving me a little uncertain here because it seems to 
me quite a drop in marginal costs. But if you're comfortable 
with it----
    Dr. Sambur. Yes, we are.
    Mr. Wynne. I'm not comfortable, sir, with any estimate. I 
am only trying to answer the question as best I could.
    Mr. Shays. No. No. You're trying to answer the question as 
best you could. But, with all due respect, you're a 
professional here; and we've gotten to the point where we can 
start--because we are in the fourth quarter, make some 
meaningful estimates. I didn't pin you down to, you know, from 
225 to 227. We gave you a range of 10. I'm just using the lower 
number, OK?
    Dr. Sambur. From the Air Force's point of view.
    Mr. Shays. We're not playing tricks here. We're just trying 
to understand.
    Dr. Sambur. I appreciate your understanding of the issue is 
very clear. From the Air Force's point of view, our point here 
is that there is a lot of leverage to be gained at the end of 
the programs when you add money there because the marginal 
costs at the end is much lower than at the beginning and 
there's a lot more clout. So you can get more planes. We feel 
comfortable that for that extra investment we can get that 
additional number of planes.
    Mr. Shays. I'll tell you, as a Member of Congress, I'm 
going to be asking to get more planes at those marginal cost 
differences.
    Dr. Sambur. And this is legitimate. That's why as you add 
more quantities you get more value. The unit costs go down, and 
the latter part of that run is always significantly less 
expensive than the beginning part.
    Mr. Shays. OK. Here's what we'd like from you gentlemen. 
We'd like the cost of the program, we'd like the cost per 
plane, and we want to know how many planes you need. So that 
will be something we'd like from you in the interim.
    In regard to the business plan, I didn't want to make a big 
deal out of it. But we are Members of Congress, and we do have 
access to, obviously, classified information. This committee 
has never in the time that I've certainly chaired it, any 
problem with classified material; and we have been told many 
things that would have been interesting for people to know 
about. So whatever you send us, if you send it to us in the 
classified way, it will be secure.
    But we want to know the cost of the program, the total cost 
of the program, the cost per plane and how many planes you 
need.
    Dr. Sambur. Well, we can give you those answers right now. 
The cost of the program, it will live within the caps. I mean, 
if we cannot get relief from the congressional cap, that'll be 
the cost of the program. If the cost--if the cap is relieved, 
the cost will be the $42 billion number. We're estimating that, 
with the relief of the cap, there will be 276 planes; and there 
are a number of--you know, in our various----
    Mr. Wynne. Congressman, in the interest of time, could I 
please take that for the record and get with your staff and get 
you an answer?
    Mr. Shays. You have been patient. You told us up front. You 
both have been very fine witnesses; and I appreciate, Dr. 
Sambur, you putting that on the record. We'll nail it down a 
little better. You have 10 minutes to get to your next meeting, 
and I hope you have a chance to stop along the way.
    Mr. Wynne. Thank you very much and thank you very much for 
holding this conference, this meeting. Thank you.
    Mr. Shays. Thank you both. We appreciate your being here 
and appreciate your service to our country, both of you.
    Our third panel is Mr. Eric Miller, senior defense 
investigator, Project on Government Oversight; Mr. Christopher 
Hellman, senior analyst, Center for Defense Information, and 
Mr. Steven Ellis, vice president of programs, Taxpayers for 
Common Sense.
    Gentlemen, if you would come up, stay standing; and we'll 
swear you in.
    [Witnesses sworn.]
    Mr. Shays. Thank you. Note for the record our three 
witnesses have responded in the affirmative.
    I think we will do it as I called you, and I think you're 
in that order: Miller, Hellman and Ellis. We will go in that 
order. I thank all three of you.
    Mr. Miller.

STATEMENTS OF ERIC MILLER, SENIOR DEFENSE INVESTIGATOR, PROJECT 
 ON GOVERNMENT OVERSIGHT; CHRISTOPHER HELLMAN, SENIOR ANALYST, 
    CENTER FOR DEFENSE INFORMATION; AND STEVEN ELLIS, VICE 
       PRESIDENT OF PROGRAMS, TAXPAYERS FOR COMMON SENSE

    Mr. Miller. Good afternoon, Mr. Chairman and members of the 
committee. Thank you for this opportunity to comment on 
controlling costs in tactical aircraft programs.
    Founded in 1981, the Project on Government Oversight is a 
nonpartisan, nonprofit watchdog that strives to promote a 
government that is accountable to the citizenry.
    I was very impressed with the candid testimony of Mr. 
Walker today----
    Mr. Shays. Mr. Miller, I'm just going to interrupt you 
because I want to make sure that it's clear for the record that 
we are asking the business plan from the Department of Defense 
and the Air Force; and we'll just make sure that is part of the 
record. I think it's clear, but I want to make sure. Thank you.
    Mr. Miller, I am going to have you start all over again; 
and we are going start that clock all over again. I apologize.
    Mr. Miller. Mr. Chairman and members of the committee, 
thank you for this opportunity to comment on controlling costs 
in tactical aviation. Founded in 1981, the Project on 
Government Oversight is a nonpartisan, nonprofit watchdog that 
strives to promote a government that is accountable to the 
citizenry.
    I was very impressed with the candid testimony of Mr. 
Walker this morning, and we would tend to agree with many of 
his conclusions. We would, however, have to respectfully 
disagree with Mr. Walker on his testimony that the F/A-22 will 
be the best aircraft ever built. From our vantage point, the 
facts show we don't really yet know how the tactical fighter 
will perform, particularly in the area of avionics. After all, 
it has not been operationally tested yet.
    Your instincts to closely scrutinize the financial aspects 
of the F/A-22 program are right on target. As you have seen, 
probably observed, the Air Force has a public face. But the 
people that we talk with inside the acquisition system share 
your concern. In places where these people let their hair down 
and feel free to talk candidly, they question whether the F/A-
22 has a role, if it is worth the cost and if it really will 
work.
    Just like all of you, we continue to read troubling public 
accounts detailing out-of-control cost escalation in the F/A-22 
program and reports of seemingly insurmountable technological 
challenges. We also understand from our context and sources 
that critical problems within the program have been the subject 
of some rather heated internal debate at the Pentagon. We wish 
the debate would become more public.
    My organization typically focuses on holding weapon systems 
accountable, and we rarely call for the outright cancellation 
of a major weapons system. However, in light of the September 
11 tragedy, we are now more than ever convinced that an F/A-22 
buy is not consistent with the Pentagon's goals of transforming 
the military. In fact, Defense Secretary Donald Rumsfeld has 
publicly stated that, although he has to pick his battles on 
canceling systems, killing the F/A-22 is a battle he's 
considering taking on.
    The F/A-22 essentially has become an aircraft without a 
practical mission, not unlike the B-2 bombers that have, for 
the most part, been sitting on runways even during recent 
conflicts. Why purchase one $257 million aircraft like the F/A-
22 when you can buy several F-16 Falcons or F-15 Eagles for 
roughly the same price? It doesn't make sense to us. The F/A-22 
is a solution to a problem that no longer exists.
    Of course, anyone who studies the history of the Pentagon's 
acquisition system would be hard pressed to claim that rising 
costs, the dumbing down of testing and the shrinking number of 
buys are unique to the F/A-22.
    It looks to us that what you, as Members of Congress, are 
now facing is a repeat of the procurement of the B-2 bomber. At 
first, the Air Force told us that $40 billion would buy from 
135 to 150 B-12s. In the end, you might recall, you only got 21 
B-2s for that same price, each costing roughly $2 billion.
    To us, the only reasonable answer is to terminate the 
program. It doesn't take a clairvoyant to see that the F/A-22 
is shaping up to be a part of the problem, rather than a 
solution to the Air Forces' shrinking tactical fighter fleet. 
It may be a sleek-looking aircraft and fly a little bit faster 
and longer than other U.S. fighters and it may be somewhat 
harder to detect on a radar screen in darkness, but it's a 
budget buster. Its structural soundness is suspect, and its 
avionics package is still little more than a dream.
    The Air Force wants that aircraft so bad that it's willing 
to mortgage the future. We fear that unless you, as Members of 
Congress, will have the will to hold the military and defense 
contractors accountable, the F/A-22 will become another sorry 
chapter in the history of Pentagon acquisition boondoggles.
    Thank you for inviting me to testify before the 
subcommittee. I'm happy to answer any questions.
    Mr. Shays. Thank you, Mr. Miller.
    [The prepared statement of Mr. Miller follows:]
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    Mr. Shays. Mr. Hellman.
    Mr. Hellman. Thank you, Mr. Chairman and members of the 
committee and also to Mr. Tierney, for bringing attention to 
this issue and also for his able representation in my home 
State.
    Like many analysts, I believe that cost growth in 
successive generations of weapons systems is inevitable. Over 
time, the threat will increase. Capabilities of systems that 
supercede the past generation have to be improved 
correspondingly, and new technologies are usually more costly 
than those of the current technologies.
    It's also a truism that costs of developing a new weapons 
system will rise over original estimates, as one of the 
previous panelists pointed out. Historically, that expectation 
is roughly in the range of 30 percent; and that's due to a lot 
of factors. But if one agrees with the precept that cost growth 
in weapons systems is, to a certain extent, inevitable, then I 
think an important question is what extent of cost growth is 
acceptable and how does one determine what is reasonable and 
what is unacceptable.
    Further, in attempting to answer that question, it's 
critical to discuss whether strategies that might limit this 
growth are applicable and, if so, whether they've been adopted.
    With that in mind, I'd reference statements earlier by Mr. 
Tierney where he was discussing the PIP programs that GAO 
identified and the service's use of some of those funds not to 
leverage additional savings in the future but actually to pay 
for existing cost overruns.
    The second thing that I think is important to point out is 
the impact that cost increases have in programs like this. As 
GAO has pointed out, this is going to have an impact on efforts 
to modernize the tactical Air Force--the tactical aircraft 
fleet.
    The first impact is going to be there's going to be a 
slower replacement schedule of existing aircraft. What that 
will do is drive up the costs of operations and maintenance of 
the existing aircraft as they age. These costs always 
inevitably go up; and if you replace them more slowly, 
estimates about growth and O&M costs are skewed.
    The second thing to point out is that the number of 
aircraft ultimately will diminish, and I think that has been 
discussed at length here. We talked about the original 648 down 
to, at this point, a possible number as low as 224. This also 
has an impact, particularly on the overall age and cost of 
maintaining the TACAIR fleet.
    Earlier, the gentleman from GAO alluded to a study that 
they had done--actually, that GAO had done back in 2001 that 
looked at the average age of the TACAIR fleet and the effect 
that the current modernization program would have on that age. 
What they discovered and what some of your questions have 
highlighted is the fact that the current plan--and at that 
point they were talking about a buy of 329 F-22s, not the 225 
that were being discussed under the current cost cap--was that 
the actual age of the Air Force fleet would grow over the 
current--and well above the target age of about 11 years of age 
for aircraft in that inventory.
    So in effect what happens is that if you stick with the F-
22 program and look at it as a solution to your modernization 
of the TACAIR fleet, not only is it not the solution, it 
actually increases the problem.
    Then I want to return to something that Mr. Walker spoke to 
this morning which I hadn't heard quite so well defined before, 
but the plug and hope approach to determining number of 
aircraft that would be purchased in the F-22 program. I think 
that when you look at this, that number, the 225 or the 276 or 
wherever it is, you have to recognize that number really 
doesn't do a lot in terms of one-for-one replacement of the 
existing fleet.
    This is something that I believe you, Mr. Shays, brought up 
earlier, which is, what are these aircraft attempting to 
replace? Even at the 381 mark, which is the most optimistic 
number I heard discussed today in terms of aircraft that would 
be required, you're talking about a one-for-two replacement 
over the current fleet of F-15s.
    While technologically the aircraft could be twice as good 
as the program it's designed to replace, at some point numbers 
do make a difference in terms not just of our ability to 
project force on a given battlefield but just the aircraft that 
are available to do the things that they do, when they are not 
fighting, training, maintenance, those types of things.
    You can only substitute technology to a certain point; and 
my concern is that when you get numbers this low you're not 
going to be able to fill out the roles of all the things that 
you're asking our air expeditionary forces to do in the future.
    And the question that was raised but not answered--and I 
did hear some very good answers today. But one of the questions 
that was raised and not answered is, if you look at the lower 
numbers, the 224s or the 276s, what other types of aircraft are 
you going to look at in order to fill out the numbers across 
the tac air fleet, so that you can do all the things that the 
Air Force is going to be required to do in the future? And I 
would be interested, at some point, in hearing that information 
revealed to us.
    And with that, I would like to say once again, thank you. 
And I look forward to your questions.
    Mr. Shays. Thank you, Mr. Hellman.
    [The prepared statement of Mr. Hellman follows:]
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    Mr. Shays. Mr. Ellis.
    Mr. Ellis. Good afternoon, Chairman Shays, Congressman 
Tierney, Congressman Schrock.
    Thank you for calling this hearing and inviting me to 
testify. It's been very informative and helpful. It has caused 
me to--as evidenced by my testimony, which I've scribbled all 
over to try to revise it and improve it so that I could provide 
some assistance.
    I'm Steve Ellis, vice president of programs at Taxpayers 
for Common Sense, a national, nonpartisan budget watchdog 
group.
    In the 6 years my organization has been watching the F/A-22 
Raptor program, we have found it to be a veritable poster child 
for some of the problems of putting the weapons production cart 
in front of the development and testing horse. The 
unprecedented cost increases of this program coupled with 
several other factors, including a reduction in the number of 
F/A-22s procured, the development of the F-35 Joint Strike 
Fighter, and the overwhelming air superiority the United States 
already enjoys, raise the fundamental question: Do we need to 
continue to pursue the acquisition of the F/A-22, or is it 
unnecessary and redundant?
    We cannot stop asking questions just at improving the 
acquisition process. TCS strongly agrees with the Comptroller 
General that the Bush administration, the Department of 
Defense, and Congress need to seriously evaluate what are our 
needs and whether the F/A-22 is still an essential part of our 
force mix, or if the billions planned for this program are 
better spent elsewhere.
    The discipline acquisition procedures embodied by ``fly 
before you buy,'' basically, conduct Operational Testing and 
Evaluation before moving into full-scale production, have been 
abandoned in the case of the F/A-22. Until that approach is 
rectified, cost overruns, system failures, and a lack of 
performance can be assured. The simple mantra of the carpenter: 
Measure twice, cut once, also applies to aircraft acquisition, 
but the Air Force's aggressive production plan for the F/A-22 
seems to be: Cut first and measure later.
    In an admirable but failing effort to control cost 
overruns--although we hope not in the end failing--Congress 
mandated that the F/A-22 production cost not exceed $36.8 
billion. However, current DOD estimates put costs at $42.2 
billion, $5.4 billion over the cap.
    Additionally, the Air Force ``buy to budget'' strategy 
reduces contractor incentives to control costs and essentially 
guarantees that taxpayers will get fewer aircraft for the 
money. Or, worse, contractors and the Air Force hope to use an 
old salesman trick to force taxpayers to buy more to meet the 
real need--purportedly 381--after the production run is over. 
This is the ``plug and hope'' approach Comptroller General 
Walker discussed.
    Rather than slowing down or potentially pausing F/A-22 
production levels to stabilize cost overruns, DOD has done the 
opposite, increasing 2003 production levels to 20, arguing, 
unconvincingly, that the increased costs of terminating some 
contracts, inflation, and reduced manufacturing efficiencies 
outweigh the high risk of expensive retrofitting and repair of 
aircraft and more costly delays.
    The problems revealed so far in the F/A-22 testing impair 
safety and performance.
    The Air Force posture seems to be little more than a policy 
of ``get as many planes as you can, as fast as you can,'' 
despite the long-term risks. This is more of the ``buy before 
you fly'' approach that got us in the vicious cycle of cost 
overruns and project delays in the first place.
    The delays in aircraft delivery have forced DOD to slip 
schedules; but instead of shifting the full testing and 
production schedule, DOD plans to slip just the testing, while 
leaving the timing of the full-scale production decision 
unchanged. The new schedule removes a 3-month lag between the 
two, and requires the production decision to be 4 months before 
the completion of OT&E. Common sense, as well as recent 
experience with the F/A-22 and other weapons systems, has 
revealed that significant changes and improvements generally 
result from OT&E. But under this plan, 25 to 30 percent of the 
production aircraft will be completed and will have to be 
retrofitted at possibly significant cost.
    An additional cost risk factor is that by--is that only $14 
billion of the $27.3 billion of the announced Program Cost 
Reduction Plans are implemented. One cost reduction tool, the 
Production Improvement Plan [PIPs], require an initial 
government investment to improve production processes, but are 
predicted to reduce long-term cost growth by $3.7 billion.
    However, in fiscal year 2001, 2002, the Air Force had used 
$87 million in planning PIP funding to offset cost growth in 
the first two production lots as previously discussed. By 
failing to invest in these improved processes, we are 
guaranteeing that some of the planned savings in future years 
will not occur.
    The Air Force has led taxpayers down the primrose path on 
the cost of the F/A-22. Original plans called for 750 aircraft 
at $68 million per plane. We just heard the DOD could purchase 
225 to 235 planes for the congressionally mandated production 
cap. That's more than $250 million per F/A-22, roughly six 
times the cost of an F-15. The acquisition and procurement 
problems serve to highlight that this program needs further 
scrutiny. The fundamental question of whether we need to pursue 
acquisition of the F/A-22 remains, and taxpayers need it to be 
answered.
    Thank you, again, for inviting me to testify. I will be 
happy to answer any questions you might have.
    [The prepared statement of Mr. Ellis follows:]
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    Mr. Shays. Thank you, Mr. Ellis and Mr. Hellman, again, and 
Mr. Miller.
    We will start with Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    Mr. Chair, let me say before I question, first of all, 
welcome to all of you. I don't usually say this about hearings 
that I attend all day, but this has probably been one of the 
best ones I've been to since I've been in Congress. This has 
really been good. And I'm telling you, I have learned a lot of 
things from people I didn't think I was going to agree with 
that I do agree with. And I think when that situation happens, 
I think a lot of good things happen. And I appreciate 
everything I've heard and what you all say, too.
    Let me just make a couple comments. Mr. Miller, I think 
you're right, no one is questioning that there have been some 
real problems with this platform, and they certainly need to be 
corrected. I think they are. And it has cost a lot of money to 
do that. So you are dead right on that.
    You mentioned that you felt the F-16 could probably do what 
the F/A-22 does, with the exception, I believe, that the F-22 
has the stealth capability that I think is going to be so 
important for our war fighter in future years, because our 
adversaries out there are creating all sorts of nasty things 
they want to lob at us. And if we can get a pilot in and out 
real quick and do the job, I think that's going to save lives, 
and I really think that has to be one of our main goals.
    And I don't think I heard you correctly. You weren't 
suggesting the B-1 isn't doing what it's supposed to do. It did 
a beautiful job. I think it's done a beautiful job in the last 
3 weeks. I hope I didn't hear you----
    Mr. Miller. No, sir. I was talking about the B-2.
    Mr. Schrock. Oh, the B-2.
    Mr. Miller. A more sophisticated stealthy bomber.
    Mr. Schrock. OK. Great.
    I have one question and a comment for Mr. Miller and then 
one for Mr. Ellis. Somebody gave me an article when they knew I 
was coming here to read from the Fighting With Failure series. 
I think you are familiar with that. And the stated purpose for 
the series, of course, was to document weapons that don't work 
but waste taxpayers' money and aren't suitable for combat. And 
they particularly focused on the C-17, which clearly had its 
problems initially. But I'm wondering if you all still believe 
that the C-17 doesn't work, and it's not suitable for combat. 
Because I think it's done a yeoman's job.
    Mr. Miller. Oh, no. We don't believe it doesn't work. It's 
had some problems and it has some very--if you read the most 
GAO report, it has some astounding maintenance cost problems. 
It's a very costly aircraft to operate and maintain. It has not 
qualified in some areas, for example, of dropping a brigade of 
troops and such. Some of its aspects have not been realized 
fully yet, but I think we were more critical of the actual 
process of the development process.
    Mr. Schrock. Just the development process. Let me make a 
comment on that, and it's a statement, and it follows on from 
what I said this morning about the C-17. And I raise it because 
I think it's relevant to this discussion.
    You know, the C-17 went through the same turbulence that 
the F-22 is going through now, and many people question its 
value when, in fact, we reduced the numbers for what was 
planned, I think, to be 220 down to about 40, to as low as 40, 
and we were ringing our hands about the development issues, and 
now, we are back up to 180 with, potentially, even more being 
built. And it really has proven almost everything I think we've 
anticipated. And I can't imagine not having that platform, not 
having that air frame in this particular war that we have just 
gone through and continue to go through. But, guess what? All 
that hand wringing and doubt caused the plane to cost more 
because we were producing fewer. And I think the F-22 is going 
through the same thing, it's no different.
    So we need to really get--and I think that's what you are 
all saying. We need to get stability into these programs so 
that we can get the cost down. And at some point in the 
Pentagon, they have simply got to do that.
    As I said before, I don't really blame the Air Force or the 
manufacturers. It's all within that mindset at the five-sided 
puzzle palace across the river, where I worked for several 
years. So I understand the problems they have over there. But I 
think there is no doubt in my mind that this is going to be--we 
need this aircraft, and it's going to be a good one.
    And Mr. Ellis you are from the Taxpayers for Common Sense. 
That's a great title, I love it, because I think we all--as 
taxpayers, we all need to have common sense.
    But I have an opportunity on almost a weekly basis to talk 
with the men and women in uniform. I represent the Hampton 
Roads area, which is Virginia Beach, Norfolk, and represent 
more military than 385 members, combined. And one of the 
things--when you ask them what they are most concerned about, 
you swear it's going to be pay and benefits. But what they want 
is equipment that works, they want spare parts, and they've 
been sorely lacking in that for a long time. And that's one of 
the key things I hear from them. And, of course, the cost of 
maintaining a lot of this equipment, a lot of the air frames is 
skyrocketing. And I find myself increasingly concerned that, if 
we don't modernize, we are going to find ourselves no longer 
able to provide the war fighter with the air dominance that we 
have all talked about here today, and especially as we have 
seen demonstrated in the last few week weeks in Iraq.
    How does your organization propose to deal with these 
issues? And as a taxpayer myself, modernizing, and modernizing 
with the incredible capabilities of a platform like the F-22, 
just seems to make common sense. How would you do it 
differently?
    Mr. Ellis. Well, first let me say that----
    Mr. Schrock. Your credibility is already pre-established, 
being a Coasty, because part of the sea service, that really--
--
    Mr. Ellis. Right. And not only a Coasty, but a son of a 
career Naval officer and nephew of another one. So I've had a 
lot of time in the Hampton Roads area.
    Mr. Schrock. You've just gone up two more rungs on the 
ladder.
    Mr. Ellis. Well, I dropped one when I went to the Coast 
Guard Academy instead of Annapolis.
    Mr. Schrock. Not at all.
    Mr. Ellis. But, and actually, the other thing on 
reliability and understanding that is, is the ship--first ship 
I was on in the Coast Guard was the Coast Guard Cutter Sorrel, 
which I happened to be on board for the 50th anniversary of its 
commissioning. So the Coast Guard is clearly aware of age 
infrastructure. As a matter of fact, from the gentlemen from 
the other chamber--or used to be in the other chamber, now the 
Governor of Alaska, Senator Murkowski, served on the Sorrel as 
a seaman. So, the same ship I was on.
    Mr. Schrock. He's an old-timer.
    Mr. Ellis. Yeah. So, but--no. I think that actually coming 
to grips with the critical issues of modernization and really 
spending our money wisely and putting it in the most 
appropriate places is what's going to make our service members 
the most happy.
    And that we need to--we need to really target our funding, 
our acquisition dollars. And I realize there is different 
accounts, and you can't just change acquisition money into 
money for spare parts or--etc. But that the key thing for us is 
to making sure that we are acquiring new assets that are 
maintainable and easily maintainable, that are cost effective; 
that we are not trying to keep alive incredibly old assets, 
like a 50-year-old buoy tender, and that you know we look at, 
we really--the key thing, and I saw in the business plan, the 
discussion there, it seemed to me the Air Force when they were 
discussing that, the F-22 was always--F/A-22. Excuse me. I 
haven't quite gotten used to that--was always part of the mix. 
That, you know, instead of really stepping back and looking at 
the need and looking at the universe and what do we actually 
need, and then figuring out, OK, what are the various factors? 
Does the F/A-22 fix and actually fit into that mix? They 
instead seem to have the F/A-22 already there, and then, what 
part of it does it fit into?
    And that's not really a way of doing a business plan, and 
that's not really going to get us to have the most cost-
effective approach into dealing with these issues.
    Mr. Schrock. Appreciate that.
    Thank you, Mr. Chairman.
    Mr. Shays. Thank you, Mr. Schrock.
    Mr. Tierney.
    Mr. Tierney. Thank you.
    Mr. Schrock, just to add on. I have to say that I don't 
think I've had an occasion to be in a lengthy hearing with you, 
but I appreciate your perspective on these issues. And I think 
you have added a lot of value to the hearing, and certainly, we 
learned a lot from your questioning and some of your comments.
    And just to ingratiate myself with you, my father and 
brother were both in the Navy, so you won't be slinging 
anything over here. Just cover yourself at all times, Mr. 
Chairman, is what I say.
    Let me cut to the quick on one thing. When I tried to ask 
the Air Force and the Department of Defense what the need was 
for the F/A-22 going forward, whatever the answer I seemed to 
get--and you can correct me if I've misstated it--was that 
there is a particular aircraft that the Soviet Union is 
supposedly creating and maybe sharing with China and others. 
And Mr. Chairman or Mr. Schrock may remember what it was, the 
31 Sorrel, or the Russian aircraft that the Department of 
Defense and the Air Force indicated that they were concerned 
with that the F/A-22 was going to combat. And they also were 
talking about double surface-to-air missiles and those things.
    Talk to me, if you would, the three of you, in turn, is the 
F/A-22 going to address those issues? Is it the only platform 
that can address those issues? And, how do we address those 
issues if they are real threats and we don't have the F/A-22?
    Mr. Hellman. I'm going to go first just by default. I think 
part of the answer--because I'm not an expert in threat 
assessment, but I think part of the answer has been answered 
already, which is, we are already going to buy the F/A-22, and 
that, therefore, the question becomes one of how many and at 
what cost?
    One of the things that I've looked at is trying to--and 
this is something that Mr. Kucinich brought up earlier, was 
what's the mix going--what's the force mix of tac air going to 
look like? Clearly, it's going to have a component of F-22. The 
question then becomes: How much of the mix is going to be F-22, 
and how much of it is going to be something else?
    We haven't heard what the other options are that are out 
there. I would argue that you could do it with an upgraded F-
15, maybe it's an upgraded F-16. But the point is that there 
has to be some discussion of that. Because I believe from a 
purely budgetary standpoint that you can't do the full 
replacement with F/A-22s, nor do I think that's necessarily a 
good idea. Because I think one of the things that you have to 
recognize about programs like the F/A-22--and this is not 
unique to the Air Force, it's true of a lot of the Capital 
Improvement Programs in other services, which is why I think 
this discussion is particularly relevant--is that it's going to 
bleed funding away from other priorities.
    The Air Force is not just a fighter--a school for fighter 
aircraft. They have other functions. And one of the things that 
they are struggling with right now is how they are going to 
upgrade their mid-air refueling capability. They have to revamp 
so they can stop calling on the Navy; they have to resuscitate 
their airborne jamming capability. These are all things that 
are going to place demands on the Air Force budget. And my 
belief and my fear is that the F-22 is going to place a 
disproportionate burden on that, and that, therefore, you have 
to look at alternatives, so that you can achieve the balance 
within the Air Force budget and within the DOD budget, so that 
you can get all the things that you need to do done.
    Mr. Tierney. Do the other gentlemen feel compelled to add 
something? Or are you going to let that go?
    Mr. Miller.
    Mr. Miller. I think it is also a matter of how much you 
want to spend. Accountability. Are you getting for the 
taxpayers what you tell them you are going to get them? And I 
don't think that's happening with the F/A-22. So far we haven't 
seen demonstrable evidence.
    And I think--while I'm not made privy to classified 
information, I haven't seen a lot of evidence yet supplied by 
the Air Force that there are better aircraft out on the drawing 
board, better than the F-15, and I've not seen evidence that 
any other countries would be willing to spend the kind of money 
to develop those types of fighters that are so costly. But, 
again, I've not had access to any classified information, so 
maybe--perhaps the Air Force has.
    Mr. Tierney. Thank you.
    Mr. Ellis, either I stole a phrase from you or you stole it 
from me at one point. I think I may have heard it, but I was 
using the expression you used for developing--``put the 
development cart in front of the testing horse.'' I think I 
used it in terms of National Missile Defense, but I think one 
of the problems--and Mr. Schrock mentioned it earlier, too. I 
think one of the problems we have in all these systems is this 
apparent desire to race forward and develop something before 
you have tested it appropriately, and then end up spending a 
lot of money retrofitting it or whatever expression you want to 
use, at a much higher cost and less efficient result on the 
long run on that.
    But I don't want to stop you from answering any other 
question; I want to make that point, that I quite agree with 
you on that, that one of the issues we're looking at here today 
is, if you get over the threshold, and you can't go back, and 
they are already in production of some of these F/A-22s, then 
the question is, how do we not make that mistake of putting the 
development cart in front of the testing horse in the future or 
with respect to the rest of what we have to do with the F/A-22?
    Mr. Ellis. Well, yeah. Before I go to what you asked 
previously, absolutely, the getting the development--or the 
cart before the horse in this case actually worked. I mean, 
we've all pretty much conceded that we are going to be building 
some F/A-22s. And so the Air Force, in some measure, has gotten 
what they wanted. I mean, they have gotten a series of these 
aircraft and where people are conceded, basically anywhere 
between, you know, somewhere in the hundreds to 225.
    Mr. Tierney. I guess the question would be, if we had done 
this properly, might that not have been the case, and might we 
have had other and better choices as we went around if we found 
out we were going to have this kind of cost overrun and this 
kind of technical problems with avionics and everything else, 
might we have shifted gears, gone to a better platform, or--if 
it were the case, and upgraded the others more efficiently than 
now saying, well, they were persistent enough, and they kept 
jamming it in; it has all these problems, still way over cost, 
but here we are.
    Mr. Ellis. Right. Sort of abandoned the economic theory of 
sunken costs and go ahead and sink more in to it.
    No. I think that those are critical issues, and I think 
that some of the discussions about spiral planning and some of 
the discussions about, you know, really having--if they are 
going to do a real business plan, I mean, a really ground-up 
sort of business plan of what do we need and what do we think 
is going to happen. And obviously there are going to be new 
threats developing over time. I mean, that's understandable. 
And we are going to have to evolve and hopefully we do a 
design--we design a planning process that will answer that. I 
don't have the perfect idea in my head. I don't think anybody 
does.
    I think that just a little point that I would add on the 
potential opponents, competitors for the F/A-22 air dominance, 
the key things that--air frames are not the only thing that 
have made our country have the greatest air superiority. Some 
of it has been training and has been equipment and has been 
maintenance. And those are all things that other countries are 
going to be far behind us on and have been previously. And I 
think that is something that I'm sure that Congressman Schrock 
would agree with, that we have the best trained and the best 
outfitted pilots and aviation personnel in the world. And so 
that's one area that always will assist us in air superiority.
    And then the other is, that I'm a bit jaded by a lot of the 
things that happened in the cold war, where we heard a lot 
about the Soviet military threat and how big it was and how bad 
it was. And I'm not saying that there wasn't a threat there by 
any stretch of the imagination, and I remember those Soviet 
threat books that we used to get when I was at the Coast Guard 
Academy in the 1980's. And, lo and behold, when the Iron 
Curtain fell, we found out that they were not nearly as capable 
as we thought they were.
    And I'm not saying that people are drumming up or are more 
concerned than is necessary, but I am also somewhat concerned 
about that, just as Mr. Miller mentioned, that I haven't quite 
heard about this new capability out there that is going to 
outperform our F-15s and F-16s. And so that's the other thing 
that I--I'm not going to say that it isn't out there, but I 
don't know to the level of the threat. And again, it does come 
down to the cost benefit analysis across the spectrum of the 
Department of Defense spending that Mr. Hellman mentioned.
    Mr. Tierney. Thank you. Thank you all for your testimony 
here today. It's been enormously helpful.
    Anything that any of you want to add?
    Mr. Miller. I think, with respect to the F/A-22, I think we 
shouldn't forget that the F-16 and the F-15 are getting some 
incredible upgrades to their systems, to their avionics. So 
they are not the same aircraft that they were when they were 
first built. And so the answer some of the threats--might be 
able to answer some of the threats with the upgrades.
    Mr. Tierney. We actually had a hearing on that some time 
back, the chairman will remember, and the people testified what 
the upgrades were from the Air Force and from the Department of 
Defense. My memory of that hearing is that essentially with the 
upgrades there was very, very little that they couldn't do with 
the enhanced existing capabilities, as opposed to what they 
were proposing on this.
    Now, I don't know how much they now seem to think that 
they've gone beyond that or whatever; it was only a couple 
years ago. But I think they were at least, at one point in time 
with a different group of people that testified and today, were 
willing to admit that with upgrades, the others did essentially 
all of the tasks that we would be asking an F/A-22 to do. So 
that is interesting to note.
    Mr. Chairman, I will yield back the balance of the time. 
Thank you.
    Mr. Shays. Thank you. Appreciate that.
    Gentlemen, what was your reaction when you learned about 
the business plan that they have? What was your reaction to 
that? Were you--was your reaction, well, that makes sense; they 
should have it? Were you surprised they had it? Were you 
surprised they haven't made it public?
    Mr. Ellis. I was not aware of it. I'm not surprised--and 
I'm curious, at least the part that I can see, to know what 
exactly is it comprised of.
    You know, as I mentioned earlier, I am concerned that it 
seemed that there were a lot of preconceived notions that went 
into the business plan rather than actually a real 
identification of need and then finding how to match that need 
or meet that need.
    Mr. Shays. Anyone else?
    Mr. Miller. That was the first I'd heard of the business 
plan. I mean, I'm not sure I even understand it or that it was 
very well explained.
    Mr. Shays. OK. In terms of the issue of marginal cost, if, 
in fact--this is what we have a pretty good idea of: They are 
saying that they can build 276 planes for $42.2 million, which 
is $5.4--excuse me 276 planes for $42.2 billion. They are 
saying for the cap level of $36.8 billion, they estimate--but 
even this 276 is an estimate. They estimate for the $36.8 
billion, they can build 225 to 235. Were you surprised that the 
marginal cost of the last 41 planes to 60 would be in the realm 
of $5.4 billion?
    And, do you think that's realistic?
    Mr. Ellis. I was quickly doing my long division on my pad 
when those numbers were coming through, and I came out to 
$131.5 million per copy for that last 41. You know, for that--
basically for that $5.4 billion number, Mr. Chairman. And, 
yeah, I think that it's a pretty significant cost savings. I 
would be curious to see--obviously, it's, you know, a pretty 
widely accepted fact and widely known fact that the more copies 
you produce, generally, that the reduction in prices is 
greater.
    So I'm not surprised that's occurring. But the scale to 
deviate from the average, from which the average is somewhere 
around $250 million per copy, it's a pretty significant cost 
savings over $100 million there, almost 50 percent savings over 
the life of the program. I think that pretty large.
    Mr. Shays. In your experience of looking at other programs, 
would that be a consistent drop?
    Mr. Ellis. Well----
    Mr. Shays. If you don't know----
    Mr. Ellis. We could try to answer that for the record.
    Mr. Shays. See, what I'm going to be very interested in is, 
if we do decide--given the reality that in 1991 we went from 
750 to 248, in 1993 to 438, and in 1997 to 337, and then 1999 
to 333, 2002 to 276, down to potentially 225 to 235, I am--I'm 
wondering if we aren't going to get caught in this trap of then 
saying, let's build 276 at that additional cost, or let's 
build--if the marginal cost is so much less, you know, it 
appears to me maybe--and the requirement is there, let's build 
330 of them or 380 of them, if we aren't going to then find 
that once we committed, that then we are going to find the cost 
is going to go up.
    Is there any way that you would know to nail down this 
number in any work that you have done with other projects?
    Mr. Hellman. The short answer to that one is, no. And I 
think, in part, it may be because this program is somewhat 
unique in a lot of ways. But I think that--first off, I thought 
the number was pretty optimistic. But, again, that's intuitive, 
and it's based on what we have seen about cost projections not 
so much in other programs but in this program, which has been 
notoriously bad.
    So while I recognize that to a certain extent, it's new day 
here and that, you know, the past is not necessarily a 
precursor to the future, and taking into the account the fact 
that you will see obviously improvement in cost as you get 
further into the program on the per unit costs, it seems that 
given the track record in this program in making those types of 
projections, it's reasonable to ask how they came up with that 
number. And it goes back to what Mr. Walker was saying about 
the ``plug and hope'' approach to this.
    It also leads me to a question about how--because it seems 
that your question is, how do we avoid a situation where we 
agree to do something and then find ourselves with a fait 
accompli, where the money that we agreed to spend on it is not 
there and, yet, we have already gone so much further down the 
road, that we have to make up the difference.
    Mr. Shays. Given that, all of you have pointed out that in 
the late 1980's and early 1990's, this didn't seem like a bad 
deal if you could get 700-plus planes.
    Mr. Hellman. Right.
    Mr. Shays. But if you had told us in 1990 that in 2004, 
2005 and 2006, we might end up with 224 planes at approximately 
that cost, we might have said, I'm not sure we are going to do 
it.
    Mr. Hellman. And I think that Mr. Miller's point on the B-2 
in that regard is well taken, because that was a situation 
where Congress, despite receiving repeated assurances from the 
Air Force about what they were going to get for the investment, 
found that it didn't--actually didn't never come to pass, and, 
ultimately in their wisdom, they decided to end the program. 
Ultimately, you have that recourse. But it would seem to me 
that, from what I heard today, they still have to do a little 
bit about making that case, at least just on a numbers 
perspective.
    Mr. Shays. Let me just ask two more questions, and then I 
think we will be done here. Should the statutory--let me ask 
you this first. What--and if you don't have an answer to it--if 
you are not feeling confident to answer it, then I don't want 
an answer. But what actions does the Department need to take to 
stabilize program costs? Any of the three of you want to take a 
stab at that?
    Mr. Hellman. In just this program?
    Mr. Shays. Yes. Let me ask this question. Should the 
statutory production cap be eliminated? And the question is, 
why or why not? Mr. Ellis.
    Mr. Ellis. Mr. Chairman, we would be very concerned about 
removing the statutory cap. I think that although people can 
talk about how it may have hurt the program or the fact that 
now it's much cheaper per copy, that was part of the reason 
why.
    I mean, that the cap actually helped force the Air Force to 
look very hard and come up with different things to try to 
reduce costs in out years, and it made them really make hard 
decisions about what they need. Or maybe not as hard as I would 
have liked, but still harder than they wanted to make on this. 
And it wasn't free money. And I think that the cap has served 
us well and that we can evaluate in the future, if there is a 
need for additional copies in some discreet amount to go at. 
And I think that's something that is lost, is something of the 
benefits that we have already achieved from the wisdom of 
Congress in establishing that in the past.
    Mr. Shays. Let me react to it, though. When I look at the 
charts that we see, whether they've gone up $19.8 billion or 
close to that, we are certain that the drop in the number of 
planes is there. If the cap simply means we are going to spend 
the same amount of money and get one-third the planes.
    I'm not--I don't know if the cap has done all that much. If 
you, on the other hand, are saying to me that the costs would 
have gone up even more than $20 billion, then I guess I'd 
agree.
    Mr. Ellis. That would be my impression. Yes, and, no, 
absolutely, that's one of the things that I raised in my 
testimony is, is that--I mean, the sad thing is, is that we are 
still spending the same amount of money. I mean the taxpayer is 
on the hook for the $40 billion plus. Whether we get 100 planes 
or we get 300 planes, we are still paying the same amount of 
money. And the sad thing is, is that, in this case, as per unit 
cost goes up, we are getting less bang for the exact same buck. 
And that is the conundrum about the cap.
    Mr. Shays. We basically are existing with 400, therefore, 
less planes that we anticipated, and we are getting them much 
later than we anticipated, and so on.
    Anyone else want to respond before we close up? I see Mr. 
Tierney----
    Mr. Miller. I would say, we would probably want you to stay 
with the cap. But I suppose it would also be a judgment call on 
your part as to how bad you as a Member of Congress want this 
aircraft and feel that the fighting men and women really need 
it. It might set a bad precedent.
    Mr. Shays. You started, Mr. Miller, making the point that, 
rather than what was beginning to develop as a consensus, that 
we are probably going to see some of these planes. The question 
is how much. Your view is that you are not convinced that we 
should see any of these planes.
    Mr. Miller. No, we are not.
    Mr. Shays. Mr. Hellman. Your view is?
    Mr. Hellman. Well, the fact is we have already authorized 
51 of the aircraft and the funding. Therefore, and it's already 
in limited production, so we're going to see some. So then the 
question is, how many and at what cost. I mean, there have been 
plenty of programs that have been overseen by Congress that did 
not have a cost cap. So I think that function can be performed 
without the rigor of a cap, if that's what you so decide.
    But I think it's important to remember that first the 
initial cap was based on Air Force figures that were supplied 
to Congress, and it was adopted by Congress because their 
efforts to regulate costs in this program prior to that had 
been unsuccessful. And it was, I think, in part, to actually 
set a hard limit but also, in part, to put these people on 
record.
    Has that been effectively done? It seems so. Is it the only 
way to achieve that? I'm not sure. But given the track record 
on costs, this is a program and the projections that GAO has 
made about some of the changes or some of the problems that 
they see in the future in both schedule and technology, there 
is likely to be further cost growth in this. And I'm not sure 
how one keeps that under control without a cap.
    Mr. Shays. Which one of you was making the claim that there 
is a real maintenance issue on this plane? Did one of you say 
that there was a challenge on maintenance? Was that you, Mr. 
Miller?
    Mr. Miller. No, I didn't say that. But--I think that was in 
the new GAO report; that in effect their goal with the F/A-22 
was to get 3 hours of flying time between maintenance actions, 
and I think it comes down to about 17 minutes between every 
average maintenance. It's point 29 or something like that 
hours.
    Mr. Shays. Well, that will be something I should take a 
good look at, because I didn't catch that. But thank you.
    I have no further questions to ask. Mr. Tierney, do you 
want to?
    Mr. Tierney. If I could, just a couple.
    First of all, it seems to me that the reason that the cap 
was set, was for all the reasons you stated, about kind of to 
control costs. But I heard on a number of occasions here, 
people keep saying, whether it was the Air Force or the 
Department of Defense, they need stability in this program.
    That was what the cap was all about. Wasn't it? Am I wrong? 
The idea was to set, this is a cap, this is all you can spend. 
It's about as stable as you can get. Congress is telling you, 
that's it. And it wasn't even cold, and then all of a sudden 
it's like, well, the hell; we're not going to worry about that. 
We got a call here from the Secretary, they said earlier that, 
the hell, our number is different and we're just going forward. 
So they've had stability. They've had it at least since the 
time they had the cap. And that, clearly, has not done the 
trick.
    So I hope, Mr. Chairman, that we will be mindful of that, 
that all these assertions that we need funding stability, 
really doesn't mean that. What it means is, they need an 
unlimited pocketbook, so they can go do whatever the heck they 
want to do. Because when they had stability, it didn't quite 
work out that way, instead of restraining them.
    Mr. Shays. I might comment that what seemed to have 
replaced the cap is the number 276. In other words, locked into 
the 276 rather than the $36.8. That's what it appears.
    Mr. Tierney. No, I think what happened is that they are now 
going to spend up at $43-something, and decided that what they 
can do for the $43-something is 276. But I think it's going the 
other way; I think it's plugging, just like Mr. Walker said it 
was.
    Mr. Shays. To be continued.
    Mr. Tierney. But I think that's--so I made a great point on 
that. It's like, whatever we get, we'll just figure out what we 
can make it at that point in time and keep on rolling here. And 
now they figure if they get another $5.2 billion we'll do 276. 
Because, otherwise, I heard no logic of why 276. I heard that 
they wanted 381, and they seemed to have some logic for that 
although I'm not sure what it is, but there was no logic for 
276 other than that's the amount we think we can squeeze out.
    I think it's imperative, and I hope the chairman and maybe 
others in this committee might join me in a letter to the 
Department of Defense and the Air Force asking them for that 
business plan. I think that's critical to see that. And to 
then, if we need to, followup on it with a hearing, to do that. 
Because we have to see that information so Congress can 
establish an opinion of the amount of these aircraft that are 
needed, if any.
    Mr. Shays. Then it will be a request with your signature on 
it from the committee and the other the chairman and myself and 
others.
    Mr. Tierney. Because I mean, I think that's really where 
the crux really comes in. We see what they say their business 
plan is, we see whether or not the enhanced F-16, F-15 can 
serve some of the functions or all of the functions there. We 
will know whether we don't need the F-22 at all, and that to go 
forward is just going to be such maintenance cost and such 
continued overruns or whatever, that we should fill this need 
otherwise. We will know whether or not we should just take the 
51 or whatever that's authorized now and stop there, and fill 
the remaining need for tactical aircraft with other things or 
just what we need to do and how we can better spend the money. 
So I look forward to seeing that report.
    Again, Mr. Chairman, I thank the witnesses for all of their 
help today, as well as, again, thank you for an excellent 
hearing as usual.
    Mr. Shays. Thank you very much. Appreciate all your 
participation and work on this.
    Is there anything that any of the three of you would like 
to put on the record before we close? Anything that you might 
have been prepared to answer that we should have asked that you 
want on the record?
    Mr. Miller. I don't know if you--if the committee would--if 
it will be proper for the committee to do this. But I notice 
the Air Force said that they now agreed with the Cost Analysis 
Impact Groups' assessment of what the costs would be. And those 
documents haven't been public since 1997, I believe, when they 
were made public by appropriation legislation, I think. It 
would be nice for those to be public to see there is actually--
if they are on the same page, because they were $9 billion off 
the last time we heard.
    Mr. Shays. I can't imagine why they wouldn't be public, and 
so we will work on that.
    Mr. Miller. Thank you.
    Mr. Shays. That's one thing that I've tried to emphasize 
with this administration, and that is--on a whole host of 
areas. But if the administration wants more authority, more 
power, then there has to be more congressional oversight and 
there has to be, frankly, more transparency. Clearly it's been 
a tradition, as long as I can remember, that when we talk about 
costs, Congress has obviously not just a right to know, a 
responsibility to find out, and the public has a right to know. 
So--because we also appreciate the input of organizations like 
your own, and we want to make sure you can take a look at that 
and respond to it and help us figure out what's going on. This 
is how democracies work.
    Thank you all very, very much. Appreciate it. And we will 
adjourn this hearing.
    [Whereupon, at 3:45 p.m., the subcommittee was adjourned.]

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