    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                             [H.A.S.C. No. 111-146]

         DEPARTMENT OF THE NAVY AND AIR FORCE COMBAT AVIATION PROGRAMS

                                   __________

                                 JOINT HEARING

                                   BEFORE THE

                        AIR AND LAND FORCES SUBCOMMITTEE

                              MEETING JOINTLY WITH

                 SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

                                     OF THE

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD

                                 MARCH 24, 2010

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                        AIR AND LAND FORCES SUBCOMMITTEE

                        ADAM SMITH, Washington, Chairman
    JOHN SPRATT, South Carolina          ROSCOE G. BARTLETT, Maryland
    SILVESTRE REYES, Texas               CATHY McMORRIS RODGERS, Washington
    MIKE McINTYRE, North Carolina        MARY FALLIN, Oklahoma
    ROBERT A. BRADY, Pennsylvania        DUNCAN HUNTER, California
    JIM COOPER, Tennessee                JOHN C. FLEMING, Louisiana
    JIM MARSHALL, Georgia                MIKE COFFMAN, Colorado
    JOE SESTAK, Pennsylvania             W. TODD AKIN, Missouri
    GABRIELLE GIFFORDS, Arizona          JEFF MILLER, Florida
    NIKI TSONGAS, Massachusetts          JOE WILSON, South Carolina
    LARRY KISSELL, North Carolina        FRANK A. LoBIONDO, New Jersey
    FRANK M. KRATOVIL, Jr., Maryland     ROB BISHOP, Utah
    BOBBY BRIGHT, Alabama                MICHAEL TURNER, Ohio
    WILLIAM L. OWENS, New York           TODD RUSSELL PLATTS, Pennsylvania
    DAN BOREN, Oklahoma
                    John Sullivan, Professional Staff Member
                    Lynn Williams, Professional Staff Member
                         Scott Bousum, Staff Assistant
                                     ------

                 SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

                       GENE TAYLOR, Mississippi, Chairman
    SOLOMON P. ORTIZ, Texas              W. TODD AKIN, Missouri
    JAMES R. LANGEVIN, Rhode Island      ROB WITTMAN, Virginia
    RICK LARSEN, Washington              ROSCOE G. BARTLETT, Maryland
    BRAD ELLSWORTH, Indiana              J. RANDY FORBES, Virginia
    JOE COURTNEY, Connecticut            DUNCAN HUNTER, California
    JOE SESTAK, Pennsylvania             MIKE COFFMAN, Colorado
    GLENN NYE, Virginia                  THOMAS J. ROONEY, Florida
    CHELLIE PINGREE, Maine
                     Heath Bope, Professional Staff Member
                   Jenness Simler, Professional Staff Member
                      Elizabeth Drummond, Staff Assistant

                                C O N T E N T S

                                  ----------

                         CHRONOLOGICAL LIST OF HEARINGS
                                      2010

                                                                       Page

    Hearing:

    Wednesday, March 24, 2010, Department of the Navy and Air Force
      Combat Aviation Programs.......................................     1

    Appendix:

    Wednesday, March 24, 2010........................................    45
                                  ----------

                           WEDNESDAY, MARCH 24, 2010
         DEPARTMENT OF THE NAVY AND AIR FORCE COMBAT AVIATION PROGRAMS
                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Akin, Hon. W. Todd, a Representative from Missouri, Ranking
      Member, Seapower and Expeditionary Forces Subcommittee.........     5
    Bartlett, Hon. Roscoe G., a Representative from Maryland, Ranking
      Member, Air and Land Forces Subcommittee.......................     4
    Smith, Hon. Adam, a Representative from Washington, Chairman, Air
      and Land Forces Subcommittee...................................     1
    Taylor, Hon. Gene, a Representative from Mississippi, Chairman,
      Seapower and Expeditionary Forces Subcommittee.................     3

                                   WITNESSES

    Carter, Hon. Ashton B., Under Secretary of Defense for
      Acquisition, Technology and Logistics..........................     6
    Fox, Hon. Christine H., Director of Cost Assessment and Program
      Evaluation, Office of the Secretary of Defense.................    10
    Gilmore, Dr. J. Michael, Director, Operational Test and
      Evaluation, Office of the Secretary of Defense.................    11
    Sullivan, Michael J., Director of Acquisition and Sourcing, U.S.
      Government Accountability Office...............................    12
    Stackley, Hon. Sean J., Assistant Secretary of the Navy for
      Research, Development and Acquisition; Lt. Gen. George J.
      Trautman III, USMC, Deputy Commandant of the Marine Corps for
      Aviation; Rear Adm. David L. Philman, USN, Director of the Air
      Warfare Division for the U.S. Navy; David M. Van Buren, Acting
      Assistant Secretary of the Air Force for Acquisition; and Lt.
      Gen. Philip M. Breedlove, USAF, Deputy Chief of Staff for
      Operations, Plans and Requirements, U.S. Air Force, beginning
      on.............................................................    34

                                    APPENDIX

    Prepared Statements:

        Carter, Hon. Ashton B........................................    57
        Fox, Hon. Christine H........................................    81
        Gilmore, Dr. J. Michael......................................    89
        Smith, Hon. Adam.............................................    49
        Stackley, Hon. Sean J., joint with Lt. Gen. George J.
          Trautman III, and Rear Adm. David L. Philman...............   127
        Sullivan, Michael J..........................................   108
        Taylor, Hon. Gene............................................    55
        Van Buren, David M., joint with Lt. Gen. Philip M. Breedlove.   173

    Documents Submitted for the Record:

        Air Force answer to Question 22 from Mr. Smith and F-35 Joint
          Program Office answer to Question 6 from Mr. Smith, April
          12, 2010...................................................   197

    Witness Responses to Questions Asked During the Hearing:

        Mr. Bartlett.................................................   202
        Mr. Smith....................................................   201
        Mr. Taylor...................................................   201

    Questions Submitted by Members Post Hearing:

        Mr. Brady....................................................   226
        Mr. Smith....................................................   205
        Mr. Taylor...................................................   218
        Mr. Turner...................................................   228

         DEPARTMENT OF THE NAVY AND AIR FORCE COMBAT AVIATION PROGRAMS

                                  ----------

            House of Representatives, Committee on Armed
                Services, Air and Land Forces Subcommittee,
                meeting jointly with Seapower and Expeditionary
                Forces Subcommittee, Washington, DC, Wednesday,
                March 24, 2010.

        The subcommittees met, pursuant to call, at 2:01 p.m., in
    room 2118, Rayburn House Office Building, Hon. Adam Smith
    (chairman of the Air and Land Forces Subcommittee) presiding.

      OPENING STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM
         WASHINGTON, CHAIRMAN, AIR AND LAND FORCES SUBCOMMITTEE

        Mr. Smith. Hearing will come to order.
        Good afternoon. Welcome to the joint hearing for air, land
    and seapower forces. We, as I understand it, will have votes
    probably in the not-too-distant future which will interrupt us.
    We will try to get to do as many opening statements as possible
    before we have to head out for that purpose.
        The subcommittees meet today to receive testimony on the
    Department of the Navy and the Department of the Air Force
    budget requests for combat aircraft for fiscal year 2011. And
    we have two panels of witnesses today. I will introduce them
    first and then we will have our opening statements from our
    chairs and ranking members, and then turn it over to our first
    panel for their opening statements.
        We have the Honorable Ashton Carter, who is the Under
    Secretary of Defense for Acquisition, Technology and Logistics,
    Office of the Secretary of Defense (OSD).
        We have the Honorable Christine Fox, Director of the Office
    of Cost Assessment and Program Evaluation (CAPE), also with
    OSD.
        The Honorable J. Michael Gilmore, Director, Operational
    Test and Evaluation at OSD.
        Mr. Michael Sullivan, Director of Acquisition and Sourcing
    for the Government Accountability Office.
        That is the first panel.
        On the second panel we will have the Honorable Sean
    Stackley, Assistant Secretary of the Navy for Research,
    Development and Acquisition.
        Lieutenant General George Trautman, Deputy Commander of the
    Marine Corps for Aviation.
        Rear Admiral Deke Philman, Director of the Air Warfare
    Division for the U.S. Navy.
        Mr. David Van Buren, acting Assistant Secretary of the Air
    Force for Acquisition.
        And last but not least, Lieutenant General Philip
    Breedlove, who is the Deputy Chief of Staff for Operations,
    Plans and Requirements.
        As I mentioned, we have scheduled this hearing to give
    members the opportunity to address issues related to all combat
    aircraft programs of the Navy, Marine Corps and Air Force. We
    will be having another subcommittee hearing in late April to
    address mobility aircraft programs.
        I have a complete statement. With unanimous consent I will
    ask that it be included in the record, and I will just briefly
    summarize.
        This committee is very interested in this issue. This is
    arguably the biggest financial issue facing the Department of
    Defense (DOD) in the Armed Services Committee, with the price
    tag on the Joint Strike Fighter (JSF) going forward and the
    challenges that the program has faced.
        And what we really want to learn today on the committee is
    what the force structure for combat aircraft is and what our
    plans are for meeting that force structure requirement. I am
    sure some members will also be curious about how we arrived at
    those requirement numbers year to year going forward.
        And then the specifics of how we get there. There are a
    number of different air platforms or aircraft that are going to
    be factored into that, but obviously the big ticket item here
    is the F-35. Joint Strike is meant to replace a fair number of
    airframes within our force, and therefore how it is progressing
    plays a major role.
        But there are other issues. How long can the F-15s and the
    F-16s last, in your estimation? How many more F-18s might we
    need to buy? And how does all of that combine to give us the
    force structure that we require for fighter aircraft?
        We need to have a better understanding of that, and the
    main concern is the slippage in the cost overruns within Joint
    Strike. Joint Strike is considerably behind its original
    schedule and on pace to be considerably more expensive.
        And my biggest concern at this point is not just that,
    though certainly that is a concern. That to a certain degree is
    the past. The future is what is our path forward. And in my
    study of this issue, it has not become clear to me that we have
    a clear path forward that we can confidently assert that we
    will meet. I am worried about whether or not this program will
    continue to slip to the right, it will get more expensive as we
    go.
        We have laid out a new schedule. Again, it is not clear to
    this committee yet how it is that we have confidence in that
    schedule. As we know, our test aircraft have encountered a
    variety of different difficulties. I don't think we yet have a
    clear idea of this is what any one, A, B or C variant, is going
    to look like, this is what we are building, we know we can
    build it, and we are ready to get started. It is quite a ways
    out before we get to that point.
        One of the aircraft, I believe, was scheduled to start
    production aircraft in 2012; the other two variants are going
    to be 2016. And with all of the testing problems that we have
    had, with all of the cost overrun problems that we have, our
    committee really needs to gain greater confidence that we have
    a plan going forward.
        Certainly people will study what went wrong in the past,
    but for our purposes right now the most important thing is to
    know that we have restructured a schedule that we can
    confidently meet, so we are not sitting back here again next
    year going, ``Here is the new plan.''
        To a certain degree, that is what happened between last
    year and this year. We procured a certain number of the
    aircraft in the fiscal year 2010 budget that after having done
    it through the authorization and appropriations process, DOD
    came back to us and said, ``We don't really need that many,
    because we can't get there.''
        We would rather not keep having that happen every year.
    This is over $10 billion of our acquisition budget, the largest
    chunk we have, and we need to make sure that we are spending it
    wisely, because, as I am sure all of you are aware, we clearly
    and unequivocally have other needs as well.
        As I said, I have a longer statement for the record that
    gets into some of these details that will be made available,
    but those are the main concerns that we hope to hear from our
    witnesses today and from the questioning period.
        [The prepared statement of Mr. Smith can be found in the
    Appendix on page 49.]
        Mr. Smith. And with that--forgive me, I am not sure the
    protocol with two subcommittees here. Do I turn it over to Mr.
    Taylor or to Mr. Bartlett?
        With that, I will turn it over to the chairman of the
    Seapower Subcommittee, Mr. Taylor.

         STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM
       MISSISSIPPI, CHAIRMAN, SEAPOWER AND EXPEDITIONARY FORCES
                              SUBCOMMITTEE

        Mr. Taylor. Thank you, Mr. Chairman. And with your
    permission I would like to--and unanimous consent--I would like
    to enter my statement for the record.
        Mr. Smith. So ordered.
        [The prepared statement of Mr. Taylor can be found in the
    Appendix on page 55.]
        Mr. Taylor. Mr. Chairman, I thank you very much for calling
    this hearing. Like everyone in this room, we are told that the
    cost of this platform has gone up by 80 percent since 1996,
    that because the cost has gone up so much the anticipated buy
    has dropped by about 535 planes.
        But what is particularly troubling is that, by some
    estimates, the cost of maintaining this aircraft will be 40
    percent more than some of the legacy platforms that it is
    replacing. So I would hope that those three things could be
    addressed in today's hearing.
        Like everyone else, I realize there is a need for the F-35.
    I would also remind our panel and everyone in this room that
    about the time we are buying the F-35, we will have the Ohio
    replacement coming on-line and at an estimated $7 billion per
    ship. The Social Security trust fund will no longer be
    collecting more than it spends. It will be spending more than
    it collects. The Medicare trust fund will be spending more than
    it collects.
        There will be a lot of problems that our Nation will be
    facing, which means if we need the platform, as a Nation, and I
    think we do, we all have a huge responsibility to make it
    affordable.
        So I thank you for calling this hearing.
        Mr. Smith. Thank you.
        Mr. Bartlett.

      STATEMENT OF HON. ROSCOE G. BARTLETT, A REPRESENTATIVE FROM
       MARYLAND, RANKING MEMBER, AIR AND LAND FORCES SUBCOMMITTEE

        Mr. Bartlett. Thank you, Mr. Chairman. I will keep my
    remarks brief, as we have got a busy schedule today with two
    panels of witnesses and both subcommittees in attendance.
        I welcome all of our witnesses, and thank you for being
    here today.
        This committee has been actively working to try to
    understand the risk the Department is taking in its combat
    aviation programs. I hope that this hearing will clarify some
    things for us because I have some real concerns about the force
    structure decisions that have been made.
        After reviewing the report to Congress on the Combat Air
    Force restructuring plan, it appears to me that the
    recommendation to retire 250 fighters from the Air Force and
    the subsequent budget reductions were made before the Secretary
    of Defense announced he was terminating the F-22 production and
    before any of us learned of the years of delay now forecast in
    Joint Strike Fighter fielding.
        So while the Air Force assumptions back in 2008 led to a
    conclusion that the short-term risk was manageable, the fact is
    today those assumptions are not reality.
        Despite that, it appears the Air Force is going ahead with
    the plan.
        I also share my colleagues' concern over the health of the
    Joint Strike Fighter program. This is an enormously expensive
    program that promises a great deal of capability, but I am,
    frankly, concerned that the cost growth will render it
    unaffordable in the long term.
        In my 18 years in Congress I have seen program after
    program in which the cost grows, the production is reduced to
    fit inside a fixed budget, and the program ends in a spiral
    that leaves the services well short of their inventory
    requirements.
        In attempting to manage the risk associated with the JSF
    program, all of the services appear to be looking for stopgap
    measures. However, to my knowledge, the engineering analysis
    needed to determine if service life extension programs (SLEP)
    on our existing fighter fleets are a reasonable course of
    action have not been completed yet, so we don't know what it
    will cost, how long it will take, or if the resultant service
    life is worth the investment.
        To make matters worse, it has been very difficult to get
    programmatic details from the Office of the Secretary of
    Defense on the JSF program. That has generated not only a sense
    of frustration for the committee, but also has elevated our
    concerns about the true state of the program and validity of
    the proposed restructuring.
        Some have said that the JSF program is too big to fail. I
    am not sure that is wholly accurate. But I do know this is a
    capability that is needed by our war-fighters and is overdue.
        It is critical that we understand the risk in the JSF
    program in the context of the state of the legacy fighter
    fleets as we continue our work on the fiscal year 2011 Defense
    Authorization Act. I hope the witnesses before the committee
    today will help us do that.
        Thank you, Mr. Chairman, for holding this hearing. I look
    forward to the discussion.
        Mr. Smith. Thank you, Mr. Bartlett.
        Mr. Akin now, the ranking member on the Seapower
    Subcommittee.

    STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM MISSOURI,
     RANKING MEMBER, SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

        Mr. Akin. Thank you, Mr. Chairman.
        My sincere hope is that during our first panel we will be
    able to reach a common understanding on the progress being made
    to date on the Joint Strike Fighter program, any remaining
    schedule and affordability challenges, and the Department's
    plan for managing those risks.
        I am particularly concerned about the unprecedented
    concurrency of testing and production, and am convinced that
    this is a bad idea.
        At the same time, I believe it is just as important that we
    come to a common understanding of the big picture affordability
    and inventory risk of our Nation's strike fighters.
        The Department has many competing priorities, including but
    certainly not limited to tactical aviation. Much like
    shipbuilding, we are seeing alarming force structure levels and
    increased demand on our equipment across the board. Although we
    may differ in terms of our recommendations for balancing
    Department of Defense's (DOD) investment against those many
    priorities, we should at least be able to come to agreement on
    the shortfalls and risks we are assuming as a result of our
    decisions.
        Sadly, to date, the Department has been unable to
    articulate the shortfall it faces in Navy and Marine Corps
    strike fighters, let alone tactical aviation across all the
    services. Without consensus within DOD on the situation, we can
    hardly hope for a shared definition of the problem between the
    executive and legislative branches.
        Let me show you what I mean.
        On March 2008, the Department briefed the committee the
    Department of the Navy shortfall was 188 aircraft. That is
    March 2008. In March 2009, we are told the shortfall was 312.
    As if by magic, 2 months later, on May 2009, we are told the
    shortfall was only 146. At the beginning of February 2010,
    Secretary Gates testified the shortfall is only 100 aircraft.
    Toward the end of February the committee was told that the
    shortfall was 177. Five days later, my staff was told the
    shortfall of 100 was--shortfall was 100 aircraft. In testimony
    before the Senate Armed Services Committee (SASC) this month,
    Ms. Fox stated that 100 was an old number, and while she could
    not provide an estimate of the shortfall, it was under review.
        Some change to these estimates could be expected as changes
    are made to the JSF program of record and the other fact-of-
    life issues arise. But based on this track record I think it is
    easy to see how we could become concerned that either the
    Department does not know how to handle the viability of the
    strike fighter inventory or the Department is changing the data
    to mask a problem.
        In response to this uncertainty, the Congress has provided
    tools to the Department to create affordable options to improve
    the strike fighter inventory. Among these is the authority to
    enter into a multi-year contract on Super Hornets and Growlers
    that can save the taxpayers nearly $0.5 billion. Unfortunately,
    DOD has yet to take advantage of this tool, and time is running
    out.
        Even if the DOD comes to its senses and proceeds with the
    multi-year, the Department of the Navy will still be several
    hundred planes short. I am baffled by the continued reluctance
    of senior DOD leadership to honestly address the shortfall.
        My goal today is to achieve that mutual understanding of
    the problem. We could benefit greatly from the panels' views
    and updates on this issue. I do look forward to your testimony.
    The biggest single question I have is, if you and the many
    other people who have appeared as witnesses before this
    committee over the past two years would simply look us in the
    eye and say, ``You guys are congressmen. You are the ones that
    make the decision about what kind of budget we have for
    defense, and given the amount of money you are giving us, this
    is our best bet as to how we balance things,'' I don't have a
    complaint.
        But when all I get is year after year smoke and mirrors and
    people pretending like there is not a problem and people that
    pretend like they are answering a question and everybody in the
    room knows you are not answering questions, it makes us have a
    very, very low opinion of your ability to actually deal with
    what the situation is in a rational manner. I hope I make
    myself at least a little bit clear.
        Thank you, Mr. Chairman.
        Mr. Smith. Thank you, Mr. Akin.
        And we will begin with Dr. Carter.

    STATEMENT OF HON. ASHTON B. CARTER, UNDER SECRETARY OF DEFENSE
               FOR ACQUISITION, TECHNOLOGY AND LOGISTICS

        Secretary Carter. Thank you, Mr. Chairman, distinguished
    members of the committee. I appreciate the opportunity to be
    here with you to discuss DOD's tactical aircraft programs.
        I have a lengthy and detailed written statement. The
    Department has also provided you with responses to many
    questions you had in the letter of invitation to us, and we
    have also provided you with several independent reviews that
    importantly illuminated our department-wide review of the Joint
    Strike Fighter program, which is one topic I will be reporting
    on today.
        So with your leave, in my oral statement I wanted to
    describe the basis for and the main ingredients of the
    restructuring of the Joint Strike Fighter program to put it on
    a more realistic basis.
        Mr. Chairman, that is your path forward I will attempt to
    describe.
        And I hope, Mr. Akin, it is a realistic one. But I will do
    my best to describe reality as we judge it to be.
        And also I thought I would touch on the analytical
    foundation for the Department's decision not to pursue a second
    engine for the Joint Strike Fighter.
        I would, of course, be pleased to answer questions on other
    topics with respect to the force structure requirements. I am
    pleased to talk about that as well. I just thought in view of
    the time that that might be better pursued with the Navy and
    Air Force panel which follows me, but again, I am happy to
    address that.
        I am accompanied on this panel by Christine Fox, the
    Director of CAPE; Mike Gilmore, Director of Operational Test
    and Evaluation; and on the next panel by the service
    acquisition executives, Mr. Van Buren and Mr. Stackley. All
    four of those individuals participated in the internal reviews
    of JSF, which led to its restructuring, and they can all
    provide additional detail.
        JSF is our largest, as has been noted, critically important
    program, and it is important for the three services that are
    going to be depending on this aircraft, our international
    partners and, of course, you to know whether after the recent
    restructuring it is now on a realistic and stable path to
    complete development and testing and eventually a full
    production to produce 2,443 aircraft for us, the Marines, the
    Air Force and the Navy, and 734 for international partners.
        The easiest way to answer this question, I think, is to
    recount the sequence of events over the past several years.
    Again, full detail is provided in the written statement. But
    JSF's development began in 2001, and at that time the unit cost
    of a Joint Strike Fighter--there were 2,852 U.S. fighters
    planned at that time; now 2,443--was $50 million in 2002
    dollars, which would be $59 million today.
        In retrospect this estimate may have been unrealistically
    low, something we are trying to avoid in the future by
    requiring independent cost estimates early in the lifetime of a
    program, as is required by the Weapon System Acquisition Reform
    Act. But in any event, by 2007 the estimated cost had grown 36
    percent--namely, to $69 million in 2002 dollars.
        In late 2008--and this may go to a point you were making
    earlier, Mr. Bartlett--the first joint estimating team (JET)
    analysis was conducted--JET I. Ms. Fox will describe how this
    was done, but JET I found that JSF's costs were continuing to
    rise and that the development program was taking longer and
    therefore costing more than projected by the Joint Program
    Office and the contractor.
        Secretary Gates at that time determined that the JET
    estimate was credible, and early in 2009 he accordingly added
    $476 million to the program--that is, for fiscal year 2010--to
    try to arrest this trend. By November of 2009, a few months
    ago, JET completed a second analysis--JET II--that became one
    of the foundations for the restructuring.
        The JET II's results were substantially similar to those of
    JET I a year before--namely, the line at Fort Worth was still
    taking longer than planned to produce the initial JSF aircraft,
    and this was delaying flight testing and therefore the ramp-up
    to full rate production, and also costing more money, so that
    the unit cost of the aircraft, which had been $50 million in
    2002 dollars, would now be as much as $95 million--that is, up
    to 90 percent cost growth.
        So it was clear in November of last year that if we took
    the JET II estimate as credible, JSF would have a Nunn-McCurdy
    breach. Similar results from the JET over two consecutive years
    clearly indicated to the Department that we needed to take a
    more forceful management action this year than we had taken in
    light of the JET I estimate a year before.
        At about this time also two additional reviews were
    conducted. The JET, by the way, as I indicated, was conducted
    by Ms. Fox's office. My office sponsored an independent
    manufacturing review team, which looked at the performance of
    the manufacturing process, and also something we called a joint
    assessment team, to look at the performance of the engine, the
    F135 engine.
        All of these things came in together late last year, and we
    accordingly undertook department-wide reviews in November as
    though we were already in Nunn-McCurdy breach. This review
    continued through December and January, and the result was the
    restructuring announced by Secretary Gates in February.
        And I realize, if I may say so, during this time we were
    conducting the review and before the President's budget was
    announced, that there was not information available here, and I
    recognize that some of the comments you made, that that was
    frustrating. We will attempt to do better in the future.
        But that is what led up to the restructuring that Secretary
    Gates announced in February. And now let me describe the main
    features of that restructuring and the rationale for each.
        First, the Department undertook several steps to stop the
    development and test program schedule from slipping yet
    further. There were three actions. One was the purchase of an
    additional aircraft to add to test. That is just the physics of
    getting through the test points faster, if you have more test
    assets.
        So also secondly, the addition--or actually borrowing or
    loan of three developmental aircraft to--I am sorry, three
    operational test aircraft to developmental test--again, to
    hasten the process of completing developmental test.
        And third, integration of--or, sorry, addition of another
    software integration line to ensure that the writing of mission
    system software would not become the factor that lengthened the
    development schedule after we tried to take care of the
    lengthening of the developmental flight test program.
        With these three steps, the schedule slip that had been
    estimated by JET II to be 30 months of schedule slip was
    reduced to 13 months, a substantial, though not complete
    restoral of the original schedule.
        Second feature of the restructuring was recognizing that
    the three steps I just described cost money. The Department
    decided to withhold $614 million of fee from the contractor,
    since it was not reasonable for the taxpayer to bear the entire
    burden of what is, after all, disappointing performance by the
    program.
        I might add that the contractors have been part of this
    process from the beginning and have emphasized their commitment
    to better performance, and we are expecting that.
        Third, the Department directed that the results of the
    independent manufacturing review team I described earlier
    regarding the ramp-up to full rate production be adopted,
    meaning that the Joint Strike Fighter program should plan for a
    somewhat later--that is 13 months--and somewhat flatter ramp to
    full rate production than had been planned. This step had the
    effect of reducing concurrency and the program.
        For us, the Department determined that the JET II estimate,
    revised to take into account the changes I have already
    described, would be adopted as the program baseline for
    budgeting purposes throughout the future year's defense program
    and beyond--that is, that we would accept the independent cost
    estimate as the basis for the program.
        And that is the basis, Mr. Chairman, for what we hope and
    believe is a realistic forecast. I will come back to that point
    in a moment. But as I have mentioned also, accepting that
    forecast implies a Nunn-McCurdy breach.
        Fifth, the Department directed that the position of program
    executive officer for the Joint Strike Fighter program be
    elevated to three-star rank to give a fresh eye and vigorous
    management to the Joint Strike Fighter. And I am pleased that
    President Obama has nominated Vice Admiral Dave Venlet to this
    position.
        These five steps, then, are the JSF restructuring in a
    nutshell. We believe that this restructuring puts JSF on a
    realistic path to restore its performance. Over the next few
    years we will be looking closely to the program to show
    progress against a reasonable set of specific objectives
    according to this overall plan.
        We will be managing aggressively to see if we can improve
    the performance of the program relative to the JET II forecast,
    including the possibility of buying more than 43 aircraft in
    fiscal year 2011 and earlier transition to fixed price
    production contracts.
        While, Mr. Chairman, the plan is realistic, this is still a
    challenging program entering its period of flight tests, and
    these are all forecasts--not weather forecasting, but it is
    program forecasting. Reality is going to get a vote.
        At the same time no fundamental technological problems have
    surfaced in the reviews to date, nor have the capabilities of
    the aircraft changed.
        In sum, in response to the JET and other estimates of the
    JSF program's performance and the impending Nunn-McCurdy
    breach, the Department has undertaken a fundamental
    restructuring of the program. We believe it is now on a
    stronger footing.
        We now turn to the subject of whether two engines should be
    part of the Joint Strike Fighter program rather than one. The
    Department's decision not to support the second engine is a
    judgment informed by the analysis conducted by CAPE under Ms.
    Fox and which has been provided to the committee.
        We weighed the very real upfront costs of preparing a
    second engine for competition, estimated at $2.9 billion,
    against the possible long-term savings produced in the out
    years from the competition assumed in the analysis. The
    analysis shows that under these assumptions the long-term
    savings calculated just balanced the large upfront investment.
        However, the assumptions that need to be made to produce
    this break-even result are optimistic and in some cases
    unrealistic. For example, the analysis assumes that the second
    engine quickly follows upon the same learning curve as the
    first engine, that the additional learning will outweigh the
    fact that each manufacturer will build fewer engines and
    therefore proceed less far down the learning curve, and perhaps
    most importantly, that there will be true competition.
        A more likely dynamic is a series of split or shared buys,
    since JSF will be procured by a diverse set of customers, many
    of whom are unable or unwilling to purchase from two engine
    manufacturers. We therefore concluded that the Department is
    unlikely to realize these long-term savings and that the $2.9
    billion required to prepare the second engine for competition
    would be better spent on other critical military needs.
        We also considered potential non-financial benefits of
    having a second engine for the F-35, but did not find them
    compelling. On this basis the Department is respectfully
    requesting that the Congress not direct pursuit of the second
    engine again this year.
        Thank you, and I look forward to your questions.
        [The prepared statement of Secretary Carter can be found in
    the Appendix on page 57.]
        Mr. Smith. Thank you very much, Mr. Carter.
        Ms. Fox.

    STATEMENT OF HON. CHRISTINE H. FOX, DIRECTOR OF COST ASSESSMENT
       AND PROGRAM EVALUATION, OFFICE OF THE SECRETARY OF DEFENSE

        Ms. Fox. Thank you, Mr. Chairman and distinguished members
    of the committee. Thank you for the opportunity to appear
    before you today.
        Dr. Carter's statement and our written testimonies provide
    you with the specific information about the Joint Strike
    Fighter independent review and the subsequent restructuring.
    Today I would like to quickly emphasize just a few key points.
        First, CAPE conducts independent cost estimates for major
    weapon systems providing the Secretary and OSD leadership an
    estimate derived independently from the contractor and the
    program office. The Weapon Systems Acquisition Reform Act
    recently increased the responsibility and authority of CAPE in
    the conduct of these estimates. In the case of JSF, we went one
    step further and built a team of experts from the defense
    tactical aircraft community.
        Specifically, the Joint Estimating Team, or JET, was
    composed of multifunctional government experts drawn from the
    Navy, Air Force and OSD staff. The members of the team provided
    technical expertise across the areas of air vehicle and mission
    systems engineering, testing and cost estimation. The JET
    conducted comprehensive onsite reviews with the prime
    contractor and each of the major subcontractors for the JSF
    program.
        They then benchmarked this information against past
    programs to forecast the likely path of events going forward.
    As Dr. Carter just explained, the JET conducted two reviews;
    the first, JET I, conducted last year and was made available to
    the OSD leadership and the Congress. This past summer, the
    Deputy Secretary of Defense directed that the JET I be updated
    and the result of this update, JET II, were consistent with the
    findings of JET I and led the Secretary to significantly
    restructure the program as Dr. Carter has just described to
    you.
        It is important to let you know that this restructuring in
    my view is completely aligned with the findings of the JET II
    and fully consistent with Congress' intent of using realistic
    cost estimates and schedule information to assess and structure
    a program. In particular, the JET worked because it is based on
    historical comparisons, allows more time for tests and allows
    for more test points than was in the original program allowing
    for more test discovery.
        It is difficult to mathematically calculate the precise
    confidence levels associated with independent cost estimates
    prepared for major acquisition programs. Based on the rigor of
    the methods used in building CAPE estimates, the strong
    adherence to the collection and use of historical cost
    information and the review of the applied assumptions, we
    project that it is about equally likely that the JET estimate
    will prove too low or too high for execution of the
    restructured program as described.
        Finally, I would like to discuss the analysis behind the
    Secretary's decision not to fund the alternate engine for JSF.
    We have provided you with more details on this, but quickly I
    wanted to let you know that we were able to conduct a business
    case analysis of the alternate engine and that analysis after
    accounting for all of the--costs to date suggests that we are
    at the break-even point in net present value terms.
        Business case analysis included several optimistic
    assumptions. Dr. Carter has described some. Another is that the
    start of the competitive engine procurement would begin in
    2014. CAPE was also able to estimate that DOD would have to
    invest approximately $2.9 billion to full fund the alternate
    engine on a more realistic schedule in light of the program
    restructuring to the point where it could participate in a
    competitive procurement that we now estimate would be in 2017.
        We could not, however, quantify the intangible values of
    competition that are often cited. Based on the fact that the
    additional early costs to the program are known, but the
    intangible benefits of competition are speculative. The
    Secretary decided that we could not afford to invest the
    additional $2.9 billion. Thank you again for the opportunity to
    appear before you today.
        [The prepared statement of Ms. Fox can be found in the
    Appendix on page 81.]
        Mr. Smith. Thank you. Mr. Gilmore.

    STATEMENT OF DR. J. MICHAEL GILMORE, DIRECTOR, OPERATIONAL TEST
           AND EVALUATION, OFFICE OF THE SECRETARY OF DEFENSE

        Dr. Gilmore. Chairman Smith, Chairman Taylor, members of
    the committee, my primary concern is that the Joint Strike
    Fighter Program be structured to conduct robust developmental
    testing so that we will be ready to do the operational testing
    which will confirm the combat capabilities of the aircraft in
    January 2015 and complete that testing in April 2016.
        We don't want discovery of problems--significant problems
    to be postponed to operational testing because problems
    discovered that late will be more costly and more time-
    consuming to fix than if they are discovered early. The only
    way to assure that is to have a robust developmental test
    flight program. The changes to the program that Secretary Gates
    and Dr. Carter have directed are going to be key to assuring
    that that robust developmental flight test program occurs.
        And the important changes that have been made are, of
    course, providing additional flight test aircraft or additional
    flight test aircraft, providing the resources in time needed to
    develop, deliver and test effective software because the
    mission system software is very complex and provides that
    combat capability in the aircraft.
        I have to take into account realistically the inevitable
    discovery of problems during flight testing which means you
    have to have sufficient time to do the flight testing. And you
    have to provide the engineering and other resources needed to
    maintain an adequate pace of testing and the changes that have
    been directed to address all of those issues. So my concern is
    that the developmental flight test program be robust, the
    restructured program takes the steps necessary to do that.
    Thank you, and I look forward to your questions.
        [The prepared statement of Dr. Gilmore can be found in the
    Appendix on page 89.]
        Mr. Smith. Thank you. Mr. Sullivan.

     STATEMENT OF MICHAEL J. SULLIVAN, DIRECTOR OF ACQUISITION AND
            SOURCING, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Sullivan. Thank you, Mr. Chairman, Chairman Taylor,
    distinguished members of the committee. I am pleased to be here
    today to discuss the F-35 Joint Strike Fighter Program and our
    updated analysis to the competitive engine discussion.
        In brief, Mr. Chairman, even given the strong actions taken
    by the Department to recently restructure the Joint Strike
    Fighter Program, it continues to struggle with increased costs,
    slow progress and risk of not being able to deliver expected
    capability and quantities of aircraft to the war fighter on
    time. It is also important, I think, to note that setbacks and
    costs and deliveries of the Joint Strike Fighter directly
    impact modernization plans and retirement schedules for our
    aging legacy aircraft that the fighter is slated to replace.
        The recent restructuring increase program acquisition costs
    by $46 billion in then-year dollars compared to the program
    baseline approved in 2007, about $92 billion when compared to
    the original 2001 baseline. It also did the things that Dr.
    Carter went through which we think a lot of those things are
    very important to put--to actually putting the program on firm
    footing and having much more reasonable costs and schedule
    estimates at this point.
        And another thing it did that we found important was it
    reduced near term procurement quantities by as much as 122
    aircraft which, again, we think helps reduce the risk of buying
    aircraft that may not be through flight test at that time. That
    is through 2015. These actions should put the program on a
    firmer footing and they should establish more reasonable
    estimates for aircraft deliveries; however, there is still
    substantial overlap between development testing and production
    activities.
        Slowed by manufacturing delays, late aircraft deliveries
    and low productivity, the flight test program has barely begun
    and only completed about 10 percent of its planned sorties
    through 2009. In addition, the program is relying on an
    extensive, but largely unproven network of ground test
    laboratories and simulation models to evaluate aircraft
    performance.
        It is developing and integrating very large and complex
    software requirements and is still maturing some of the
    technologies that are essential to the cost savings, the
    program plans to get in the lifecycle due to logistical support
    requirements.
        With the restructuring in place, the Department still plans
    to procure up to 307 aircraft at an estimated cost of $58.2
    billion through 2015 before completing flight testing. We view
    that as very risky. These aircraft are currently being procured
    using cost reimbursable contracts, which I think the Chairman
    and the committee members understand that that indicates that
    there is a great deal of cost risk still in the aircraft due to
    many uncertainties the contract doesn't feel prepared to bid a
    fixed price. I believe Dr. Carter did address that, and I think
    that the Department now is trying to move much more quickly
    towards fixed price contracts. We are hoping that they can do
    that. That would be good.
        Now, I will turn to the alternate engine discussion. As
    requested for this hearing, we have updated the analysis that
    we have done in the past for this committee to assess whether
    the changes to the Joint Strike Fighter Program that Dr. Carter
    just discussed have impacted the cost and benefits of sole
    source and competitive scenarios for acquisition and
    sustainment of the Joint Strike Fighter engine.
        Our updated analysis indicates that given certain
    assumptions, competition may reasonably be expected to provide
    enough savings over the life of the engine to offset the
    investment in developing a second engine source. In a sole-
    source scenario, the engines will cost an estimated $62.5
    billion in 2002 dollars over the remainder of the program.
    Additional costs are between $4.5 billion and $5.7 billion may
    be needed to maintain competition.
        Some of that is the upfront investment that we have
    discussed to get the other contractor through development. I
    think that is somewhere between 1 and $2 billion and the rest
    of that is due to the increased overall costs--the recurring
    costs per engine that--and the learning curve losses that will
    take place if the competition goes forward. We ascertain that
    the costs--that all of that cost, the $4.5 to $5.7 billion
    could possibly be recouped if competition were to generate
    approximately 10 to 12\1/2\ percent savings over the life of
    the program.
        Air Force data from past engine programs where competition
    was introduced into a sole source environment indicates that
    savings of that much or more have been achieved in the past;
    however, whether that happens on this program will ultimately
    depend on the final approach for competition, the number of
    aircraft eventually purchased, the ratio of engines awarded to
    each contractor and when the competition actually begins.
        In addition to cost savings, most experts also agree that
    there are other benefits to competition that are not directly
    tied to savings such as improved contractor responsiveness,
    engine reliability and technical innovation. Currently, both
    the primary and second engine sources have experienced cost
    growth and delays. The F135 primary engine development cost is
    now estimated at approximately $7.3 billion, a 50 percent
    increase over the current budgeted estimate.
        And the most recent unit costs for the conventional engine
    is now $17.7 million, which is 42 percent higher than the
    original estimate. Similarly, the unit cost for the short
    takeoff and vertical landing engine rose from $27.6 million to
    $33.4 million, a 21 percent increase. As planned, the F136
    alternate engine development is about three years behind the
    F135 program. It also is facing cost and schedule challenges
    similar to the F135. Both programs have experienced about 21-
    months' delays for their initial release for flight testing.
        Mr. Chairman, that concludes my prepared statement. I would
    be happy to entertain questions.
        [The prepared statement of Mr. Sullivan can be found in the
    Appendix on page 108.]
        Mr. Smith. Thank you very much. A lot of ground to cover. A
    lot to ask about. Fortunately, there are a lot of members on
    the committee who are very informed of this program. So we will
    spread that around. But I will start by asking Dr. Carter and
    Ms. Fox about these cost estimates going forward.
        And I realize as you quite accurately said, Dr. Carter,
    events will happen and we will have to adjust to them, but I
    want to get some greater idea for how much we have clarified
    the picture. I mean, going forward, there were a lot of
    different costs, but as I understand it, you are still looking
    at to try to estimate which are lifecycle estimates, lifecycle
    costs. There are various military construction pieces. There
    are issues with the--I am into Mr. Taylor's territory here, but
    with the C model, I think it is, if I have got that right, the
    one that takes off--the Navy version, what is going to do in
    terms of how we have to adjust aircraft carriers.
        So different military construction pieces. And I understand
    that CAPE is still looking at some of this. Can you give us
    some idea of what you are done with, what you are still looking
    at in terms of what are sort of if you--it is a terrible
    phrase, but the anticipated surprises that you still haven't
    quite been able to calculate? Can you turn your mike back----
        Secretary Carter. Yes, Mr. Chairman. The CAPE estimate upon
    which we base the restructuring was of the development program,
    the ramp-up to production and initial production because that
    is the part--that is the phase that is immediately upon us.
        Mr. Smith. Right.
        Secretary Carter. And we had that estimate, and then we had
    another estimate from the program office and the contractor
    which was a--which showed less cost and a more accelerated
    schedule. The essence of accepting the JET estimate is in
    adopting it is recognizing what I certainly believe, and I know
    the Secretary does, that that is a more credible forecast for
    those three phases than was the program office's and the
    contractors'.
        Which was a--which showed less cost and a more accelerated
    schedule.
        The essence of accepting the JET estimate and adopting it
    is recognizing what I certainly believe, and I know the
    Secretary does, that that is a more credible forecast for those
    three phases than was the program office's and the
    contractor's.
        Beyond that, when we get out beyond production to
    sustainment, that is, of course, many years in the future, so
    there isn't a managerial action that needed to be taken at this
    moment about that, but it is something we need to manage going
    forward--what are the costs of these airplanes going to be to
    operate them in the years in the future when they come? Not too
    early to take a look and begin to manage that.
        And that is something we will be looking toward, going
    forward.
        It doesn't affect our managerial decisions at the moment,
    but you are absolutely right, that is a phase out there in the
    future that will need to be costed also.
        But we think we have our most realistic estimates of the
    development, ramp-up to production and production.
        I will repeat what Ms. Fox said about these are so-called
    in the art that her office practices, a 50 percent estimate,
    meaning--and this isn't math, it is JET that there is in the
    judgment of the estimators a 50 percent chance that the cost
    will be greater than estimated and a 50 percent chance less.
        That is why I talk about, it is not weather forecasting,
    but it is forecasting.
        We are giving you our most realistic judgment, and we are
    trying to manage to that realistic--what was quite clear was
    that the path we were on was not realistic.
        Mr. Smith. Fair enough.
        Dr. Gilmore, Mr. Sullivan, if I could have you deal with a
    couple different aspects of what is one of the central problems
    at this point, we are going to be procuring aircraft while we
    are still testing them. And there is always a delicate balance
    there.
        I mean, ideally, you would like to have it tested and know
    exactly what you have got, and you are good to go. But the
    rapid pace of technology and the changes make that difficult
    with some of our new systems.
        But I want to get a greater idea of the risks involved with
    that plan. Again, our hope is, I think, by 2016--I get my As,
    Bs and Cs, mixed up here, but two out of the three will be
    ready to go into production mode by 2016, or ready to be used
    at any rate, the other one in 2012.
        At the same time, we are sort of testing as we go. How do
    you balance those risks, in terms of what--and it is hard to
    say, because you don't know exactly what you are going to
    figure out in the flight testing. On the other hand, we have
    been testing it for a little while and have some idea of what
    is going on.
        Is it a good risk that is being taken here by saying that
    we are going to, in essence, bet on the come, we are going to
    start building this thing, and we are going to learn as we go
    and then make changes to it as we go?
        What are the risks there? And how realistic do you think
    the approach that has been laid out?
        Dr. Gilmore. While I would observe that we are really just
    at the beginning of a flight test program now----
        Mr. Smith. Right.
        Dr. Gilmore [continuing]. In terms of, you know, total
    flight tests, we have flown in System Development and
    Demonstration (SDD) program, we have flown 37 flights out of
    over 5,700 that will be required. So we are at the beginning
    now.
        With regard to how many aircraft will be delivered, once
    flight test has begun--and it has just now started--the program
    will be delivering more aircraft than almost any other aircraft
    program have been delivered, as--before flight testing is
    complete. That is just the situation that we are in.
        Obviously, we will know more and more as we go along, and
    the rate of discovery, of knowledge, of accruing knowledge is
    going to increase rapidly under current plans. That is also
    consistent with past history.
        So, I mean, there is concurrency in the program. The
    concurrency is greater than it has been in the past. But
    there--you know, the history of these programs is that there is
    concurrency.
        Mr. Smith. Right. That strikes me as a fairly big risk, as
    described, given how early we are in the testing portion, by
    comparison, to be making that big a production commitment.
        Dr. Gilmore. Well, on the one hand, there is risk that you
    could run into structural problems and have to fix those, and
    that would--could potentially be time-consuming and costly to
    fix.
        Now, so far, there is no indication of major structural
    problems, and they have completed a good deal of the ground
    testing of the structure, although that is not completely--that
    is not completed.
        There is also risk that you could run into problems
    developing the mission systems software. However, if you run
    into those problems, a lot of those problems can be fixed not
    by changing the hardware, but by continuing to work on the
    problems fixing the software and then doing a new software
    release.
        So a good deal of the risk in this program is associated
    with developing the mission system software. I mean, for
    example, the mission system software lines of code are 2.5
    times in Joint Strike Fighter at the current estimate than they
    were in the F-22.
        But you can fix those kinds of problems without major
    hardware changes in a number of instances. So that that
    counterbalances that risk.
        Mr. Smith. Mr. Sullivan, did you have anything to add on
    that?
        Mr. Sullivan. Well, our perspective on that is, first of
    all, there is actually in the acquisition policies at the
    Department a kind of a rule that you shouldn't procure more
    than 10 percent of your total buy in Low Rate Initial
    Production (LRIP), which is what they are in now.
        And you should try to get the fixed--you know, the fact
    that these are cost-plus contracts say a lot. If the Department
    can get this through a fixed price environment, that will
    settle a lot of this risk.
        But, in addition to that, I think the risk moving forward
    is the--Dr. Gilmore alluded to the complexity of the software.
    And I think it is--there is a lot of risk left in that, because
    to get to the full-capability aircraft, which is Block III
    software, I am not sure how far along the program is in doing
    that. They haven't even established the lines of code for that.
        So they have got an enormous effort in software. They
    haven't flown--I think that the development flight test program
    now has probably, basically, got a lot of safety-of-flight
    issues, and has not really started on the full performance
    envelope of the aircraft.
        So there is risk something is going to happen.
        Mr. Smith. I am just going to ask one more question, and
    then turn it over my colleagues. And that is, you know, sort of
    the crux of the issue for us in the short term.
        In 2010, we, in response, to your requests, you know, put
    in a certain number of production aircraft procurement. Shortly
    after we authorized and appropriated that, came back and said
    you only needed half of those.
        How confident are you in the number that you are asking for
    us this year? Because on the surface of it, we are not
    confident at all. And that is a big chunk of our budget that we
    are putting to this. And we would hate to do that again, and
    then have, you know, the number change, six months after we did
    it.
        What is different this year from last year on that issue?
        Secretary Carter. Is this to me?
        Mr. Smith. Yes, Dr. Carter, sir.
        Secretary Carter. We have slowed the ramp down,
    considerably, going forward. And that was one of the most
    important decisions we made in the restructuring. It was in
    recognition of some of the risk that has been adduced here, and
    we did try to reduce that risk, including the concurrency risk.
        If I--we are trying to strike a balance here, Mr. Chairman,
    in the concurrency issue.
        On the one hand, if you--if we tried to pull the ramp back,
    the ramp-up to production and steepen it unrealistically, we
    would have excessive concurrency and an excessive risk that we
    would discover in the course of flight testing things that had
    to be retrofitted and fixed and that would be expensive.
        Against that, if we slip the ramp too much or flatten it
    more than we have already, you are adding cost, and adding
    schedule, unnecessarily.
        So we are trying to fix that balance. We think we are in
    the sweet spot of that balancing, as best as we can ascertain
    it now. So we have slipped the ramp and flattened it. We are
    not recommending slipping it further and flattening it further,
    because that increases cost and delays the delivery of the
    aircraft to the services.
        We are not recommending keeping the ramp, however, where it
    was before the review began, because that seemed--that not only
    seemed, our judgment was that that was unachievable.
        If I may comment, also, on the fixed price. It is a very
    important point, and I am glad Mr. Sullivan raised it.
        The willingness to go to fixed price is a measure of
    whether the contractor judges that the assembly line is stable
    and, therefore, the contractor is able to predict its
    performance well enough to offer a fixed price.
        So that is an indicator--that is why we are using it, and I
    indicated that in my opening statement. We want to move to
    fixed price contracts as early as possible in LRIP. That asks
    the contractor to make a commitment to the stability of the
    line. The contractor has indicated a willingness to do that.
    That is a good deal for us----
        Mr. Smith. Right.
        Secretary Carter. A willingness, but they have not actually
    done it----
        Mr. Smith. Yet.
        Secretary Carter. Yes, we are in negotiations now.
        Mr. Smith. Okay. I do have to--if you have something really
    quick----
        Secretary Carter. Well, I just wanted, very quickly, to say
    that I think another issue in all this is the ability for them
    to deliver aircraft from--from the manufacturing facility now.
    That is not going well. And----
        Mr. Smith. Right.
        Secretary Carter [continuing]. And with flight testing,
    there is going to be more design changes. There is an awful lot
    of design change traffic hitting the floor now. So I think
    manufacturing this aircraft moving forward is going to be--that
    is another one of the risks on the program.
        Mr. Smith. Mr. Bartlett.
        Mr. Bartlett. Thank you very much, Mr. Chairman.
        Mr. Sullivan, how long after we started the development of
    Engine 135 did we start the development of Engine 136?
        Mr. Sullivan. Umm.
        Mr. Bartlett. I think--if my memory serves me right, it was
    46 months. Is that correct?
        Mr. Sullivan. Yes, I think, approximately, it is about a 3-
    to 4-year lag.
        Mr. Bartlett. Forty-six is the number I remember.
        Mr. Sullivan. Yes.
        Mr. Bartlett. You said that the 136 was 1 year behind the
    135, which means in fact, that its development is going better
    than the development of the 135.
        Mr. Sullivan. Well, no, sir, I think I may have made a
    mistake, but I think it is three--I said it was three years
    behind. That is what I meant to say, anyway.
        Mr. Bartlett. It is my understanding that, in fact, the
    development of the 136 is proceeding faster than the
    development of 135. This 3 years behind 135 is because its
    development started 46 months, nearly 4 years behind. So it is,
    in reality, almost a year ahead of the development of the 135.
    Correct?
        Mr. Sullivan. I guess, yes, if taking the--the three--I
    would have to look at that, but, yes, it could be, and we can
    take a look at that.
        Mr. Bartlett. If you say it is three years behind, that
    leads people to believe, gee, this is a lousy engine. They are
    even behind in development.
        The fact is, they are, in fact, ahead in development by----
        Mr. Sullivan. It was planned--yes, the program was planned
    to be three years behind so that it could--they could ramp into
    competition.
        Dr. Gilmore. Congressman Bartlett, the information I have
    is that the development of the 136 is about 2 years behind the
    schedule that was planned in 2005, which placed--you know, the
    development of the engine did start, by design, 4 years later
    than the development of the 135, but the 136 is about 2 years
    behind the schedule that the contractor and the program office
    had laid out as recently as 2005.
        Mr. Bartlett. And how far behind is 135?
        Dr. Gilmore. It is about the same amount behind.
        Mr. Bartlett. That much or more is my understanding.
        Dr. Gilmore. Yes, it is about the same amount behind. They
    have had--both engines have had similar kinds of problems, the
    kinds of problems that should be expected when you are trying
    to develop and build a high-performance jet engine.*
    ---------------------------------------------------------------------------
        * The explanation of the scheduled delays provided by the DOT&E
    director is contrary to the information provided at a later date by the
    Air Force and F-35 Joint Program Office, shown in the Appendix on page
    197.
    ---------------------------------------------------------------------------
        Mr. Bartlett. Dr. Carter, in both your written testimony
    and your oral testimony, you noted that analysis and cost
    estimates done in November of 2009 showed that the program
    would trigger a Nunn-McCurdy breach. How come we didn't know
    that then?
        Secretary Carter. We had received the JET report in
    November 2009. It was an estimate at that time. It was very
    different from what we had--our program office was telling us,
    which was the official baseline at that time.
        It was then, around the turn of the year, that we completed
    our review of the JET estimate, and concluded that the JET
    estimate, and not the program office estimate, was the more
    realistic of the two.
        It was January when the Secretary of Defense adopted the
    JET estimate as the projected way forward. And then he
    announced that in the budget in February. And I--the--and I
    have stated before that JSF was going to be a Nunn-McCurdy
    breach. It will be a matter of days before the official
    declaration goes.
        But once we accepted the JET estimate, or adopted that,
    that meant that the program would be in Nunn-McCurdy breach,
    because the forecast of the program's progress made in the JET
    estimate suggested greater than 50 percent cost growth, which
    is the trigger for Nunn-McCurdy.
        Mr. Bartlett. Are there regulations, written or unwritten,
    in the building that precludes including us as a partner in
    those discussions?
        Secretary Carter. I would have to get back to you on the
    technicality of that. Certainly, in--as a general matter, no,
    we try promptly to keep this committee informed of important
    developments in programs that are in your purview.
        [The information referred to can be found in the Appendix
    on page 201.]
        As I said when I--earlier, because of the particular timing
    of the JET estimate and the Department's deliberations, which
    were in the December-January period leading up to the release
    of the President's budget, it wasn't until the President's
    budget was released that the--the JET estimate was--which was
    included in that budget--was available.
        We did, however--it is my understanding that the JET
    estimate, even back in 2008, was made available to the
    committee.
        Mr. Bartlett. Thank you.
        Your statement goes on to say that ``Program management
    contractors and the Department need to surface, candidly and
    openly, issues with this program as they arise, so that
    Congress is aware of them and they can be addressed.''
        In the spirit of that statement, it would have been nice, I
    think, if we would have been a part of that two-month
    discussion between November and January. Would you agree?
        Secretary Carter. I promise that, going forward, we will be
    as open as we possibly can, and candid about the--what is going
    on in this program.
        I firmly believe, as the acquisition executive, that you
    have got to create a climate in which people are willing to
    surface issues in programs. That is the only way you solve
    them.
        And that is the only way we can do it--programs are,
    particularly at this particular inflection point in the
    transition from development to production, they are going to
    have issues. And if you don't create an environment in which
    those things are surfaced, you are never going to solve them.
        Mr. Bartlett. Thank you, Mr. Chairman. I yield back.
        Mr. Smith. Thank you. For members' information, we have
    had, I think--how many--what, four votes, I think it is called,
    one 15-minute, three fives. We are going to get to Mr. Taylor,
    at least, before we go, push this up a little bit, and then we
    will have to take a break and come back.
        Mr. Taylor.
        Mr. Taylor. Thank you, Mr. Chairman.
        And, Mr. Carter, I have been listening to your rational
    arguments on the dual sourcing for the engine. And you tell me
    that, because of the huge Research and Development (R&D) costs
    that, even if you get a second source in there, by the time you
    have bought all these engines, you end up with--I think the
    word you used was ``a wash.''
        I am curious, since that is the way you have chosen to
    proceed, are you demanding that the vendor, the successful
    vendor, provide to the services a technical data package, that
    we would own the specifications to that engine?
        The reason being is, if R&D is the reason that makes that
    second engine unaffordable, then you are only paying, in
    effect, for one case of R&D. But then you are in a position to
    take those specifications and see if a second vendor wants to
    build the engine that you have now blessed.
        Have you--and we are doing that with some other things
    right--as we speak--in Navy shipbuilding. Have you pursued that
    line of thought at all?
        And if not, tell me why.
        Secretary Carter. The--that particular approach to second-
    sourcing engines was tried once before in the case of the F/A-
    18 and was not successful.
        Mr. Taylor. Walk me through it.
        Secretary Carter. Just to answer your specific question, we
    have not required the vendor of the F135 engine to produce the
    technical data package that would allow a build-to-print
    version of a competitive engine.
        The competitive engine program that has been pursued has
    been an independent development of a second engine.
        Mr. Taylor. Okay, I am with you, Dr. Carter, but I am just
    telling you, without the technical data package--we are paying
    for this research. From what I can tell, we are paying for
    everything in this research, as a Nation.
        Then why should we not have the knowledge that is gained?
        Why should someone have a monopoly on that knowledge for
    replacing that engine at some point, for fixing that engine at
    some point?
        Wouldn't it be a wise acquisition tool for our Nation to
    own that technical data package?
        Secretary Carter. I will get back to you with a specific
    answer to that question. What I can tell you is this, regarding
    the R&D, two things. One is that, with respect to the R&D on
    the so-called second engine, the F136, that is a part of but
    not all of the cost to prepare that to compete.
        [The information referred to can be found in the Appendix
    on page 201.]
        Secretary Carter. The other thing that I think may be
    useful to say at this point is that we do value competition in
    the military jet aircraft field and innovation in that field.
    And we have a number of programs to increase the fuel
    efficiency, the thrust-to-weight and other desirable features
    in the military aircraft engine area.
        So the F135----
        Mr. Taylor. So doesn't that--okay, so then you just talked
    yourself into a dual source. So which one is it?
        Secretary Carter. Not a dual source for the Joint Strike
    Fighter engine. I would like to have more than one, and we do
    have more than one competitor in the military aircraft field. I
    don't need to have two duplicative engines for the F-35 in
    order to have two parties in the military jet aircraft engine
    business.
        I do want that, and some of our tech-base programs, in
    addition to developing technology, have that purpose.
        On the question of the second engine for the F-35, I have
    the greatest respect for people who come to the opposite
    decision from the one we have come to. I know that many people
    with great expertise do, and I completely respect that point of
    view.
        It is simply a matter of looking at up-front costs, which
    are very real, and assumed savings as a result of a competitive
    process that is much harder to have confidence would actually
    produce those savings.
        And one just has to make a judgment between those two. We
    made a judgment that the large near-term costs, which displace
    other things we could spend our money on, are not--those costs
    are not outweighed.
        But again, I respect people who come to the other view. We
    needed to make a judgment between those two cases, and this is
    the judgment that we have made.
        Mr. Taylor. Okay, Mr. Carter, not to belabor this, because
    there are other people with good questions that--but I would
    like you, say, within the next two to three weeks, certainly
    well before markup of this bill, to visit with me and give me a
    good reason why we should not own that technical data package?
        Thank you, Mr. Chairman.
        Secretary Carter. I will get back to you on that. I don't
    have a good reason, as I sit here now. I promise I will get
    back to you on that.
        [The information referred to can be found in the Appendix
    on page 201.]
        Mr. Smith. Thank you, Mr. Taylor.
        Mr. Wilson, we will try and get your five minutes in before
    we go over and vote. You are next in line. Mr. Akin had to go
    somewhere. We will get him as soon as we get back. Mr. Wilson?
        And then, after him, we will go vote and come back.
        Mr. Wilson. Thank you. Mr. Chairman.
        And, Dr. Carter, last year, the F136 development maturation
    to competition was expected to be completed by 2014. This year
    there is a 3-year F136 schedule delay to 2017.
        Why does the Department believe that the F136 development
    should take an additional 3 years?
        Secretary Carter. The analysis of the preparation of the
    F136 engine for competition was done by CAPE. So if I may ask
    Ms. Fox to answer that question?
        Ms. Fox. Certainly. There are two fundamental factors that
    have caused us to look at moving the competition from 2014 to
    2017. One has already been touched on, and that is that the 136
    is behind their predicted schedule for development.
        And the other is, frankly, the restructuring of the program
    overall. In order to get the engines in a place where they can
    compete, we need to have some directed buys. They need to be
    sufficiently mature in order to successfully compete. Given
    that we have slowed the ramp and moved the program out, we need
    planes to do that with.
        And so it has just, by mostly the nature of the
    restructuring, pushed it out--plus, some of the delay in the
    136, which we want to give them time to catch up. It is those
    two factors.
        Mr. Wilson. Well, I thank both of you for being thoughtful
    on that issue.
        And, Mr. Sullivan, you question, in your March report,
    whether the current plan for ramping up production of F-35s is
    prudent. Do you believe procuring fewer F-35s in fiscal year
    2011 would decrease the program risk?
        If so, what leads you to believe this?
        Mr. Sullivan. I think we view it as any aircraft that you
    get out of the near term, fiscal year 2011, specifically, would
    reduce risk to the buyer. And we base that on a couple of
    things.
        Number one, as we said earlier, the lack of development
    flight testing that has been done so far, so that there are
    still--there is a lot of unknowns about the design and about
    how the software is going to work and the hardware is going to
    work.
        But in addition to that, we think it is prudent because, as
    I alluded to earlier, they are still having--the contractor is
    still having trouble learning how to build the aircraft. It is
    not coming down the learning curve real well.
        So, in effect, there is, kind of, a backlog of aircraft, as
    we speak. I think, in fiscal year 2010--well, I think there is,
    like, 28 aircraft on order now, and this year, they are asking
    for another 43. You are beginning to get a backlog of aircraft
    on order that we are not sure they are going to be able to
    build within two years.
        Mr. Wilson. And then, I do want you to have--the
    communities I represent, Beaufort, South Carolina, the Marine
    Corps Air Station; I represent communities adjacent to McEntire
    Joint Air Base, Eastover, South Carolina. And those communities
    are--are hopeful about F-35s.
        And so any way that we can--I can be supportive, please let
    me know. The communities I represent enjoy the sound of
    freedom. So we would love to have them.
        Secretary Carter. Congressman, may I make a comment on
    the--in response to the last question?
        Mr. Wilson. Yes.
        Secretary Carter. There are two kinds of risk here. And I
    really think we need to balance the two risks, at least. We are
    trying to do that.
        One can reduce the risk of the kind that Mr. Sullivan is
    referring to by waiting until all the testing is done and then
    starting production. That reduces that risk, but it means that
    you don't get the airplanes until later and they cost more.
        So one can't talk about only one kind of risk. There are
    two risks here that are being balanced. One is the risk
    associated with concurrency, which Mr. Sullivan is talking
    about, which is real, but one has to balance against that the
    risk of slipping the schedule and the ramp to the point where
    production is uneconomical and jets are delivered later than
    they otherwise could be.
        That is the balancing that we are trying to do. So risk has
    several dimensions to it, and just reducing risk by slipping
    the program introduces yet another kind of risk.
        We are trying to balance those two, and in the restructured
    program, have done our level best to strike that balance.
        Mr. Wilson. And I just can't imagine all the different risk
    and the balancing you have to do. And--but thank you for
    expediting, however.
        I understand the official restructuring acquisition
    decision memorandum has been recently approved, Dr. Carter. You
    mentioned that, if contractors can execute a development
    program and/or deliver aircraft at lower costs, you will work
    with Congress to procure additional aircraft.
        What will be the incentives for the contractor and the
    government team to reach these milestones?
        Secretary Carter. It is in the interests of the contractor
    to get up that production learning curve, have confidence in
    the Department of Defense and in you, in the services, in the
    international partners in the ability to produce aircraft.
        So it is very much in their interests to produce more than
    43 aircraft in fiscal year 2011, if that is at all possible. We
    are trying to use that incentive to get better performance. And
    that is a commitment the contractor has made, and I would like
    to hold them to and enjoy the benefits of.
        Mr. Smith. On that note, we have to go. We will hopefully
    be back in 20 minutes to a half hour. There are four votes, so
    we are about out of time on the first vote, and then we have
    got the next three, so we should be able to maximize our time.
        See you in a few.
        [Recess.]
        Mr. Smith. If we could have everybody sort of re-find their
    seats. We are done now. Members should be drifting back in here
    shortly. Want to make sure we maximize our time. Thank you.
        And in the spirit of maximizing our time, I will ask a
    couple of questions while we are waiting for some other members
    to get back. Mr. Akin will be first up when he returns.
        Obviously the main focus of this hearing is the Joint
    Strike Fighter because of the large portion of our fleets that
    it is going to make up.
        But could you talk a little bit about some of the other
    options in terms of how we get to the force structure that we
    are looking for at the various points, 5, 10, 15, 20 years out,
    and in particular what role existing aircraft--the F-18 and the
    F-15 and the F-16s--play in that, and how the slippage to the
    right of the JSF can affect that and how also determinations on
    things like what is the realistic life cycle for existing F-15s
    and F-16s. Are there ways to retrofit them to give them a
    longer life?
        What sort of--are you playing around with those other
    pieces as well, and how do they fit into our long-term--well,
    short-term and long-term force structure demands?
        And, Dr. Carter, I will let you go ahead and start us off
    on that.
        Secretary Carter. Thank you, Mr. Chairman. I will do that,
    and then probably ask Ms. Fox, if I may. And then the witnesses
    in the panel that come after us, I know, are prepared to
    discuss that also.
        A couple of comments on that. One is that our principal
    effort is to restore affordability and schedule to the Joint
    Strike Fighter. That has been the burden of what we have been
    trying to do over the last few months because of the key role
    it plays in recapitalizing the Tactical Aircraft (TACAIR) fleet
    going forward.
        And it is not just a matter of numbers, I guess is the
    second comment I would make, Mr. Chairman, it is the
    capabilities of the aircraft. The aircraft it is replacing are
    good aircraft also, but the Joint Strike Fighter has
    capabilities that the legacy aircraft don't, and obviously we
    want to have those capabilities as soon as possible.
        With respect to life extension on legacy aircraft, I know
    that the acquisition executive is prepared to discuss that in
    detail.
        Mr. Smith. I will tell you what. Why don't we do this. I
    will follow up with him. We have had some other members join
    us. I want to make sure they get a chance to ask that.
        You know, on those follow-up questions later, I am curious,
    you know, what is the threat that we are proposing to counter,
    the need for 22,000 or 2,200 or whatever is it in fighter
    aircraft and how that fits in with the Quadrennial Defense
    Review (QDR) and threats that we are worried about.
        But I will go to Mr. Marshall now for five minutes and then
    Mr. LoBiondo after him.
        Mr. Marshall. Well, I thank the chairman for his line of
    questioning that I stumbled in on. I do think it is important
    for us to hear, you know, with the recent changes that you have
    made on the ramp and flattening out the F-35, how that also
    changes other things. Obviously, force structure decisions were
    made with a different contemplated availability of the F-35 in
    mind.
        I have got no parochial interest in this at all, into the
    F136 engine. It is almost--it is fascinating to me how this has
    evolved. If we get a new Secretary we are always subject to
    budget constraints, Secretary Carter, you mentioned just a
    minute ago, you know, which displaces other things. You know,
    the dollars involved in this displacing other things we can
    spend our money on.
        But we get a new Secretary, a decision is made, comes as a
    surprise to us, given what we have heard from the Pentagon for
    years concerning the value of the competitive engine. Decision
    is made to cancel it. We fund it that year and request that
    Cost Analysis Improvement Group (CAIG) do a study. CAIG does a
    study, it comes back, we look at the study, we conclude that,
    okay, well, we should continue funding this thing. We just
    respectfully disagree.
        After plunking a bunch more money into it, just sort of
    looking at the CAIG numbers, looked to us like both then-year
    and current-year dollars were either even or positive for the
    alternate engine. And then comes the veto threat over this,
    which just stunned all of us, frankly. It was pretty harsh
    rhetoric over something that we thought was a pretty close
    call, and it is sort of, because we had been funding it
    repeatedly, had gotten to the point where it was in the
    positive column.
        So you all went back, and now CAPE does a study, I assume
    thinking sort of same people thinking about the same kind of
    objectives, et cetera, worried about the same kind of things,
    including the three or four things that you mentioned that make
    you uncomfortable with the projection that currently is
    available, and it looks like it is a wash, present dollars. I
    don't know what the then-year dollars look like. Maybe it is
    positive then-year dollars. We were only given present dollars.
        And so the decision seems to rest on whether or not you buy
    all these attendant benefits and whether we will actually
    realize those attendant benefits. That is one thing.
        Then the second thing is, are we willing to spend the
    money? Are we willing to say, Gosh, we will find money
    someplace else or we will just run a little red ink in order to
    avoid, as you put it, displacing other things that are
    priorities?
        That puts us in a real awkward position. It seems to me
    that we are sort of where we have been for the last four or
    five years. Nothing has really changed. And consistently we
    have made this judgment that the alternate engine should be
    funded.
        Now, I understand from the discussion earlier that the
    slippage in both programs have been about the same. I presume
    that means we are spending more money than we anticipated
    spending in the development of the 135 as well, both of those
    programs.
        And I am just still at a loss to figure out why--I mean, I
    can understand that there is, you know, judgment back and forth
    called for, but I am at a loss to figure out why the Department
    would be threatening a veto over this.
        Is that currently the Department's attitude about it?
        Secretary Carter. It is. And I think there are two things
    that make what is the--the analytical wash, which is--which you
    described and I think Ms. Fox has described--there are two
    other ingredients to the story that I think lie behind the
    Department's judgment that it is not advisable to proceed with
    the second engine.
        The two other ingredients are--both of which you have
    mentioned--one is attendant benefits: Are there attendant,
    noneconomic, nonfinancial----
        Mr. Smith. If I could interrupt.
        Mr. Sullivan, addressing the competition question, will we
    receive a payback that is valuable from competition, you are
    skeptical, considering whether or not that will occur.
        Mr. Sullivan notes historically that paybacks in the range
    of 10 percent or 12 percent, which is what Mr. Sullivan
    identified in his opinion as being necessary in order to break
    even dollars-wise, that that historically has occurred.
        You don't think so here?
        Secretary Carter. That is the other thing. Our judgment is
    that the assumptions that show that payback--historical,
    analytical--are very optimistic. And, therefore, if one accepts
    that, you have to compare very real, very certain upfront costs
    to hypothesized savings.
        And I--we have not been able to substantiate those
    hypothesized savings.
        Mr. Smith. It is almost always the case that in trying to
    spend money on any future program, you have to predict benefits
    of--and whether it is economic payback, or, you know, improved
    security, et cetera. I mean, there are all kinds of projections
    that you make.
        I don't see why these are really that different.
        Secretary Carter. Well, making an upfront investment to
    realize savings for the taxpayer in the long run is a very
    prudent. We do it all the time.
        Investing real upfront money against a, to us, not
    analytically well-grounded expectation of future saving, that
    is where we have trouble making that particular--this
    investment.
        Mr. Smith. So it is the failure by CAIG to properly analyze
    this, to come up with the right balance----
        Secretary Carter. No, I think they have done the best
    analysis that can be done, which is kind of a--it takes
    learning--I don't want to get too technical about it, but it
    takes learning curves, the way the unit price is reduced with
    the strength of a buy----
        Mr. Smith. I am sorry. I am going to have to have you wrap
    this up fairly quickly. We are a little over time, and I want
    to get to the next questioner.
        Secretary Carter. I am sorry.
        Mr. Smith. But go ahead and complete your thoughts.
        Secretary Carter. My only point was I think it is the best
    kind of economics textbook, if I may say it, analysis that can
    be done. But that presumes a competition in the out-years, a
    certain competitive dynamic, that just doesn't look like it is
    realistically based.
        Some of the customers will not, in fact, buy whatever
    engine is produced more cheaply in that particular year. They
    want one engine or the other engine.
        So when one hypothesizes a free and open competition, we
    are concerned that it would actually be a series of directed
    buys.
        Mr. Smith. I am going to have to let Mr. Marshall get the
    last word here and then move on.
        Jim, if you have got a word or two here?
        Mr. Marshall. Well, I just don't see why CAIG and the
    bright folks that no doubt make up the group that did the
    original study wouldn't have been able to think through exactly
    those risks.
        What has changed that all of a sudden somebody concludes,
    oh, we didn't think through--their thoughts concerning the
    value of competition are faulty because, as you have just
    described, that they couldn't have thought that through to
    start out with?
        Mr. Smith. And this will have to be continued, I am sorry,
    at a later point.
        Mr. LoBiondo, and then I will get to Mr. Akin after him.
        Go ahead.
        Mr. LoBiondo. Thank you very much, Mr. Chairman.
        I kind of don't know where to begin to start. I don't know
    how other members feel--there aren't that many here. But I
    can't believe what I am hearing.
        I mean, there have been slippages, there have been cost
    overruns, there have been all kinds of problems, and the--what
    we are being told is just ``spend a little more money, take a
    little more time, don't worry about it, everything is okay.''
        I have been really on this fighter gap issue for some time
    now, and no one can explain how we are going to make this up.
        You all have dug your heels in on this F-35, and I think
    this is going to come back in years to come and haunt us as a
    monumental mistake to look at what we are doing to our legacy
    fighters and the fighter gap issue--the bathtub issue.
        There is no way anyone has been able to explain for years
    how you are going to make up this gap.
        When these F-16s and F-15s are no longer able to fly and
    the F-35 still have problems because someone hasn't figured it
    out, you are going to have Air Guard units that are not going
    to have planes.
        And, as someone pointed out earlier, all we are doing when
    we say what we need in terms of numbers is shrinking them down
    when someone points out that we have got a problem.
        I don't--Mr. Chairman, I don't know how we get our arms
    around this.
        Mr. Taylor, you talked about it earlier.
        We have got serious, serious fiscal problems that are
    facing this country and we are billions and billions of dollars
    down the wrong track, because somebody made a decision that the
    F-35 was where we were going to put all our eggs into that
    basket.
        And I am really angry about this. Hearing after hearing, it
    is the same thing--more time slippage, more money, more
    problems. ``Just have a little more patience, Congress. We know
    more than you. Working with the vendors, working with the
    contractors. Don't worry. We are buying these things. We are
    doing it.''
        I will tell you. I hope somebody wakes up on this. I really
    do.
        I apologize, because I--I had not intended to go this
    route. But I am listening to this, and there is only so much we
    can take.
        Somebody has got to wake up and start giving us some
    answers.
        If you are able to give us some answers on what you are
    doing to make up the bathtub issues and how substantively we
    are going to solve that problem, I would be quiet and be calm.
        But I feel like a second grader, being patted on the head,
    saying, ``Don't worry about. Everything is going to be okay.
    Just go back into the classroom and fold your hands. And
    everything will be fine.''
        I yield back.
        Mr. Taylor. The chair thanks the gentleman from New Jersey.
        The chair now recognizes the gentleman from Missouri, Mr.
    Akin.
        Mr. Akin. Thank you, Mr. Chairman.
        As I mentioned when we started, I had been having a hard
    time trying to get some answers. I guess you are sensing,
    perhaps, some frustration on our committee. And to try to put--
    to give an overarching kind of sense of what is going on, is we
    feel like we are being given the mushroom treatment over here.
        We are not included. There is not transparency. There is
    not visibility as to what the decisions are.
        We talked about QDR this morning, and, as I said earlier,
    we live in the political world. We play with budgets, and we
    make decisions about how much the Department of Defense gets in
    their spending.
        And if you are not getting enough money, we need to know
    about it. If we are going to give you this much money, and you
    say, ``Okay, with this much money, here is what we can do to
    give you the least amount of risk,'' then you have got to tell
    us, ``Yes, but we have left these gaps in here that are a
    problem.''
        And it is our job to go back and get more money for DOD,
    but we can't do that if we don't know what is going on.
        And the transparency has been nonexistent. It is like it is
    transparent as a concrete wall.
        Now, here is one that I--I have asked this question about
    2\1/2\ years in a row now. I just keep trying it because I
    think maybe somebody can answer it. It is not on JSF, but it is
    related tightly.
        First of all, what is the status of the DOD cost analysis
    on F-18 multi-year procurement, and will the Department meet
    the May 1st contract award deadline? That should be a yes or
    no.
        Secretary Carter. We are going to meet the May 1st
    deadline, if we possibly can. The only reason I add as we
    possibly can, sir, is that that is not entirely under our
    control. It is a matter of the interaction with the contractor.
        It is an important discussion that we are having. We had
    some indication from the contractor of a willingness to make an
    offer that we would be interested in, and we are trying to wrap
    that up just as soon as we can, because we understand the
    deadline.
        If I may comment on the mushroom issue, and to the
    congressman from New Jersey as well, I kind of felt the same
    way in November, that is, that we were seeing in the JET
    estimate a picture of the Joint Strike Fighter program so
    different from the one that had been portrayed by the joint
    program office and the contractor.
        And that is the reason that the Secretary took the action
    he did.
        So I can very much relate to your anger about it and----
        Mr. Akin. The concern we had, sir, was that it wasn't just
    in one issue. It wasn't just Joint Strike Fighter. It has been
    across the board in a whole series of different areas.
        So it is not like it is that one program. We know that
    there is certain problems with certain programs, understand
    that. But this has been a broader sense. The Quadrennial
    Defense Review is not just specifically that one plane. It is a
    whole series.
        And how do you come to the decision of how many ships, how
    many this, how are you balancing that?
        And that--that process is what I am talking about as being
    opaque. It is not just this one program, which also is that
    way.
        So you are saying you are going to try to meet that
    deadline to the best of your--depending on negotiations with
    the contractor.
        Secretary Carter. Absolutely.
        Mr. Akin. Now, here is--next question: There is a memo we
    got from the Navy that says the shortfall is actually 177, but
    by--they think they can reduce it to 100 by several mitigation
    options. And then it says, ``All options are on the table to
    manage.''
        So I asked a simple question before: Is one of the options
    if we don't have enough F-18s, that is the only thing we are
    flying off of aircraft carriers, is one of the options to buy
    some more of them?
        It seems like you have got three options: One, you take old
    ones, fix them up; two, you just get by with what you have got,
    don't have as many airplanes on an aircraft carrier; or, three,
    you buy some new ones. That seems to me to be common sense.
        Now, I asked that specific question, and I asked it three
    times, and never got an answer.
        Are ``all options are on the table,'' does that mean buying
    more F-18s is an option? Or is it not an option?
        Secretary Carter. Well, we are buying more F-18s.
        Mr. Akin. I mean beyond what is currently on record, the
    program of record. Because the program of record--this
    shortfall is after we buy the ones on record. It is still a
    shortfall.
        Secretary Carter. That is correct. Well, I want to be very
    clear. And then, of course, Mr. Stackley will be addressing
    this also.
        The options that we are looking at now, and that we would
    then fund in fiscal year 2012 and beyond are ones designed to
    prolong the life of the existing fleet of F/A-18s until they
    can be replaced by Joint Strike Fighters.
        Mr. Akin. You say you are talking about rebuilding old
    planes?
        Secretary Carter. It is extending the life, the operational
    life, of the F/A-18s.
        Mr. Akin. But you are not considering buying some new ones
    instead of that?
        Secretary Carter. No, the options that are being considered
    that I think were in the--specifically referenced in the quote
    that you are discussing, are options for extending the service
    life of the F-35s--of the F-18s.
        Ms. Fox will be conducting that analysis in the course of
    the year and I really ought to allow her to answer it.
        Mr. Akin. Okay. Well, I am about out of time, so I guess my
    concern is, we have taken a look at the cost per flight hour
    doing that, and, boy, is that an expensive alternative.
        And I guess the question I have is why wouldn't you
    consider the alternative of buying a new one if it comes out to
    be a whole lot financially more desirable? But I have never had
    anybody say, ``Well, we would consider that.''
        I mean, it is obviously logically something you could
    consider.
        Secretary Carter. Absolutely.
        Mr. Akin. You either fix up the old one, you go without, or
    you buy a new one. But why not consider buying the new one,
    because to fix up the old one is half the cost of the new one,
    and you get whatever it is--6,000 more hours on the sucker. So
    I don't understand that.
        Here is one last question, if you will indulge me just a
    minute, Mr. Chairman: In the previous testimony, the committee
    has been told that the F/A-18 manufacturer submitted a proposal
    offering a 10 percent cost savings for multi-year procurement.
        In fact, that is what Secretary Gates said--he had to have
    10 percent, or he wouldn't be happy. I guess I would take any
    amount of money I could get, if we would get an improvement.
        But, anyway, in your recent testimony to the Senate Armed
    Services Committee (SASC), you indicated that a 10 percent
    saving was simply not enough to meet a threshold of interest.
    But that a savings in the teens would actually be required for
    a multi-year procurement.
        It appears to me that you are either trying to posture
    yourself to negotiate more savings from the manufacturer or you
    are arbitrarily setting requirements on the fly.
        What is the basis for now requiring a savings that exceeds
    10 percent? I would like to believe that this figure wasn't
    arbitrarily chosen, so I would like to see your analysis that
    supports this new figure and would allow you to justify walking
    away from nearly $0.5 billion of savings.
        Do you understand--this is one that was kind of carefully
    written. Do you understand what we are saying?
        Secretary Carter. I do. And I can respond very directly to
    it. The Secretary said that 10 percent was the threshold of
    interest. I think that was the phrase I used. Obviously, we
    would like to get as much savings as we possibly can. That is
    something that is a matter of discussion and negotiation with
    the contractor and also, as we do our own independent
    assessment of what we should pay for the aircraft.
        So we are trying to get the best deal for the taxpayer and
    the warfighter--the best deal. And----
        Mr. Akin. Now, when you are doing that negotiation, why
    wouldn't you, in that negotiation, say, ``Hey, if we throw some
    more planes in, instead of fixing up the old ones, what kind of
    deal will you give us?'' Why wouldn't you throw that part of
    the table too?
        Secretary Carter. Well, at the moment, we are discussing
    with them, very specifically, the planned buy of both E/F
    models and Growlers and trying to leverage the opportunity of--
    of placing a larger order, to see if it is possible that we can
    get a multi-year savings that would warrant taking the action
    of a multi-year.
        And obviously I would like to get the best deal that we
    possibly can in that regard.
        Mr. Akin. I understand you are trying to get the best deal,
    but currently you have a program of record you are going to buy
    some planes, the contractor came and said, ``Hey, we can do 10
    percent to help you on this if you do a multi-year.''
        Now, if you are really trying to get the best buy, have the
    shortfall, and you got a tremendously high cost to rebuild some
    planes, why wouldn't you at least consider tossing out, ``How
    about we increase the number of planes we are going to buy,
    what will you give us as a price?''
        I mean, the Secretary has said: I like the 80 percent
    solutions instead of the real pricey, big ticket thing. Why
    don't we use a little of that reasoning to say, if you got a
    plane at, whatever it is, $50 million, versus another one that
    is going to be, what do you think, $120 million, when you get
    done with F-35, and you don't have the F-35 anyway at the time,
    and you do need some of them, now maybe you say, ``Hey, we
    can't afford to fill this gap because we don't have enough
    money.'' Hey, I can understand that as an answer, but I keep
    feeling like you are not being rational about the way you are
    approaching it. That is my sense of frustration.
        Secretary Carter. The analysis certainly compares life
    extension to recapitalization. You are right, that is logical.
    I think that has taken us to looking at different variants of
    life extension. And I don't--that is analysis that is very
    straightforward to do and I think we can share entirely what
    the basis of that is as we go forward. And I think that----
        Mr. Smith [continuing]. And work on that.
        Mr. Akin. Thank you.
        Thank you, Mr. Chairman.
        Mr. Smith. I just have one more question of this panel, and
    I will see if anyone else has anything, move on to the next
    one.
        One thing on the alternate engine that we have not talked
    about is the May 2008 Defense Contract Management Agency
    Fighter Engine Industrial Capability Assessment that basically
    recommended the F136, sort of took Mr. Marshall's and others'
    side of that argument, if you will. We have asked for different
    opinions about different studies and it seems your Department
    has not commented on that one.
        Are you aware of it? And if so, how do you refute it?
        Secretary Carter. I will need to get back to you on this.
    This is a DCMA analysis. I will get back to you on that.
        [The information referred to can be found in the Appendix
    on page 201.]
        Mr. Smith. Okay. We will be sure and provide that for you,
    and would very much like your feedback on that particular
    study.
        Does anyone else have anything for this panel?
        Mr. Marshall.
        Mr. Marshall. Try to be brief.
        Do you think it is necessary that we maintain the
    industrial base in the sense that fighter engine production is
    different from other engine production?
        Secretary Carter. I would like to have--and I think the
    Department wants to have more than one participant in the
    military jet engine business. We have strong contenders now. We
    have ongoing procurements. We have technology base programs,
    R&D programs that are intended to advance the art in military
    jet engine technology. And all those activities support the
    industrial base and we do want an industrial----
        Mr. Marshall. What would be helpful to me and, I think, the
    committee is if you could take the four reasons why you find
    the projection, you know, that there will be a wash to be
    unrealistic now, and do two things. Flesh them out a little bit
    more, they are very conclusory, and be very specific about why
    you will maintain, for example, an industrial base without the
    competitive engine.
        And then if you could go back and specifically determine
    whether or not CAIG, when it originally considered all of this,
    took into account, in trying to make their 50-50 judgment,
    which is the same thing that CAPE does now, took into account
    the very things that you are now suggesting weigh against
    continuing with the alternate engine. That would be very
    helpful.
        Ms. Fox. May I add to that, sir, in the estimate that we
    did in 2007 and the update we did make several optimistic
    assumptions. And Dr. Carter's referring to them is accurate. We
    do delineate them in our report and are clear about them in the
    current. And it does bring us to a----
        Mr. Marshall. If I could, Ms. Fox, were you involved in
    that?
        Ms. Fox. No, sir.
        Mr. Marshall. So you are now saying that they were
    optimistic then.
        Ms. Fox. Right.
        Mr. Marshall. So you are saying that CAIG, at the time that
    it made these projections intentionally made optimistic----
        Ms. Fox. No, sir, we didn't intentionally make optimistic
    assumptions. We tried to make----
        Mr. Smith. If I may--optimistic assumption is a matter of
    opinion at a certain point. I am sure when they put together
    the paper they didn't say, ``And these assumptions are
    optimistic.'' I am sure when they put it together, when they
    did the study and all the studies that Mr. Marshall comes to,
    they did them based on what they thought was going to happen. I
    mean, your assessment now that it is not a good idea is a
    pessimistic assumption, if you want to put it that way. I mean
    those really are just sort of semantic words.
        What would be helpful, and when we are talking about, for
    instance, the discussion about, you know, it is an optimistic
    assumption these cost savings are going to come forward, and we
    put forward and say, ``Well, historically, if you have this
    sort of competition, a 10 to 12 percent savings is
    reasonable.'' That is not just sort of pulling it out of the
    air, that is going back and looking and seeing historically
    what have we learned. I mean, those are the assumptions you
    make. I mean, we--I think it would be obvious to anybody
    working on the Joint Strike Fighter that assumptions are far,
    far from guaranteed. We understand that. But to call them
    optimistic sort of--it really doesn't help us much unless you
    can say, ``Well, gosh, you know, they say that historically you
    have saved 10 to 12 percent.''
        Well, look, we looked at 10 programs, and really only 7 of
    them, you know, 7 of them saved 5 percent, only 3 of them saved
    10 to 12 percent. That is an actual data point, instead of just
    continually saying to us optimistic assumptions. That is, I
    believe, what Mr. Marshall and certainly what I am looking for.
        Ms. Fox. A few comments, if I might.
        First of all, the analysts that did the analysis in 2007
    and updated it now are the ones that gave us all the list of
    assumptions they felt were, let me use the word
    ``conservative,'' instead of optimistic. It is no attempt to be
    in any way disingenuous with the analysis. Analysis does have
    to make assumptions.
        Mr. Smith. Absolutely.
        Ms. Fox. And in 2007 we were trying to put the best case
    forward for the alternate engine to inform the Secretary's
    decision, and so we did make conservative assumptions to elicit
    that. And when we updated the analysis we held those
    assumptions constant so we would be comparing apples and
    apples.
        That is all I am trying to say.
        Mr. Smith. Okay.
        Mr. Marshall. So back to 2007. Were you trying to prove a
    case or were you just trying to do a study?
        Ms. Fox. We were trying to do a study, sir.
        Mr. Marshall. So--and the same analysts. So you made your
    best judgment concerning these various issues. Certainly that
    group would have been aware of the issues that are now being
    specifically discussed. You made your best judgment, it was a
    frank, honest, not optimistic, not pessimistic judgment, and
    gave it to us. And based on that we decided to proceed.
        So that is what we are struggling with right now, the
    suggestion that somehow that group did not accurately--well,
    two things. One, either that group somehow was faulty and it
    made overly optimistic assumptions. They would probably say,
    ``No, we don't think we did, we thought we were right on the
    mark.'' Or things have changed. So that is what we are really
    struggling with here.
        Mr. Smith. If I could, I think we have beaten the horse
    sufficiently at this point. So I think I would like to move on
    to the next panel, unless there is something new and different
    that members want to raise that we have not raised with this
    panel.
        Okay. Thank you very much.
        And we will obviously from this, and I am sure you have
    been taking notes about some of the questions that we have had
    and get specific answers to them. And we know, I mean, this is
    a very difficult program. It is very expensive, big burden for
    all of us. Communication between your office and Congress would
    be important, and I would concur with Mr. Akin and some others
    who have said that that communication has been not what it
    could be to this point.
        We all have to make tough decisions here. We just want to
    make sure that we are informed as much as possible so that we
    can, you know, hopefully come up with a plan that we can all
    agree on. So hopefully we will do a better job of that in the
    future.
        I thank you for your testimony. We will move on to the
    second panel.
        And I will give you a moment to switch out.
        We have introduced this panel previously, but I will fire
    through it again quickly here just so that we know who we are
    dealing with. And the way I read these off will also be the
    order in which you will be asked to testify.
        We have the Honorable Sean Stackley, Assistant Secretary of
    the Navy for Research, Development and Acquisition; Lieutenant
    General George Trautman, Deputy Commandant for the Marine Corps
    for Aviation; Rear Admiral Deke Philman, Director of the Air
    Warfare Division for the U.S. Navy; Mr. David Van Buren, who is
    the acting Assistant Secretary of the Air Force for
    Acquisition; and Lieutenant General Philip Breedlove, who is
    the Deputy Chief of Staff for Operations, Plans and
    Requirements, U.S. Air Force.
        A lot has been said about this already, as you gentlemen no
    doubt heard. I would ask that--we have your statements. I will
    by unanimous consent submit them all for the record. We will
    have more votes coming up shortly, and I would hope that we
    could get done with this hearing before we do that.
        So it is a very long, complicated way of saying try to be
    as brief as you can.
        And with that, we will go with Mr. Stackley to get us
    started here.

    STATEMENTS OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE
    NAVY FOR RESEARCH, DEVELOPMENT AND ACQUISITION; LT. GEN. GEORGE
     J. TRAUTMAN III, USMC, DEPUTY COMMANDANT OF THE MARINE CORPS
    FOR AVIATION; REAR ADM. DAVID L. PHILMAN, USN, DIRECTOR OF AIR
    WARFARE DIVISION FOR THE U.S. NAVY; DAVID M. VAN BUREN, ACTING
     ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION; AND LT.
       GEN. PHILIP M. BREEDLOVE, USAF, DEPUTY CHIEF OF STAFF FOR
           OPERATIONS, PLANS AND REQUIREMENTS, U.S. AIR FORCE

                   STATEMENT OF HON. SEAN J. STACKLEY

        Secretary Stackley. Yes, sir.
        Chairman Smith, Chairman Taylor, Representatives Bartlett
    and Akin, and distinguished members of the subcommittees, thank
    you for the opportunity to appear before you today to discuss
    Department of the Navy aviation procurement programs.
        The Department of the Navy's fiscal year 2011 budget
    requests funding to procure 206 aircraft--103 fixed-wing, 100
    rotary wing, and 3 UAVs.
        Aviation programs represent the Department's greatest
    warfare investment, and this year program continues recent
    trends, which reflect an increase in our aviation procurement.
        In formulating our investment strategy, we are mindful to
    balance cost, schedule, performance and risk to ensure the
    ability to meet the warfare--war-fighter's needs both today and
    for the future.
        We are leveraging stable procurement in rotary-wing
    programs with continued procurement of the H-60, H-1 and MV-22.
    We are establishing strong technical foundation and putting in
    place the tools to control cost for the P-8A Maritime Patrol
    Aircraft, E-2D Advanced Hawkeye and the 53K Heavy Lift
    Helicopter programs. We are investing in next-generation
    technologies and opportunities that come from unmanned aircraft
    systems.
        And significantly, we are proceeding with E- and F-18
    series production to include, as was discussed with the
    previous panel, pursuing multi-year procurement for the 124
    aircraft in fiscal year 2010 through 2013, while completing
    development and ramping up procurement on the F-35 Joint Strike
    Fighter.
        Our commitment to the JSF program is unequivocal. Now,
    within the framework of the restructured program, it is
    essential that we deliver the cost and schedule performance
    that matches our commitment to the program.
        The Department has long recognized our ability to
    affordably meet our requirements relies upon our ability to
    manage the service life of our aviation fleet. As example, the
    P-3 sustainment. With Congress' help, we are able to ensure
    that that aging aircraft is able to meet our operational
    requirements while we await the arrival of the more capable P-
    8A aircraft.
        And equally, similarly, the Department is aggressively
    managing service life of the legacy F/A-18A through D aircraft
    until its replacement by Joint Strike Fighter.
        And to this end, we are initiating further steps to
    mitigate the impacts of delays associated with a restructured
    JSF program.
        Again, we thank the subcommittees for this opportunity to
    discuss Navy and Marine Corps aviation programs and look
    forward to your questions.
        [The joint prepared statement of Mr. Stackley, General
    Trautman, and Admiral Philman can be found in the Appendix on
    page 127.]
        Mr. Smith. Thank you.
        General Trautman.
        General Trautman. I have no opening verbal statement. I
    will just go with Mr. Stackley on this one, sir.
        Thank you.
        Mr. Smith. Thank you.
        Admiral Philman.
        Admiral Philman. Likewise, sir. I stand with Mr. Stackley's
    comments.
        Mr. Smith. Okay. Thanks very much. We will move on to the
    Air Force then and start with Mr. Van Buren.

                    STATEMENT OF DAVID M. VAN BUREN

        Mr. Van Buren. Thank you, Mr. Chairman. I have a very short
    statement.
        Good afternoon, Chairmen Smith and Taylor, Ranking Members
    Bartlett and Akin, and distinguished members of the committee.
    Lieutenant General Breedlove and I thank you for the
    opportunity to address the committee regarding the Air Force's
    current and future aviation requirements and capabilities.
        Within acquisition, we are focused on our warfighting
    customers represented by General Breedlove. We are focused on
    what we buy and how we buy it. We are working very hard on the
    large-scale KC-X and F-35 programs, but also equally on the
    Intelligence, Surveillance, and Reconnaissance (ISR) platforms
    for today's fight such as Project Liberty and the MQ-9 Reaper.
        We have much effort as well on modernizing our aging force.
    We have a robust acquisition improvement program with a key
    emphasis on affordability of what we buy and a cycle time
    reduction effort of how long it takes us to deliver to our
    warfighting customer.
        We have made some gains, but we have much work to do. We
    have submitted a combined statement for the record. We look
    forward to answering your questions.
        Thank you, Mr. Chairman.
        [The joint prepared statement of Mr. Van Buren and General
    Breedlove can be found in the Appendix on page 173.]
        Mr. Smith. Thank you.
        General Breedlove.
        General Breedlove. Mr. Chairman, thanks for the opportunity
    to be here today. I join Mr. Van Buren's remarks.
        Mr. Smith. Thank you.
        Starting off, General Breedlove, with you and talking about
    the bomber programs. As you know, we canceled the next
    generation bomber program not long ago, and now we have
    restarted the process of figuring out what our next generation
    long-range strike platform is going to look like.
        Two things about that. One, can you walk us through sort of
    what the plans are, and then explain how it is going to be
    different this time. It is, you know, the juxtaposition between
    canceling one year and then starting up a new process for
    developing it. The next does ask for a little bit of an
    explanation for why that decision was made.
        Could you walk us through that?
        General Breedlove. Sir, I can, and I am happy to do that.
    The Secretary did cancel that program. We began immediately
    looking at what that would mean for our requirements, and the
    Secretary commissioned another group to study what those
    requirements would be, and that group is working vigorously
    across the Department with the help of the United States Air
    Force.
        As far as our contributions to that and what this next
    program would look like, some things do not change much in the
    aggregate, and that is that the overall range, payload and
    stealth capability of the aircraft, some of that will remain
    fairly constant. But the program is being given a hard look. We
    are looking at it, sir, as you and I have talked about before,
    as a family of systems where the one platform for the bomber
    would only be one of the contributions to that family of
    systems.
        It would be supported probably by a penetrating ISR, an
    electronic attack capability, a stand-off cruise missile
    capability, a prompt global strike capability, and those are
    across two different services, sir, so it would be a joint
    family of systems that would bring a capability to our
    Department and to our Nation to take care of whichever target
    set.
        The original bomber was looked at more in the vein of being
    a single penetrating capability. We see that as a capability
    that one might need in certain less-dense target sets. In more-
    dense target sets, it may take the entire family of systems in
    order to accomplish the mission that we would need. And that, I
    think, will change the work from the first time when we were
    concentrating solely on one penetrating platform, and now how
    will we get to this capability across both naval and Air Force
    capabilities.
        Mr. Smith. Thank you.
        And then my--the force structure question that I was asking
    the previous panel. As I understand it, that was adjusted, I
    think, this year from 2,200 down to 2,000. A couple of
    questions around that. One, why the downward adjustment? What
    is the threat that we are attempting to counter with that force
    structure? How did it change that allowed us to have 200 fewer
    aircraft?
        And then talk to us a little bit about the F-15s and the F-
    16s, what their service life is going to be and what the
    variables are there? How confident are you that they will get
    to their service life? And if you aren't confident, what are
    our plans to sort of make up the difference? And is there a
    period in there, lastly, that we might have a shortfall, given
    where we are at with Joint Strike and with the service life of
    the F-15 and the F-16?
        General Breedlove. Yes, sir, I would be happy to address
    those. To begin with, the 200 delta is during the--after the
    recent release of the QDR and the supporting documents, the
    ``Guidance to the Employment of Force,'' and in conversations
    with our OSD counterparts as they were developing those
    documents, the decision was taken that the Department should
    move from a low to medium or moderate threat from that, to a
    moderate threat.
        In other words, the Department agreed to accept a little
    higher threat as we make these computations. And sir, that
    equals 200 aircraft in the modeling.
        Sir, to look at the fighters that you were talking about,
    the F-16s and the F-15s. I would like to just touch first on a
    question that Mr. Bartlett, Congressman Bartlett asked, and
    that is: How do we know what we need? And I want--and I will
    start my discussion of the F-16s and F-15s by saying we have,
    sir, started to look at all of our platforms. The look at the
    A-10 is complete and we know what we have to do on the A-10. We
    know we have to re-skin 233 of them.
        The look at the F-16C, the air-to-air version, the hard
    fatigue-testing program is complete. And we know what we have
    to accomplish in the F-15C. The F-15E is our newest fighter,
    and we have not scheduled that full-scale testing for
    functional life yet. That will be a Program Objective
    Memorandum (POM) 12 initiative, but it is the newest fighter,
    and we are not nearly as far along into the period when we
    would need investigation.
        The F-16, which is the workhorse of our fleet, of course,
    and has some of the oldest fighters associated with it, we are
    partially funded to look at that, and that look will begin next
    year in 2011. And we, as I said, we have partially funded that
    full-scale testing. And we will finish the funding of that
    full-scale testing in 2012. And this will provide us the data
    that we need structurally to look at those aircraft well before
    they are obsolescence lives.
        Mr. Chairman, to address the F-15 and the F-16 question
    that you asked, we have made several efforts to look at what we
    need to do to move those fleets to the right, and in some cases
    to retire portions of those fleets and move other portions of
    the fleet to the right. We are electing to make major
    modifications to 176 of our F-15s. Those modifications range
    from avionics to new Active Electronically Scanned Array (AESA)
    radars, structural numbers in the longerons, which you know we
    had problems with several years back.
        But for the F-15 fleet, 176 of them, we will invest fully
    to take them out to their full economic life. And that will buy
    them forward into the period where we will know much more about
    the JSF and how we make that time-out.
        For the F-16 fleet, we kind of put them in two categories.
    We have the older models, the block 25s and 30s. We have looked
    at about 136 of those that we will elect to retire. The
    investment in those aircraft is too high in order to buy them
    forward. The remaining about 50 percent of that fleet, we are
    looking at a cost of about $500,000 to $800,000 apiece or a
    total cost of about $250 million for the whole fleet, to buy
    that fleet forward 5 years to cover the gaps that we are
    thinking may occur in that fleet. And that is primarily for
    lower skin repairs.
        For the block 40s and the block 50s, our newer F-16s, those
    are the ones that will be looked the hardest at in this program
    which we initiated in this budget and will finish in the next
    budget to do the detailed fatigue testing, and we will know
    more about those aircraft when that is complete.
        But what we already do know is that we need to invest in
    avionics and we are closing out this year the (CCIP), common
    configuration cockpit capability, which brings all of the block
    40s and 50s up to one standard--a standard that will carry them
    well into 2020 or possibly beyond. And we are investing in
    that, and that program is ongoing now. In fact, all of the
    block 50s are done and we should finish the block 40s here in
    the next 2 years.
        Mr. Smith. Okay.
        General Breedlove. So we have addressed each one those
    platforms and looked at how we can move them right to lessen
    the gap or risk.
        Mr. Smith. Understood. That is very thorough, and I
    appreciate your answer.
        I want to make sure I get to Mr. Taylor so I will turn it
    over to Mr. Taylor.
        Mr. Taylor. Thank you, Mr. Chairman. I am going to keep
    this hopefully in my lane.
        So Secretary Stackley, I thought I heard you say that you
    had plans to mitigate the effects of delaying the F-35. I was
    wondering if you could lay out some of the options that you
    have in mind and the time lines that would trigger those
    different options.
        Secretary Stackley. Yes, sir. Let me break it down into a
    couple of categories. One is managing the fleet of aircraft;
    and then the other is extending the service life for the legacy
    aircraft.
        In terms of managing the fleet, we look at several things
    that we have ongoing. One is we currently have in place what we
    refer to as TACAIR integration, Navy-Marine Corps, between
    respective services; squadrons both deployed on carriers and
    expeditionary, working the combined service to reduce the
    burden across the two, while separately working the pipeline of
    aircraft back stateside through depot training, et cetera.
        So there is a TACAIR integration piece that is in place
    today that provides a baseline for what our requirements are.
    And then between the Marine Corps, which is referred to as a
    ``bed-down plan'' for Marine Corps TACAIR, and on the Navy
    side, the way the Navy introduces E and F squadrons to
    accelerate the introduction of E and F squadrons to replace F-
    18 legacy aircraft A- and C-type aircraft so that they can then
    go back into a depot pipeline for service life extension
    purposes.
        So there is a fleet management piece, and then on the
    service life extension piece, we have a series of ongoing
    efforts for the F-18 that take it from what was originally a
    6,000-hour aircraft, we have been able to extend its service
    life out to 8,000 hours through a number of sustainment efforts
    which, depending on what version of aircraft you are, that
    would define what your sustainment effort is.
        This would include things like center barrel replacements
    which you may be familiar with. It is a significant upgrade to
    the early version F-18s that will get it out to the 8,000-hour
    timeframe. But as well, to go from 8,000 hours up to 8,600
    hours, there is a series of inspections that are required where
    we know what the aircraft hot spots are that are of interest.
    And so an inspection regimen has been established to give us
    confidence in taking the aircraft from 8,000 out to 8,600
    hours.
        So in earlier discussion regarding what the TACAIR
    shortfall is for the Department of the Navy, the baseline hours
    that go with the most recent number that was described, 177, is
    that we will be able to get the legacy F-18 aircraft out to
    8,600 hours service life.
        The balance to get from--to drive down below 177 aircraft,
    that is where we need to go. The next step in terms of service
    life extension is to get it out to 10,000 hours. We have not
    started--the aircraft have not got to that point in their age
    and we have not started that SLEP program. That would be a 2012
    issue in terms of starting to procure kits for inducting the
    aircraft into that service life extension program.
        And this--this SLEP program basically buys an additional 4
    to 5 years of service life on the legacy F-18 aircraft. What we
    have got to carefully determine is the extent of the SLEP. That
    effort is going on today to define the piece parts of the SLEP.
        Mr. Smith. Sorry, I need to interrupt for just one quick
    minute.
        Secretary Stackley. Yes.
        Mr. Smith. Votes are on. We have got 15 minutes. We are
    going to use this full 15 minutes as much as possible to get to
    Mr. Taylor, Mr. Bartlett and Mr. Akin. And then it is going to
    be a good while before we can come back, and we will probably
    have to end the hearing at that point.
        So we are going to enter the speed round here, so if we
    could get through all three of those folks, given our time
    constraints, that would be great.
        Go ahead.
        Secretary Stackley. Yes, sir.
        The significant balance of service life extension is the
    foremost SLEP program, POM-12 issue with defining what it would
    contain today, that is everything from the technical details,
    starting to develop what I would call production-type of
    packages, and the cost estimates.
        Then it is a matter of managing the throughput through the
    SLEP, and it is a significant matter of managing the
    throughputs through the SLEP so that we are not impacting the
    operational, the in-service aircraft by pulling too many
    aircraft out, but maintaining an efficient throughput at the
    depot.
        And then there is a timing issue. When we talk about the
    strike fighter shortfall, it is really a period of time from
    start to finish. The numbers that you have quoted are the peak
    in about a 2017 timeframe. So what we would be doing is
    attacking that peak through the SLEP program.
        Mr. Taylor. If the F-35, like so many other programs, takes
    longer than any of us wants, do you have a backup plan to
    continue buying F-18Es and Fs?
        Secretary Stackley. We talked about the 124 aircraft that
    are in the program of record. That multi-year would be in
    fiscal year 2010 through 2013 multi-year. So those production
    lines would remain hot. The front end of the production line
    would remain hot until about the 2013-2014 timeframe.
        Mr. Taylor. Okay. Lastly, to what extent--as you know, Mr.
    Bartlett and I are both adamant in that, if our Nation pays for
    some research, if our Nation pays to develop something, we
    ought to own those plans in case we ever need to buy parts for
    that engine, in case the supplier of that engine or whatever
    burns down, is destroyed by an act of God, act of man.
        To what extent are you insistent on--as you have done on
    the Littoral Combat Ship (LCS) program--that we own the
    technical data package to the engine to the F-35?
        Secretary Stackley. Yes, sir. The same question that you
    had asked Dr. Carter and had an opportunity to discuss a little
    bit with him during a break--there are two pieces to the
    technical data package. I will call it the paper or the
    electrons that come with form, fit, and function, dimensions,
    characteristics of the engine--those are all deliverables
    associated with the engine development.
        The part that I would say is proprietary--and we do owe you
    a formal response for the record--are processes that are unique
    in the case of the 130 engine and practices, techniques, and
    tooling that goes with those practices and processes for
    building that engine.
        So while we would own a technical data package that would
    suggest build-to-print, the processes that go with that----
        Mr. Smith. But you will own the specs of what each part in
    that engine looks like; is that correct
        Secretary Stackley. I will confirm that, but yes, sir.
        Mr. Smith. Okay.
        Secretary Stackley. I will get back to you formally for the
    record.
        [The information referred to can be found in the Appendix
    beginning on page 201.]
        Mr. Smith. Thank you.
        Mr. Bartlett.
        Mr. Bartlett. A quick question. Would this be adequate for
    competitive bidding, or would you need more?
        Secretary Stackley. That is the concern is it is one thing
    to have a build-to-print drawing, but the processing and the
    manufacturing processes and tooling that go with that----
        Mr. Bartlett. But different manufacturers use different
    processes and tooling. My question is: Is what we own adequate
    to get competitive bidding?
        Secretary Stackley. I can't give you a confident answer
    today, sir. I need to come back to you formally for the record.
        [The information referred to can be found in the Appendix
    on page 202.]
        Mr. Bartlett. We would appreciate that very much.
        Do you know how much it will cost to do the service-life
    extension on these legacy aircraft? And have you included that
    in the budget
        Secretary Stackley. Yes, sir.
        Mr. Bartlett. Just a simple--okay. If you have, that is
    fine.
        Secretary Stackley. Oh, no, no, no. Yes, sir, meaning I
    understand your question.
        Mr. Bartlett. Okay.
        Secretary Stackley. Service-life extension has many pieces
    to it. So the first part of service-life extension I am going
    to hit you with is the center-barrel replacement. That is late
    in the budget. There is north of a billion dollars for 421
    aircraft we are already in process with.
        The second part is planning for the more extensive SLEP
    program, which takes the aircraft from 8,600 to 10,000 hours.
    We are in that planning phase. That is a POM-12 issue for the
    Department of the Navy. And in POM-12, we will take a look at
    not just the numbers of the aircraft that we are going to drive
    through the SLEP but the extent of the SLEP for the different
    versions of the aircraft.
        That gets you the airframe, as well, you want capability.
    So we also need to take a look at any upgrades that would be
    associated with an additional 5 years of service life for the
    F-18s.
        Mr. Bartlett. Thank you. What kind of confidence do you
    have that you will be able to achieve adequate service-life
    extension? Or is this the only option left to you now that the
    22 has been cancelled and the 35 is late?
        Secretary Stackley. Sir, I am going to tell you that we
    have significant confidence. Now, there is--I want to say--a
    business case that emerges as you go deeper and deeper into a
    SLEP program. In other words, as the aircraft get older, the
    sustainment cost increases. And when we look at the fleet of
    aircraft that are under consideration for SLEP, to attempt to
    do them all would not be a good--that is not an alternative
    that we would look at.
        So we have taken the A through D aircraft, and we have
    shrunk the potential aircraft down to the 150 to 280 range that
    we would drive through a SLEP. And that is the range that we
    will be looking at in POM-12.
        Mr. Bartlett. One more quick question to which I just need
    a yes or a no answer. Looking at the deep strike heavy bomber,
    I note that the Chinese are able to take out a satellite. I
    note that we are able to take out a missile with a missile.
    This new airplane will fly lower than the satellite and slower
    than the missile.
        It may be stealthy, sir, but it is still has a cross-
    sectional area. I am not sure that, in this new world that we
    are entering, that the juice is worth the squeezing in
    producing a new deep strike heavy bomber. I think that things
    may have changed.
        Can you include us in your decision process as to how we
    decide what we are going to do in that area?
        That is the only question I have. If the answer is yes, I
    am pleased. Thank you very much.
        General Trautman. Yes, I think so. And that goes back to
    General Breedlove's discussion of the family assistance.
        Mr. Smith. Mr. Akin.
        Mr. Akin. I guess we have kind of maybe beat this dead
    horse and still haven't gotten, really, an answer. I had a
    chance to see those F-18s being taken apart with the cracks in
    the wings and cracks in other parts. And it looks like a pretty
    tedious process, and the numbers saying it is a pretty
    expensive process. And it just seemed to me like common sense
    that you have got to compare one thing with the other and
    trying to pay a tremendous amount of money to get, you know,
    less than 10 percent more hours on the airframe when you can
    get a whole new airframe.
        And I guess my question is: Are you willing to do the cost
    analysis at least to compare those two alternatives? Right now,
    everything I have heard you say is, well, we are going to take
    a good look at taking the old ones and fixing them up. And
    compared to what? Well, compare it to--we are not going to say.
        You know, are we going to compare it to something? Is it a
    comparison to just not do it at all? Or is it a comparison to
    buying a new one? I have never heard anybody say that yet.
        Secretary Stackley. Yes, sir. Let me first describe--the
    SLEP program, under all circumstances, we have got to get the
    SLEP program up, running, and producing. We cannot--when you
    take a look at a shortfall number of 177 aircraft in a 2017
    timeframe, you cannot buy new out of that shortfall.
        In the economics of SLEP versus buying new, we look at--and
    we are doing the business-case analysis. We look at what it
    would cost to SLEP. And then there is a range of answers there
    depending on the material condition of the aircraft. So we have
    a bottom number, and we have an upper number. And we believe
    the answer is in between and it will vary by aircraft.
        And when you take that number and you compare it to what it
    would cost to buy new, there is a factor there.
        Mr. Akin. So you will consider what it costs to buy new
    then when you do that analysis?
        Secretary Stackley. I would tell you that our analysis--we
    have side-by-side with what a new F-18--the unit recurring fly-
    away cost is, and we can compare that versus what it costs to
    SLEP. The other factor that comes into play is what are we
    trying to resolve in terms of the shortfall. And it is a
    shortfall that extends from, you know, the peak of 2017 and it
    goes down towards zero in the 2023 timeframe.
        So the SLEP program overlays that well. When we buy new, we
    are getting more hours, and we are getting those additional
    service hours in a period of time beyond when we have this
    shortfall. That is not a bad thing, but those extra dollars we
    pay for those extra hours are coming away from, potentially,
    for example, a JSF program which gives us the capability in
    that timeframe that we believe--the added capability that we
    believe we need.
        Mr. Akin. Of course, the SLEP is whatever it is--77
    aircraft. The other hundred, you have still got the shortfall.
    So I mean, you could make a decision--I just haven't heard
    anybody say--I mean, if you are going to cost compare, you have
    got to compare something to something. And it seems to me, to
    compare--especially if you are negotiating a multi-year, if I
    were a camel trader, I would say, well, okay; you give me this
    percent, what happens if we throw a couple more aircraft in,
    you know, for the negotiation.
        Just toss that out for your consideration.
        Thank you, Mr. Chairman.
        Mr. Smith. Thank you very much.
        We are out of time regrettably. I know members have more
    questions. There are some questions that we have prepared that
    we will submit to you and, for the record, we would like to
    reflect that. We appreciate any answers as quickly as you can
    get them to us.
        And, obviously, we have a deep interest in this subject
    matter, and we will continue to work with all of you on
    resolving the issues that were raised.
        Thank you. I appreciate your testimony and the questions
    from the members. And we are adjourned.
        [Whereupon, at 4:54 p.m., the subcommittees were
    adjourned.]

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                                A P P E N D I X

                                 March 24, 2010

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                  PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                                 March 24, 2010

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                       DOCUMENTS SUBMITTED FOR THE RECORD

                                 March 24, 2010

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                  WITNESS RESPONSES TO QUESTIONS ASKED DURING

                                  THE HEARING

                                 March 24, 2010

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                  RESPONSE TO QUESTION SUBMITTED BY MR. SMITH

        Secretary Carter. The DCMA Fighter Engine Industrial Capability
    Assessment (ICA) focused on the Industrial Base (IB) and specifically
    the long-term outlook for fighter engine development. DCMA strategic
    conclusions and recommendations from the ICA focused on the inherent
    risks and/or benefits to the IB of various fighter engine procurement
    scenarios. This included the impact to maintaining a competitive
    environment. The overall DoD decision to not continue funding of the
    F136 engine is based on a multitude of other factors that were not
    within the scope of the assessment requirements. The factors, which
    included budget/mission tradeoffs, acquisition risks, performance,
    supportability and overall life cycle cost were analyzed by the
    Government Accountability Office and the Cost Analysis Improvement
    Group, now Cost Analysis and Program Evaluation. Positive outlook for
    engine manufactures in 2008 was largely attributable to commercial and
    services business; however, this workload will only partially sustain
    specialized skills, processes, facilities and technologies required to
    design and develop next generation fighter engines. At the completion
    of F135 and F136 SDD programs, industry will be without a major fighter
    engine development program for the first time in over 35 years. This is
    regardless of production strategies. Strategic recommendation included
    defining and funding requirements for next generation engines. The
    benefits included retaining critical engineering skills and attracting
    new generation of engineers to refill the pipeline.

        Background

        The DCMA Fighter Engine ICA performed in 2008 focused on a limited
    data set and assumptions including existing employment, unique skill
    sets, competition and market forecast. The ICA requirements from the
    Secretary of the Air Force for Acquisition included assessing Fighter
    Engine capabilities at Pratt and Whitney (P&W), General Electric (GE)
    and Rolls Royce (RR), analysis of production scenarios at each
    contractor, market and economic assessment of the commercial and
    fighter engine industrial base and impacts of Research Development Test
    and Evaluation budgets. The production scenarios included F136 engine
    cancelled, F136 engine cancelled and increased quantities of F-22
    engines and F136 reinstated with a JSF engine workload split. Risk was
    assessed based on the three production scenarios and design
    engineering, commercial engine production and fighter engine production
    in 2008, 2012 and 2017. For decades, GE and P&W have had at least one
    new or derivative fighter engine under development. The ICA concluded
    that without the F136, GE's unique Fighter Engine design capabilities
    would erode. This would impact the ability of GE to compete on future
    fighter/combat engine contacts. From a tactical level, the study
    recommended that F136 production is reinstated under FY 2006 schedule.
    The ICA revealed that GE and RR were working on Adaptive Versatile
    Engine Technology (ADVENT), developing and demonstrating technologies
    for next generation engines. ADVENT and Highly Efficient Embedded
    Turbine Engine (HEETE) have been among the largest Science and
    Technology (S&T) efforts in the Air Force since 2007. The ICA concluded
    that ADVENT, HEETE, S&T, Tech Mat and Component Improvement Programs
    are not sufficient to sustain the engineering base for fighter engines
    long term. The ICA shows relatively little difference in out-year risk
    (2017), regardless of F135/136 engine sales, and revealed if new R&D
    efforts are not defined and launched at the Program level, design
    skills would be at risk at both GE and P&W. [See page 31.]
                                     ______

                 RESPONSES TO QUESTIONS SUBMITTED BY MR. TAYLOR
        Secretary Carter. [The Under Secretary of Defense for Acquisition,
    Technology and Logistics met with Representative Taylor on March 15,
    2010, to discuss his concerns.] [See pages 21 and 22.]
        Secretary Stackley. Under the SDD contract we procured data rights
    to the majority of the technical data created in developing the engine.
    This includes rights to drawings and specifications. There is still a
    significant portion of the technical data for which we have limited
    rights. Although limited, these rights are suitable for executing a
    sustainment strategy which includes standing up organic support for the
    F135 engine and components at government depots. Where warranted by
    business case analysis and consistent with the provisions of existing
    Memoranda of Understanding, the F-35 program will assess the merits of
    acquiring the technical data that would be required to compete
    sustainment of parts, components, or subsystems. [See page 40.]
                                     ______

                 RESPONSE TO QUESTION SUBMITTED BY MR. BARTLETT
        Secretary Stackley. In those cases where the government paid for
    the development of all the intellectual property contained in the
    drawing/specifications for an engine part, the government retains
    unlimited rights and could obtain competitive bidding. In those cases
    where the government did not pay for the development of all the
    intellectual property, which is a significant portion of the engine, we
    acquired only those rights needed to sustain the parts throughout their
    life cycles. The program office will continue to assess the value to
    the government of paying the substantial up-front costs to procure a
    competitive data package for engine parts in the event that the
    sustainment strategy needs to be updated based on fleet experience or a
    change in business conditions.
        In those cases where the government paid for the development of all
    the intellectual property contained in the drawings, specifications,
    and manufacturing processes for an engine part, the government retains
    unlimited rights. In those cases where the government did not pay for
    the development of all the intellectual property, which is a
    significant portion of the engine, we acquired only those rights needed
    to sustain the parts throughout their life cycles. The program office
    will continue to assess the value to the government of paying the
    substantial up-front costs to procure a competitive data package for
    engine parts in the event that the sustainment strategy needs to be
    updated based on fleet experience or a change in business conditions.
        Regarding tooling, the government paid for the design and
    procurement of most of the tools uniquely needed for manufacturing the
    F135 and therefore owns the special purpose tooling and rights thereto.
    General purpose tooling used on multiple product lines is owned by the
    manufacturer. [See page 41.]
    ?

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                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                 March 24, 2010

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

                        QUESTIONS SUBMITTED BY MR. SMITH

        Mr. Smith. In the letter of invitation for this hearing, the
    committee asked if there had been any fighter engine industrial base
    studies that had been completed by the Department or on behalf of the
    Department in the past five years of one-engine and two-engine F-35
    programs.
        Your staff-provided response indicated that there have been no
    studies beyond the Department's 2007 study prepared in response to a
    congressional requirement.
        Your staff was apparently not aware of a May 2008 Defense Contract
    Management Agency ``Fighter Engine Industrial Capability Assessment''
    that recommended that F136 alternate engine production be reinstated
    under the fiscal year 2006 schedule to provide for production
    deliveries in fiscal year 2010. As you are aware, fiscal year 2006 was
    the last year that the Department of Defense budgeted for the alternate
    engine. In your testimony you indicated you would like to have more
    than one military engine company in the U.S. The DCMA assessment
    indicates that the lack of a major engine development program threatens
    the survivability of the military engine industrial base after the
    development of the F135, regardless of whether the F136 is funded: At
    completion of the F-35 SDD program, the F-35 engine manufacturers
    ``will be without a major fighter engine development program for the
    first time in over 35 years.'' What is the policy of the Department
    with regard to maintaining a competitive high performance-low
    observable engine industrial base and what FYDP plan and funding does
    the Department have to support the Department's policy? What is your
    view of the military engine industrial base's ability to develop and
    produce affordable low-observable high performance engines in a
    competitive environment absent the F136 program?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. As you know, section 213 of the National Defense
    Authorization Act for FY 2008 directed the Department to ensure the
    ``obligation and expenditure in each fiscal year of sufficient annual
    amounts for the continued development and procurement of two options
    for the propulsion system for the Joint Strike Fighter.''
        How do you and the OSD General Counsel view the Department's
    conformance with section 213 by not including funds in the budget
    request for a competitive JSF engine?
        What is the status of fiscal years 2009 and 2010 procurement and
    RDT&E appropriated funds specifically directed to the alternate engine?
    Has the Department withheld funding? Why and what are the plans for use
    of the withheld money?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. What has been the impact of funding withholds and
    uncertain future funding on the second engine contractor?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. The committee remains concerned that the Department is
    not complying with the intent of Congress and existing statute in the
    execution of the F136 program. The Department's continued failure to
    execute authorized and appropriated funding for the F136 makes
    management of the program unnecessarily difficult and ultimately more
    expensive for the Department.
        Congress authorized and appropriated $35 million in each of fiscal
    years 2009 and 2010 for F135 advance procurement, as specified by the
    F-35 Joint Program Office as the amount needed and executable for the
    F135 program. The Department later determined that procurement funds in
    fiscal years were premature to need. Given the clear intent of Congress
    to proceed with the alternate engine, why has the Department not
    reprogrammed the $70 million for alternate engine development?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. As you know, the Department has a LRIP standard of ten
    percent of total production, yet determined in 2001, long before the
    major delays in the program, that exceeding the ten percent standard
    was warranted. The procurement profile currently planned would result
    in Congress being required to authorize a cumulative 550 F-35s in 2015,
    one year before the milestone C decision, for the highest year of
    annual production in 2016 of any year in the JSF program. What should
    determine LRIP annual and cumulative production rates prior to
    milestone C, the production facility's ability to produce airplanes or
    the progress of flight testing?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Affordable life-cycle operating and support costs are a
    key tenet of the JSF program goals. It is critically important that the
    U.S. and international partners be able to afford future O&S bills. The
    estimate in the new SAR shows O&S costs per flying hour are materially
    higher than current costs for the F-16, one of the aircraft it is to
    replace.
        Wasn't the JSF supposed to cost less per flying hour than the
    aircraft it is replacing? What are the implications and impacts on
    future budgets if costs are materially higher than those for legacy
    systems?
        What factors are driving increased life cycle cost estimates?
        We understand that the Naval Air Systems Command is projecting even
    higher O&S costs than the program. How much more? What are the key
    reasons why the NAVAIR estimate is higher? Do you agree or disagree
    with NAVAIR?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Regarding the history of the F135 and F136 test delays
    due to engine anomalies during testing, for each significant finding
    during SDD testing, please: 1) describe the engine anomaly, 2) describe
    length of delay for redesign/repair, 3) provide the cost impact to the
    program as a result of this delay, and 4) provide the weight growth
    impact as a result of the necessary modifications to fix the anomaly.
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. In your statement you note that Secretary Gates directed
    the procurement of an additional carrier version to be used for flight
    testing, and that three early production jets planned for operational
    test would be loaned to developmental test. Of the three early
    production jets to be loaned to development test, what is the model of
    the aircraft (ie. A, B, or C) that the Joint Estimating Team II
    recommended, and what model is the Joint Program Office executing for
    this purpose? If they are different, why are they different?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Is ``business case'' defined anywhere in Department
    regulations or directives? Is there a requirement as to what the
    content is for a business case analysis?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. With your statement you attached an enclosure 1
    classified in its entirety as ``For Official Use Only'' and
    ``Competition Sensitive-Company Proprietary.'' Please provide an
    updated copy of this document that identifies which paragraphs are
    ``For Official Use Only,'' ``Competition Sensitive-Company
    Proprietary,'' or unclassified.
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Ms. Fox, your recent analysis of the alternate engine
    program shows that, on a net present value basis, life-cycle costs to
    go are the same for either a one-engine or two-engine program. DOD's
    2007 alternate engine study considered the non-financial factors of a
    two-engine program, including a hedge against risks in development and
    production, enhanced contractor responsiveness, technological
    innovation, and a more robust industrial base. In your latest analysis,
    what value did you ascribe to these non-financial factors? Why wouldn't
    a two-engine F-35 program be the best value since the costs to go for
    either option are the same?
        Ms. Fox. OSD-CAPE did not assign a value to possible long-term
    aspirational nonfinancial factors in its 2010 update analysis. Rather,
    OSD-CAPE's analysis considered the tangible near-term factors that
    yield a savings in the short term.
        Mr. Smith. Ms. Fox, in your statement you note that CAPE concluded
    that the competitive procurement of F136 engines would now begin in
    2017, three years later than the 2014 date assumed in prior analyses.
    Last year, the Joint Program Office noted a requirement for long-lead
    procurement funding so that engines could be procured in 2011 with a
    competition in 2014. What has changed about the F136 program that you
    now believe there is a three year delay? What information otherwise do
    you base your recommendation on to delay competitive procurement to
    2017? Why is there necessarily a correlation between F-35 aircraft
    program delays and the ability of the F-35 aircraft program to test
    F136 engines? How many months delay in the F136 program do you
    attribute primarily to the delay in the F-35 aircraft program?
        Ms. Fox. With the restructured program, the engine competition will
    slide to 2017 because additional time is necessary for: (1) completing
    the development program, i.e., SDD, for the alternate engine; (2)
    funding an engine component improvement program to maintain engine
    currency; (3) performing directed buys of engines from the primary and
    second sources to prepare for a competition, and (4) procuring tooling,
    support equipment, and spares.
        Mr. Smith. Ms. Fox, the Department concurred with GAO's
    recommendation in their recent report that DOD complete a full
    independent and comprehensive cost estimate for the JSF program. We
    understand that your CAPE team is continuing its good work. What is the
    status of the CAPE's work and the schedule for completing it? Will the
    new estimate be in the December 2009 Selected Acquisition Report?
    Military construction costs have been seriously under-estimated in past
    F-35 SARs. Past SARs projected MILCON from $0.5-$2 billion. Are you
    making a new projection of MILCON? Will it be in the December 2009 SAR?
    Do you have an idea on the order of magnitude of a more complete
    estimate? What about JSF-related expenses that are not funded through
    the program? Is your CAPE team looking at potential requirements such
    as strengthening and heat-shielding carrier decks? What about costs for
    reconfiguring carrier storage and servicing space and special
    facilities, support equipment, command and control systems for deployed
    JSF units? Are any of these already programmed for funding in the FYDP?
    What and how much? Are there initial projections for these kinds of
    costs and when they will be needed in the budget?
        Ms. Fox. OSD-CAPE will assess MILCON and other JSF-related costs in
    the program, in accordance with the Nunn-McCurdy certification review,
    which is scheduled to be complete on 1 Jun 2010. The Office of the
    Under Secretary of Defense for Acquisition, Technology & Logistics
    (OUSD(AT&L)) is better able to answer questions related to the 2009
    SAR, which was released on 6 Apr 2010. OSD-CAPE will conduct an
    independent cost analysis of the JSF program in accordance with the
    Nunn-McCurdy certification review. This analysis will conclude on or
    before 1 Jun 2010, with a new program baseline (including an estimate
    of MILCON costs) to be provided sometime in the summer. The SAR,
    published on 6 Apr 2010 does not reflect this work. The OSD-CAPE Nunn-
    McCurdy analysis will not include non-program-related costs, e.g., heat
    shielding. These are potential Service-specific requirements that, if
    required, will be funded by the Services.
        Mr. Smith. Ms. Fox, on the F135 and F136 engine, assuming fully
    funding the respective contractors at a dollar level that can be
    productively executed, what would be the required funding, in then-year
    dollars, by appropriation, for fiscal year 2011 and in total for the
    remainder of the future years defense program, (A) To complete
    development (B) To prepare for competitive procurement (C) And in what
    year would competition be possible?
        Ms. Fox. OSD-CAPE estimates that $2.9 billion is required through
    FY 16 to prepare the alternate engine for competition starting in FY
    17.
        Mr. Smith. Ms. Fox, what was the CAIG's estimated total cost ($TY),
    by fiscal year, for SDD, procurement, and operation and maintenance
    funding required for both the F135 and F136 engines when the 2007 study
    was accomplished (actual through 2006 and projected thereafter) and for
    the February 2010 provided update the CAPE's estimated total cost ($TY)
    for SDD, procurement, and operation and maintenance funding, by fiscal
    year, as currently projected (actual through 2009, projected
    thereafter) for both the F135 and F136 engines? Also, how much of the
    recently determined additional $2.9 billion (to take the F136 program
    to competition in 2017) was included in the 2007 study? If the amounts
    are higher in the 2010 analysis, please explain why.
        Ms. Fox. Because question #40 contains two questions, the answers
    are provided in two parts.
        Proposed Response: The Joint Strike Fighter Alternative Engine
    Acquisition and Independent Cost Analyses report prepared by the Office
    of the Secretary of Defense, Cost Analysis Improvement Group in 2007
    was prepared in accordance with Section 211 of the FY 2007 National
    Defense Authorization Act (P.L. 109-364). The statute required
    preparation of a life-cycle cost estimate. The results of the life-
    cycle cost computations are captured in the following two tables
    extracted directly from the original report. The first table, Table 4
    in the original report, shows the costs for an F135 only program except
    for the sunk costs which consists of both F135 and F136 funding through
    FY 2007.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The second table, Table 5 in the original report, shows the
    estimated life-cycle cost savings associated with competition.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        This life-cycle cost analysis prepared in the FY 2007 report,
    as specified in law, required the estimation and integration of the
    total development, procurement, and operating and support costs over
    the anticipated life-cycle of the JSF aircraft program. As a result, no
    breakouts of costs by fiscal year or by appropriation were prepared
    during the preparation of the FY 2007 report.
        A more recent ``quick update'' to the 2007 analysis, prepared in
    February 2010, updated two specific areas of SDD costs estimated in the
    FY 2007 report. First, ``sunk costs'' were updated to include the
    additional appropriations, through FY 2010, that had been directed by
    Congress for development of the F136 alternative engine. Second, the
    SDD costs to go were updated based on more recent actual cost
    information from both engine development programs. These changes were
    incorporated as changes to the original life cycle cost estimates from
    the 2007 report. Accordingly, breakouts by fiscal year or by
    appropriation are not available from this analysis.
        A revised version of the two tables (i.e., Tables 4 and 5 in the
    2007 report) is shown below. As expected, the 2010 ``quick update''
    indicates that a competitive engine acquisition strategy becomes
    slightly more attractive in an economic sense than the 2007 analysis.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        2nd question:
        Also, how much of the recently determined additional $2.9 billion
    (to take the F136 program to competition in 2017) was included in the
    2007 study? If the amounts are higher in the 2010 analysis, please
    explain why.
        Proposed Response: It is important to note that $2.9B estimate of
    FY 2011-16 funding requirements is distinct from the 2007 acquisition
    study and the 2010 quick update analysis described above. Each of these
    analyses were built on different sets of assumptions and accomplished
    for different purposes. The 2010 $2.9B budget estimate was computed to
    provide an estimate of the annual funding requirements of an alternate
    engine program in FY 2011-16. It is based on what we believe to be the
    most current program assumptions with respect to aircraft quantities
    and when an engine competition can reasonably be expected to occur.
    Conversely, the 2007 study was intended as a more broadly-based, life-
    cycle, comparative analysis between two alternative acquisition
    strategies for the JSF propulsion system. The 2007 study was based on
    program assumptions current at the time but which have since changed.
    The purpose of the 2007 study was not to provide the foundation for
    short-term budget estimates, but rather to give insight into the
    relative costs and benefits of a single vs competitive source
    acquisition strategy over a program life-cycle, in accordance with the
    statutory requirements specified in the 2007 NDAA. It is therefore not
    possible to do an ``apples to apples'' comparison between the 2007
    acquisition study and the 2010 $2.9B budget estimate.
        There is, however, some overlap in methodologies between the two
    analyses. The 2010 $2.9B budget analysis includes the cost to complete
    development of the F136 engine; the cost to initiate and continue a
    component improvement program for the alternate engine; the cost to
    procure alternate engines; and costs to provide for the tooling, spares
    and initial sustainment of the alternate engine. It also includes the
    effects of reduced production efficiencies since the buy would be split
    over two contractors vice one and neither contractor is able to proceed
    down a learning curve as quickly with smaller quantities. Many of these
    same costs were explicitly or implicitly accounted for in the 2007
    acquisition strategy analysis.
        Mr. Smith. Dr. Gilmore, in your December 2009 report on the F-35
    program, you found that continued production concurrent with the slow
    increase in flight test over the next two years will commit the DOD and
    Services to testing, training, and deployment plans with substantial
    risk. Do you think that this risk has been eliminated with the removal
    of 122 F-35s in the future years defense program? Would reducing the
    budget request of 43 aircraft for fiscal year 2011 reduce risks
    further?
        Dr. Gilmore. The removal of aircraft in LRIP lots 5 through 9 has
    reduced but not eliminated the risk to the Services of procuring
    systems that may need significant modifications resulting from
    discoveries made during flight test, which, at this point, is
    approximately 3 percent complete. LRIP 5, the lot funded in FY11,
    includes 4 IOT&E aircraft, 26 initial training aircraft, and 13
    aircraft for other purposes. The numbers and delivery schedule for the
    IOT&E and initial training aircraft should not be changed; otherwise,
    the risks of concurrent development, testing and production would
    increase.
        Mr. Smith. Dr. Gilmore, the F-35 test program relies to an
    unprecedented degree on modeling, simulation, and similar tools to
    achieve test requirements normally achieved through flight testing. Are
    you confident in this approach to flight testing strategy? How many of
    these models are there and have they been accredited or validated? Is
    there a need for a backup strategy or is it just a matter of adding
    flight tests? If so, how many additional flight tests would be required
    to substitute for the current flight testing surrogates in the program?
        Dr. Gilmore. There are 28 models and simulations in the JSF
    modeling and simulation accreditation plans, several of which will be
    accredited multiple times throughout System Design and Demonstration as
    systems are upgraded (40 total accreditations). The program office has
    accomplished three accreditations so far, ten more accreditations are
    planned before the end of 2010. It is my understanding that the
    contractor and program office plan to use flight test data during
    validation of the models without dedicating specific flight test
    missions for this purpose. Although possible, it remains to be seen to
    what degree this will occur and if the models can achieve
    accreditation. The progress made during the next 18 months in actually
    executing current plans in both the flight testing and model
    accreditation will be critical to improving my confidence in the
    development team's ability to accredit and use all the models as
    planned. The overall flight test program was reduced approximately
    4,000 flight test hours when program management changed the test
    strategy to use the labs/models as verification venues. Since then, the
    flight test plan has increased by approximately 1,300 total flight test
    hours. The difference potentially establishes an upper bound for the
    estimate of additional flight testing needed should the labs/models not
    be accredited. Given the importance of the labs/models, the program
    needs to at least explicitly plan for the flight testing needed to
    validate and accredit them as test venues.
        Mr. Smith. Dr. Gilmore, in comparison with prior defense systems,
    the JSF development testing will depend much more heavily on ground
    test labs and computer simulations. Are you comfortable with both the
    in-place resources to do this and with this approach in general? How
    will DOD validate and verify results from test venues other than flight
    tests?
        Dr. Gilmore. The process relies heavily on being able to gather
    adequate numbers of subject matter experts from within the program
    office and the services to evaluate the validation and accreditation
    data generated by the contractor team. I am concerned about the tempo
    of validation and accreditation activity that a small government team
    must manage, and the schedule pressure that is likely to occur. I am
    also concerned that the program schedule is predicated heavily on the
    expectation that modeling and simulation validation efforts will
    usually be successful on the first attempt. That is, I'm concerned that
    time has not been incorporated within the schedule to accommodate the
    need to fix flaws with models and simulations (M&S) that are discovered
    during the validation process. Historically, the discovery of M&S flaws
    during validation is fairly typical. In the DOT&E FY 2009 annual
    report, I recommended that verification, validation and accreditation
    of models be subject to disciplined government oversight and undergo an
    independent review. Independent review is necessary to assure that
    verification, validation, and accreditation is rigorous.
        Mr. Smith. Dr. Gilmore, you note that a recent operational
    assessment determined that the program is on track to achieve
    operational effectiveness requirements, but not operational suitability
    requirements. Do you believe the program is now taking the right
    actions to address meeting operational suitability requirements?
        Dr. Gilmore. The Operational Assessment highlighted the need for
    significant work to improve the suitability of all JSF variants before
    entering IOT&E. Some design changes are being proposed and reviewed by
    the development team, such as altering the Autonomic Logistics
    Information System to enable it to support unit deployments from both
    main and forward operation locations. My understanding is that aircraft
    design changes are also being considered to address the surface
    compatibility and external environment effects (such as thermal damage
    to operating surfaces and downwash impact to equipment and personnel)
    included in the basing issues identified in the operational assessment.
    Sortie generation rate and logistics footprint are two contract
    specifications that will not be validated by flight test data before
    operational test. Performance affecting these requirements, such as
    reliability and maintainability, need to be closely monitored during
    developmental and operational flight test to confirm the predicted
    performance is being achieved. Internal cooling of JSF aircraft
    subsystems is also an area that requires continued monitoring of
    performance as flight test progresses. A change to the design of the
    fuel boost pump is planned for LRIP aircraft to address this problem.
    Data on the actual performance of the JSF thermal management systems in
    mission systems flight test aircraft and production aircraft are needed
    to confirm this modification fully addresses the problem. The
    suitability of the weapons system in all of its required operational
    environments needs to be carefully and continuously tracked by the
    Department as flight test progresses.
        Mr. Smith. Dr. Gilmore, what is your general assessment of the
    state of development testing and system maturity? Based on current test
    plans and schedules, do you expect DT&E to be sufficiently advanced and
    robust to allow scheduled initiation of initial operational testing?
        Dr. Gilmore. The re-structure of the JSF program provides the
    opportunity to conduct the robust developmental testing that is a pre-
    requisite of successful IOT&E. With only 3 percent of developmental
    flight testing complete, the system is not yet mature. The first combat
    capability is not available until Block 2 is delivered in 2012. We are
    in the process of reviewing the details of the new integrated test
    plan. The need for a number of resource commitments has been
    identified. Initiating IOT&E of Block 3 capability in accordance with
    the most recent plan depends on providing those resources, delivering
    the test aircraft to the test centers, and timely delivery of effective
    mission systems software. The re-structured program provides the
    opportunity for these needs to be met.
        Mr. Smith. Dr. Gilmore, how many F-35 aircraft are needed to
    complete Initial Operational Test and Evaluation (IOT&E) in 2016, and
    how does that number compare with the Department's low-rate initial
    production (LRIP) plan? Should there be some correlation between the
    number of aircraft required to complete IOT&E and the LRIP plan?
        Dr. Gilmore. Eighteen aircraft, six from each variant, are needed
    to conduct the Block 3 IOT&E, which are procured in LRIP lots 3, 4, and
    5. An additional 53 US aircraft are planned for initial training at the
    Eglin training center. Aircraft in addition to these 53 will be needed
    to support achievement of the Marine Corps, Navy, and Air Force initial
    operational capabilities. LRIP quantities do not need to be limited to
    IOT&E and training assets. In addition to those purposes, Title 10 also
    identifies establishing an initial production base and permitting an
    orderly increase in the production rate for the system sufficient to
    lead to full rate production after successful completion of operational
    testing as justification for LRIP.
        Mr. Smith. Dr. Gilmore, your report states that ``the mission
    capability of the LRIP systems is unclear.'' Could you please amplify
    this statement and how it impacts your testing plans as well as the
    Services' initial operational capability plans.
        Dr. Gilmore. The capability that will actually be available when
    each LRIP aircraft leaves the production line depends on the progress
    of flight testing. The LRIP lot contracts predict based on current
    plans what that capability will be. However, flight testing yields the
    data used to generate the flight clearances and certifications needed
    by the operational testers, trainers, and fleet pilots to know what
    flight envelope and mission systems capabilities they will be able to
    use. Successful deliveries of software providing maintenance capability
    will also determine the combat capability that will be available. Thus,
    the development and implementation of a realistic, executable test and
    schedule--which the re-structure enables--is key to providing a clear
    understanding of the capability provided by LRIP aircraft.
        Mr. Smith. Dr. Gilmore, your report identifies eight important
    recommendations dating back to FY 2007 that have not yet been
    addressed. Are you expecting action on those recommendations? When?
    Your 2009 report makes additional recommendations. What 1 or 2 are most
    crucial in your mind and when are these expected to be implemented?
    Overall, how responsive have the JPO and contractors been to your
    team's efforts?
        Dr. Gilmore. The DOT&E FY09 Annual Report stated that satisfactory
    progress had been made on 11 of 19 recommendations from FY06 through
    FY08. Four of the recommendations concern vulnerability issues and
    suggest design changes which have not been made. It is my understanding
    that space is available for some of these changes pending review of
    full-up system-level vulnerability test results. The remaining four
    recommendations concern resourcing a realistic test plan. The detailed
    integrated test review of the restructured test plan, which is in
    progress now, is intended to reveal resource issues that need to be
    addressed to execute the test plan. Adequately building up and
    maintaining resources at the two test centers (Edwards AFB and Patuxent
    River NAS) in accordance with the expectations for flight testing is
    the most crucial recommendation and I expect that recommendation to be
    implemented by the program's new leader. The JPO and contracting team
    have been willing to listen to DOT&E observations, provide responses to
    questions and access to information.
        Mr. Smith. Dr. Gilmore, Clearly, F-35 production will far exceed
    what is needed for operational test and evaluation and the 10 percent
    standard for low rate initial production before initial operational
    test and evaluation is completed in 2016. The path the program is on
    will result in funding for the highest rate of production of any other
    year in the program in 2016 before the full rate production decision is
    even made. The F-35 contractor argues that the production should be
    increased, stating that it is cheaper to modify airplanes than incur
    the inefficiencies of lower rate production. Please comment. What are
    your views?
        Dr. Gilmore. The level of concurrency in the program creates high
    risk until flight test demonstrates the performance of the system and
    operational test confirms the required capability is resident in the
    system without extensive modifications to the aircraft. Numerous re-
    design efforts are already underway for all three variants. I cannot
    predict the potential costs of future modifications, but historical
    experience indicates that the sooner in development problems are
    discovered, the easier and less expensive it is to fix them.
        Mr. Smith. In your statement you say the JSF problems were
    foreseeable. What has been the primary cause of the poor cost and
    schedule outcomes to date? Have the problems been adequately rectified
    in your view?
        Mr. Sullivan. We believe the proximate cause of the JSF program's
    continuing cost and schedule problems can be traced to an acquisition
    strategy and subsequent decisions at key junctures that did not
    adequately follow the best practices we have documented in successful
    commercial firms and government programs. From the start, the JSF
    acquisition strategy incorporated excessive concurrency, or overlap, in
    development, testing, and production activities increasing risks of
    poor cost, schedule, and performance outcomes. Purchasing aircraft
    before technologies are ready and testing successfully demonstrates
    that designs are mature and systems will perform as intended increases
    the likelihood and impact of design, manufacturing, and requirements
    changes resulting in subsequent cost growth, delivery delays, and
    performance shortfalls. In the JSF's case, the program started system
    development before requisite technologies were ready, started
    manufacturing test aircraft before designs were stable, and moved to
    production before flight tests have adequately demonstrated that the
    aircraft design meets performance and operational suitability
    requirements. The late release of engineering drawings resulted in a
    cascading of problems to establish a mature supplier base and
    manufacturing processes, which in turn led to late parts deliveries,
    inefficient manufacturing processes, and delays in delivering test
    aircraft.
        Although we note some improvements in the supplier base and reduced
    out of station work, the impacts from these problems have persisted and
    are still contributing to poor program outcomes. Manufacturing labor
    hours have continued to increase, management reserves have been
    depleted, and test aircraft have been delivered late, contributing to
    delays in development testing. Poor decisions exacerbated the
    situation. In late 2007, DOD decided to cut two test aircraft and
    accelerate the reduction in contractor engineering staff in order to
    replenish management reserves. We disagreed with this plan because the
    reduction in test assets was not tenable and because the problems
    causing reserves to be depleted had not first been identified and
    fixed. We also determined that the official program cost estimate was
    not reliable and was understated, and we recommended that a new
    comprehensive and independent cost estimate through completion of the
    program be accomplished. DOD disagreed. Since that time, management
    reserves were again depleted and the Joint Estimating Team (JET)
    determined that program office cost and schedule estimates were
    understated and overly optimistic. The recently announced restructure
    extends the time for testing, and adds back in one test aircraft while
    providing for the use of three production aircraft to supplement
    development flight testing. Also, due to the program's recent critical
    Nunn-McCurdy breach, a comprehensive independent cost estimate is being
    prepared. We support the restructure and expect it to improve program
    outcomes in the future, but concurrency is still excessive. The
    Department now plans to procure up to 307 aircraft costing $58.2
    billion before completing development testing. Also, the Independent
    Manufacturing Review Team (IMRT) identified major improvements needed
    to achieve planned production rates and the F135 Joint Assessment Team
    (JAT) noted substantial engine cost growth and opportunities to reduce
    costs; these improvements will require funding and will need time to
    implement and take effect.
        Mr. Smith. In past reports, the GAO has been critical of the level
    of concurrency in the program with development, test, and production.
    Do the actions being taken as part of the restructure alleviate your
    concerns? If so why? If not, why not?
        Mr. Sullivan. The restructure ordered several positive actions,
    including increasing funding and extending the schedule to complete
    system development, adding 4 more development test assets, and reducing
    near-term procurement. We think these and other actions, if effectively
    implemented, will improve program outcomes, but only marginally lessen
    concurrency. Restructure-related improvements are geared to specific
    functions and do not directly impact the acquisition strategy and
    concurrency among functions. There is still substantial overlap of
    development, test, and production activities now stretching another
    2\1/2\ years to April 2016. Even with the reduced near-term procurement
    quantities, the program is still planning to procure as many as 307
    aircraft costing $58.2 billion before development flight testing is
    completed. Purchasing aircraft before testing successfully demonstrates
    that the designs are mature and that the weapon system will work as
    intended increases the likelihood and impact of design, manufacturing,
    and requirements changes resulting in subsequent cost growth, delivery
    delays, and performance shortfalls.
        Mr. Smith. In your statement and in the past you have been
    concerned about DOD's use of cost-reimbursement contracts for
    procurement of low rate initial production. Last year's report
    recommended that DOD report to Congress plans to mitigate risks and
    migrate to fixed price contracts. Why is the program using these types
    of contracts and what are the risks? Does the restructuring adequately
    address these concerns for now?
        Mr. Sullivan. The first 3 low-rate production lots are on cost
    reimbursement contracts, evidently because the knowledge about the JSF
    design, production processes, and costs for labor and material were not
    yet sufficiently mature and pricing information not yet exact enough
    for the contractor to assume the risk under a fixed-price contract.
    Cost reimbursement contracts provide for payment of allowable incurred
    costs, to the extent prescribed in the contract. Cost contracts place
    most of the risk on the buyer--DOD in this case-- who is liable to pay
    more than budgeted should labor, material, or other incurred costs be
    more than expected when the contract was signed.
        The February 24, 2010, JSF program restructure acquisition decision
    memorandum and related actions direct several positive steps concerning
    JSF development and low rate procurement contracts. DOD withheld some
    award fees on the development contract and directed revision of the
    contract structure with the intent to reward measurable progress and
    improved cost and schedule performance compared to the program plan.
    The decision memorandum also states that future aircraft and engine
    production contracts should move to fixed-price incentive fee
    structures as soon as possible. Supplementary information provided us
    by the Defense Director of Portfolio Systems Acquisition discussed (1)
    possibility of awarding a fixed price contract as early as LRIP lot 4
    (fiscal year 2010 procurement) and (2) establishment of a Should Cost
    team to inform negotiation of a fixed price contract for LRIP 5 (fiscal
    year 2011 procurement). While the restructuring did reduce near-term
    procurement and establish critical business measure to move to fixed
    price contacts as soon as possible, until fixed price LRIP contracts
    are negotiated between DOD and the prime contractor, the government is
    still bearing most of the cost risk.
        Mr. Smith. In the GAO's F-35 report, you asked Congress to consider
    a matter that asks the Department to submit a tool or ``system maturity
    matrix'' for better measuring program progress in maturing the weapon
    system. What is your vision of this tool and how do you expect this to
    help the Congress in its annual deliberation of JSF's budget request?
    Has such a tool been used previously and with what impact?
        Mr. Sullivan. Congress had similar concerns concerning the
    concurrency on the B-2 program and planned investment in procurement
    aircraft prior to fully testing the aircraft. Congress enacted
    legislation to control B-2 procurement decisions and require the
    Department to deliver assurances prior to procurement of additional B-
    2s. A key tool was a ``full performance matrix'' that Congress required
    DOD to develop and which identified minimum conditions that would be
    met before making annual procurements. The full performance matrix laid
    out over time how different capabilities for the B-2 would be
    demonstrated in relationship to procurement decisions. Such a tool
    helped provide visibility for decisionmakers into a program's progress
    in ensuring the maturity of the weapon system based on expected
    demonstrated knowledge against a baseline plan thus allowing for more
    informed investment decisions, and better managed risks of that inherit
    with a highly concurrent development and production program.
        Appendix 1 is a suggested system maturity matrix for the JSF that
    could be used to track annual progress versus plans. Congress could
    apply the matrix in its annual deliberations on whether to approve, add
    to, reduce, or restrict the Department's annual procurement requests.
    The matrix provides criteria and conditions for comparing documented
    results by year to expected progressive levels of demonstrated weapon
    system maturity in relationship to planned increases in annual future
    procurement quantities. This matrix should explain how increasing
    levels of demonstrated, quantifiable knowledge about the weapon system
    maturity at annual procurement decision points justify ramp up of
    procurement quantities, and corresponding increasing funding needs,
    leading up to full-rate procurement.
        Mr. Smith. As you know the DOD is requesting funding for 43
    aircraft (including one for overseas contingency operations) in its FY
    2011 budget request, an increase of 13 aircraft from last year. Does
    GAO feel the aircraft system is at a maturity point that justifies such
    an increase? Why or why not? What are the risks?
        Mr. Sullivan. Considering the increased costs, extended development
    schedule, and corrective actions directed, but not yet implemented, by
    the recent restructuring and the Nunn-McCurdy breach announcement, we
    believe that a significant ramp up in production is not warranted at
    this time. Increased manufacturing labor hours, parts problems,
    continuing design changes, and late deliveries indicate that design and
    manufacturing processes may lack the maturity needed to efficiently
    produce aircraft at planned rates. As of January 2010, only 4 test
    aircraft had been delivered and the first two production aircraft--
    ordered in 2007--are expected to be delivered later this fall. DOD has
    already bought 28 production aircraft through fiscal year 2009. Under
    the current plan, DOD proposes increasing production rates by 163
    percent from fiscal year 2011 to 2015. DOD wants to buy as many as 307
    aircraft at a total estimated cost of $58.2 billion before development
    flight testing is completed. However, at the same time, it has not been
    successful in meeting demonstration goals and testing schedules to
    support increases in production investments, placing billions of
    dollars at risk as it develops and produces aircraft concurrently. We
    have reported in the past on several occasions about the risks of
    producing aircraft before testing demonstrates the design is mature,
    costs are well understood, and manufacturing activities can support the
    ramp up in production. As the JSF's program development and test
    program slips, it further increases the chances that costly design
    changes will surface in the later years of flight testing.
        Reducing fiscal year 2011 procurement would lessen the steep ramp
    rate and provide the program with more time to implement
    recommendations made by the Independent Manufacturing Review Team
    (IMRT) commissioned last year to assess the program's manufacturing
    capabilities and production plans. The IMRT notes that to reach the
    planned production levels, new production transition, risk mitigation,
    and supplier support plans are needed. Without such improvements, there
    is significant risk that the prime contractor will not produce planes
    according to plan and a backlog of production aircraft will develop.
    Considering the program's relatively slow test progress and
    manufacturing performance, procuring less aircraft in fiscal year 2011
    would also better align the manufacturing and testing schedules without
    unduly disrupting the program. We have submitted Budget Justification
    Fact Sheets recommending the reduction of 7 total JSF aircraft out of
    the fiscal year 2011 procurement buy (Two aircraft from each Service's
    regular budget request and one aircraft from the Air Force's OCO
    request.)
        Mr. Smith. How confident is the GAO that the program will not
    encounter future cost and schedule perturbations? What things should
    Congress watch as indicators that the program is on track to deliver on
    cost and schedule moving forward?
        Mr. Sullivan. The program will likely continue to experience cost
    increases and schedule delays despite the recent restructuring's
    positive steps. There remains substantial overlap of development, test,
    and production activities while DOD continues to push ahead and invest
    in large quantities of production aircraft before variant designs are
    proven and system performance verified. Also, DOD is repricing the
    procurement program through completion in 2035; this is expected to
    significantly increase future funding requirements. In addition, the
    IMRT and JAT identified numerous improvements needed in airframe and
    engine production, respectively, with associated costs and schedule
    impacts. Further, manufacturing inefficiencies will likely prevent the
    program from meeting the substantial increase in annual procurement
    quantities until certain steps are taken. Indicators for Congress to
    focus on include (1) test progress as measured by the number of flight
    test sorties completed, flight test hours, and test point burn down;
    and (2) scheduled versus actual delivery of test and production
    aircraft.
        Mr. Smith. Members of Congress are perturbed about a general lack
    of access to JSF program information and the Department's late
    announcement of cost and schedule problems resulting in a major
    restructuring and Nunn-McCurdy breach. How has your access been? In
    particular, to what extent have you and your team had timely visibility
    into efforts such as the JET, JAT, and IMRT in the past year?
        Mr. Sullivan. The team generally had poor visibility into the
    independent reviews conducted by the Joint Estimating Team (JET),
    Independent Manufacturing Assessment Team (IMRT), and the F135 Engine
    Joint Assessment Team (JAT) until very late. We made repeated requests
    for this information starting in November 2009, but was not briefed and
    provided supporting documentation by DOD until February 25, 2010. This
    occurred while our draft report was in processing and we ended up
    delaying issuance by one week, in part, so we could provide more
    current and accurate information about these important reviews. We did
    not, however, have sufficient time to do the necessary follow-up work
    and analysis to fully evaluate the reviews and their significance to
    the JSF program. We plan to do this during our next review starting
    soon.
        Mr. Smith. On the F135 and F136 engine, assuming fully funding the
    respective contractors at a dollar level that can be productively
    executed, what would be the required funding, in then-year dollars, by
    appropriation, for fiscal year 2011 and in total for the remainder of
    the future years defense program,

          To complete development

          To prepare for competitive procurement

          And in what year would competition be possible?

        Mr. Sullivan. For our engine cost analysis, we did not conduct an
    independent cost estimate to include the required funding for the F135
    and F136 and our analysis was not intended to provide a definitive
    estimate of the total government funding requirement to execute the
    F135 and F136 programs. The cost analysis was intended to provide a
    reasonable cost comparison for the completion of system development and
    demonstration, engine recurring flyaway costs, production support and,
    sustainment on sole source basis and under two different competitive
    scenarios. It was also intended to provide a reasonable estimate of the
    level savings needed to recoup the additional costs of competition
    given certain assumptions. It was based on the best information we had
    available at the time we conducted our analysis in March 2010.\1\ For
    our analysis, we assumed that competitive procurement would begin in
    fiscal year 2015. This aligns with the completion of the JSF aircraft
    program development flight test program and would start the competition
    with the last low-rate initial production aircraft buy.
    ---------------------------------------------------------------------------
        \1\ Refer to GAO-10-478T for details on the scope and methodology
    of our analysis.
    ---------------------------------------------------------------------------
        Table 1 and 2 below provide the estimated costs we used in our
    updated analysis for the sole source scenario and the additional
    estimated costs (converted to then year dollars) to execute the
    competitive scenarios (50/50 and 70/30 split of total engine purchases
    to either contractor) for Fiscal Year 2011 and for the periods Fiscal
    Year 2012 to 2015, respectively. It is important to note that the cost
    analysis presented in our March 2010 testimony was presented in
    constant fiscal year 2002 dollars.

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        Mr. Smith. Clearly, F-35 production will far exceed what is
    needed for operational test and evaluation and the 10 percent standard
    for low rate initial production before initial operational test and
    evaluation is completed in 2016. The path the program is on will result
    in funding for the highest rate of production of any other year in the
    program in 2016 before the full rate production decision is even made.
    The F-35 contractor argues that the production should be increased,
    stating that it is cheaper to modify airplanes than incur the
    inefficiencies of lower rate production. Please comment. What are your
    views?
        Mr. Sullivan. Although officials recently reduced near-term
    procurement plans, DOD still plans significant investments in procuring
    large quantities of JSF aircraft before flight testing proves they will
    perform as required. We believe this strategy contains risk for further
    cost growth resulting from design changes uncovered from flight
    testing. The cost of discovering design problems during production
    could be significant if testing shows that large, structural components
    of the aircraft require modifications. Design changes needed in one
    variant could also ripple through the other two variants, reducing
    efficiencies necessary to lower production and operational costs with
    common parts and manufacturing processes for the three variants. The
    intent of development flight testing is to discover and fix design and
    performance deficiencies during development when it is cheaper to do so
    than discovering problems and shortfalls during follow-on operational
    testing and after initial fielding. Purchasing aircraft before testing
    successfully demonstrates that the designs are mature and that the
    weapon system will work as intended increases the likelihood and impact
    of design, manufacturing, and requirements changes resulting in
    subsequent cost growth, schedule delays, and performance shortfalls.
    Systems already built and fielded may require substantial
    modifications, driving further costs.
        Some of the more stressing and critical testing for the program
    still lies ahead. This includes high angle of attack tests, ship tests,
    full up mission system tests and operational testing. By the time these
    events occur, the program will have purchased as many as 307 aircraft
    at a cost of over $58 billion. The program believes the risk of major
    modifications resulting from flight testing is low because of its
    extensive use of modeling and simulation. As we reported in March 2010,
    despite the extensive network of simulation labs, their ability to
    substitute for flight testing is unproven and the contractor's progress
    in reducing program risk is difficult to assess, as many labs and
    models have yet to be accredited. Rand Corporation reported in a 2004
    study on testing and evaluation that modeling is not a substitute for
    flight testing.\2\ Rand found that even in performance areas that are
    well understood, it is not unusual for flight testing to uncover
    problems that were not apparent in simulations. Examples include flight
    effects on the wing of the F/A-18 E/F and buffeting of stores
    externally carried on various aircraft when flown in certain
    conditions. Additionally, OSD testing officials have indicated that
    flight testing of each variant is necessary to demonstrate designed
    capabilities. Our past work has found that flying quality problems were
    identified during actual flight testing on programs like the F-22A, B-
    2A, and V-22.
    ---------------------------------------------------------------------------
        \2\ Rand Corporation, Test and Evaluation Trends and Costs for
    Aircraft and Guided Weapons (Santa Monica, California, 2004).

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        Mr. Smith. From an acquisition perspective, with 1,763 Air
    Force F-35s in the current program, and the fact that a one-engine and
    two-engine F-35 program cost the same on a net present value basis, why
    wouldn't the Air Force want to choose a competitive engine strategy for
    the F-35 when it would also provide additional non-financial factors
    such as technological innovation, enhanced contractor responsiveness,
    and a more robust industrial base?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. When was the 1763 F-35A requirement established?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. When the 1763 F-35A aircraft requirement was
    established, what was the IOC at that time and when is the IOC
    projected now?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. When the 1763 F-35A aircraft requirement was
    established, what was the projected average procurement unit cost ($TY)
    for the F-35A? Projected average unit flyaway cost ($TY)?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. What are the current projected APUC and average unit
    flyaway costs ($TY)?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. When the percentage increase in the APUC and flyaway
    cost are calculated, is the Air Force expecting its budget in the FYDP
    and extended planning period for the F-35A to increase proportionately?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Does the AF foresee a need to adjust its planned
    procurement of the F-35A proportionately?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. When the Air Force budget was submitted for fiscal year
    2009, what was the projected F-35A procurement quantity for fiscal year
    2010? What was the F-35A budget request for procurement for fiscal year
    10?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Has a fighter engine ever been required to have the
    capabilities that the F135 and F136 are being required to satisfy?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. How many foreign countries have procured both the F100
    and F110?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Air Force official statements express concern that
    funding of an alternate engine program could result in a decrement of
    F-35A aircraft in Air Force procurement: (CSAF) ``If you have a fixed
    program top line for the F-35, if you fund the alternate engine out of
    that top line, it has an inescapable effect of reducing aircraft
    procurement.'' The JSF program has increased in cost by $100 billion
    and the F135 SDD contract has increased 50 percent. Yet the Air Force
    continues to project a total procurement of 1,763 aircraft. Given this
    apparent flexibility in the AF budget, why is not possible, in order to
    maintain competition for the F-35 engine and a balanced F-35 program,
    to also fund the F136 engine?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. A May 2008 Defense Contract Management Agency study done
    on behalf of SAF/AQ, ``Fighter Engine Industrial Capability
    Assessment,'' recommended that F136 alternate engine production be
    reinstated under the fiscal year 2006 schedule to provide for
    production deliveries in fiscal year 2010. As you are aware, fiscal
    year 2006 was the last year that the Department of Defense budgeted for
    the alternate engine. The DCMA assessment indicates that the lack of a
    major engine development program threatens the survivability of the
    military engine industrial base after the development of the F135,
    regardless of whether the F136 is funded: At completion of the F-35 SDD
    program, the F-35 engine manufacturers will be without a major fighter
    engine development program for the first time in over 35 years. What is
    the policy of the Department of the Air Force with regard to
    maintaining a competitive high performance engine industrial base and
    what FYDP plan and funding does the Department of the AF have to
    support its policy?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. The committee understands that the Department's new
    position on long-range strike is that a ``family of systems'' is
    required to meet warfighting requirements. Can you explain to the
    committee why you feel it will be more cost-effective to operate and
    maintain multiple long-range strike platforms rather than integrating
    technologically feasible technologies onto a single platform?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. As it relates to the long-range strike development
    program, what specifically about sustaining the industrial base
    workforce concerns you, and how will the $200.0 million requested in
    fiscal year 2011 be applied to address your concerns?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Smith. Are service life extension programs (SLEPs) budgeted
    that will allow legacy aircraft to address fighter aircraft inventory
    requirements?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
                                     ______

                       QUESTIONS SUBMITTED BY MR. TAYLOR
        Mr. Taylor. Dr. Carter, during the JSF program restructuring, we
    understand that Secretary Gates directed a withhold of $614 million
    dollars of award fee from the contractor based on the program's poor
    performance because he stated that the taxpayer shouldn't be the only
    one's held responsible for the cost and schedule overrun in this cost-
    plus development contract. However, it's our understanding that you are
    giving the contractor a chance to recoup $614 million dollar award fee
    in the future. So given the contractor's poor performance and their
    ability to recoup the award fee, the taxpayer is really going to be
    paying all of the cost overrun, correct? Why does that make sense?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. Ms. Fox, in terms of percentages, what do you assess
    the commonality of each of the airframes, missions systems, engines,
    and vehicle systems to be for all three models of JSF aircraft for the
    phases of development, production and operating and support? What is
    your assessment of how the commonality, or lack thereof, is
    contributing to the increased cost growth for the total ownership costs
    of each of the aircraft and are commonality expectations being
    realized?
        Ms. Fox. Proposed Response: With respect to Joint Strike Fighter
    cost estimates, the assessment of commonality comes primarily into play
    with respect to the production cost estimate for the airframe. Assuming
    more commonality translates into lower costs through the application of
    learning curves. The second JSF Joint Estimating Team (i.e., JET II),
    led by OSD CAPE, employed a methodology in assessing commonality that
    is based on airframe weight classified as either being common to all
    variants, common to a subset combination of the variants, or unique to
    individual variants. Through this assessment, the JET II assesses
    airframe commonality of approximately 25% whereas the joint program
    office and contractor assessments are greater than 80%. This generates
    a significant cost difference between the two airframe production cost
    estimates.
        As part of the Nunn-McCurdy recertification process, OSD/CAPE will
    re-assess its treatment of airframe commonality, including the review
    of actual contractor production cost data for the early LRIP production
    aircraft. However, it should be recognized that the actual commonality
    data is based on a limited number of aircraft delivered to date, and
    that we will not have a better foundation of actuals for Carrier
    Variant aircraft for another 2-3 years. Similarly, O&S costs should be
    reduced with higher levels of commonality. CAPE has not yet performed a
    quantitative assessment of commonality related to O&S costs.
        Mr. Taylor. Ms. Fox, what do you estimate to be the total ownership
    life-cycle costs for the Department of the Navy for the F-35B and F-
    35C, and what are the assumptions that go into that estimate?
        Ms. Fox. We do not have a current estimate of the total life-cycle
    costs. We expect to complete a life-cycle cost estimate later this
    summer, and will provide the information to the committee at that time.
        Mr. Taylor. Ms. Fox, if the F/A-18E/F aircraft was procured for the
    Navy, in lieu of the F-35C, what do you estimate would be the total
    ownership life-cycle costs of the F/A-18E/F would be, assuming that it
    would be operated for the planned service-life of the F-35C?
        Ms. Fox. We do not have current estimates of F/A-18E/F total
    ownership life-cycle costs. These calculations are difficult to
    compute. We are looking at them as part of the FY 2012 program review.
    What we can do is show you a comparison using average procurement costs
    (APUC) between the F-35C and the F/A-18 E/F.
        Consider the table below. The Navy is planning to buy 680 F-35s.
    They have not decided on how that total will be split between variants.
    For the purpose of this exercise, we assumed a 50/50 split meaning that
    we assume a total of 340 F-35Cs. The F-35 SAR lists an APUC (in 2010
    dollars) of $93 million per aircraft for a ``total cost'' of $31.6
    billion. If the Navy bought 340 F/A-18 E/Fs at an estimated APUC of $90
    million per aircraft, the ``total cost'' would be $30.6 billion.

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        Mr. Taylor. Ms. Fox, in testimony to the Senate Armed Services
    Committee two weeks ago, you stated that in your estimate, the Navy's
    100 aircraft strike-fighter shortfall was an old number. Can you
    provide us the CAPE estimate for the number of strike-fighter aircraft
    that the Department of the Navy will be short and when that shortfall
    is supposed to peak?
        Ms. Fox. We are in the process of analyzing this question as part
    of the PB 2012 program review. We will be happy to show this analysis
    with you upon completion.
        Mr. Taylor. Dr. Gilmore, you state in your testimony that because
    of durability issues, the Marine Corps' current version of the JSF
    requires a re-design of the drive-shaft that connects the main engine
    to the vertical lift-fan, and the clutch that connects the drive-shaft
    to the lift-fan also needs to be re-designed because of excessive
    heating issues which could cause it to fail during vertical flight
    operations. In your opinion, how serious do characterize these issues,
    how long do you assess it will take to redesign and test the new drive-
    shaft and clutch, and how do you assess the Marine Corps being able to
    declare IOC in year 2012?
        Dr. Gilmore. The issues are serious enough that the design must be
    changed soon and incorporated with production plans beginning with the
    upcoming LRIP lot 4. The final nature of these two re-designs is not
    yet known and all the implications are not fully understood. Test
    aircraft are receiving new instrumentation to collect more data on the
    problems to determine root cause. My understanding is that these design
    changes will be finalized late this year and, in the meantime, the SDD
    and initial LRIP aircraft will have operating limits. The redesigns are
    needed for the system to complete the SDD flight test program and meet
    operational requirements. Successful redesign and implementation by
    LRIP 4, plus retrofit of prior systems may be possible in time for the
    STOVL IOC in late 2012, but there is little margin in the schedule.
        Mr. Taylor. Dr. Gilmore, we understand that the Logistics
    Information System that is required to pre-flight and trouble-shoot the
    JSF before and after flight is very large and cumbersome and is not
    suitable for forward deployed operations. How do you assess this will
    affect the Marine Corps' ability to declare IOC in year 2012 and when
    do you expect a suitable forward deployed system will be available to
    support Marine Corps forward-deployed operations?
        Dr. Gilmore. A Logistics Information System which is not designed
    for deployment will limit all the Services' abilities to operate from
    forward bases. As designed, the entire squadron operating unit weighs
    2,400 pounds and is six feet tall, excluding transportation dolly and
    packaging material, making it difficult to transport on and off ships,
    or to detachment-type operations at forward operating locations. The
    program office is currently developing deployment procedures for a
    squadron kit to support Marine Corps requirements in 2012, but that kit
    will have limited capability. It is my understanding that the Marine
    Corps is reviewing this solution to determine if it meets the need for
    STOVL IOC. The program office has also begun a detailed analysis of
    deployment requirements and is planning to develop, deliver, and test a
    fully deployable solution in the 2014-2015 time frame.
        Mr. Taylor. Dr. Gilmore, your report mentions that the program's
    recent removal of shutoff fuses for engine fueldraulics lines coupled
    with the removal of fire extinguishers has increased the likelihood of
    combat losses from ballistic threat induced fires. Do you believe these
    items were removed to save cost? Do you believe these are prudent
    actions for a combat aircraft?
        Dr. Gilmore. The JSF program office removed the engine fueldraulics
    shutoff fuses and five of six dry bay fire suppression systems to save
    weight and costs. DOT&E continues to recommend that these features be
    reinstated and does not view their removal as prudent. JSF Live Fire
    ballistic testing has demonstrated that the JSF is vulnerable to threat
    induced fires. Live Fire testing has also demonstrated that an
    effective fire suppression system exists and can be installed.
    Historical combat data indicate that threat induced fire is a leading
    cause (25 percent) of combat aircraft loss. The program office
    estimates that removal of these systems will reduce life cycle costs
    for the total program by $125M. This equates to the cost of less than
    two aircraft (December 2009 unit cost estimates) losses during combat
    operations over the JSF aircraft's entire combat service lifetime. The
    dollar value of additional likely combat losses, due to lack of these
    systems, would more than offset these savings.
        Mr. Taylor. Dr. Gilmore, what are the current aircraft operating
    limitations for the F-35B aircraft participating in the SDD program as
    it relates to crosswinds, monitored parameters, vertical lift
    performance as it relates to hot gas ingestion, thunderstorms, wet and
    standing water runways, descent rate as it relates to the fuel system
    and icing? Will sufficient aircraft operating limitations be lifted in
    time to support initial pilot aircraft training to support Marine Corps
    IOC in 2012?
        Dr. Gilmore. I cannot assess when the series of STOVL aircraft
    operating limitations, or those on the other variants, will be lifted.
    The new test plan schedule is being finalized. As flight test yields a
    better understanding of performance and achievable pace of envelope
    expansion, a more accurate prediction of the resolution for each
    limitation can be made. Current F-35B SDD aircraft operating
    limitations include the following:

          Crosswinds. Current limit is between 5 and 15 knots
    depending on type of test, transition points, temperature, engine
    thrust, conventional or vertical mode, airspeed, and whether the
    aircraft is monitored or unmonitored. For example, conventional
    takeoffs and landings without flying qualities monitoring by control
    room personnel are limited to 10 knots crosswind component;
    conventional takeoffs and landings with flying qualities monitoring are
    limited to 15 knots crosswind component (See also vertical lift
    performance--hot gas ingestion.)

          Monitored parameters. Each test flight tailors the data
    it collects and monitors from over 1,200 parameters depending on the
    condition, risks and test being accomplished. For example, there are no
    lift fan engagements unless in contact with the control room.

          Vertical lift performance as it relates to hot gas
    ingestion. Aircraft operations are limited to specific wind components
    and limitations vary depending on the SDD aircraft and what kinds of
    test points are being pursued. For example, 5 knots is the maximum wind
    speed within 22 degrees of the nose and from abeam to behind the
    aircraft for BF-1 performing certain ``initial transition'' vertical
    landing test points. BF-2, BF-3, and BF-4 cannot perform vertical
    landings with wind components greater than 5 knots for wind directions
    greater than 22 degrees off the nose. Limits for vertical landing
    envelope expansion in BF-1 increase up to 20 knots crosswind component
    for wind directions within 30 degrees left of the nose and 45 degrees
    right of the nose.

          Thunderstorms. The airplane is restricted from flight
    within 25 nm of lightning due to structural bonding issues.

          Wet and standing water. Takeoff or landing with standing
    water in the intended area of runway operations is prohibited. With no
    engine ice protection systems installed, ground operations are
    prohibited if standing water is present within 10 feet of the engine
    inlet. No lift fan operations are allowed in the presence of rain or
    above specific relative humidity limits (e.g. 100 percent allowed until
    80 degrees, then decreasing depending on temperature).

          Descent rate relative to fuel system. Descents of greater
    than 5,000 feet are limited to 20,000 feet per minute at idle power,
    and 10,000 feet per minute if above idle power, unless within specific
    technical parameters monitored by the flight test control room,
    including confirmation that the fuel pressure and vent system are
    working.

          Icing. With no engine ice protection system installed, no
    ground operations below 40 degrees F with precipitation or standing
    water present within 10 feet of the engine inlet, or dew point within 5
    degrees of ambient temperature between -4 degrees F and 40 degrees F.
    Flight in icing conditions in excess of 30 seconds is prohibited. STOVL
    lift fan operation in flight in visible moisture is also prohibited.

        Mr. Taylor. Dr. Gilmore, as it relates to potential mishap rates,
    what do you assess and characterize the risk to be for LRIP 1 aircraft
    regarding immaturity of the aircraft system and in-flight limitations
    to support initial pilot training, and would you expect the potential
    for Class A mishaps to be higher than historical experiences?
        Dr. Gilmore. At this point, I cannot predict mishap rates for JSF
    production aircraft. The program is working to close the test points
    needed before delivery of the two LRIP 1 aircraft early next year.
    These aircraft will have a very limited flight envelope and only the
    initial, limited mission systems capabilities provided by Block 0.5.
    The flight envelope will need to be expanded and the mission systems
    capability will need to be upgraded to Block 1 through flight test
    before the planned crew training can begin in mid-2011. The aircraft
    limitations are being reviewed by the training center and Service
    planners, who are aware of the challenge created by concurrent
    development and production. Safely increasing capability through flight
    test, adding more aircraft, and continuously training operators and
    maintainers requires tight coordination and planning by the Services
    and development team.
        Mr. Taylor. Secretary Stackley, the 30 year aviation plan provides
    no discussion of operational risk as it relates to meeting combatant
    commander warfighting requirements and the National Defense Strategy .
    . . how would you characterize, in terms of risk, the force structure
    outlined in the 30 year aviation plan for bombers and the ability for
    the legacy bomber fleet to survive against more advanced integrated air
    defenses in 2015 and beyond since a new bomber will not be fielded now
    until towards the end of the 2020 decade?
        Secretary Stackley. The Department of the Navy has no oversight of
    any bomber programs. We defer this question to the Department of the
    Air Force who manages/oversees all bomber programs.
        Mr. Taylor. Secretary Stackley, given the lack of ``affordability''
    in the JSF program, have you looked at the option of foregoing
    development and production for the F-35C in favor of buying more F/A-
    18E/F Super Hornets?
        Secretary Stackley. With the SECDEF approved F-35 program
    restructure, the Department of Defense has added $2.8B across FYDP to
    fully fund development of the program. As part of the restructure, we
    significantly reduced the production profile to fund these additional
    System Development and Demonstration requirements, accounted for
    increased costs due to Partner projected procurements moving to the
    right, accounted for higher Joint Estimating Team (JET II) procurement
    estimates, and adjusted the production ramp due to recommendations made
    by an Independent Manufacturing and Resources Team (IMRT). As such, the
    Department is fully committed to the restructured F-35 program and the
    existing F-18E/F program of record.
        Mr. Taylor. Secretary Stackley, how do you define ``affordability''
    as it relates to the Joint Strike Fighter program and how has the
    definition and concept of ``affordability'' changed since the
    initiation of SDD and present day in which the cost of the program is
    markedly greater?
        Secretary Stackley. Affordability needs to account not only for the
    overall cost of a weapon system but the capability any given weapon
    system provides as measured against existing and emerging threats to
    the security of the nation. The Department is not satisfied with the
    cost growth brought forward with the recent F-35 program restructure
    and remains focused on improving upon this cost projection. However,
    the F-35 program is essential towards providing the necessary 5th
    generation tactical aviation capability needed by the nation and that
    this capability is considered affordable within the resources requested
    by the FY 2011 President's Budget. This question will be further
    addressed in the ongoing assessment associated with the Nunn-McCurdy
    review and certification process.
        Mr. Taylor. Secretary Stackley, according to NAVAIR, the F-35B and
    F-35C operations and sustainment cost is predicted to be 40 percent
    higher than the legacy fleet of F/A-18A-D and AV-8B aircraft combined.
    Do you agree with this assessment? If not, why not? What do you assess
    the operations and support cost of the F-35B and F-35C to be per flight
    hour? How does this compare to the cost per flight hour for the F/A-
    18E/F?
        Secretary Stackley. Understanding and controlling total ownership
    costs is a priority for the Department, and we will continue to pursue
    ways to reduce our long-term operations and support costs for all our
    ships and aircraft. I have directed my leaders to study and understand
    the total ownership costs of new and existing systems. Early
    assessments serve to highlight risk areas which need to be managed in
    order to mitigate operations and support costs. The NAVAIR estimate of
    JSF cost per flight hour is consistent with that intent and will be
    further informed by other service and Department assessments to
    validate the findings while initiating `next steps' to mitigating
    costs. As well, the unique in-service support plan for JSF poses
    challenges for direct comparison with legacy sustainment costs, and we
    are taking added measures to align bases of estimates. Accordingly, it
    is not prudent to conclude the total ownership costs of JSF based on
    the NAVAIR study alone. The more complete analysis will be accomplished
    in conjunction with the Nunn-McCurdy review and certification process.
        Mr. Taylor. Secretary Stackley, what do you estimate to be the
    total ownership costs of the F-35B and F-35C for the Navy and Marine
    Corps?
        Secretary Stackley. Understanding and controlling total ownership
    costs is a priority for the Department, and we will continue to pursue
    ways to reduce our long-term operations and support costs for all our
    ships and aircraft. I have directed my leaders to study and understand
    the total ownership costs of new and existing systems. Early
    assessments serve to highlight risk areas which need to be managed in
    order to mitigate operations and support costs. The NAVAIR estimate of
    JSF cost per flight hour is consistent with that intent and will be
    further informed by other service and Department assessments to
    validate the findings while initiating `next steps' to mitigating
    costs. As well, the unique in-service support plan for JSF poses
    challenges for direct comparison with legacy sustainment costs, and we
    are taking added measures to align bases of estimates. Accordingly, it
    is not prudent to conclude the total ownership costs of JSF based on
    the NAVAIR study alone. The more complete analysis will be accomplished
    in conjunction with the Nunn-McCurdy review and certification process.
        Mr. Taylor. Admiral Philman and General Trautman, the JSF program
    office now estimates the JSF will now cost you $112 million per
    aircraft to buy instead of $59 million per aircraft, and Naval Air
    Systems Command estimates that the JSF will cost you $31,000 dollars
    per hour to operate compared to the current fleet of aircraft that
    costs you $18,000 dollars per hour. How will these increased costs
    affect your ability to buy and operate JSF given all the other
    priorities the Navy has concerning its challenges to pay for new ships,
    personnel and operations and maintenance costs for its ships? Wasn't
    the JSF originally planned to cost you less than your current fleet of
    tactical aircraft?
        Admiral Philman and General Trautman. Understanding and controlling
    total ownership costs of new and existing weapon systems are priorities
    for the Navy in order to reduce long term operations and support costs.
    The most opportune time to control such costs is early in the weapon
    system's development when actions can be taken which will carry over
    the life of the system. As such, acquisition programs are encouraged to
    study the issue in depth considering many different scenarios. While
    such information taken alone is interesting, it's true value is
    realized when the entire body of work is analyzed, vetted and formally
    presented. The release of such information piecemeal without benefit of
    full analysis can be misleading and should be avoided.
        The Navy believes that recapitalizing the fleet with the JSF F-35C,
    delivering a true 5th generation strike aircraft combining stealth and
    enhanced sensors to provide lethal, survivable, and supportable
    tactical jet aviation strike fighters that complement the F/A-18E/F,
    provides the most flexibility and striking capability for the
    investment. The JSF will provide a survivable ``Day One'' strike
    capability in a denied access environment that can not be accomplished
    by current legacy aircraft. It can be misleading to compare current
    year procurement costs of aircraft with very different capabilities,
    different quantity assumptions, and at very different stages of the
    acquisition cycle (i.e., F/A-18E/F is nearing the end of production and
    F-35 is early in the production phase (i.e., FY11 is Low Rate Initial
    Production Lot V and Full Rate Production is several years away).
        For the Marine Corps the return on investment in capabilities of
    the F-35B outweighs the unavoidable legacy aircraft O&S cost increases
    of not replacing three different aircraft; F/A-18, AV-8B, and EA-6B we
    will incur as these aircraft age far beyond their original service life
    and require substantial modifications to maintain operational relevancy
    and airworthiness, specifically maintaining safety without performance
    limitations. Supporting three aging and lesser technological different
    type model series aircraft exceeds the cost of operating one common
    aircraft with the depth and synergy provided by a collaborative
    globally based program.
        Mr. Taylor. Admiral Philman and General Trautman, the Navy
    currently operates 6 types of aircraft engines on its carriers and is
    forecasted to operate 4 engines when JSF is fielded. Why would
    operating an alternate engine be a challenge for the Navy or Marine
    Corps since you are predicting to operate at least 4 engines on the
    carrier now? Also, wouldn't it be possible for carrier air wings to be
    outfitted with either the F135 or F136 engine which means that during
    deployments carrier air wings would only have either engine on board
    the carrier? How do you assess the operational risk of having only 1
    engine type available for the JSF? Are you not concerned about
    potential fleet wide grounding issues due to an unexpected engine
    problem?
        Admiral Philman and General Trautman. A numerical engine count does
    not provide the full context for this discussion. The JSF engine is the
    largest tactical fighter engine in size and overall logistics footprint
    in the history of the Department of Defense. In comparison to legacy F/
    A-18E/F (Model F414), the F135 engine is approximate twice the size of
    the Super Hornet F414 engine. While the performance of the F135 engine
    brings significant performance gains and warfighting advantage, it
    presents logistical challenge for all of the Services--but no more so
    than to the Navy and Marine Corps who operate in already constrained
    spaces aboard L-Class and CVN ships.
        The Navy Department believes the implementation of two JSF engines
    onboard aircraft carriers is suboptimal due to increased operational
    logistics foot print (LFP). Current LFP challenges available hangar
    deck space due to the JSF engines being too large to fit in the
    aviation bulk storage or jet shop (either F135 or F136). LFP problem
    compounds with both F135 & F136 engines afloat on the same ship, each
    engine has unique support equipment and tools effectively doubling the
    LFP required for these items. Spotting and supporting two engines will
    negatively affect hangar bay aircraft spotting and maintenance
    operations. Regardless of the decision on an alternate engine, it would
    be the Navy's intent to deploy only one engine variant on any one CV.
        The Navy does not fly aircraft that have interchangeable engines.
    While some model types such as the F/A-18 are supported by two distinct
    engines, they are unique to the model series (A/B, C or E/F) and are
    not interchangeable across series. If there is a fleet wide grounding
    of an aircraft due to engine issues, there is no alternate engine to
    mitigate the problem.
        Mr. Taylor. Admiral Philman and General Trautman, according to Dr
    Gilmore's written testimony from panel 1, we understand that unlike all
    aircraft now in service, the JSF is being designed without a fire-
    suppression system in its engine bay because of aircraft weight issues?
    Why is this acceptable since all aircraft in operation currently have a
    fire-suppression system and what level of risk does this pose for a
    single-engine aircraft being unable to put out an engine fire due to a
    fuel leak or enemy ballistic fire?
        Admiral Philman and General Trautman. The JSF is being designed
    with an engine bay fire detection and fire suppression system. Several
    features in the F-35 vulnerability design resulted in a system that
    exceeded the specification in the Operational Requirements Document
    (ORD): ``4.1.3.2 The JSF Vulnerability Posture shall be better than the
    F-16C.'' These unprecedented survivability features led to design
    trades to better balance performance, weight, cost, and risk. These
    trades included: a ballistic liner, dry bay fire extinguishing, and
    coolant/hydraulic shutoff valves. The resulting design met the ORD
    requirement with the exception of a 30mm high-explosive incendiary
    round typically associated with light anti-aircraft artillery. The
    option to remove these features was fully debated through the
    requirements process to ensure the true cost benefit was fully
    evaluated. The identified weight and cost penalties (11 lbs and $1.4M)
    were compared against the minimal survivability increases (6%)
    predicted by the assessment models. The Joint Executive Steering Board
    (JESB) concurred with this decision and stipulated that an updated
    Vulnerability Assessment be conducted after the conclusion of the Live
    Fire Testing (2011). The overall survivability posture of the F-35 is
    without equal due to the advanced avionics and sensor suite, fifth
    generation stealth performance, advanced countermeasures and balanced
    vulnerability reduction design. The functionality and benefit of each
    design feature is carefully weighed against the overall system impact
    to cost, weight and supportability. After careful, detailed, and
    extensive deliberations the risk posed by removal of these systems was
    deemed acceptable.
        Mr. Taylor. Admiral Philman and General Trautman, can you describe
    for us the ship integration challenges and expected costs you foresee
    for integrating the JSF onto Large Deck Amphibs and Aircraft Carriers
    as it relates to the significant engine thrust, pressure and
    temperature challenges over what has been experienced with legacy
    aircraft?
        Admiral Philman and General Trautman. JSF integration on L Class
    ships is progressing on a logical path aligned across engineering,
    acquisition, and implementation. NAVSEA generated specific ship changes
    ``Cornerstone Alts'' to provide shipboard infrastructure (i.e., power,
    weapons stowage, secure facilities). These cornerstone modifications
    start in PR-11 ($27M per hull) and are programmed throughout the FYDP.
    External environment impacts are still being evaluated through
    engineering analysis, land based testing and during Developmental
    Testing (DT) 1 in 2nd quarter FY2011. The DT 1 ship will be fully
    instrumented to collect heat, pressure, noise and velocity data with
    topside equipment/systems either being temporarily removed or shielded
    to lower risk to damage. This DT event will assist in defining
    shipboard mitigation required to meet USMC IOC such as relocating
    systems, material changes and shielding. External environment
    modifications are a POM-12 issue ($43M per Hull) and are programmed to
    support Operational Test in the later part of 2012 and our first
    operational F-35B MEU deployment in 2014. There will be an L Class ship
    available in 2012 with all the F-35B integration modifications
    incorporated to support a shipboard deployment if required.
        Aircraft carrier F-35 integration poses similar challenges for both
    the STOVL and CV variants. There is a large degree of synergy between
    infrastructure support requirements and design for the shipboard
    compatibility required for shipboard integration. Environmental effects
    differ due to the unique take-off and landing characteristics of each
    variant. The L Class F-35B integration challenges represent the most
    difficult situation for STOVL operations, when combined with the more
    robust CVN design and ship structure we anticipate less effort required
    for F-35B carrier operations.
        Mr. Taylor. General Trautman: As you know, the JSF program has
    experienced a 13 month delay in its SDD program, yet the Marine Corps
    is confident that it can still meet IOC for the F-35B in fiscal year
    2012, and the Navy and the Air Force have officially delayed their
    IOC's by two years as a result. And given the challenges with JSF ship
    integration, the fact that JSF has only completed three percent of its
    test sorties. Can you discuss why the Marine Corps is confident that it
    can meet the 2012 date and also what specific capabilities do you
    expect to have in the F-35B at IOC?
        General Trautman. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. Admiral Philman: In determining future year strike
    fighter inventory requirements, why is the Department of the Navy using
    1,154 aircraft as its requirement, which is derived solely by existing
    tactical air demand in current operations, and not the Department of
    the Navy validated requirement of 1,240 strike fighter aircraft? Can
    you explain the rationale of why you are basing future fighter
    requirements on current operational demand?
        Admiral Philman. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. Admiral Philman: Why is the Navy not planning to buy
    additional F/A-18E/F aircraft to fill the 263 aircraft gap predicted to
    peak in fiscal year 2017? Do you believe that our adversaries will have
    the ability to detect with their air defenses both stealth and non-
    stealth aircraft by that date? Has the Navy totally ruled out as an
    option additional Super Hornets? Do you agree with Admiral Mullen's
    testimony to the HAC-D on March 24, 2010, that the extension of the F/
    A-18E/F production line through 2013 will be used as a hedge to
    mitigate additional cost growth and/or schedule slip of the Joint
    Strike Fighter program?
        Admiral Philman. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. Secretary Gates stated that previous Next Generation
    Bomber studies were accomplished to determine ``if '' we needed a new
    bomber, and that the upcoming studies will determine ``what type'' of
    bomber we need. However, given the progress to date that was made in
    system design and development (SDD) of the Next Generation Bomber
    platform before it was cancelled, and the fact that the Air Force was
    given formal approval to enter SDD by the same Secretary of Defense
    three years ago, can you explain to us why the Department's position
    now is that it didn't know ``what type'' of bomber was needed?
        Mr. Van Buren and General Breedlove. [The information referred to
    was not available at the time of printing.]
        Mr. Taylor. What requirements and key performance parameters have
    changed that the cancelled Next Generation Bomber platform (NGB), as
    laid out in the systems requirements document for the NGB, would not
    have been able to execute or meet?
        Mr. Van Buren and General Breedlove. [The information referred to
    was not available at the time of printing.]
        Mr. Taylor. Which organization has the lead to reaccomplish the
    Long Range Strike AoA, when is it estimated to be complete and provide
    a wire diagram of the organizational structure of all organizations and
    agencies involved in the AoA process?
        Mr. Van Buren and General Breedlove. [The information referred to
    was not available at the time of printing.]
        Mr. Taylor. Mr. Van Buren: The committee understands that the
    Department's new position on long-range strike is that a ``family of
    systems'' is required to meet warfighting requirements. Can you explain
    to the committee why you feel it will be more cost-effective to operate
    and maintain multiple long-range strike platforms rather than
    integrating technologically feasible technologies onto a single
    platform?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. Mr. Van Buren: As it relates to the long-range strike
    development program, what specifically about sustaining the industrial
    base workforce concerns you, and how will the $200.0 million requested
    in fiscal year 2011 be applied to address your concerns?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Taylor. General Breedlove: Secretary Gates cancelled the Air
    Force's Next Generation Bomber program last April, but now there is
    $1.7 billion of funding requested in fiscal years 2011 through 2015 for
    development of a long-range strike platform. Can you walk us through
    your deliberative process of canceling a program just 10 months ago and
    now reinstating funding for development of a Next Generation Bomber
    platform in this year's budget? Have requirements or capabilities for a
    new long-range strike platform changed since the previously validated
    requirements and capabilities of the canceled Next Generation Bomber
    program?
        General Breedlove. [The information referred to was not available
    at the time of printing.]
        Mr. Taylor. General Breedlove: The 30 year aviation plan provides
    no discussion of operational risk as it relates to meeting combatant
    commander warfighting requirements and the National Defense Strategy .
    . . how would you characterize, in terms of risk, the force structure
    outlined in the 30 year aviation plan for bombers and the ability for
    the legacy bomber fleet to survive against more advanced integrated air
    defenses in 2015 and beyond since a new bomber will not be fielded now
    until towards the end of the 2020 decade?
        General Breedlove. [The information referred to was not available
    at the time of printing.]
                                     ______

                        QUESTIONS SUBMITTED BY MR. BRADY
        Mr. Brady. Dr. Carter, the Alternate JSF engine has been a source
    of controversy, and both sides have legitimate points. Since the
    delivery of the aircraft has slid, isn't it possible to have a
    legitimate competition for the service engine? The delays haven't been
    engine-related, so how difficult would it be and would there be any
    further delays in having a competition between the two engines?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Brady. I have heard from maintainers in the field that as long
    as the engines are interchangeable and differences in tools and
    procedures are minimal, that having an alternate engine would pose
    little to no problem in maintaining combat-ready aircraft. Operators
    say that understanding the nuances of two engines (operating limits,
    etc.) make a single engine more practical. What perceptions have you
    heard from the field?
        Secretary Carter. [The information referred to was not available at
    the time of printing.]
        Mr. Brady. Secretary Stackley, the Alternate JSF engine has been a
    source of controversy, and both sides have legitimate points. Since the
    delivery of the aircraft has slid, isn't it possible to have a
    legitimate competition for the service engine? The delays haven't been
    engine-related, so how difficult would it be and would there be any
    further delays in having a competition between the two engines?
        Secretary Stackley. The Department of the Navy supports the
    conclusions of the analysis completed by the Director of Cost
    Assessment and Program Evaluation (D/CAPE) within the Office of the
    Secretary of Defense. D/CAPE estimates that $2.9B is required to take
    the alternate engine to competitive procurement in FY 2017--of which
    $2.5B is required over the next five years. And that the additional
    costs and the burden of maintaining two logistical systems are not
    offset by the potential savings generated through competition--even
    taking into account the recent F-35 program restructure.
        Mr. Brady. Secretary Stackley, I have heard from maintainers in the
    field that as long as the engines are interchangeable and differences
    in tools and procedures are minimal, that having an alternate engine
    would pose little to no problem in maintaining combat-ready aircraft.
    Operators say that understanding the nuances of two engines (operating
    limits, etc.) make a single engine more practical. What perceptions
    have you heard from the field?
        Secretary Stackley. A numerical engine count does not provide the
    full context for this discussion. The JSF engine is the largest
    tactical fighter engine in size and overall logistics footprint in the
    history of the Department of Defense. In comparison to legacy F/A-18E/F
    (Model F414), the F135 engine is approximately twice the size of the
    Super Hornet F414 engine. The Navy does not fly aircraft that have
    interchangeable engines. While some model types such as the F/A-18 are
    supported by two distinct engines, they are unique to the model series
    (A/B, C or E/F) and are not interchangeable across series. While the
    performance of the F135 engine brings significant performance gains and
    warfighting advantage, it presents logistical challenge for all of the
    Services--but particularly for the Navy and Marine Corps who operate in
    already constrained spaces aboard L-Class and CVN ships. Our Navy
    personnel are dedicated and will go to great lengths to get the job
    done. However, with the diminishing space and manpower aboard Navy
    ships, we must look for ways to optimize our resources.
        The Department of the Navy believes the implementation of two JSF
    engines onboard aircraft carriers is suboptimal due to increased
    operational logistics foot print (LFP). Proposed LFP concept of
    operations will challenge the available hangar deck space. This is
    mainly due to the JSF engines being too large to fit in the aviation
    bulk storage or jet shop (either F135 or F136). LFP problem compounds
    with both F135 & F136 engines afloat on the same ship, each engine has
    unique support equipment and tools effectively doubling the LFP
    required for these items. Spotting and supporting two engines will
    negatively affect hangar bay aircraft spotting and maintenance
    operations. Regardless of the decision on an alternate engine, it would
    be the Navy's intent to deploy only one engine variant on any one
    carrier.
        Mr. Brady. LTG. Trautman, what's the long term strategy for EA in
    support of the MAGTF? The EA-6Bs will be over 40 years old by 2020, and
    with delays in JSF, the development of an EA variant of that aircraft
    seems even further off. Is USMC going to shed the role, or are Growlers
    on the table as an option to provide that aircraft and ground force
    support that Marines are asking for everyday in the field?
        General Trautman. We certainly are not shedding the EW mission. In
    fact, the emphasis for the entire Marine Corps is becoming more focused
    on ensuring we have EW available to support both ground and air forces
    down to the lowest tactical levels. We are already on a path to fulfill
    our vision of MAGTF EW: the composite of manned and unmanned surface,
    air, and space-based assets, fully networked and collaborating to
    provide the MAGTF commander the ability to control the electromagnetic
    spectrum at the time and place of his choosing, at sea or ashore,
    regardless of the basing posture or environment.
        The Nation has relied upon and will continue to operate with an EW
    System of Systems approach to address the threat, as there is no
    ``silver bullet,'' single program solution that fits every scenario.
    Today our Corps relies upon the EA-6B Prowler from the air and a mix of
    Radio Battalion and the proliferated Counter Radio-frequency controlled
    improvised explosive device EW systems, better known as CREW, on the
    ground to provide MAGTF EW. We are expanding this EW system of systems
    over time. As we build up our concepts of employment and concepts of
    operations (CONEMPS/CONOPS), we see MAGTF EW focusing on addressing and
    mitigating current EW capability gaps and shortfalls to ensure that
    there will be the growth necessary to support all MAGTF operations in
    the future. Wherever and whenever Marines go, they will have access to
    organic EW capabilities. Our goal is to take EW from its current state
    of low density/high demand (LD/HD) to one of high density/high demand
    (HD/HD).
        We are increasing the number of EA-6Bs in the Corps (by folding in
    Navy Prowlers as they transition to EA-18Gs) and introducing the
    Improved Capabilities III (ICAP III) upgrade. As part of the transition
    to ICAP III the Marine EA-6B aircraft inventory will be increased to
    32. The ICAP III system, or ALQ-218, is the same system the US Navy is
    incorporating in the FA-18F to make it an EA-18G, thus maintaining a
    common capability across the Department of the Navy. The first USMC
    ICAP III aircraft has already been delivered to Marine Tactical
    Electronic Warfare Squadron Four (VMAQ-4) at MCAS Cherry Point, NC.
        While there is no intent to have a mission-specific ``EF-35,'' all
    three variants of the F-35 come with significant EP, ES and EA
    capabilities for autonomous operations in the Block 2 aircraft which we
    will IOC in 2012. In this configuration it will not only be able to
    protect itself in the fighter and attack roles, but also do a great job
    escorting Assault Support assets (helicopters, tiltrotar aircraft, and
    KC-130's/C-17's) in hybrid threat environments. The sensors and data
    fusion capabilities of the F-35 make it a superb platform to host an
    increased EW capability--on par with EA-18Gs--by integrating the Next
    Generation Jammer (NGJ) on the platform.
        As advanced EW payloads, such as Intrepid Tiger II Software
    Reprogrammable Payload (SRP), and Next Generation Jammer (NGJ)
    technologies are developed they will be deployed on both our manned and
    unmanned systems. These technologies capitalize on already proven
    deployed systems. Intrepid Tiger I deployed to OIF on AV-8 & FA-18 and
    the Pioneer UAS Electronic Attack Payload (PEAPL) demonstrated the art
    of reality.
        In addition to our Aviation assets, the Marine Corps is expanding
    its ground based EW as well. With the deployment of Communication
    Emitter Sensing and Attacking System (CESAS), the EW capabilities
    resident in the Radio Battalions are growing beyond the Mobile
    Electronic Warfare Support System (MEWSS). Additionally, the CREW
    systems proliferated across the battlefield will also be incorporated
    as EW nodes to collaboratively provide ELINT/COMINT, as well as EA. All
    together, the Marine Corps is actually expanding EW capabilities across
    the entire MAGTF and is NOT shirking the EW mission.
        Mr. Brady. The Alternate JSF engine has been a source of
    controversy, and both sides have legitimate points. Since the delivery
    of the aircraft has slid, isn't it possible to have a legitimate
    competition for the service engine? The delays haven't been engine-
    related, so how difficult would it be and would there be any further
    delays in having a competition between the two engines?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Brady. I have heard from maintainers in the field that as long
    as the engines are interchangeable and differences in tools and
    procedures are minimal, that having an alternate engine would pose
    little to no problem in maintaining combat-ready aircraft. Operators
    say that understanding the nuances of two engines (operating limits,
    etc.) make a single engine more practical. What perceptions have you
    heard from the field?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Brady. What's the long term strategy for EA in support of the
    Air Force Expeditionary Wing? In response to the retirement of the EF-
    111 and seconded by an F-117 shootdown over Serbia, the Navy stood up
    four squadrons in the '90s to support the USAF and just expanded the
    purchase of EA-18Gs to maintain sole support of combatant commander
    requests for EA in support of land and air forces, including USAF. So
    as the Navy is finalizing plans to enhance its EA capabilities to
    support the joint force, the USAF looks like it's going down a road
    travelled before: relying on stealth technology until it fails us, then
    asking the Navy to cover down. Is the USAF committed to providing these
    capabilities at some point?
        General Breedlove. [The information referred to was not available
    at the time of printing.]
                                     ______

                       QUESTIONS SUBMITTED BY MR. TURNER
        Mr. Turner. Mr. Secretary, can you give us an update on the status
    of the reorganization of the weapon systems acquisition organizations
    under the Air Force Acquisition Improvement Plan and explain how this
    will benefit Air Force acquisition? How will this affect the location
    of current and future jobs?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]
        Mr. Turner. Mr. Secretary, as you look at ways to reform the
    acquisition process to ensure greater efficiency and higher performance
    standards, have you considered the advantage of seeking prime
    contractors located in the vicinity of the Air Force research and
    acquisition organizations with responsibility for the execution of that
    contractor's program? As you well know, there is considerably
    inefficiency with contracting officers and other government technical
    experts shuttling from their offices to provide contractor oversight.
    Moreover, there would be valuable opportunities for creative
    interaction among contractor, contracting staff, and technical experts
    if all were located just a few minutes away. Would you be willing to
    work with me to fashion a pilot program to test the concept?
        Mr. Van Buren. [The information referred to was not available at
    the time of printing.]