    [Senate Hearing 113-]
    [From the U.S. Government Publishing Office]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2014

                                  ----------

                            WEDNESDAY, JUNE 19, 2013

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:36 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Richard J. Durbin (chairman)
    presiding.
        Present: Senators Durbin, Reed, Cochran, Shelby, Collins,
    Murkowski, Coats, and Blunt.

                             DEPARTMENT OF DEFENSE

    STATEMENT OF HON. FRANK KENDALL, UNDER SECRETARY FOR
                ACQUISITION, TECHNOLOGY AND LOGISTICS

                 OPENING STATEMENT OF SENATOR RICHARD J. DURBIN

        Senator Durbin. Thank you all for joining us this morning.
        The subcommittee meets to receive testimony on the fiscal
    year 2014 budget, the request for the Joint Strike Fighter
    (JSF) program, to review its cost, schedule, performance, given
    that it is the largest acquisition program in the history of
    our Nation.
        To provide some context, since its inception, the
    Department has invested $44 billion to develop these aircraft.
    For fiscal year 2014 alone, the President's budget request for
    the Joint Strike Fighter program includes $8.7 billion to
    continue development of test and procure 29 aircraft, operate
    and sustain the growing fleet, and begin a formal modification
    program.
        For today's hearing, there will be two panels. On the first
    panel, I will welcome Under Secretary of Defense for
    Acquisition, Technology and Logistics, the Honorable Frank
    Kendall. Thank you for coming. Chief of Naval Operations,
    Admiral Jonathan Greenert. Admiral, thank you for being here.
    Chief of Staff of the Air Force, General Mark Welsh. General,
    thank you. Assistant Commandant of the Marine Corps, General
    John Paxton. General, thank you. Program Executive Officer for
    the Joint Strike Fighter program, Lieutenant General
    Christopher Bogdan. Thank you.
        On the second panel, we are going to hear from the Director
    of Operational Test and Evaluation, the Honorable Michael
    Gilmore; Director, Government Accountability Office Acquisition
    and Sourcing Management Team, Michael Sullivan; and Senior
    Fellow and Director of Research, Brookings Foreign Policy
    Program, Michael O'Hanlon. Gentlemen, thank you for being here
    and providing your testimony.
        I have been concerned about the defense acquisition
    programs that obviously cost taxpayers billions of dollars more
    than what the Department and Congress originally signed up for.
    The Joint Strike Fighter program has had more than its share of
    problems over the last decade. Frankly, its history reads like
    a textbook on how not to run a major acquisition effort.
        For instance, the Government turned over complete oversight
    responsibility to the prime contractor on a cost reimbursement
    contract, resulting in questionable design decisions, some cost
    overruns and schedule delays. And the extreme overlap between
    development and production, also known as concurrency,
    guaranteed the unit costs of the aircraft would be considerably
    higher than the $69 million per copy we originally planned.
        That said, after many challenging years of development, I
    am told that the program is starting to turn the corner in
    terms of cost and schedule. The most recent selected
    acquisition report shows the aircraft unit cost decreasing
    slightly by 4.2 percent. Moreover, projected concurrency costs
    to modify production aircraft have decreased by 47 percent, and
    durability testing is showing the aircraft's structure is
    reacting within normal limits.
        Now, I look forward to hearing testimony addressing these
    achievements later today, as well as a better understanding of
    how we reached this point in the acquisition process. I want to
    hear what steps are being taken to ensure that we learn from
    this experience and not repeat mistakes.
        Given the difficult budget challenges facing our Nation,
    this hearing must also address the remaining development risks,
    the entire cost of the program, the relevance to the future war
    fight, and whether any other options are being considered for a
    less costly future mix of tactical fighter aircraft.
        Each of you will have an opportunity to provide an opening
    statement, as well as to respond to questions, and I ask that
    you keep your opening statements brief so we can have more
    questions. And your full written statement, of course, will be
    part of the record.
        I now turn it over to Senator Cochran for opening remarks.

                       STATEMENT OF SENATOR THAD COCHRAN

        Senator Cochran. Mr. Chairman, I am pleased to join you in
    welcoming these distinguished witnesses to our hearing to
    review the F-35 Joint Strike Fighter program and the funds
    needed to provide for tactical aircraft.
        This hearing should help us understand the threats to our
    safety and security and the defenses we need to defend against
    those threats.
        We look forward to hearing your testimony and appreciate
    your assistance to our committee.
        Thank you.
        Senator Durbin. Thanks, Senator Cochran.
        Our first witness is Under Secretary of Defense for
    Acquisition, Technology and Logistics, the Honorable Frank
    Kendall. Frank, please proceed.

                    SUMMARY STATEMENT OF HON. FRANK KENDALL

        Mr. Kendall. Thank you, Mr. Chairman.
        I ask that our written testimony be admitted to the record,
    please.
        Chairman Durbin, Ranking Member Cochran, members of the
    subcommittee, I am delighted to have the opportunity to discuss
    the F-35 Joint Strike Fighter program with you today.
    Obviously, this is a critical program for the Department and
    our Nation. Air superiority and the ability to project power
    from the air are central to the way our armed forces fight.
    Other nations are developing capabilities that threaten our
    technological superiority in the air, and we cannot afford to
    be complacent about the decisive advantage we have enjoyed
    since World War II.
        I will let my colleagues from the Air Force, Navy, and
    Marine Corps say more about the operational importance of the
    F-35, and I will focus on the acquisition aspects of the
    program.
        My experience with the F-35 dates back about 3 years to the
    spring of 2010. The Department's and my focus has been on the
    efforts to control cost on the program and to achieve a more
    stable design so that we could increase the production rate to
    more economical quantities. Indications at this time are that
    these efforts are succeeding, but we still have a lot of work
    left to do.
        We are now about 90 percent of the way through the
    development program and 40 percent of the way through the
    flight test program. Since the program was rebaselined,
    following the 2010 Nunn-McCurdy cost breach, the program has
    been executing with modest schedule slips.
        Looking ahead, there is still risk in the schedule,
    particularly with the final block of software called Build 3-F.
    There is also the potential for surprise in the remaining test
    program, including flight testing and fatigue life structural
    testing.
        Our intention is to complete the development effort within
    the planned cost and schedule. However, we may need to make
    some adjustments as events unfold. On the whole, however, the
    F-35 design today is much more stable than it was 2 or 3 years
    ago.
        In 2011, I concluded that given the design issues we were
    seeing at that time and the uncertainty about how soon they
    would be resolved, that we were not ready to increase the
    production rate on the program. The F-35 is one of the most
    concurrent programs I have ever seen, meaning that there was a
    high degree of overlap between the development phase and the
    production phase of the program. Mr. Chairman, I understand
    that this is of high interest to you and I would be happy to
    address this subject in more detail in response to your
    questions.
        In our 2013 budget request, we kept the production rate
    flat for the next 2 years. I seriously considered stopping
    production at that time, but concluded that the cost and
    disruption that would result would be considerable and that the
    better course was to delay the previously planned increase in
    production rate until the test program had progressed to the
    point where we would have more confidence in design.
        This fall, I will be reviewing the program to determine
    whether or not we should plan to increase the production rate
    significantly in 2015, as is currently planned. At this point,
    I am cautiously optimistic that we will be able to do so.
        With regard to cost, we are most of the way through
    development and intend to execute the balance of the ongoing
    development effort within the available funds. Since 2010,
    production costs have been stable and are coming down, as you
    mentioned, roughly consistent with our estimates. We have been
    tightening the terms of production contracts beginning with Lot
    4 in 2010, which is our first fixed-price incentive contract.
    In Lot 5, we tightened the terms further and lowered cost
    despite the fact that we did not increase the production rate.
    For the first time in Lot 5, Lockheed was required to share in
    the cost associated with design changes due to concurrency.
    Lots 6 and 7 are currently in negotiation, and in these lots
    and all future lots, Lockheed will bear all the risks of
    overruns. At this point, we have a solid understanding of the
    production costs and believe that they are under control.
        Sustainment costs represent our greatest opportunity to
    reduce lifecycle cost of the F-35 going forward, and we are now
    focused on finding ways to introduce competition and to take
    creative steps to lower those costs as well.

                               PREPARED STATEMENT

        The bottom line is that since 2010, we have been making
    steady progress to complete development, stabilize the design,
    and control costs. We have a lot of work remaining, and we
    should not be surprised if bad news does occur. We have still a
    long way to go in the test program. But as I said, I am
    cautiously optimistic that we will be able to increase
    production to more economical rates beginning in 2015 as
    planned.
        Thank you, Mr. Chairman.
        [The statement follows:]

                 Prepared Statement of Hon. Frank Kendall and
                    Lieutenant General Christopher C. Bogdan

        Chairman Durbin, Vice Chairman Cochran, and distinguished members
    of the subcommittee: Thank you for the opportunity to address this
    subcommittee regarding the F-35 Joint Strike Fighter.
        The F-35 is the Department of Defense's largest and most important
    acquisition program. Its success is of fundamental importance to our
    national security. The JSF will form the backbone of U.S. air combat
    superiority for generations to come. It will replace legacy tactical
    fighter of the Air Force, Marine Corps and the Navy. The F-35 will
    provide a dominant, multirole, fifth-generation aircraft capable of
    projecting U.S. power and deterring potential adversaries across the
    full spectrum of combat operations. For our international partners and
    foreign military sales customers, the JSF will become a linchpin for
    future coalition operations, will help to close crucial capability
    gaps, and will enhance the strength of our security alliances. Military
    technology does not stand still, and maintaining technological
    superiority our service men and women have relied upon effectively for
    decades depends on the successful fielding of the F-35.
        The multirole F-35 is the centerpiece of the Department of
    Defense's future air dominance and precision attack capabilities. The
    F-35's 5th generation attributes, including integrated advanced
    technology sensors, networking, and signature controls, are critical
    for maintaining U.S. air supremacy and ensuring our ability to operate
    against modern and emerging threats. The emergence of competitor 5th
    generation aircraft within the next decade; coupled with the
    proliferation of sophisticated electronic warfare capabilities and
    modern integrated air defense systems increasingly threaten our current
    4th generation aircraft. The F-35 is designed to control the air and to
    penetrate heavily defended environments in order to deliver a wide-
    range of precision munitions. Shared development and international
    production will bring the added benefit of increased allied
    interoperability and cost-sharing across the Services and partner
    nations. The President's fiscal year 2014 budget request includes a
    total of $8.3 billion for continued system development ($1.8 billion)
    and procurement ($6.5 billion) of an additional 29 F-35 aircraft. To
    ensure the F-35 maintains its effectiveness against continually
    evolving threats, this request also includes resources to deliver
    advanced weapons and sensors to the F-35 fleet in the years following
    Initial Operational Capability for our Services. The Department also
    endeavored to protect the development of the F-35 Program this year as
    it adjusted its budget to execute the mandates of sequestration. The
    Department has requested a reprogramming of $75 million to keep the
    development program on schedule and we urge the subcommittee's support
    for this request. Ensuring the success of the F-35 development program
    and achieving a stable design that will permit increased and more
    economical production rates have been among my top priorities. I would
    also ask this subcommittee to help us maintain funding stability in the
    F-35 Program as you review the fiscal year 2014 President's budget
    request.

                           WHERE THE PROGRAM HAS BEEN

        Three years ago, the program experienced a critical unit cost
    breaches according to the Nunn McCurdy statute. My predecessor, now
    Deputy Secretary of Defense Ash Carter, rescinded the Milestone B and
    Acquisition Program Baseline. The Nunn McCurdy breach resulted from
    overly optimistic perceptions of development risk and an overly
    aggressive, concurrent acquisition strategy. The critical review and
    rebaselining process included an examination of all aspects of the
    program and led to significant changes in how the F-35 program is
    managed and executed. After elevating the Program Executive Officer to
    a three-star flag officer billet and bringing in Vice Admiral Dave
    Venlet from the Naval Air Systems Command to be the Program Executive
    Officer, the Department executed a detailed Technical Baseline Review
    to reassess the time and resources required to complete development
    prior to resetting the Baseline and certifying the program. To address
    the technical risks identified by that review, the Department added 2
    years and $4.6 billion to the development and test programs. We also
    made significant changes to our technical and contractual relationships
    with Lockheed Martin, the prime contractor. To ensure Lockheed Martin
    shared equitably in program risks and to incentivize cost reduction, we
    began the transition from cost-plus production contracts to fixed
    price-type contracts beginning with a fixed-price incentive-fee
    contract for Lot 4. In Lot 5, the 2011 Lot, we continued this process,
    tightening contract terms and obtaining a cost sharing agreement with
    Lockheed Martin for concurrency risk--the costs associated with
    implementing design changes to fix problems identified in testing on
    aircraft that had already been manufactured. We are currently
    negotiating fixed price-type contracts for production Lots 6 and 7,
    under which the contractor will be assuming the risk for any cost
    overruns. With me today is the current Program Executive Officer, Lt.
    Gen. Chris Bogdan, who is focused on continuing to execute these
    changes and deliver this critical warfighting capability to the U.S.
    Services and our international partners. Also here today is Sean
    Stackley, Assistant Secretary of the Navy for Research, Development and
    Acquisition and Dr. William LaPlante, Principal Deputy Assistant
    Secretary of the Air Force for Acquisition and Management. All of us
    are fully dedicated to the success of this program.

                    PROGRAM ACCOMPLISHMENTS IN THE LAST YEAR

        Flight test is progressing close to plan and is about 40 percent
    complete. To date the F-35 Program has flown more than 3,000 flights
    totaling more than 5,000 flight hours and is largely tracking to our
    re-baselined plan. The first in-flight weapons releases were conducted
    from both the Air Force's F-35A conventional take-off and landing
    variant and the Marine Corps' F-35B short take-off/vertical landing
    version and the program also began testing the most dynamically
    challenging portion of flight envelope testing. Flight testing of the
    aircraft's maximum design speed, maximum altitude and high angle of
    attack flight characteristics, has been successful to date. On June 5,
    2013, the integrated test team at Edwards Air Force Base conducted the
    first powered launch of an AIM-120 Advanced Medium-Range Air-to-Air
    Missile from an F-35A. Dynamic Load Testing models of the F-35A and F-
    35B have completed their first lifetime (8,000 hours) of structural
    fatigue testing, with the F-35C scheduled to complete in July. After
    tearing down the aircraft, analyzing the results, and making any
    necessary modifications, each variant will move on to a second lifetime
    of testing over the coming year. The program also completed a U.S. Air
    Force operational evaluation that cleared the way to begin pilot and
    maintenance training at Eglin Air Force Base (AFB). The Marine Corps
    and Air Force now have thirty-nine (39) F-35's deployed to operational
    and training squadrons at four locations and have completed over 1,500
    sorties totaling 2,000 flight hours. The program has completed initial
    training for the transition of nearly fifty (50) pilots and over seven
    hundred (700) maintainers. The Marine Corps activated the first F-35B
    squadron at Marine Corps Air Station (MCAS) Yuma, Arizona and now has
    six aircraft flying. None of these aircraft are fully operational of
    course; that cannot occur until operational software completes
    development and test and is fielded. The Services also recently
    informed the Congress of their plans for establishing Initial
    Operational Capability (IOC), indicating their confidence in the
    program's ability to deliver capabilities on schedule. Concurrency
    costs are coming down faster than program estimates, and production
    costs are coming down as well. The price of producing F-35s continues
    to decrease for each successive lot placed on contract; Lot 5 aircraft
    averaged 4 percent less than Lot 4's, as did the price for Pratt &
    Whitney's engines. We expect such reductions to continue.

                           INTERNATIONAL PARTNERSHIP

        The F-35 program continues to be the Department of Defense's
    largest cooperative development and production program, and with eight
    original Partner countries all continuing their participation under
    Memorandums of Understanding for System Development and Demonstration
    (SDD) and for Production, Sustainment and Follow-on Development (PSFD).
    The eight partner countries are the United Kingdom, Italy, The
    Netherlands, Turkey, Canada, Australia, Denmark, and Norway. I recently
    met with my international counterparts at our annual Chief Executive
    Officer's Conference and I can assure you that the partnership remains
    strong and committed to the program. Over the last few years,
    individual partner nations have modified their procurement plans to
    reflect the program's progress and the available funding in their
    defense budgets, in a manner similar to the changes in our own
    procurement plans. However, at this time each considers the F-35 a key
    to their national defense and remains committed to the program. Turkey
    deferred the two jets they had ordered in LRIP 7 (2012), deciding to
    revisit their production decision in time to join LRIP 9 (long lead--
    2014; on contract in 2015). The Netherlands first two aircraft are
    being readied for delivery this year to train Dutch pilots to
    participate in operational testing. The Netherlands Ministry of Defense
    is fully committed to the F-35, awaiting conclusion of parliamentary
    budget debates this summer to determine the timing for the next Dutch
    aircraft order. Lastly, Canada continues to fulfill the requirements in
    its mandated CF-18 replacement process with the next update due to
    Parliament the fall. The process is not anticipated to complete with
    this update.
        In addition to development and production with our international
    partners, there is robust activity in the Foreign Military Sales (FMS)
    arena. Delivery of Israel's first of nineteen (19) F-35A aircraft is
    scheduled to begin in 2016, with current plans for seventy-five (75)
    Israeli F-35's. Japan signed a Letter of Offer Acceptance (LOA) for
    four F-35A variant aircraft in June 2012 to be delivered from the
    Lockheed Martin assembly line in 2016. Thirty-eight (38) follow-on
    aircraft will be produced in a Final Assembly and Check-out Facility
    (FACO) built in Japan, with deliveries beginning in 2017, for a total
    of forty-two (42) aircraft. Japan's Ministry of Defense continues to
    plan for additional production to replace their aging fighter fleet;
    and a decision on the replacement aircraft is expected by 2017. Last
    June the F-35 team provided a proposal to the Republic of Korea, which
    is also competing for the acquisition of its future fighter. We expect
    Korea's decision by the end of this month. Should the F-35 be selected,
    deliveries would commence in 2017. The Singapore Air Force is currently
    working with the F-35 program through a Studies and Analysis FMS case
    leading to a potential request for acquisition later this year.

                                WHERE WE ARE NOW

        The F-35 program continues to make steady progress. I believe we
    have a realistic plan in place. We are seeing progress close to plan
    but challenges and risks remain. We still have a long way to go in the
    flight test program, with over 50 percent of the flight test remaining,
    and have a good deal of development to complete, particularly software
    and weapons integration.
        While the program did experience significant schedule and cost
    growth prior to the 2010 Nunn-McCurdy cost breach, the Department's
    actions and our experience over the last 3 years reflect that the
    program is on a more stable footing. Our focus now is on completing
    development, which will permit ramping up to increased economies of
    scale in production, and on getting support costs down.

                         COST, SCHEDULE AND PERFORMANCE

        The Department is focused on executing the development program with
    discipline to ensure the program delivers the planned for capabilities
    within the time and funding that has been budgeted.
        Unit Recurring Flyaway (URF) costs are on track to meet the
    affordability targets that I established during the MS B
    recertification in 2012. The transition to fixed price production
    contracts is helping with this positive trend, but to meet our cost
    goals the Department must ramp up the production profile. In 2012, I
    flattened production because of excessive concurrency risk and concern
    about the stability of the design. The situation today has improved to
    the point that I am cautiously optimistic that we will be able to
    increase production in 2015 as planned, provided development and test
    progress continues to show improvement and costs risks associated with
    concurrency continue to decline.

                               DEVELOPMENT STATUS

        Over the past 2 years the Program Office has implemented
    significant changes in how system software is developed, lab tested,
    flight tested, measured and controlled. These changes are showing
    positive effects, and we are moderately confident that the program will
    successfully release the Block 2B and 3I capability as planned in 2015
    and 2016. Block 2B is our initial combat capability, which the U.S.
    Marine Corps plans to use to declare their IOC. Block 3I will have the
    same operational capabilities as Block 2B, but includes a hardware
    upgrade of the aircraft's computers. The Air Force plans to declare IOC
    with the Block 2B/3I capabilities by December 2016. However, there is
    more risk to the delivery of Block 3F, required for Navy IOC and the
    Services' full warfighting capability, by late 2017. The F-35 Program
    Office is conducting a Block 3 Critical Design Review early this
    summer. The results of this review, coupled with a solid 6 months of
    flight testing on our 2B software, will allow the Department to
    determine the likelihood of meeting its Block 3F commitments on time. I
    expect to have more definition regarding Block 3F capability at the end
    of the summer, but we do see risk in the Block 3F schedule at this
    time.
        While software development and integration is the highest risk the
    program faces as we complete development, there are other risks we are
    tracking that warrant management attention. Among these are the Helmet
    Mounted Display System (HMDS), the Arresting Hook System (AHS) for the
    F-35C (carrier variant), and the Autonomic Logistic Information System
    (ALIS). The HMDS is a major technological advance for pilot situational
    awareness but it has presented design challenges. HMDS issues faced by
    the program over the past year were ``green glow,'' or insufficient
    helmet display contrast; latency of the displayed information;
    ``jitter,'' or lack of stability of the displayed symbology as the
    aircraft maneuvers; night vision acuity; and alignment of the displayed
    symbology. Last year the program made significant progress against
    these challenges using dedicated HMDS flight testing to identify and
    analyze acceptable HMDS performance. As a result of testing, the
    program has successfully mitigated the effects of four of these HDMS
    issues. More work is planned this summer to ensure that the night
    vision camera is effective for Marine Corps operations. All of these
    systems still pose moderate risk, but the program has well-planned and
    resourced mitigation plans in place for each. I would categorize these
    as typical of challenges associated with a complex weapon system
    development program, but design and production concurrency have
    rendered them more acute in the F-35's case.
        It is important to note the impact our budget uncertainty has had
    on the program, specifically in the test program. The devastation
    caused by sequestration and the future furlough of our civilian
    workforce are real. Although these are not typical challenges, they are
    our reality and are increasingly difficult to recover from. For
    example, we estimate a minimum impact to our testing schedule of a 1
    month slip due to the furlough of Government test personnel. We
    continue to assess the effects downrange from furlough to our
    activities on this and other programs, as this is new territory for us
    in terms of understanding the full impacts.

                               PRODUCTION STATUS

        Overall, production performance is tracking to the post-strike
    Lockheed Martin baseline and the aircraft production quality is
    improving. As of June 10, 2013, the program has delivered a total of
    fifty-six (56) aircraft--twenty-five (25) for testing and thirty-one
    (31) for operations and training.
        In the fall of 2012, the F-35 Program Office was alerted to a case
    where noncompliant specialty metals were used in the manufacturing of
    the F-35 Radar. The metals in question are in small high performance
    magnets that are embedded in the lowest levels of the F-35 supply
    chain. The noncompliance does not refer to the quality of these
    materials but to their country of origin. Following a thorough review,
    and after the required congressional notification, I determined that a
    National Security Waiver was appropriate to allow acceptance of
    aircraft containing these noncompliant high performance magnets. There
    was no risk associated with the use of the materials and the time
    required to re-qualify a compliant high performance magnet would have
    resulted in major delay to the production and fielding of the aircraft.
    Subsequent to the discovery and disclosure of this noncompliance, a
    complete assessment of the supply chain bill of materials was completed
    and two other instances where noncompliant specialty metals were being
    used in the manufacturing of the F-35 Radar and Target Assemblies were
    discovered. I both amended my earlier National Security Waiver and
    issued a new National Security Waiver to cover these instances of
    noncompliance in order to ensure that the production and testing
    timeline for this critical program would not be negatively impacted
    until compliant parts could be qualified and obtained. I can assure you
    that the Department and I take this matter extremely seriously. I have
    personally met with the prime contractor to discuss its corrective
    action plans and have tasked the Defense Contract Management Agency to
    review the reasons behind the noncompliance on the target assemblies.
    In addition, the program office has insisted that the prime contractor
    institute aggressive and thorough measures to identify any additional
    instances and correct its specialty metal compliance process.

                               CONCURRENCY COSTS

        As I mentioned, structural fatigue testing is proceeding according
    to plan and one of the biggest concurrency risks--that of a significant
    structural redesign--is decreasing accordingly. The quantity and
    significance of test findings to date have been consistent with or
    better than what we have seen on past fighter programs.
        Predicted concurrency costs are coming down with the execution of
    flight testing. Additionally, the projected concurrency costs per
    aircraft are being revised downward due to a number of initiatives. In
    the summer of 2012, the F-35 Joint Program Office (JPO) and Lockheed
    Martin (LM) created a joint JPO-LM Concurrency Management Team. Their
    first tasks were to identify the key drivers of concurrency costs,
    develop a discrete bottoms-up cost estimate, and work collaboratively
    to mitigate expected concurrency impacts. The new cost model reflects a
    detailed engineering approach informed by the remaining F-35
    qualification, flight test, and ground test events. The F-35 program
    has taken measures to improve management of concurrency risk and
    minimize the costs of delivering warfighting capability to the Services
    by reducing the time required to implement changes to the production
    line, where these modifications are cheapest, and ensure that fewer
    aircraft need post-production retrofits. These included introducing
    incentives to the Lot 5 and beyond production contracts so that
    Lockheed Martin absorbed a reasonable share of the risk and cost of
    discovering and implementing concurrency changes during production.

                               SUSTAINMENT COSTS

        The operation and sustainment (O&S) costs estimate reported in this
    year's Selected Acquisition Report (SAR) to Congress is unchanged from
    the independent cost estimate the Director of the Cost Assessment and
    Program Evaluation office (D, CAPE) provided to support the Defense
    Acquisition Board's 2012 Milestone B Nunn-McCurdy recertification
    review. It will be updated for the fall 2013 Interim Program Review
    DAB, based in part on the program's cost data gained from operations at
    Eglin AFB and MCAS Yuma.
        The SAR reflects O&S costs that total $617 billion in constant year
    2012 dollars or $1,113 billion in then-year dollars; the then-year
    estimate highlights the inflationary impacts of operating those
    aircraft beyond the year 2065. The cost per flight hour (CPFH)
    reflected in the SAR is also the unchanged D, CAPE estimate. I
    established CPFH affordability targets during the MS B recertification,
    and we are working to achieve reductions that will bring the program in
    below these targets to ensure the F-35 is affordable as we transition
    to the operations and sustainment phase.
        The Department, Services, and F-35 Program Office have undertaken
    numerous initiatives to explore ways to reduce total O&S costs. At this
    point, the O&S costs represent the best remaining opportunity to reduce
    program costs. These initiatives include:
      --Conducting a Sustainment Business Case Analysis using independent
            reviewers.
      --Injecting competition in sustainment areas to include managing the
            global supply chain, producing support equipment, operating our
            training centers and administering ALIS in each of our bases
            and squadrons.
      --Instituting a robust Reliability and Maintainability program to
            systematically identify parts and systems on the aircraft today
            that require repairs too frequently.
      --Standing up the organic depots to improve the quality, throughput,
            and turn-around times for parts repairs.
        While we are being aggressive in our efforts to reduce overall O&S
    costs, our current estimates are just that--estimates. My confidence in
    our cost estimates will improve when we have actual costs based on
    sustaining broad operational employment and can benefit from the
    learning and experience of our warfighters.

                 FUTURE OF THE TACTICAL FIGHTER INDUSTRIAL BASE

        The Department is concerned about the future of the United States'
    high performance tactical aircraft industrial base. We are on the path
    to having one active fighter production facility in the next few years,
    but even more disconcerting is the gap between development programs for
    the F-35 and the next generation of high performance aircraft.
    Approximately a year ago, the Defense Advanced Research Projects Agency
    was tasked by the USD(AT&L) to begin the ``Air Dominance Initiative,''
    a program envisioned as leading to competitive prototyping programs for
    the next generation of air dominance systems technologies beginning in
    2016. In the current austere budget climate it will be difficult to
    find resources to maintain and advance our competitive technologies for
    high performance tactical aircraft, but it is important that we do so.
    Programs such as the Unmanned Carrier Launched Air System can fill
    part, but not all, of this gap.

                                   CONCLUSION

        The Department has a realistic baseline in place and we are seeing
    steady progress in the program. The Department remains committed to the
    F-35 as the core of our U.S. combat air superiority and precision
    strike capabilities for generations to come. The capabilities of the F-
    35 are necessary to our continued technological superiority on the
    battlefield. Over the past few years, the Department has put in place
    the right fundamentals and realistic plans using sound systems
    engineering processes, and we are monitoring and tracking performance
    using detailed metrics. Overall, there is much work still ahead of us
    and there is still the possibility that we will be surprised during the
    balance of the development and test program, but at this time we
    believe we have put the program on a much more stable footing then it
    had prior to the Nunn McCurdy breach in 2010.
        Thank you again for this opportunity to discuss the F-35 Joint
    Strike Fighter Program. We look forward to answering any questions you
    have.

        Senator Durbin. Thank you, sir.
        Chief of Naval Operations, Admiral Greenert.

    STATEMENT OF ADMIRAL JONATHAN W. GREENERT, CHIEF OF
                NAVAL OPERATIONS, UNITED STATES NAVY
        Admiral Greenert. Thank you, Chairman Durbin, Vice Chairman
    Cochran. Thanks for the invitation to discuss the future of
    naval aviation here this morning.
        Today's topic, for me, the F-35C, is really a key part of
    our future. It provides a unique and essential set of
    capabilities for our air wing and for our carrier strike group
    and effectively for the fleet, and it will dramatically enhance
    the near-term and the future air wing capability immediately
    upon its integration.
        Now, as we prepare to integrate this aircraft, we are
    focused on three things: One, to ensure that the F-35C delivers
    on the requirements that we validated that we need; two, to
    make sure that integrating the F-35 Charlie into our air wing
    is effective and that it conforms to the carrier--it has to fit
    into the air wing; and third, to understand the concepts
    required for affordable operations and sustainment.
        Now, with regard to capability, we need the stealth. We
    need their advanced electronic warfare (EW) sensors, the
    weapons, and perhaps more importantly, the command and control
    capability that this aircraft brings. With its stealth and its
    EW capability, it effectively enables us to be closer to the
    threat. You can fuse targets. That means as you detect targets,
    you can bring them together, determine what is what, what is
    the threat, and build a common operational picture, and you can
    engage first. And perhaps just as important, the F-35 Charlie
    is designed to share this operational picture with other F-35s,
    other tactical aircraft, including our Super Hornet and the
    other aircraft in the air wing, other ships, other platforms
    via our tactical data links. So it really is a force multiplier
    in addition to be an incredibly capable aircraft.
        With regard to integrating the F-35C into the carrier and
    into the air wings, our top challenge is to reconcile that we
    need to get done before our IOCR. We need to get the software
    program, the Block 3F capability, certified. It brings us
    weapons, the EW systems that I just mentioned, and an aircraft
    that meets the operational envelope certification. We need an
    arresting hook that is durable, reliable, and precise. And we
    need the helmet monitor display system which is being worked
    right now with some deficiencies. We need that certified. And
    as I mentioned before, to integrate, we need it to be carrier
    compatible, if you will, and that at-sea evaluation will start
    next year.
        Based on the Joint Program Office projections, we are on
    track for this with some risk, particularly in the software
    certification.
        Now, with regard to understanding and addressing our
    operations and sustainment, we have a lot of work to do, but I
    think we have adequate time to prepare to integrate the F-35.
    We are conducting a business case analysis on the level of
    repair effort, the logistics, the maintenance schemes that we
    will use, and we have tri-service meetings. That means I meet
    with my service chief counterparts quarterly, and we meet with
    the Joint Program Office quarterly to go over these sorts of
    things.
        The CONOPS--we will need a concept of operations to have
    been established to settle what the flying hour cost is going
    to be. In other words, what are my flying habits for this type
    of aircraft? Simulation, which is very advanced, versus
    training versus proficiency flying. I need to determine what is
    the best estimate for the cost to fly this aircraft and we will
    work through that. We have a mandate that Mr. Kendall has given
    us. And right now, we look and project we will meet this
    mandate, but this is something we have to focus on--we, the
    fleet.

                               PREPARED STATEMENT

        Our sustainment challenges are to be able to maintain this
    aircraft in a maritime environment, saltwater, moving ship and
    a carrier, human environment. It is hot. It is dusty. And how
    do we maintain this aircraft in that hangar bay? We need to be
    able to repair the aircraft in my view, and that requires the
    right parts and the correct scheme. And we need trained sailors
    to do that. And if we are going to repair it, then we need
    logistics, and we got to have an affordable logistics train and
    one that is responsive.
        So to me, Mr. Chairman, the F-35C is designed to provide
    the capability we need, and I look forward to working with this
    committee, with the Congress, and with the Program Office to
    bring it into the fleet at an affordable rate. Thank you.
        [The statement follows:]

               Prepared Statement of Admiral Jonathan W. Greenert

        Chairman Durbin, Vice Chairman Cochran, distinguished members of
    the subcommittee, thank you for the opportunity to testify today on the
    carrier variant of the F-35 Joint Strike Fighter (F-35C).
        The F-35C will replace our F/A-18C Hornet fleet starting at the end
    of this decade and provide essential and unique capabilities that
    complement the rest of our carrier air wing (CVW). Our focus areas,
    from today until the time F-35C enters the fleet, remain: Ensuring the
    F-35C delivers the capability we need and expect, integrating F-35C
    into our CVWs, and understanding and addressing the requirements to
    sustain the aircraft and its payloads.

                THE CAPABILITY WE NEED AND EXPECT FROM THE F-35C

        The capability the F-35C is expected to deliver is needed to
    provide Navy a strike-fighter with the stealth, sensing and command and
    control capabilities for our future CVW to do two important missions:
    assure access and project power. These missions require our aircraft be
    able to overcome, by stealth, jamming or threat system destruction,
    surface-to-air missiles, air-air missiles, tactical aircraft and
    sensors. These threats and their components will continue to advance
    and (likely) proliferate within the next decade--and may be employed
    individually or collectively as part of more capable air defense ships
    or integrated air defense systems. Our CVWs will need the F-35C's
    contributions to assure access and project power in the future.
        The F-35C is expected to operate closer to threats than the F/A-18
    E/F Super Hornet because the F-35C has a lower radar signature and an
    improved capability to detect, avoid and jam enemy radars. The F-35C is
    designed to be able to use this access and its more sophisticated and
    comprehensive suite of sensors to conduct ``first day'' attacks and to
    establish an operational picture of the battlespace.
        Equally important, the F-35C is designed to share its operational
    picture with other aircraft--particularly the F/A-18 E/F--to enable
    them to conduct strike and anti-air attacks with stand-off weapons. The
    F-35C is expected to be able to integrate various active and passive
    sensors from multiple aircraft (including F/A-18, E-2D Hawkeye, and EA-
    18G Growler) into the F-35C's operational picture. This process
    automatically formulates ``weapons-quality'' tracks for each target
    that can then be shared with other aircraft and ships, enabling them to
    engage the target.

                  INTEGRATING F-35C INTO OUR CARRIER AIR WINGS

        At a minimum, the F-35C will need to initially deliver equivalent
    capabilities to the F/A-18C it replaces in order for F-35C to integrate
    into the CVW. These capabilities are the ability to operate on and from
    the aircraft carrier and the ability to detect and engage aircraft,
    ground targets and surface maritime targets. These capabilities will be
    incorporated into F-35 as part of Block 3F, which makes this software
    program and associated equipment (Block) necessary for F-35C to be
    integrated into the CVW.
        I am monitoring two other items needed to integrate F-35C into the
    CVW: Redesign and testing of the Arresting Hook System (AHS) and
    correction of problems with the Helmet Mounted Display System (HMDS).
    Based on Joint Program Office (JPO) projections, the AHS will be
    corrected within a year, while the HMDS will be addressed in the F-35A
    and F-35B, before the Navy's F-35C is fielded. Based on JPO-projected
    development timelines, testing milestones and carrier suitability
    evaluations, the Navy has established February 2019 as our threshold
    (minimum expected) Initial Operational Capability (IOC) date, with an
    objective date of August 2018.

             UNDERSTANDING AND ADDRESSING SUSTAINMENT REQUIREMENTS

        The timeframe between now and threshold IOC affords the Navy
    adequate time to prepare to integrate F-35 into the fleet. In addition
    to integrating F-35C's warfighting capabilities into the CVW, the
    system's maintenance and sustainment processes must be compatible with
    our existing infrastructure--and the F-35C presents unique maintenance
    and logistics challenges. For example, sustaining the Low Observable
    (LO) signature of the aircraft will be a new challenge to Navy
    maintainers. It is expected that there will be a learning curve in
    order to properly maintain this critical feature in the relatively
    harsh at-sea environment. Another challenge is the movement and
    transfer of replacement (spare) engines onto a deployed aircraft
    carrier, at sea around the world. Current fixed-wing, helicopter, and
    ship-to-ship at-sea transfer methods are not capable of moving the
    ``Power Module,'' the largest module of the F135 engine; it is too big.
    We are exploring different options to resolve these at-sea challenges
    prior to IOC, and our first F-35C operational deployment.
        There are additional challenges, from Navy's perspective,
    associated with the builder's maintenance concept for F-35C. The
    demands of CVW operation in an expeditionary environment have taught us
    we need to be able to do maintenance, and some repairs, at sea. Our
    Sailors accomplish many of the maintenance requirements for all of our
    CVW aircraft at intermediate (``I-level'') maintenance facilities
    inherent aboard the aircraft carrier at sea. Currently, the F-35C
    program is not designed to incorporate I-level maintenance. The Joint
    Program Office (JPO) has been requested to arrange for, and review, a
    Level of Repair Analysis (LORA), which will be independently assessed
    by a third-party, to study the business case of incorporating I-level
    infrastructure into the F-35 program. This Tri-Service study will
    examine avenues to optimize current processes and maintenance
    investments which could save money, enable more repairs of F-35C to be
    conducted at sea and increase the operational availability. The results
    of this study will be available for all Services to consider. We are
    also examining whether the F-35C's requirements for data ``reachback''
    to support logistics orders and maintenance planning are suitable for
    the forward maritime operating environment. Each of these aspects of F-
    35C sustainment (logistics, repair and maintenance) impacts the cost to
    sustain the F-35C, and we are working to understand them fully to
    identify opportunities to reduce sustainment cost.

                                   CONCLUSION

        The Navy needs the capability of the F-35C and remains committed to
    it as an essential component of our future CVW. However, we have some
    challenges to work through to ensure it delivers the capability we need
    and expect, integrate F-35C into our CVWs, and understand the
    requirements to sustain F-35C. The JPO plans are designed to address
    these challenges in the timeframe between now and when Navy intends to
    field the F-35C.
        Thank you again for the opportunity to appear before the committee
    and I look forward to your questions.

        Senator Durbin. Thanks, Admiral.
        The Chief of Staff of the Air Force, General Mark Welsh.

    STATEMENT OF GENERAL MARK A. WELSH, III, CHIEF OF
                STAFF, UNITED STATES AIR FORCE
        General Welsh. Thank you, Mr. Chairman, Vice Chairman
    Cochran, members of the committee. We appreciate the
    opportunity to be here this morning to discuss the importance
    of the Joint Strike Fighter to our Nation's security, in my
    view, and also any other tactical aircraft programs you would
    like to address.
        Since April 1953, the United States has deployed roughly 7
    million American servicemembers to combat and contingency
    operations around the world, and thousands of them have died
    there, but not a single one has been killed by enemy aircraft.
    The air superiority that this Nation has enjoyed for those 60
    years is not an accident and gaining it and maintaining it is
    not easy. It requires trained, proficient, and ready airmen,
    and it requires credible, capable, and technologically superior
    aircraft.
        Air superiority is critical to our Nation's security, as
    Mr. Kendall mentioned a moment ago. It is a fundamental pillar
    of not just air power but a prerequisite to the American way of
    modern joint warfare, and without it, our Nation's ground and
    maritime forces would have to radically change how they go to
    war.
        I believe the F-35 is essential to ensuring we can provide
    that air superiority in the future. Potential adversaries are
    acquiring fighters on a par with or better than our legacy
    fourth generation fleet. They are developing sophisticated
    early warning radar systems and employing better surface-to-air
    missile systems, and this is at a time when our fighter fleet
    numbers about 2,000 aircraft and averages a little over 23
    years of age, the smallest and the oldest in the Air Force's
    history. America needs the F-35 to stay a step ahead, to make
    sure that the future fight is an away game and to minimize the
    risk to our ground forces when conflict inevitably does occur.
    Its interoperability among the Services and partner nations,
    its survivability against the advance integrated air defense
    systems, and its ability to hold any target at risk make the F-
    35 the only real viable option that I see to form the backbone
    of our future fighter fleet.

                               PREPARED STATEMENT

        Over the past 2 years, the program has shown steady
    progress, and now it needs stability. I am proud to lead the
    airmen who power the most capable air force on the planet and
    they need the right tools, as you know and have helped them
    get, to guarantee global vigilance, reach, and power for
    America. The F-35 is one of those tools.
        And I look forward to our discussion.
        [The statement follows:]

                Prepared Statement of General Mark A. Welsh, III

        Chairman Durbin, Ranking Member Cochran, and distinguished members
    of the subcommittee, thank you for the opportunity to discuss the Joint
    Strike Fighter (JSF) and the future of tactical aircraft. Thank you
    also for your support of our Airmen who are currently engaged around
    the world executing our five core missions of air and space
    superiority, intelligence, surveillance, and reconnaissance, rapid
    global mobility, global strike, and command and control to provide
    Global Vigilance, Global Reach, and Global Power for our Nation.
        In January 2012, the Secretary of Defense issued new defense
    strategic guidance (DSG)--Sustaining U.S. Global Leadership: Priorities
    for 21st Century Defense--which serves as a foundational document both
    to articulate national security interests, and to guide America's
    military posture and procurement. To support this guidance, the F-35A,
    along with the KC-46 tanker and the long range strike bomber, remain
    the Air Force's top three acquisition programs. The F-35A will form the
    backbone of our tactical aircraft fleet for many years, and will
    replace our aging fighters with a dominant, multirole, fifth-generation
    aircraft, capable of projecting power, deterring potential adversaries,
    and winning future wars alongside similarly-equipped allies and
    partners.

                       AIR SUPERIORITY AND GLOBAL STRIKE

        The F-35A directly impacts two of our five core missions--air
    superiority and global strike. While complementing the F-22's world-
    class air superiority capabilities, the F-35A is designed to penetrate
    integrated air defense systems (IADS) and deliver a wide range of
    precision air-to-ground and air-to-air munitions against air defense
    targets. These suppression and destruction of enemy air defense (SEAD/
    DEAD) missions are a prerequisite to gaining air superiority. Air
    superiority provides freedom of action for the entire joint force. In
    fact, April 15, 1953, was the last time an American servicemember on
    the ground was killed by an enemy aircraft. The air superiority that
    America has enjoyed for over 60 years is not an accident, and gaining
    and maintaining it is not easy. It requires a credible, capable fleet
    of aircraft employing cutting edge technology to counter emergent
    threats, as well as a trained, proficient, and ready force of Airmen to
    fly them. As an Air Force, we are proud of the decades of consistent
    delivery of air superiority that we have been able to provide the
    Nation, and we believe it is our duty and obligation to continue and
    preserve that core mission. Without air superiority, the joint team
    would have to radically change how it goes to war, with U.S. and allied
    operational success subject to much greater risk.
        In terms of global strike, the F-35A will also pay dividends as we
    re-focus our attention to the possibility of military operations in
    contested environments. Our fighters and bombers have enjoyed relative
    freedom from attack in Iraq and Afghanistan, but as increasingly
    sophisticated and capable global anti-access/area-denial threats
    continue to proliferate, the ability of our fourth-generation fighters
    to penetrate contested airspace will wane. Much like the initial days
    of the first Gulf War, when only the F-117 possessed the capability to
    strike downtown Baghdad, the F-35A's survivability and lethality in
    highly contested environments will help deter and defeat potential
    adversaries anywhere on the planet, holding any target at risk, today
    and tomorrow.

                                    THREATS

        Over the last 22 years, our military has fought four major regional
    conflicts--Kuwait, Bosnia, Afghanistan, and Iraq, with the smaller-
    scale enforcement of United Nations Security Council Resolution 1973
    over Libya concluding just 18 months ago. However, our security
    challenges persist across the globe from transnational terrorism in
    Africa, to regional instability in the Middle East, to a nuclear-armed
    North Korea. Our technological advantage is threatened by the worldwide
    proliferation of advanced air defense systems such as the Russian-built
    S-300 which has garnered recent headlines in Syria. Moreover, countries
    are developing fighters on par or better than our legacy, fourth-
    generation fleet. For example, China and Russia are currently testing
    fifth-generation fighters, with China recently flying two new advanced
    stealth fighters--the J-20 and J-31. These world-wide technological
    advancements are occurring at time when our fighter fleet numbers about
    2,000 aircraft and averages 23 years old, the smallest and oldest in
    our history.

                                  CAPABILITIES

        While the Air Force's current fleet of fighters has excelled in
    recent conflicts, the JSF is a necessity for future, high-end
    engagement, providing increased survivability and lethality. Fifth-
    generation survivability attributes include improved all-aspect
    stealth, advanced electronic warfare systems, and fused mission systems
    that provide unmatched battlespace awareness. It also includes the
    necessary tactical air characteristics of maneuverability and speed. In
    terms of lethality, the F-35A offers unprecedented data fusion and
    situational awareness with powerful radars, sensors, and other high
    performance capabilities that allow the successful prosecution of
    advanced ground and air threats in any environment, to include the
    dense high-threat environments characterized by double digit surface-
    to-air-missiles (SAMs) and multilayered IADS. Our current fighters have
    been modernized to incorporate some of the latest component
    technologies, but they are at the limits of both modernization and
    service life. We cannot modernize the fourth-generation fleet to the
    level of survivability and lethality necessary to operate and prevail
    in highly contested environments. Recapitalization of the tactical
    fighter fleet through the JSF program best positions America's military
    to meet the security challenges of today and tomorrow, and to fulfill
    America's defense posture as expressed by the Defense Strategic
    Guidance.
        Future military operations will require partnership with
    international partners and allies. The JSF's interoperability offers
    another unique capability that will enable America's military and Air
    Force to fight alongside our coalition partners seamlessly in the
    future. In addition to shared equipment and costs,\1\ the JSF's
    interoperability will lead to common tactics, techniques, and
    procedures, mutual understanding of employment, and unprecedented
    degrees of shared situational awareness. Such integration will greatly
    enhance our ability to operate, survive, and succeed in future joint
    and coalition environments. By employing the same world-class equipment
    with similar procedures and tactics, we will be able to fully realize
    the synergistic effects of fifth-generation joint and coalition
    warfare.
    ---------------------------------------------------------------------------
        \1\ International partners have provided over $4.5 billion for JSF
    development.
    ---------------------------------------------------------------------------
                                 CURRENT STATUS

        The fiscal year 2014 budget request includes $4.5 billion for
    continued development and procurement of 19 F-35A conventional take-off
    and landing (CTOL) aircraft. Aggressive risk management and refined
    system engineering analysis contributed to an approximate 30 percent
    reduction in concurrency cost estimates since 2011, and the program has
    made significant strides overcoming technical challenges and software
    development delays.
        The Air Force has received 22 production aircraft, and these early
    production deliveries have allowed us to begin the necessary ramp-up
    for future operational tests, and to build our initial cadre of pilot
    and maintenance instructors. To date, the program has completed over
    1,400 CTOL test flights, comprising 46 percent of planned test points,
    and testing the JSF to its full envelope--700 knots, over 50,000 feet,
    over 50 degrees angle of attack, and multiple successful weapon
    separation tests to include the first AIM-120 live launch. We also
    completed the first life-durability test on the F-35A, a key milestone
    that reduces concurrency cost risk to future low-rate initial
    production (LRIP) lots.
        During calendar year 2012, the JSF program conducted a successful
    operational utility evaluation and started pilot training at Eglin Air
    Force Base. We currently have 23 trained USAF pilots and 437 trained
    maintainers at Eglin. We expect the first aircraft delivery to Luke
    AFB--the first F-35A pilot training center--in February 2014, and to
    our first partner there, Australia, in the summer of 2014. We will also
    stand up the CTOL depot at Hill AFB this summer, and deliver their
    first aircraft in October of 2013.
        Building on the progress made so far and the steps we take today
    are crucial in our efforts to declare F-35A initial operational
    capability (IOC). After last year's program re-baseline, the joint
    Services were tasked to provide Congress our updated IOC criteria and
    timeline estimates. Currently, the Air Force plans to declare IOC in
    December 2016 with a combat-ready squadron of 12 F-35As. The Air Force
    will declare F-35A IOC when Airmen are trained and equipped to conduct
    basic close air support, interdiction, and limited SEAD/DEAD operations
    in a contested environment. The follow-on 3F software package will add
    even more capability into the Air Force air superiority core mission by
    enabling multiship suppression and destruction of enemy air defenses,
    as well as enhanced air-to-air and air-to-ground modes. The 3F software
    suite is expected in 2017 and should be included in LRIP lot nine
    production aircraft.

                                 SEQUESTRATION

        We recognize that in the current fiscal environment, we must adapt
    to expected resource constraints. The JSF program has seen significant
    improvement in recent years, but the blunt effects of sequestration
    threaten to disrupt that progress. Sequestration significantly impacts
    every one of our investment programs, including the F-35A. Although
    unit costs for the F-35A have been trending down due to relative
    program stability, sequestration-induced disruptions to the program
    could, over time, potentially cost more taxpayer dollars to rectify
    program inefficiencies, raise unit costs, and delay delivery of
    validated capability. In fiscal year 2013, we planned to procure 19 F-
    35A aircraft. As a result of sequestration, we may have to reduce the
    procurement quantity by at least three and potentially as many as five
    aircraft.

                                   CONCLUSION

        The JSF is critical to our national security. This platform will
    form the backbone of our tactical aircraft fleet for many years to
    come, and will reinvigorate our aging fleet with a dominant, multirole,
    fifth-generation fighter. The JSF will feature prominently in future
    joint and coalition operations--flying with both U.S. and allied
    markings--projecting power, deterring potential adversaries, and
    winning future wars.
        Although sequestration jeopardizes the stability of the program as
    we struggle to simultaneously regain readiness and recapitalize the Air
    Force's fighter and tanker fleets, we are committed to build upon the
    many significant milestones the JSF program has achieved in recent
    years. We have made great strides to reduce expenses across the life of
    the program, but we need Congress to pass a defense appropriations
    measure for fiscal year 2014 so that we can plan for the future. The
    JSF represents an investment in the air superiority of our Nation. It
    will assure that when America sends her sons and daughters to fight,
    they will fight with the protection of American airpower overhead . . .
    just as their brothers, sisters, parents, and grandparents have done in
    every conflict since April 15, 1953.

        Senator Durbin. Thank you very much, General.
        Assistant Commandant of the Marine Corps, General John
    Paxton.

    STATEMENT OF GENERAL JOHN M. PAXTON, JR., ASSISTANT
                COMMANDANT, UNITED STATES MARINE CORPS
        General Paxton. Chairman Durbin, Vice Chairman Cochran,
    distinguished members of the committee, thank you for the
    opportunity to discuss the Joint Strike Fighter and its role in
    the future of both the Marine Corps and our overall tactical
    aviation.
        As the Marine Corps modernizes its aviation fleet, the
    continued development and the fielding of the F-35 Joint Strike
    Fighter remains a top priority. The capabilities offered in
    this jet are unequaled by anything in the world today. Within
    the B version of this single platform, we obtained the most
    lethal fighter characteristics, supersonic speed, low
    observable radar evading stealth, extreme agility, and the
    unmatched ability to collect, fuse, and disseminate
    information.
        The F-35B's short take-off and vertical landing (STOVL)
    triples the number of airfields worldwide that the aircraft can
    utilize, and combined with the F-35C carrier variant, it gives
    the Nation double the number of capital ships that are capable
    of operating a fifth generation multirole fighter. In today's
    growing environment of anti-access and area of denial
    technology, the ability of many more State and non-State actors
    on the world stage to reach out and potentially touch surface
    targets thousands of miles out to sea necessitates that America
    consider and plan to have sufficient assets like these
    available to combat these threats.
        Our ability to tactically base fixed wing aircraft in the
    hip pocket of our ground forces has long been instrumental to
    our many successes on the battlefield, from the birth of our
    marine aviation through today. The F-35B is the tactical
    aircraft that we need to support our Marine Air Ground Task
    Force from now into the middle of this century. The F-35C is
    the tactical aircraft that we need to enhance our participation
    in the Navy air's carrier air wings and their degree of power
    projection from the sea.
        The F-35 will replace three models, three type model
    series, of aircraft that the Marine Corps currently operates.
    It will replace all of our F/A-18 multirole fighters, our AV-8B
    attack aircraft, and our EA-6B electronic aircraft. The F-35 is
    more than just a new fighter. By replacing so many different
    capabilities in our arsenal, it represents an entirely new way
    of doing business including, as the CNO said a minute ago,
    tactical command and control.

                               PREPARED STATEMENT

        I thank each of you for your time, your interest, and your
    support of our Nation and our military.
        I request that my written testimony be accepted for the
    record and look forward to your questions.
        We are committed to always providing the Nation a force,
    today's force for today's crisis today, and the JSF is key to
    our ability to do that.
        Thank you very much.
        [The statement follows:]

               Prepared Statement of General John M. Paxton, Jr.

        Chairman Durbin, Ranking Member Cochran, and distinguished members
    of the subcommittee, thank you for the opportunity to discuss the Joint
    Strike Fighter (JSF) and the future of Marine Corps tactical aircraft.
        As the Marine Corps modernizes its aviation assets, the continued
    development and fielding of the F-35 Joint Strike Fighter (JSF) remains
    a top priority. The F-35 will supplant the Marine Corps' aging Tactical
    Aviation (TACAIR) fleet by replacing F/A-18 Hornets, AV-8B Harriers,
    and EA-6B Prowlers. The incorporation of the F-35 aircraft into the
    Marine Air Ground Task Force (MAGTF) will provide a dominant,
    multirole, fifth-generation platform capable of full spectrum combat
    operations in support of naval and joint forces. We are well into this
    transition plan and failure to maintain both JSF production rates and
    legacy aircraft service life extension programs will impact operational
    readiness and aircraft availability.
        While today's U.S. military force is highly adept, new challenges
    are emerging from nations and non-State actors employing increasingly
    sophisticated anti-access/area-denial (A2/AD) strategies. The
    proliferation of A2/AD technology enables them to reach out and
    potentially touch surface targets thousands of miles out to sea. This
    necessitates America to consider and plan to have sufficient assets
    available to combat these threats. While designed to meet an advanced
    threat through low observable lethality and survivability, the F-35 JSF
    will also bring enhanced intelligence, surveillance, and reconnaissance
    (ISR) capabilities to the battlefield. The aircraft's ability to
    develop, process, and display information to the pilot and disseminate
    it to tactical, operational, and strategic levels is what makes the F-
    35 truly unique and a critical node for the MAGTF across the entire
    range of military operations. As the Nation's expeditionary force in
    readiness, the Marine Corps must be prepared and able to operate in an
    A2/AD environment from the sea and ashore to project influence and
    power at a time and place of the Combatant Commander's choosing. USMC
    F-35s will be a critical enabler of this capability.
        The short take-off and vertical landing (STOVL) F-35B will provide
    the MAGTF with flexible, expeditionary basing options required to
    maintain the advantage in the future fight. Expeditionary basing
    includes operating from amphibious ships and from remote locations
    ashore where few airfields are available for conventional aircraft. Our
    requirement for expeditionary tactical aviation has been demonstrated
    repeatedly from the expeditionary airfields and agile jeep carriers of
    World War II, to austere forward basing in Iraq and Afghanistan. Today
    this concept has proven viable for operations in support of the ``new
    normal''--a posture that requires an enhanced baseline of security at
    U.S. diplomatic facilities and an increased vigilance marking the
    cascading and deleterious effects of civil uprisings such as those that
    occurred in Libya and Yemen. In short, the Marine Corps' ability to
    tactically base fixed wing aircraft has been instrumental to our
    success on the battlefield and on the world stage.
        At sea, the F-35 can operate from both aircraft carriers and
    amphibious shipping. The ability to employ the F-35B from 11 big-deck
    amphibious ships doubles the number of ``aircraft carriers'' from which
    the United States can employ a fifth-generation capability. The F-35B
    also generates launch and recovery flexibility beyond U.S. Navy ships
    by being cross deck compatible with all international conventional and
    STOVL capable aircraft carriers.
        While operating ashore, the F-35B is not constrained to major
    airfields of 8,000 feet or more. The ability to operate from short,
    less than 3,000 foot runways provides a more than three-fold increase
    in the number of airfields worldwide that STOVL aircraft can utilize.
    Additionally, STOVL aircraft can operate from expeditionary airfields
    constructed from airfield matting or established on nonairfield
    infrastructure such as highways or large parking lots; a capability
    repeatedly demonstrated during Operation Iraqi Freedom and Operation
    Enduring Freedom.
        The Marine Corps' acquisition of the F-35C variant will continue
    and enhance its current participation in United States Navy carrier air
    wings. Carrier air wing capabilities of the future will be bolstered by
    the F-35C's survivability and lethality against anti-access threats
    that include advanced surface to air and anti-ship missile systems. In
    the face of emerging threats, a carrier air wing's ability to project
    power will rely heavily on the ability to detect, track and prosecute
    targets while at the same time avoiding detection. Marine Corps F-35C
    squadrons as part of United States Navy carrier air wings will be an
    essential element of this power projection capability from the sea.
        The F-35 will provide a dominating counter to a broad spectrum of
    current and future threats while ensuring success on the battlefield
    that cannot be addressed by current legacy aircraft. Continued funding
    and support from Congress for the F-35 JSF program is of utmost
    importance for the Marine Corps and our Nation.
        On behalf of the Marines and Sailors who provide this Nation with
    its versatile, reliable, middleweight force in readiness, I thank
    Congress for your constant interest in and recognition of our
    challenges. Your continued support is requested to ensure the Marines
    Corps can proceed with the fielding of this aircraft, an aircraft that
    for the first time in aviation history combines the most lethal fighter
    characteristics--supersonic speed, radar-evading stealth, extreme
    agility, a short takeoff/vertical landing capability, and the unmatched
    capability to collect, fuse and disseminate information--all in a
    fifth-generation platform. The capabilities offered in this jet are
    unequaled by anything in the world today. It is a capability critically
    needed by our Nation and your Marine Corps and a capability whose day
    is rapidly dawning.

        Senator Durbin. Thanks, General, and your statement will be
    made part of the record, without objection.
        Lieutenant General Bogdan.

    STATEMENT OF LIEUTENANT GENERAL CHRISTOPHER C. BOGDAN,
                UNITED STATES AIR FORCE, JOINT STRIKE
                FIGHTER PROGRAM EXECUTIVE OFFICER
        General Bogdan. Mr. Chairman, Ranking Member Cochran, and
    distinguished members of the subcommittee, thank you for the
    opportunity to discuss the F-35 program with you today. I will
    be brief so we can get on to the Q&As.
        The F-35 program is not the same program it was a number of
    years ago. We have significantly restructured the program over
    the past few years and created a much more realistic baseline
    to the program. We have also adequately resourced the program
    to meet our commitments in terms of manpower, technical
    expertise, time, and money.
        Relative to the program's schedule, we are executing with
    minor delays today but are mainly on track to that schedule we
    put in place in 2010. I am confident we will meet the
    commitments from Block 2B and 3I which will allow the U.S.
    Marine Corps to declare initial operational capability (IOC) in
    2015, which will allow the Air Force to declare IOC in 2016,
    and meet the commitments of our initial partners in terms of
    delivering their planes to them.
        I am less certain about our final capability 3F being
    delivered at the end of 2017, and we can discuss that further
    in the Q&As.
        Affordability is my number one concern and my number one
    priority on the program. Relative to development, we have taken
    a mindset that we have no more time and no more money in the
    development phase of the program, meaning that within the
    resources we are given, we are committed to finishing the
    program on time and within budget.
        Relative to production costs, the cost of the airplane and
    the cost of the engine are coming down lot after lot. I am
    currently negotiating Lot 6 and 7 with Lockheed Martin and
    Pratt & Whitney, and I expect that trend to continue many years
    into the future, that the prices will continue to come down.
        Relative to operations and sustainment costs, today the
    Program Office is taking aggressive action on many fronts to
    lower the lifecycle costs of this airplane, and I would be more
    than happy to detail those during the Q&A. What we need to do
    is ensure that our partners and the Services have an affordable
    weapons system in the future, and the Program Office takes this
    on very seriously.
        Technically, I believe the design of the aircraft is sound,
    and we have solutions to all the technical problems we see in
    front of us today. That does not mean that in the future we
    will not have other challenges and other discoveries, but I
    believe we have the capability and the capacity to overcome
    those.
        And finally, I have been at the helm of the program for
    about 6 months, and my promise to you and the enterprise is I
    will continue to lead this program with transparency,
    accountability, and discipline.
        Thank you and I look forward to your questions.
        Senator Durbin. Thanks, General.
        And we will do 5-minute rounds of questions here. We have,
    obviously, a great interest within the committee.
        Let us concede a few points that have been made by
    everyone. First, America wants to have air superiority--
    period--over any possible enemy. Secondly, we owe it to the men
    and women who are fighting to defend this country to give them
    the very best that they can rely on to protect their own lives
    and to perform their missions capably and successfully. Third,
    we have a responsibility to the taxpayers in achieving that
    goal to make sure we do not waste their money in the process of
    developing an aircraft that meets those criteria.
        Now, over 10 years ago, we had a competition for this
    aircraft. I believe the notion behind the Joint Strike Fighter
    was to finally try to harmonize the needs of our military
    within the Services based on a similar or likeminded platform
    that we were designing.
        The question we have to ask ourselves today is what have we
    learned over the last 10 years plus in terms of the development
    of this aircraft. Mr. Kendall, you were pretty blunt at one
    point. You stated your disagreement with the decision that
    allowed the JSF to begin production before the first test
    flight even occurred. You called it ``acquisition
    malpractice.'' The decision made by your predecessors resulted
    in the severe concurrency that the program continues to
    experience today, almost 12 years later.
        As the Under Secretary of Defense for Acquisition, you are
    responsible for establishing the Department's acquisition rules
    and regulations. What have we learned? What would you do to
    limit concurrency in not only programs under your purview today
    but future programs that we might consider?

                                  CONCURRENCY

        Mr. Kendall. Thank you, Mr. Chairman. I was going to bring
    up that quote if you did not. It is the one that I think I most
    often associated with.
        When I first saw the schedule for the F-35, I was
    surprised. I had not seen a program with that degree of
    concurrency in my past experience. I talked to some of the
    people who were involved----
        Senator Durbin. Excuse me a second. Can you step back a
    second and define ``concurrency'' in terms that the layman
    would understand for the record?
        Mr. Kendall. It is not unusual in any development program,
    as you come towards the latter phases of the development
    program, to start the production process. The key to doing that
    successfully is that you have design stability, that you do not
    expect to find anything in the test program, the balance of the
    test program, or any additional software development that you
    may be doing that will substantially change the design and
    change the manufacturing process, change the tooling, force you
    to go back and modify some of the product you have already
    made.
        The reason to do that, of course, is that you want to get
    the product into the field as soon as you can. And there are
    some efficiencies associated with making that transition
    earlier. Sometimes it is threat-driven. Sometimes there is a
    lot of urgency about getting the capability out because of the
    threat. So it is a judgment call as to how much overlap you
    have between the development phase of the program, particularly
    the testing phase, and the actual start of production.
        Historically for something like a new aircraft, a
    sophisticated, new, cutting-edge design, we would be a year or
    two into test flight before we started production. We did a
    much more aggressive approach on the F-35. And my understanding
    is that people felt at the time that the modeling and
    simulation, that our design tools were much more sophisticated,
    and that we would not see a lot of problems and find them
    through the test program. That was wishful thinking, frankly.
    It kind of flies in the face of all of our prior experience.
        I am going to read to you from the guidance. You asked me
    about policy. I brought with me the draft policy that is in
    staffing right now, and it specifically addresses concurrency.
    I will tell you what it says.
        In most programs for hardware-intensive products, there
    will be some degree of concurrency between initial production
    and the completion of developmental testing, and perhaps some
    design and development work, particularly completion of
    software, that will be scheduled to occur after the production
    decision is made. Concurrency between development and
    production can reduce the lead time to field the system, but it
    also can increase the risk of design changes and costly
    retrofits after production has started.
        Program planners and decision authorities should determine
    the acceptable or desirable degree of concurrency based on a
    range of factors. In general, however, there should be a
    reasonable expectation based on developmental testing of full-
    scale prototypes that the design is stable and will not be
    subject to significant changes following the decision to enter
    production. At milestone B, which is our development decision
    point, the specific ``typically event-based'' criteria for
    initiating production or fielding at milestone C, the
    production decision point, will be determined and included in
    the decision memorandum that is published at that time.
        So we want an event-based decision to enter production
    based on actual demonstration through developmental testing,
    primarily that the product is mature enough that we can go into
    production with reasonable risk. That is the criteria.
        Again, I think in the case of the F-35, there was a
    combination of factors. Part of it, frankly, was that the money
    was sitting there in the budget for production and people had a
    sense of momentum about getting production started because the
    money was sitting there. I resisted making that kind of
    decision in my position. We should not be driven by the fact
    that there happens to be some money sitting in the budget.

                             CONTRACTOR INCENTIVES

        Senator Durbin. So let me ask you. One is a theory and
    approach to acquisition and the other is the incentive that we
    created. And you have just identified it. There was money
    sitting there to produce, and there was the yearning urge to
    acquire that taxpayers' dollar maybe too quickly, which does
    not sound to me like a sound decision, and I think what you
    identified is your own personal decision not to fall into that
    trap.
        I would like to ask you when it comes to something that is
    characterized as UCA--I will try to pronounce this--
    undefinitized contractual action, a contractor performing work
    under a UCA is not incentivized to control cost because all of
    the actual cost incurred while under a UCA get rolled into the
    final negotiating costs recovered by the Government. That
    sounds like a similar situation where we are creating an
    incentive to produce, not to produce in a timely fashion or in
    the best fashion, but in a fashion that spends the money that
    we have appropriated.
        What would be your comment on that?
        Mr. Kendall. Chairman, I have given other testimony where I
    have talked about the pressures in our system, the incentives
    to be optimistic, to take risk. And it runs throughout our
    whole system. And anyone who has ever held a position like mine
    has, to some degree, had to kind of resist those pressures.
        If you look at the desire of the operational community to
    have the best possible capability--so there is a tendency to
    have optimism in terms of the requirements and what we can
    accomplish. Industry is interested in selling. So they tend to
    be optimistic about what can be produced, what kind of
    capability can be built. When budgeteers put together their
    budgets, they tend to be optimistic about how much you can get
    for the money because they want to get as much as possible into
    the budget. When people bid on projects, they tend to be
    optimistic because they want to win the business, and the way
    to bid a little more aggressively and hope that you can
    execute. It ripples all the way through our system. Essentially
    one of the things we have to do to keep our risk under control,
    frankly, is to kind of push back against that.
        Now, you mentioned UCAs. UCAs, undefinitized contract
    actions, are essentially situations where we have not
    completely defined the job to be done, and we have not reached
    a complete agreement with the contractor about exactly what
    that job will be and what it will cost us. So we start contract
    activities with the idea that after we have started, we will go
    back and we will clean it up. We will complete the definition
    of the contract. We will definitize, if you will, the contract
    action.

                       UNDEFINITIZED CONTRACTUAL ACTIONS

        The data is pretty clear on this. In development in
    particular, that leads to problems. It leads to difficulties
    further downstream. If you look at the history of our programs
    and our cost overruns--and I am going to be publishing some
    data on this--UCAs in development consistently result in cost
    and schedule overruns later. And it is because, frankly, the
    job has not been well enough defined on the Government part,
    the contractor is not ready to build it, there is still
    openness for optimism that has not been refined yet.
        The other problem with the UCA is that you give up a lot of
    your negotiation leverage once you sign that contract. And I
    resist them. There are rare occasions when we can do them.
        Now, interestingly, the data on production contracts that
    are started with an undefinitized contract action is not nearly
    as negative. The problem is primarily on the development side
    of the house. So as a general matter, we resist doing them.
    There are rare occasions where we really need to get the work
    started. If we are doing something that is an urgent
    operational requirement, for example, it makes more sense to
    get the work started. People are going to be dying if you do
    not get that product out, and you want to get it out quickly
    and you take some risk and you may spend some more money as a
    result of that. But you get the product out quicker because of
    it.
        Senator Durbin. Based on your testimony, it sounds like the
    enemy is optimism, and I do not know that we want to be
    pessimistic when we get into this.
        Mr. Kendall. We want to be realistic and pragmatic, Mr.
    Chairman.
        Senator Durbin. Realistic. Thank you.
        Senator Cochran.
        Senator Cochran. Mr. Chairman, we appreciate very much
    having the cooperation of this distinguished panel of
    witnesses. I have a few questions.
        General Welsh, the major challenge before us in this year
    is trying to avoid budget decisions that compromise our
    capabilities that are needed by the U.S. and our allies to look
    down the road 10 to 15 years to assess the threats that will
    exist then and then making decisions now that help meet those
    needs and capabilities.
        How do you apply that theory to actual practice? Are we
    making progress in meeting the challenge?

                       ASSESSING FUTURE MILITARY THREATS

        General Welsh. Vice Chairman, the biggest problem we have
    that Mr. Kendall mentioned is optimism, and I think he is
    exactly right, by the way. When you are looking at the military
    threat of the future, we also tend to be pessimistic so we
    assume the future threat is 10 feet tall, all-capable, all-
    knowing, and almost impossible to defeat. And so we need
    absolutely the best things money can buy and massive quantities
    to be able to fight that war. So we have to fight that tendency
    when we look at the future threat.
        In the Air Force, we have looked very closely at the future
    threat to assess whether it is for conducting the air
    superiority mission or it is doing a global strike mission or
    it is supporting ground activity, close air support or indirect
    strike. As we look at that threat, no matter how you examine
    it, when fifth generation aircraft become available to our
    adversaries, when advanced SAM systems like the S-300 become
    available to our adversaries, when they are able to integrate
    and train with those systems, the difference between fourth
    generation and fifth generation fighters becomes starkly clear.
    And the reality is, without talking about how many you need,
    just on a pure capability perspective, if a fourth generation
    fighter meets a fifth generation fighter, the fourth generation
    fighter may be more efficient, but it will be dead. It really
    is that simple.
        And so we need to determine when do we need this high-end
    capability, how much of it do we need, and then how do we mix
    it with a fourth generation capability that we will have in our
    fleet for years. We are going to have a mix of aircraft for a
    long time, and some missions will be better suited to the
    legacy fleet that will have a little bit lower operating cost
    and some will be better suited to the high-end fleet that will
    have to fight the highly contested, determined foe in a full-
    spectrum fight. You have to have the fifth generation
    capability to succeed in the air fight. And that is after a
    pretty comprehensive analysis of the threat that we intend to
    face.
        Senator Cochran. Given the expectation of increased F-35
    costs and inevitable production delays, is it still true or is
    it time to start looking at investment in alternatives, as well
    as continued commitment to the F-35 program?

                             F-35 PRODUCTION COSTS

        General Welsh. Sir, I will give you a brief answer and then
    see if Mr. Kendall or General Bogdan would like to comment on
    the actual production costs. My view is that the Program Office
    and the company, the contractors, understand what it takes to
    build this airplane now. I believe we have those costs pretty
    well captured.
        The big costs that we are most focused on now are the
    operation and sustainment costs over time. What does it cost to
    manage this fleet, to operate this fleet, to repair the fleet,
    to supply the fleet? The Program Office is leading a number of
    initiatives supported by all the Services represented here who
    are working very hard to try and drive those costs down, and I
    believe General Bogdan can give you some good examples of early
    success in that effort. But this has to be an ongoing,
    continuous effort.
        One of the benefits we have and kind of a strange side
    benefit of the concurrency problem the Chairman described is
    that we actually have actual numbers now maybe earlier in the
    program than we would otherwise. So we are starting to replace
    projected costs with actual costs, and as we continue to fly
    more hours, we will have a better feel for what it really costs
    to maintain this airplane. But that is clearly the focus.
        That will drive us to consider mixed fleets for a long time
    into the future. All of us will continue to have them for a
    while, and the investment strategies in the future have to
    consider options for continuing down that vein.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Durbin. Thanks, Senator Cochran.
        Senator Reed.
        Senator Reed. Well, thank you, Mr. Chairman.
        Let me first commend Secretary Kendall for his decisive
    intervention in the program, and also for his candor in warning
    us that we still have some real serious challenges ahead. We
    are not there yet.

                                  REWORK COST

        Let me ask a specific question about the rework cost. You
    have noted that the cost per unit seems to be coming down. Does
    that exclude or include rework cost?
        Mr. Kendall. Yes, sir. The cost of production, the basic
    production, is coming down roughly with the curve that we
    expected it to come down on.
        The cost of retrofit, of concurrency changes is also coming
    in--about 25 percent I believe--less than our predictions had
    indicated. So we are making progress on that as well.
        I mentioned that in Lot 5 we started sharing those
    concurrency costs with Lockheed. They started absorbing some of
    that risk. And we did that for two reasons. One was to focus
    their attention on this more and in part to get the concurrency
    changes into the design as quickly as possible. And we have
    made some pretty substantial progress on that as well. So at
    this point in time, we are reasonably encouraged.
        Now, of course, as we go through the test program, we are
    discovering more and more of the things that have to be fixed,
    and we do see that list of things that have to be changed. So
    as time goes on, we hope that that will come down and we have
    projection that suggests that within the next few years that
    will be well under control.
        Chris, do you want to add to that?
        General Bogdan. Yes, sir. When I talk about the price of
    the airplane coming down and I talk about the unit fly-away
    cost or the URF of the airplane, it does indeed include the
    calculations and the dollars for concurrency, retrofitting
    airplanes that came off the production line that were not
    corrected, as well as putting those fixes back into the
    production line. So our curves and our cost models include an
    estimate for that concurrency, sir.
        Senator Reed. So you are estimating, going forward, that
    the rework trend is down, and given potential issues with
    software, you do not anticipate at this point that that curve
    will bend back up and you will have another problem.
        General Bogdan. Sir, the small good news there is both our
    estimates have come down about 25 percent, looking to the
    future on how many fixes we are going to have to make to the
    airplanes, and the actual cost of making those retrofit fixes
    and getting the fixes back into the production line are also
    down about 25 percent. So if you take both of those together,
    our initial estimates of concurrency cost back 3 or 4 or 5
    years ago are probably on the order of about 50 percent lower
    now in both the estimating and the actual costs. And I can
    provide the committee that information to show you that.
        [The information follows:]

        The ``Second Report to Congress on F-35 Concurrency Costs: House
    Report 112-331, Conference Report to Accompany H.R. 2055,'' dated May
    2013, contains the chart below and shows that estimates of concurrency
    costs have been reduced approximately 32 percent between the fiscal
    year 2012 and the fiscal year 2013 estimate.

        The original estimates for concurrency were identified as
    approximately 5-8 percent of the overall production costs through
    System Development and Demonstration completion. Since that initial
    estimate, more precise estimating techniques, along with an overall
    reduction in the number of problems driving concurrency changes than
    had originally been expected, have put the current cost of concurrency
    to 3-5 percent of the overall production costs as indicated by the
    chart below.

        Senator Reed. Thank you.

                               FIRM REQUIREMENTS

        Secretary Kendall, one final question to you. One way we
    manage cost of the weapons systems is changing requirements. Do
    you anticipate or is that being discussed in terms of managing
    this cost going forward, given limited budgets?
        Mr. Kendall. Senator Reed, the requirements--we have 35--I
    think are firm at this point. One thing we will have to do is
    respond to advances in the threats as they occur. So there is
    some follow-on development planned already, and we have asked
    for some funds for that to start some of the early design work
    to respond to threats that are just emerging. This is not a
    world in which things stand still. The threat constantly
    evolves, and we have to stay ahead of it.
        I want to go back and just mention a couple things on the
    possibility of increased cost going forward.
        As we go through the test program, we are retiring risk,
    but the areas where we would be most concerned are in some kind
    of a major structural failure. We have done roughly one
    lifetime of fatigue testing on the aircraft. So we have two
    more of those to go. As we go through that, the likelihood of a
    major structural failure that would cause a significant
    redesign goes down, but it is not zero yet.
        The same is true of the aerodynamic performance. If there
    were some aerodynamic performance major problem that would
    emerge as we explore the extremes of the flight envelope, that
    might cause a significant problem and some redesign work. So
    far, we do not see a high likelihood of either of those things,
    but they are still possibilities.

                                 CYBER THREATS

        Senator Reed. Let me ask a final question and this goes to
    an issue that you are looking ahead to emerging threats. Are
    you confident that you have the systems in place to prevent the
    cyber aspects of the aircraft from being compromised and
    confident that at this point they are not?
        Mr. Kendall. I am reasonably confident--and Chris should
    answer this as well--that our classified information is well
    protected. I am not at all confident that our unclassified
    information is as well protected. Now, it is unclassified
    because it is not as sensitive or important, but I am concerned
    in general with the loss of design information that is at the
    unclassified sensitive level, and I am going to be putting some
    policies in place to try to make stronger sanctions, if you
    will, or stronger consequences for our contractors who do not
    protect that information well enough. Part of that is being
    stolen right now, and it is a major problem for us.
        Senator Reed. And does that increase the vulnerability of
    the aircraft right now that we can anticipate?
        Mr. Kendall. What it does is reduce the cost and lead time
    of our adversaries to doing their own designs. So it gives away
    a substantial advantage. So it is not as much a specific
    vulnerability. It is the amount of time and effort they are
    going to have to put in to getting their next design and
    staying with us.
        Now, as you are probably well aware, at least two nations
    are well into developing fifth generation aircraft right now.
    So that is a concern.
        Senator Reed. Thank you, Mr. Chairman.
        Senator Durbin. Thanks, Senator Reed.
        Senator Shelby.
        Senator Shelby. Thank you, Mr. Chairman.
        I thank all of you for your service.
        General Welsh, as I sit up here with this subcommittee, a
    part of the Appropriations Committee, a big part, we have to
    make sound money decisions. Most of us, I believe, believe air
    superiority is very important, as you referenced earlier. We
    have had that a long time, since the Second World War.
        My thought about the whole plane: One, is the aircraft--is
    the concept sound? Will it work? Have you worked out the
    technical glitches, most of them? Most planes and most weapons
    systems will have technical glitches, some more than others.
    And ultimately, this committee has got to balance the need to
    how much we can afford.
        I believe myself that we should be on the cutting edge of
    technology. We should be smart in what we do and how we do it.
    I believe, from what I know--and we are not in a closed
    hearing, but this plane has got a lot of stuff, potential which
    you cannot talk about here today.
        But what and how do we bring the cost down? Economies of
    scale. We know that. The more you produce of something, we got
    to do this. That is going to be one of the money decisions we
    have to make. One, do we need this plane? I think we do.
    Second, can we afford this plane and how do we afford it?

                           AFFORDABILITY OF THE F-35

        Do you want to talk about that a minute?
        General Welsh. Thank you, Senator.
        I agree we need the airplane. Can we afford the airplane is
    the question facing not just the committee but us as well.
        Senator Shelby. The American people.
        General Welsh. Yes, sir.
        Senator Shelby. Can we afford not to do it?
        General Welsh. Well, I do not think so because there is no
    other option right now.
        What we are asked to do is pretty well defined by our
    national guidance and by our Defense Strategic Guidance. And
    based on that requirement that is handed to our Services in the
    air domain, this airplane is something that we need to meet the
    mission we have been assigned. If the mission changed
    dramatically, if there was no intent to be worried about
    threats from other technology that develops in the future, if
    there was not a requirement for the United States of America to
    be able to protect its national interest against those threats,
    we would not need the airplane. But that is not the case.
        And so everything we are focused on right now is making
    sure this airplane is operationally feasible. The Program
    Office works that every single day. They focus on the cost of
    development, the production, and the sustainment over time and
    how do we drive those costs down. The Services help them in
    that effort.
        From the Services' perspective, we are both helping with a
    developmental and operational test and we are actually training
    air crews now. In the Air Force, we have 22 airplanes. Some of
    those are at Eglin Air Force Base, Florida flying right now. Of
    those aircraft, we have trained 23 new pilots on the F-35 over
    this year. We have flown about 2,200-2,300 sorties and about
    3,500 flying hours now. The airplane works. The pilots will
    tell you it is a ``great jet'' that the avionics are--here is a
    quote from the squadron commander at Eglin--``light years ahead
    of legacy fighters in our military.'' And so they believe this
    program is moving forward.
        They are still frustrated by some of the things that keep
    them from fully utilizing the aircraft, but a lot of that is
    the function of the concurrency that Mr. Kendall described.
    They cannot fly within 25 miles of lightning. They cannot fly
    in the weather yet. That is going to require software
    development that is due and is on track to be delivered. By the
    time we reach our initial operational capability at the end of
    2016 for the Air Force, those problems will be in the past.
        Senator Shelby. Will this plane, as far as you see, have
    any peer in the world?
        General Welsh. The F-22 will be a peer, but that will be
    the only one.

                                 AFFORDABILITY

        Senator Shelby. Secretary Kendall, you have to make
    decisions on acquisition, and that gets into the affordability.
    Do you want to speak to the affordability again? Economy of
    scale--I understand that. And the cost you have brought down. I
    understand that.
        Mr. Kendall. One of the initiatives that Dr. Carter, when
    he was Under Secretary, and I started was to put affordability
    caps on all of our programs as they come through the process.
    And the idea of that is to ensure that our reach does not
    exceed our grasp. And what we require programs to do now is to
    do an analysis of likely future budgets that would be expected
    and to look at the portfolio of products that the new product
    would be in and to determine a reasonable amount of money that
    could be spent on the product. And from that, we derive a cost
    cap for the production, unit production cost, and for
    sustainment costs for the program. Now, obviously, F-35 was
    many years into development before we started this policy. We
    are doing that now routinely.
        As far as the F-35 itself is concerned, it is an affordable
    program. It is affordable in part because of its priority. It
    is our number one priority conventional warfare program, and we
    will find a way to afford it. I mean, 10, 20, 30, 40 years down
    the road, there may be a question about how many we actually
    end up and how large our force structure is, but I do not think
    there is any question at this point in time that we need the
    program, that we can afford it within our budget, and that we
    need to get production up to a rate that is more economical as
    soon as we can.
        Senator Shelby. Are you still concerned about any of the
    technical glitches dealing with the Services, the Navy, the
    Marines, and Air Force?

                                TECHNICAL ISSUES

        Mr. Kendall. As General Bogdan mentioned, there are a
    number of technical issues that will be resolved. The tail hook
    was mentioned by Admiral Greenert. That will be in testing
    shortly in the next few months. The helmet is still being
    worked on. At this point in time, I would say the helmet was
    kind of on the edge of acceptable. It needs to be better. The
    software that was mentioned--we need to get that. Software is
    largely a matter of time and money, but some of the 3F
    capabilities are very important to the acceptable performance
    of this aircraft, and we need to get them even though we can
    IOC potentially without them. So there are a number of things
    that have to be done. Lightning strike was mentioned as another
    one we are working on.
        These are all things that we are working our way through in
    the development program and resolving over time. We have made a
    lot of progress in the last couple of years, and I do not see
    anything at this point in time that is going to keep us from
    getting the airplane to where we need it to be.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Durbin. Thank you, Senator Shelby.
        Senator Collins.
        Senator Collins. Thank you, Mr. Chairman.
        Secretary Kendall, from its inception the F-35 was designed
    to be an international program, and indeed, we have formal,
    binding agreements with several of our allies such as Great
    Britain, Australia. I believe the Israelis have agreed to
    purchase some F-35s. Could you comment on what value it brings
    to have international partners involved in this program from
    the beginning, and also, what cost savings to the American
    taxpayers are produced by these international agreements?

                             INTERNATIONAL PARTNERS

        Mr. Kendall. Thank you, Senator Collins.
        There are several aspects of having the international
    involvement that are beneficial. First is obviously their
    direct contribution to the development cost. Our eight original
    partners have all made some contribution to development.
        There are obviously economies of scale associated with
    higher production rates. Right now, we expect several hundred
    aircraft to be bought by our partners, and this makes a
    difference of--of course, I do not know the exact number, but
    it is 10 to 15 percent, I think, in unit cost.
        General Bogdan. Almost 20 percent.
        Mr. Kendall. Almost 20 percent difference in unit cost.
        Now, interestingly, we just had our annual meeting with all
    of our partners, all of my counterparts, and reviewed the
    program with them. They are all encouraged by the progress on
    the program. They are all still in the program, which I think
    says something. Canada is still considering its decision, and I
    think the Netherlands has not made a final decision. And even
    though, because of budget constraints and other things, some of
    them have reduced their numbers, they all see the value in the
    F-35 and are all, at this point in time, still in the program.
        In addition, we are starting some foreign military sales.
        So there is something of a consensus that this is the
    future of tactical aviation internationally.
        Senator Collins. Thank you.
        General Welsh, this morning you described the F-35 as a
    fifth generation aircraft, and we hear that term all the time
    from you and from other military officials and experts. I know
    that one of the characteristics that you are referring to is
    the aircraft's stealth capabilities.
        You share a responsibility to build a force that can
    operate effectively in an anti-access environment. We know that
    Russia and China are developing advanced stealth fighters. We
    know that some of our potential adversaries have advanced
    integrated air defense systems as well.
        To the extent that you can in open session, could you
    describe more fully for this committee what exactly it means
    that the F-35 is a fifth generation fighter and how that
    technology helps us counter emerging threats?
        General Welsh. Thanks, Senator. That is a fantastic
    question actually.
        I would put it this way. The emerging threat essentially
    means it is more integrated, it has longer range, and it
    connects quicker to things like sensors and things that can
    shoot you down if you are flying in an airplane and prevent you
    from completing your mission or getting access to a target.
    What the fifth generation capability does with a combination of
    the stealth signature that makes it more difficult for radars
    or different types to track you, with electronic protection,
    self-contained electronic attack capability against those
    radars with the ability to move quickly through a threat
    environment, with the ability to maneuver to evade enemy
    threats that are launched at you. It significantly breaks kill
    chains, if that makes sense. So a kill chain, from the time
    they first see you and pass off your data on your airplane to a
    system that is going to try and intercept you, whether it is an
    air system or it is a ground system--that kill chain is
    required to be completely intact for someone to keep you from
    preventing your mission.
        Fifth generation technology allows you to break that kill
    chain at multiple places and allows you to operate in an
    environment you could not operate in a fourth generation
    aircraft because the kill chain would not be disrupted that
    way. That is what it does for you whether you are competing
    against a single airplane or you are competing against a system
    on the ground. It allows us to operate in places we could not
    before and complete the mission we have been assigned.
        Senator Collins. Thank you. That is very helpful.
        Thank you, Mr. Chairman.
        Senator Durbin. Thanks, Senator Collins.
        Senator Murkowski.
        Senator Murkowski. Thank you, Mr. Chairman.
        And good morning, gentlemen. Thank you for being here this
    morning. Thank you for your service.
        General Welsh, as you might expect, my comments or
    questions today will deal largely with Eielson and the role
    that future OCONUS (outside the continental United States)
    basing of the F-35 might play in Eielson's future.
        For the benefit of my colleagues here on the subcommittee,
    back in February 2012, General Welsh's predecessor announced
    that the Air Force planned to transfer an F-16 squadron from
    Eielson down to Elmendorf Air Force Base. It would downsize
    Eielson by the order of about two-thirds of its Active Duty
    personnel and all done by 2015. The Air Force has informed us
    that they intend to make a decision this fall following
    completion of an environmental impact statement (EIS) and a
    strategic analysis.
        This would have a devastating impact on the economy of the
    Fairbanks and the interior region. The direct and indirect job
    loss is estimated at over 3,000 individuals. Unemployment would
    rise from where we are now at 6.2 percent to an unacceptable
    level of 8.9 percent, lay off teachers, close schools, a tough,
    tough situation. Of course, we are not in a base realignment
    and closure (BRAC) environment. I have described this as a back
    door BRAC.
        And it probably comes as no surprise that I, along with the
    other members of the Alaska delegation, have requested that the
    Air Force be prohibited from implementing its proposal for
    Eielson in 2014.
        Back in 2008, the Air Force announced to the Fairbanks
    community in writing the start of an environmental scoping
    process for possible basing of the F-35 there at Eielson, and
    then in 2009, we came to learn that the scoping process never
    occurred but we were promised at that time that Eielson was
    either at or near the top of the list of possible OCONUS basing
    of the F-35. So we were then told that there was going to be an
    announcement that would be made shortly on OCONUS bases. That
    never came.
        Can you tell me, General Welsh, what thoughts, if any, the
    Air Force has on the desirability of Eielson as an F-35 basing
    location, what kind of timeframe you are looking at for OCONUS
    F-35 basing, and then also whether or not the Air Force's
    immediate decision on downsizing Eielson will be affected by
    possible F-35 basing at some point in the future?

                               OCONUS F-35 BASING

        General Welsh. Yes, Senator. The Secretary and I just
    reviewed earlier this week the proposed criteria for our
    overseas CONUS base selection process for the F-35. There is a
    little more work to be done on that to make sure we have the
    criteria firmly established and clearly coordinated with U.S.
    Pacific Command, U.S. European Command, and Pacific Air Forces
    (PACAF) and United States Air Force in Europe (USAFE). That
    process is ongoing. I would suspect by the end of this month
    those criteria will be firmly established and we will start to
    evaluate all of the potential bases in both Europe and the
    Pacific.
        In the Pacific, Eielson is one of the bases. As you know,
    Alaska--it will be part of the Pacific basing for overseas
    basing for the Pacific. Eielson is one of the bases on the list
    to be examined. And so we will take a look at every base
    relative to these criteria and sometime this fall--my guess is
    late October--we will produce a preferred and a reasonable
    alternative listing that will be fully briefed to the Congress.
        I will tell you this, Senator. I am looking forward to my
    visit to Eielson here in about a month or month and a half to
    meet with the community there and hear their concerns directly.
    And as you mentioned, we are completing the environmental
    impact statement and we are still on the same timeline to make
    a recommendation to the Secretary this fall.
        Senator Murkowski. Let me ask then about the EIS. Some of
    the particular criticism that I have heard, which you should be
    prepared for when you go up north--I understand that the Air
    Force is simultaneously proceeding to complete the EIS and the
    strategic analysis. The public will have an opportunity,
    apparently, to comment on the EIS draft but not on the
    strategic analysis. And I am not quite sure why it is set up
    that way. It does not seem to make sense to me. An EIS is
    designed to inform the decisionmakers on the range of
    alternatives to a proposed action. So it seems logical to me
    that you would have the strategic analysis precede the EIS and
    then inform from there.
        So I guess the question to you would be whether or not you
    could leave this draft EIS comment period open until the
    strategic analysis is done and also to invite comments then on
    the strategic analysis as well, whether or not you would
    consider that.
        General Welsh. Senator, the path ahead that the Secretary
    laid out for us was for us to take a look at the EIS. The
    strategic analysis I believe you are referring to is the one
    that will be conducted by the Pacific Air Force's Commander,
    General Carlisle and his team. And when he has completed that
    analysis--and it is an operational analysis. It is an
    assessment of the inputs from the EIS. It is to look at
    costing. It is to look at all the things you and I both hope
    are in the discussion. And then he will come forward to the
    Secretary with a recommendation. I am not sure keeping that
    available for public comment, as he completes his
    recommendation, would be helpful to his process. I think public
    comment has been pretty clear in the EIS, and that is going to
    be factored in to everything he says. You, of course, will see
    the results of any analysis he does.
        Senator Murkowski. And I just might add that the concerns
    that I am hearing from those who weighed in and gave that
    public comment is that they do not feel that they have been
    heard on it. So it will be something that you will hear when
    you go up north. So it may be something that you and your folks
    might want to give an extra look at, and I would appreciate
    that. I look forward to your visit.
        Thank you, Mr. Chairman.
        Senator Durbin. Thank you, Senator Murkowski.

                           LARGE ACQUISITION PROGRAMS

        Let me ask you this, Mr. Kendall. I have listened to your
    earlier testimony, and I am trying to draw some analogies which
    may or may not be accurate in my mind. In the financial
    industry, we have this phrase ``too big to fail.'' And I am
    wondering if this project is so large in scope that it was too
    big to cancel, that it had to continue apace because of
    international partners, fifth generation demands. Have we
    reached a point, when it comes to acquisitions in the future,
    that we have to take this into consideration?
        Mr. Kendall. Mr. Chairman, I do not think any program in
    the Department is too big to fail just as a matter of
    principle.
        As a practical matter for the F-35, we are not at a place
    where we would consider stopping the program. I think General
    Welsh mentioned that. We are most of the way through
    development. The costs, I think, are under control, at least
    for production. We are trying to bring the costs of sustainment
    down. There is no question that the threat is driving us
    towards the next generation of aircraft. Our fourth generation
    aircraft are not going to be survivable on the future
    battlefields. To start over, to go back 10-20 years and to
    invest $20 billion or $30 billion in development of another
    aircraft and replacement of the F-35 just does not make any
    sense.

                                  SUSTAINMENT

        Senator Durbin. So let me go to the one particular that you
    mentioned: Sustainment. It is my understanding that the cost of
    flying the Air Force variant of the F-35 is 28 percent greater
    than sustaining the F-16. And a report that came out in 2012,
    the JSF Selected Acquisition Report, estimates the cost to
    sustain the fleet of JSF's over a 30-year life is $1.1
    trillion, which equates over a 30-year period of time to $36
    billion a year, which is a substantial sum of money by our
    calculations, by anyone's calculations.
        It is my understanding that one of the best ways to reduce
    sustainment costs is to address them very early in the program,
    and it appears that did not happen as it should have in this
    program. So what actions are we taking now to deal with these
    anticipated sustainment costs?
        Mr. Kendall. Chairman, I would just point out to you that
    is, I believe, an inflated number over about 50 years. So it
    covers a lot of time and a lot of inflated costs. It is still a
    very big number and we need to do everything we can to drive it
    down. There is a long list of things. I think in our written
    testimony we go through some of those.
        But the keys include looking very creatively at the things
    we do in sustainment to see if there are more efficient ways to
    do them and also bringing in competition. We are not going to
    leave this sole source in the hands of one provider. We are
    going to go out and bring in competition and use that to drive
    the costs down.
        We also have an initiative in the Department to use what is
    called performance-based logistics. It is a business approach
    where people essentially provide a level of reliability to us
    and get incentives to do that and provide it to us at lower and
    lower cost.
        So there are a number of things that can be done. I am
    going to let General Bogdan answer. He has got a long list of
    things that we are doing.
        Admiral Venlet, who was General Bogdan's predecessor, has
    also attacked this problem. So we are not just starting on
    this. You can, I think, argue that we started this too late. We
    should have done it a little bit earlier, but we are certainly
    giving it our full attention now.
        Senator Durbin. General Bogdan.
        General Bogdan. Sir, there are primarily three areas that I
    am taking action on right now to try and reduce the costs.
        The first area, as Mr. Kendall said, was there are
    different portions of the sustainment lifecycle of the airplane
    that we, over the next few years, will compete. For example,
    support equipment on this program is well known. We know where
    the support equipment needs to come from. We know what it is
    designed like. There is no reason in the world why I need to
    buy the support equipment for this airplane from a single
    supplier who actually just goes out and contracts with many
    other suppliers to buy that. So we will compete that type of
    thing.
        Another example is on the global supply chain. We will have
    airplanes all over the world in the next 10 or 15 years. There
    is no reason to believe that a prime contractor whose niche is
    building and manufacturing airplanes could be or should be a
    world-class global supply chain expert. There are other
    companies out there that can do that, and we will explore those
    kinds of options. So competition is one piece.
        There is a second piece that we are working on very
    aggressively. That is what we call our reliability and
    maintainability program. Until a few years ago, this was an
    airplane on paper. We did not have airplanes flying. Today we
    have over 7,000 hours under our belt and over 5,000 sorties.
    The information that I am gaining from flying those airplanes
    today is invaluable. I can show you a list of the 50 top parts
    on the airplane that are breaking more readily than we thought
    they would. I can show you the 50 parts on the airplane that
    are taking longer to repair than they should. By systematically
    looking at a reliability and maintainability program where we
    attack those problems by either redesigning the parts or
    finding a second supplier or finding a way to better repair
    those parts organically, say, by standing up your depots, you
    can begin to attack the reliability and maintainability of the
    program. We could not do that a number of years ago because we
    did not have any real data. We have a lot of that data now. So
    we are doing that.
        The third piece is that $1.1 trillion estimate that you
    talked about has an awful lot of assumptions in it that those
    three gentlemen at the other end of the table have a lot to do
    with in terms of how many hours does each pilot need to fly
    relative to getting training in a simulator. How many
    maintainers do I really need on the flight line to launch this
    airplane?
        Those kinds of assumptions, which we put in place many,
    many years ago, that came up with this $1.1 trillion number are
    now being relooked at because we know more about the airplane.
    And with their advice and with their assumptions, we will go
    back in and now relook at the CONOPS, or the concept of
    operations, for maintaining and sustaining the airplane and
    adjust those numbers. I personally think you will see over the
    next few years those numbers coming down, sir.
        Senator Durbin. Thank you very much.
        Senator Cochran, any follow-up?
        Senator Cochran. Mr. Chairman, I have one follow-up
    question.

                     F-35 OPERATIONS AND MAINTENANCE COSTS

        General Paxton, the Commandant of the Marine Corps, General
    Amos, has indicated the Marines expect to save up to $1 billion
    per year in operations and maintenance cost by having one type
    of tactical aircraft in inventory, and that billions of dollars
    have already been saved over the last decade by not
    recapitalizing the Marine Corps with fourth generation aircraft
    and waiting to recapitalize with the F-35.
        Given increased F-35 costs and production delays, is this
    still true, or is it time to start looking at alternatives, as
    well as continued commitment to the F-35 program?
        General Paxton. Thank you, Senator Cochran.
        I believe the basic premise of the Commandant's previous
    statement and then when you connect it to the comments that
    General Bogdan and Mr. Kendall just made--the basic premise of
    cost and affordability is true. It is coming down, and as we
    actually have more flight hours and more sorties and more
    reliability of the data, we have a better ability to predict
    the actual fly-away costs, as well as the cost per flight hour
    for the aircraft.
        I come at this a little differently as opposed to the
    gentlemen at the other end of the table who are either
    technicians or aviators. I am a grunt. I am an infantry guy. So
    when I look at the program and the viability and the value of
    the program, sir, I go back to the basic premise that we have
    three type model series that we are going to do away with, the
    F/A-18, the EA-6B, and the AV-8B. So there is an inherent cost
    savings in necking down the type model series.
        In addition, as we get more reliability, as General Bogdan
    said, and we get actual facts from those hours and sorties, we
    have the capability of collapsing a little bit the maintenance
    that is done at the depot level, at the intermediate level, and
    at the organizational level. We actually have marines out there
    right now turning wrenches on things that we did not expect to
    happen this early in the program because we have been able to
    identify where some of those mean times between failure are and
    what they can actually do.
        So I believe as the program gets more mature, a comment
    that General Welsh made earlier about the value of stability in
    the program--it is not an issue of too big to fail, sir. It is
    an issue of stability and using stability to create an
    advantage and turn risk into opportunity because I am confident
    we can bring the costs down on this. And then the bathtub that
    we are in where we have aging fourth generation legacy
    aircraft--we will be out of there, and then we will be into a
    fifth generation aircraft that we can optimize and use around
    the world in many more places to do many more things.
        Thank you, Senator.
        Senator Cochran. Thank you very much.
        Senator Durbin. Senator Shelby.

                              TECHNICAL CHALLENGES

        Senator Shelby. I want to go back, if I could, Secretary
    Kendall, to the technical challenges because General Bogdan
    alluded to some of them just a minute ago.
        What are, say, the top three technical challenges? Is it
    software, as it develops and will help you expand your envelope
    and so forth? Is it metal fatigue or problems with metal
    production, you know, the failure of that? What is it? I am
    sure all of them have not been satisfied, but I feel
    technically they will.
        Mr. Kendall. I will give you my three and General Bogdan
    may have----
        Senator Shelby. Is that important----
        Mr. Kendall. It is. We have a list of things, obviously,
    that we are attacking.
        The top three on my list would, first of all, be software
    and getting the software completed. The Block 3F capability is
    critical to the airplane. So we need to get that done. We will
    have to make some decisions as we get further along. We are
    about to do a critical design review for that software, and we
    will be looking at it very closely this fall.
        The second thing on my list is the helmet. The cockpit of
    the airplane was designed around the concept of that helmet and
    the ability of the pilot to look through the structure of the
    airplane and to have all the things he needs in front of him in
    the visor of that helmet to operate effectively. There are a
    number of issues there that we have been working. As I
    mentioned earlier, we are kind of at the edge of acceptable,
    but we are not where we would like to be to get out of that. So
    that would be second.
        The third thing is the thing that came up a moment ago. It
    is reliability. We are not where we need to be on reliability
    right now. And I think we can do better on that. We are lagging
    behind our own goals by a significant margin right now in terms
    of the reliability that we are actually seeing on the airplane.
    We need to improve that.
        So those would be my top three, and I will let Chris add
    anything.
        Senator Shelby. General.
        General Bogdan. Sir, I would tell you software, software,
    software.
        But realistically Mr. Kendall got it right. Software is
    number one on the list, and he talked about that.
        Senator Shelby. But the software, if I could--and correct
    me if I am wrong--expanding software, you know, software that
    people are thinking up and putting together, that would help
    you expand the envelope of the capability of this plane, would
    it not?
        General Bogdan. Absolutely, sir.
        Senator Shelby. It is key. Go ahead.
        General Bogdan. First of all, just to give you some
    perspective, the airplane itself has 10 million lines of
    software code in it. That is about five times more than any
    other airplane we have ever developed. And that is just on the
    airplane. The off-board systems, the maintenance system, the
    mission planning system, has another 10 million lines of code
    on it. So this is virtually a flying computer.
        If you do not get the software right on this program, all
    of those things that General Welsh and the CNO and the Vice
    Commandant of the Marine Corps talked about are not going to
    work right. We have many sensors on the airplane and they all
    have to talk to each other to provide the pilot with the
    situational awareness he needs to go into those very high-
    threat environments. If you do not get the software talking
    right to those sensors, you will have a problem.
        The good news there is over the last 2 years, we have made
    significant progress in the way we develop, test, and field
    software on this program. I am cautiously optimistic that in
    the future what we have learned over the last 2 years can be
    applied to the future, but that does not mean that we are out
    of the woods yet because the hardest part of the software
    development on this program still lies ahead of us in our Block
    3, and that is where we attempt to take all the information
    from one's own airplane from another F-35 flying next to you
    and all the other sensors that we have in our arsenal and put
    that all together to give that pilot a picture.
        Senator Shelby. Do you believe you can do it?
        General Bogdan. I do, sir. And the reason why I believe
    that is--and I am cautiously optimistic--is because a lot of
    the foundation of what we need to do in 2016 and 2017 we are
    flight testing today. And it is working. It is not working
    perfectly, but there are no things that I look at in the future
    relative to software that I do not think we can overcome to be
    quite honest with you.
        A couple years ago, I am not sure we could have said that
    on the program partly because we had not flight tested much of
    it. But we have 40 percent of the flight testing done now, and
    we are starting to learn a lot more.
        One of the other things that Mr. Kendall did not mention
    that is always on my mind is the maintenance system on this
    airplane is a huge information technology system. We call it
    Acquisition Logistics Information System (ALIS). And what it
    does is it combines both the maintenance of the airplane, the
    supply chain for parts on the airplane, and the training for
    the maintainers and the pilots, and puts it all together. That
    system has great promise, but that system like any other
    complicated information system with software has got serious
    problems.
        What we did over the last year, instead of keeping that
    logistics/maintenance system in that part of the development
    program organizationally, we pulled it back underneath our
    engineering team. So they are dedicating the same kind of
    software work that we use on the airplane to the maintenance
    system. I believe over the next 2 years--and you can hold me
    accountable for this--we will see great improvement in the ALIS
    system.
        Senator Shelby. General Welsh, do you have anything to add
    to that?
        General Welsh. Senator, I am pretty confident because while
    it is not the same thing and it is not nearly as complex as
    doing it on the actual airplane, we have integrated this
    concept in the simulator, which has been working well for
    training for some time. Now, there are not as many lines of
    software code in the simulator, but the data integration
    concept works tremendously well. One pilot described it to me
    as if you are flying around in a 200-mile bubble of
    information. That is the concept behind the airplane. That is
    why the helmet is so important because that is how it is
    relayed to the pilot. Everything as a young fighter pilot, I
    grew up flying around thinking, ``Boy, I sure wish I knew X; X
    is now available to somebody flying the F-35.'' It is displayed
    for you in a very easy-to-understand concept. The biggest
    problem for the pilots is figuring out how do you manage the
    info. That is what they are focusing their training on.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Durbin. Thanks, Senator Shelby. It was a good
    question and it, I think, puts in perspective what we are
    talking about here. Who could have imagined 12 years ago, when
    somebody said let us do a Joint Strike Fighter, what the
    evolving threat would be that we face today and will face in
    the future and what the evolving technology would be? We could
    not have dreamed we would be carrying these around in our
    pocket. Maybe they could have but I would not have. And we are
    dealing with that.
        And it takes a sense of optimism, Mr. Secretary. I do not
    think that is a negative in every aspect. I think it is
    positive when it comes to our view as Americans facing
    challenges, meeting them head on, and conquering them. And
    despite some setbacks here, we are on the path now to the
    development of a plane that is going to make America safer.
        Thank you for your testimony today. We are going to have
    the second panel come on now, and I will come by and say
    goodbye to you and thank you for your testimony.
        Director of Operational Test and Evaluation, Michael
    Gilmore; from the GAO, Michael Sullivan; and from Brookings,
    Michael O'Hanlon will be the next panel.
        We are going to welcome the second panel here once we get
    nametags switched. There we go.
        Our first witness on the second panel is Director,
    Operational Test and Evaluation, the Honorable Michael Gilmore.
    Dr. Gilmore, please proceed. Your written statement will be
    part of the record and please proceed with your oral testimony.
    STATEMENT OF HON. DR. J. MICHAEL GILMORE, DIRECTOR,
                OPERATIONAL TEST AND EVALUATION
        Dr. Gilmore. All right. Thank you, Mr. Chairman, Senator
    Cochran, Senator Shelby.
        I agree with the statements that were made by a number of
    the previous panel members that the program now is on a much
    sounder basis than it was back in 2009 preceding the Nunn-
    McCurdy review and the restructuring and the technical baseline
    review that actually extended--all those activities extended
    into 2011. They put the program on a much firmer basis by
    taking a hard-nosed look, a rigorous look at past program
    performance. And I am not talking about ancient programs; I am
    talking about programs like the F-22--what it took to make
    those planes operational; what were realistic assumptions about
    what kind of testing actually needed to be done; and what kind
    of, they are called, test points needed to be flown; what could
    modeling and simulation really tell you versus what you needed
    to have the aircraft itself tell you; how many aircraft did you
    actually need to do testing.
        So we added a significant number of aircraft to conduct the
    test program. We added a substantial number of test points, not
    relying on modeling and simulation or unrealistic assumptions
    about so-called test efficiencies, which the Program Office,
    unfortunately, is beginning to talk about again.
        And I also agree with the statements that were made by
    Lieutenant General Bogdan and Mr. Kendall that there are many
    important challenges that remain. In particular, the Block 3F
    software, which is going to provide the most important combat
    capabilities, has yet to be flight tested. An earlier version
    of it is just beginning development.
        What is the history of flight testing that software up to
    this point? Well, as I looked at the most recent data from the
    Program Office in preparation for this hearing, as of the end
    of May of this year, not all of the Block 1 test points had
    been completed. They were supposed to have been completed some
    time ago.
        The Block 2A software flight test program was supposed to
    complete in February 2013 according to the integrated master
    schedule's version 7 that the Program Office is funded to. That
    did not occur. That flight testing did not finish at the end of
    February. And my estimate is that it could extend anywhere from
    January 2014 to August 2014.
        Block 2B in integrated master schedule 7, was supposed to
    finish flight testing in May 2014. My current estimate, based
    on the pressures that I see building in the program, is that it
    will finish around December 2014.
        Now, admittedly, these are not the multiple-year
    disconnects with reality that existed prior to 2009. These are
    6 to 12 months in schedule slippage relative to the integrated
    master schedule to which the program is funded. So that is
    obviously an improvement. But it does demonstrate that as many
    of the previous panel members said, this is an extremely
    complex undertaking, and it is very difficult to project with
    any certainty, although we are doing a much better job of it
    than we had been, how long it will take to finish all of these
    complex developments and demonstrate through testing that they
    actually work.
        Some of the previous panel members talked about 90 percent
    of the development being complete. Well, that depends upon how
    you define development. To me, the development is not complete
    until the military capabilities have actually been demonstrated
    through testing to work. Many of the panel members talked about
    development of the software being complete when it is actually
    available for the first time to be loaded into the aircraft.
    And what we are finding is that we discover a number of
    problems, many problems that require what is called regression
    testing and other testing to sort through and fix once we
    actually start the flight test program.
        I would note that the PEO, Lieutenant General Bogdan, noted
    that the Block 2B software program is just a few weeks out of
    step with his current schedule. And that is true, but his
    current schedule is based upon a rebaselining that the program
    did back in November 2012 that added 31 weeks to the
    development program for the Block 2B software and subtracted 31
    weeks from the flight test program. Now, that is a concern to
    me because what that means is the flight test program is
    undergoing an accordion like squeeze, and I am afraid that it
    may mean that some unrealistic assumptions are being made about
    flight test efficiencies.
        And so I hope that that decision to increase the 31 weeks
    needed for development of the software, which was prudent based
    on what we have been seeing, but to then subtract 31 weeks from
    the flight test program so that the endpoint, the fleet release
    of the 2B software, stays there in 2015 consistent with needs
    for operational testing and IOC in the Marine Corps--I hope
    that is not a harbinger of decisions that were made early in
    the last decade which yielded the need for the restructuring.
        Finally, you mentioned a concern about how do we reduce
    risk, what lessons should we learn. Mr. Kendall mentioned that
    we needed much more rigorous developmental testing and that we
    should wait longer before we begin production. I mean,
    production in this program started before there was any flight
    testing at all, which was unprecedented in the history of
    aircraft development programs. And so that is about as
    concurrent as you can get. That is pretty much 100 percent
    concurrency. Obviously, that is a bad thing.

                               PREPARED STATEMENT

        We need to have more rigorous developmental testing. We
    need to let that developmental testing proceed before we make
    production decisions. But let me also say that my experience
    with early operational assessments where we take versions of
    aircraft, tanks, other military equipment before a production
    decision is made, before a decision to go to low-rate initial
    production, put it in the hands of soldiers, sailors, airmen,
    and marines, let them tell us what the problems are that they
    see at that point, even though when we start low-rate initial
    production, we still have a ways to go in terms of developing
    all of the final capabilities, let the actual people who are
    going to have to use this equipment and rely on it tell us what
    the problems are that need to be urgently fixed before we ramp
    up to full-rate production.
        Under law, we do the initial operational test just prior to
    full-rate production, but I see great value to doing these
    operational assessments prior to a decision to begin that low-
    rate initial production.
        So I thank you and I look forward to your questions.
        [The statement follows:]

               Prepared Statement of Hon. Dr. J. Michael Gilmore

                              PROGRESS IN TESTING

        Mr. Chairman, Senator Cochran, members of the committee, my
    testimony reviews the progress made in flight and ground testing over
    the past year and provides an update to my fiscal year 2012 annual
    report on the Joint Strike Fighter (JSF) program. Testing has been
    productive in allowing expansion of the aircraft's flight envelope (the
    conditions under which aircraft are permitted to fly) in flight
    sciences and in demonstration of the limited mission systems
    capabilities provided by early software versions. However, problems
    revealed by ongoing testing, particularly of mission systems, have
    required additional time and effort to resolve relative to the
    program's plans, and the most challenging portions of the flight
    envelope and mission systems capabilities are yet to be tested.
    Consequently, if no relief is provided to current limits on the cost
    and schedule for completing System Design and Development (SDD), it is
    possible all the military capability now associated with the Block 3F
    versions of JSF will not be provided for operational testing in 2018.
    Nonetheless, since the conclusion of the 2011 re-planning of JSF
    testing that yielded Integrated Master Schedule 7, which in turn
    followed the 2010 technical baseline review, flight testing has been
    planned and executed using a much more realistic set of assumptions for
    achieving progress than had been used previously. Overall, through the
    past year, the rate of flight test sorties has met or slightly exceeded
    the plan and the volume of test points attempted nearly conforms to
    that planned. The resources added in test aircraft, staffing,
    instrumentation, and support equipment have made this possible.
    However, there have also been challenges that have required the program
    to add testing, such as to diagnose discoveries that have occurred in
    all types of flight test, regression testing (to verify corrections to
    problems did not create additional problems) of new mission systems and
    vehicle systems software, and investigations into unexpected
    shortcomings like that performed on the helmet mounted display system.
        None of the analyses conducted to date, by the Program Office or
    discussed in this testimony, have accounted for the effects of
    sequestration. Reduced funding for test resources and infrastructure
    while the F-35 is in development--such as reductions or elimination of
    funding for the McKinley lab, the test chambers, and support aircraft--
    will only add to the pressure to either extend SDD or accept reductions
    in capability. Additionally, reductions in developmental testing, which
    I understand are being considered by the Program Office, without the
    appropriate matching reductions in capability, will not remedy this
    situation. This approach would likely result in significant discoveries
    in operational testing and cause the program to extend until the
    discoveries are diagnosed and remedied.

                            FLIGHT SCIENCES PROGRESS

        Flight sciences testing in all three variants has focused on what
    is needed to provide the flight envelope expected for release of Block
    2B capability to the Services in 2015, which will provide a limited
    subset of the combat capability planned for Block 3F. Testing has been
    underway to achieve air refueling capability, increase combat
    maneuverability by evaluating performance in high angle-of-attack
    regimes, perform weapons integration tests, and prepare for shipboard
    operations/suitability testing for the F-35B and F-35C.
        The test centers were affected by two stop orders earlier this
    year. The F-35B fleet was grounded after the first British production
    aircraft, BK-1, experienced a fueldraulic line failure in the Short
    Take-off Vertical Landing (STOVL)-unique swivel nozzle at Eglin Air
    Force Base (AFB) on January 16, 2013. The cause was determined to be a
    poor manufacturing process used for the hoses, leading to crimping
    dimensions being out of specification; the stop order was lifted nearly
    4 weeks later on February 11, 2013, allowing all F-35B flights to
    resume. The entire F-35 fleet was grounded on February 21, 2013, after
    a crack was discovered on February 19, 2013, in one of the third stage
    low-pressure turbine blades in the engine of AF-2, a flight sciences
    test aircraft at Edwards. The cause of the crack was determined to be a
    rupture due to thermal creep, a condition where deformation of material
    forms from the accumulated exposure to elevated temperatures at high
    stress conditions. The stop order was lifted 1 week later, on February
    28, 2013, with the requirement for additional inspections of the
    engines to ensure the effects of creep, if they occur, are within
    tolerances. Discovery of excessive wear on the rudder hinge attachments
    on AF-2 in early March 2013 also affected availability of test
    aircraft. As a result, the test fleet was grounded for inspections and
    maintenance actions, including replacing part of the hinge on AF-2 and
    adding wear-preventing washers to the hinges of the rest of the test
    fleet. In total, AF-2 was down for 6 weeks for replacement of the
    engine and rudder hinge repair. BF-2 experienced a polyalphaolefin
    (PAO) coolant leak in February, grounding the aircraft for 77 days.
    Inflight refueling for the F-35A test fleet was expanded in January to
    allow nontest wing based tankers to support test flight operations,
    allowing for more efficient use of the test aircraft at Edwards.
        F-35A Flight Sciences.--Testing on the F-35A has included envelope
    expansion for weapons, continued examination of flutter and loads, and
    some high angle-of-attack testing. During early high angle-of-attack
    testing, problems with the air data computer algorithms were
    discovered, requiring an adjustment to the control laws in the air
    vehicle software. The updated control laws, once installed, permitted
    portions of the high angle-of-attack testing to continue; however, some
    portions of the testing will need to wait for the next update of
    software expected to be delivered to flight test in October. The result
    has been a delay in opening up high angle-of-attack portions of the
    envelope, which are required to realize the full capabilities,
    including flight envelope and weapons delivery, planned for Block 2B.
        As of the end of April, progress in test points required for 2B
    envelope fleet release is behind the plan for the year, having
    completed 473 of 614 points planned for completion through the end of
    April 2013, or 77 percent. Progress in weapons integration is also
    behind schedule, having completed only 7 of 19 total separation events
    versus the plan to have completed 14 events by the end of April.
    Accounting for test activity prior to calendar year 2013, the program
    has completed approximately three-fourths of the total number of test
    points needed to clear the Block 2B flight envelope for the F-35A.
        F-35B Flight Sciences.--Testing this year has focused on STOVL mode
    operations, in preparation for the second set of ship trials planned
    for August onboard the USS Wasp, Block 2B envelope expansion, air
    refueling, and weapons separations. High angle-of-attack testing has
    not started in the F-35B. Progress on test points for Block 2B envelope
    in 2013 is behind the plan through the end of April, as the test center
    has completed 152 of 371 planned points, or 41 percent. Only 6 of the
    24 total weapons separations for Block 2B had been completed, with 10
    planned to be completed by the end of April. Accounting for prior test
    activity, the program has completed approximately two-thirds of the
    total number of test points needed to clear the 2B flight envelope for
    the F-35B.
        F-35C Flight Sciences.--Test point progress has proceeded as
    planned so far this year for Block 2B envelope expansion in the F-35C;
    however, no weapons separations or high angle-of-attack testing has
    been completed. The first set of sea trials are scheduled to start in
    the summer of 2014 (June 30), with two test aircraft from the flight
    test center. The first of these two aircraft is scheduled to be
    modified with the updated arresting hook system and upgraded nose
    landing gear brace later this year, which will permit catapult and
    arresting hook testing to begin again. The second aircraft is scheduled
    to be modified in the spring of 2014. Testing for electromagnetic
    environmental effects will need to be completed on both aircraft prior
    to the ship trials as well.
        Progress on test points for the Block 2B envelope is slightly
    behind the plan through the end of April, as the test center has
    completed 574 of 599 planned points, or 96 percent. Accounting for
    prior test activity, the program has completed approximately 70 percent
    of the total number of test points needed to clear the Block 2B flight
    envelope for the F-35C.
        Buffet and transonic roll off (TRO) (when lift is unexpectedly lost
    on a portion of one wing) continue to be a concern to achieving
    operational combat capability for all variants. Control laws have been
    changed to reduce buffet and TRO, with some success; however, both
    problems persist in regions of the flight envelope, and are most severe
    in the C model. The program plans to assess the effects of buffet and
    TRO by collecting data while flying operationally representative flight
    profiles later this year, after the next version of air vehicle
    software is released to flight test. No further changes to the control
    laws are being considered, as further changes will adversely affect
    combat maneuverability or unacceptably increase accelerative loading on
    the aircraft's structure.

                            MISSION SYSTEMS PROGRESS

        Although mission systems testing has been able to keep pace with
    the program plans for generating sorties and accomplishing the test
    points, the program is falling behind in achieving progress in
    delivering capability. This lack of progress is caused in part by the
    need to add unplanned testing to evaluate problems, such as the 221
    added points for dedicated testing of the helmet mounted display
    system, as well as for regression testing of new software loads
    delivered to flight test, where 366 test points have been added already
    in calendar year 2013 to evaluate four new software releases. The test
    centers began flight testing Block 2A software in March 2012, and, as
    of the end of May 2013--15 months of flight testing later--had
    completed about only 35 percent of the 2A test points, all of which
    should have been completed by the end of February 2013, according to
    the integrated master schedule. The first build of Block 2B software
    was delivered to flight test in February 2013, and, as of the end of
    May 2013, 54 of 2,974 Block 2B baseline test points--less than 2
    percent--had been completed. As of the end of April 2013, 303 of 1,333
    total planned baseline mission systems test points for the year with
    all versions of software had been accomplished. An additional 532 added
    (or ``growth'') points were flown to evaluate discoveries and for
    regression testing, which is 2.5 times the growth allotted in flight
    test plans through the end of April 2013. If this trend in added
    testing is maintained throughout Block 2B development, completing
    flight test by October 2014, as reflected in the program's current
    plans, will not be possible.
        Additionally, mission systems software development and delivery to
    flight test have lagged behind the plan reflected in the program's
    integrated master schedule. The final Block 2B software configuration
    is now forecast to be delivered to flight test 8 months later than
    expected by the current integrated master schedule--a delay from August
    2013 to April 2014. The delay adds to the challenge of completing 2B
    flight test by October 2014, which is necessary to support an
    operational evaluation of Block 2B capability planned now to be
    conducted in calendar year 2015. Block 2B as now planned will provide
    limited capability to conduct combat. If Block 2B F-35 forces are used
    in combat, they would likely need significant support from other
    fourth-generation and fifth-generation combat systems to counter
    modern, existing threats, unless air superiority is somehow otherwise
    assured and the threat is cooperative. Reductions to this limited Block
    2B capability, particularly if they are taken in the remaining, harder-
    to-achieve capabilities that are yet to be tested, could be difficult
    for operators to accept if they expect to use Block 2B aircraft in
    combat against a capable adversary.
        Two of the additional aircraft expected by the program plan to
    support mission systems flight test, which were borrowed from
    operational test squadrons, were delivered to the test team in April
    2013. The mission systems flight test teams are accomplishing testing
    in the final Block 2A and early Block 2B configurations, which are
    comparable in providing more combat-relevant functionality than Block
    1, such as limited simulated weapons delivery, datalink, track fusion,
    and electronic warfare capability. Aircraft start-up problems continue
    during pre-flight operations. Flight test teams have also experienced
    several problems in flight such as lost data link messages, split
    target tracks, incorrectly fused tracks, and difficulty maintaining
    targets/scenes using the electro-optical tracking system. The program
    began a focused effort this year to determine the cause of position
    errors due to drift in the ownship kinematic model, which provides
    critical flight parameters and spatial situation awareness to the
    pilot. Errors from drift in vertical velocity must be resolved before
    certification for night or instrument meteorological flight is
    possible. In the coming weeks, testing of fixes and the capability to
    warn pilots drift is occurring will begin.
        The program has also dedicated 42 flights to investigating
    deficiencies in the helmet mounted display system. Seven aircraft from
    all three variants flew test missions from October 2012 through May
    2013 to investigate jitter in the helmet mounted display system, night
    vision camera acuity, latency in the Distributed Aperture System
    projection, and light leakage onto the helmet display under low-light
    conditions. Although some progress has been achieved, results of these
    tests have been mixed according to comments from the test pilots.
    Testing could not be completed within the full operational flight
    envelope evaluating mission-related tasks, as the full combat flight
    envelope has not been released. Filters for reducing the effects of
    jitter have been helpful, but have introduced instability, or
    ``swimming,'' of the projected symbology. Night vision acuity was
    assessed as not acceptable with the current night vision camera, but
    may be improved with the ISIE-11 camera under consideration by the
    program. Latency with the Distributed Aperture System projection has
    improved from earlier versions of software, but has not yet been tested
    in operationally representative scenarios. Light leakage onto the
    helmet display may be addressed with fine-tuning adjustments of the
    symbology brightness--a process pilots will have to accomplish as
    ambient and background levels of light change. Although not an
    objective of the dedicated testing, alignment and ``double vision''
    problems have also been identified by pilots and were noted in my
    report earlier this year on the F-35A Ready for Training Operational
    Utility Evaluation (OUE). Whether the progress achieved in resolving
    the problems discussed immediately above has been adequate will likely
    not be known with confidence until the Block 2B operational evaluation
    is conducted in 2015.
        Later this year, the program plans to begin testing mission systems
    Block 3i, which includes significant hardware changes to the aircraft's
    integrated core processor, electronic warfare processor,
    communications-navigation-identification processor, and the
    multifunction array (radar). Block 3i software is needed for Lot 6 (and
    beyond) production aircraft equipped with this new hardware to be able
    to fly. Initially, Block 3i capability will be more limited than the
    Block 2B capability that will be concurrently fielded. This is because
    the timeline to develop, test, and clear Block 3i for use in production
    aircraft next year requires that Block 3i start with an early Block 2B
    version in lab tests very soon this year; thus, the capability provided
    in Block3i will lag Block 2B by about 6 months. Maturing Block 3i
    hardware and software will be a significant challenge in the next 12 to
    18 months. Simultaneously, the program will need to make progress on
    Block 3F development. The ability of the program to successfully
    execute this concurrent software development is the most significant
    source of uncertainty regarding what combat capability the JSF will
    actually provide in 2018.

                              WEAPONS INTEGRATION

        Weapons integration progress has been very slow since it began last
    year. Safe separation testing for the laser-guided bomb, GBU-12, has
    been delayed until a new lanyard and lanyard routing procedure are
    available. Deficiencies, some of them recently discovered, in the
    electro-optical tracking system's ability to maintain a track have also
    hampered progress in laser-guided bomb employment testing. As a result,
    the first end-to-end GBU-12 weapons delivery test is not likely before
    October 2013. Integration of the AIM-120 medium-range missile has
    experienced problems that have been difficult to replicate in lab and
    ground testing. A safe separation event in which an AIM-120 missile was
    launched from a flight sciences aircraft occurred on June 5, 2013; this
    event was testing the ability to safely release the missile and ignite
    the rocket motor from the weapons bay--there was no target or sensor
    fusion providing track/guidance data. The first end-to-end weapons
    delivery test using AIM-120 missiles is not likely to occur before
    November 2013, and meeting this date depends upon implementing
    essential corrections to deficiencies in the mission systems software
    and completion of remaining safe separation testing. Testing with the
    Joint Direct Attack Munition (JDAM) found that the aircraft was not
    able to transfer position and velocity data accurately to the weapon, a
    procedure required to spatially align the weapon with the target and to
    determine launch parameters and support release. A fix to this
    alignment problem has been developed and recently tested, showing some
    improvement. However, additional fixes and testing are required to
    ensure the alignment problem is fully resolved and to permit JDAM
    weapons testing to proceed. The first end-to-end weapons delivery
    testing with the JDAM weapon is not likely to occur before December
    2013. Several deficiencies of the mission systems and fire-control
    system have been identified as ``must fix'' by the test team in order
    for weapons integration to proceed. For example, a problem with
    erroneous target coordinates derived from the synthetic aperture radar
    mapping function, for which a potential fix has recently entered flight
    test, and problems with the electro-optical tracking system mentioned
    above, have significantly delayed weapons integration tests. The result
    is that approximately 9 months of margin for regression and discovery
    in weapons integration test plans has been used before the first end-
    to-end developmental test event, and there is no margin remaining in
    the schedule for completing testing and achieving integrations of both
    the Block 2B or Block 3F weapons capabilities. Consequently, the final
    Block 3F weapon integration tests are likely to be completed in late
    2017, instead of fall 2016. This will make beginning operational
    testing of Block 3F in January 2018 a challenge.

                                FATIGUE TESTING

        Durability testing of all three variant ground test articles has
    progressed as scheduled and the number and frequency of discoveries
    have been consistent with what has been observed in testing of previous
    fighter aircraft. The first of two aircraft lifetimes of testing has
    been completed on the F-35A and F-35B; detailed inspections are
    ongoing. Discoveries this year on the F-35A test article include cracks
    in the engine thrust mount shear webs on both sides of the aircraft,
    which are designed to carry some of the fore and aft engine load, and a
    crack in the frame of the web stiffener located at fuselage station
    402. The program has redesigned the thrust mounts for production cut in
    with Low-Rate Initial Production 6, and retrofits to be completed on
    earlier aircraft during depot modification periods. Root cause,
    corrective action, and modification plans for the frame crack are to be
    determined. Second lifetime testing for the F-35A is scheduled to start
    in September 2013. The program plans to conduct third lifetime testing
    on the F-35A test article beginning in the second quarter of calendar
    year 2015.
        Discoveries in the F-35B include cracks on the left and right hand
    sides of the wing aft spar lower flanges and cracking in the frame of
    the jack point stiffener, a portion of the support frame outboard of
    the main fuselage above the main landing gear designed to support load
    bearing of the aircraft during jacking operations. Redesign,
    modification, and retrofit plans for these discoveries have not yet
    been determined by the program. Second lifetime testing for the F-35B
    is schedule to start in August 2013. Durability testing of the
    redesigned auxiliary air inlet doors through two lifetimes (full test)
    was completed on March 29, 2013. The program is investigating two
    issues observed during testing, both of which involve the crank
    assembly used to open and close the doors and were awaiting resolution
    at the time of this testimony.
        The F-35C fatigue test article restarted testing on January 9,
    2013, after previously completing 4,000 hours of testing and associated
    inspections; it has now completed 6,869 equivalent flight hours of
    testing, or 86 percent of the first lifetime, as of May 21, 2013. The
    program expects to complete first lifetime testing in August 2013.
    Discovery of cracks in the floor of the avionics bay housing in
    February 2013 caused a 2-month pause in testing while interim repairs
    were completed, allowing testing to continue. Less than 1,000 hours of
    testing later, more cracks were found in the floor of the avionics bay
    housing and, similar to the F-35B, cracking in the frame of the jack
    point stiffener was also discovered. Repairs, modifications, and
    retrofits need to resolve these discoveries are to be determined. The
    program plans to restart testing on June 12, 2013.

                                TRAINING SYSTEM

        I reported on the F-35A Ready for Training OUE in February of this
    year. In mid-2010, the JSF Program Executive Officer (PEO) requested an
    assessment of the readiness to begin F-35A pilot training, which, at
    that time, was planned to begin in August 2011. Throughout 2011 and
    part of 2012, the JSF Program Office and the Air Force worked to
    achieve a flight clearance that would allow pilot training to begin.
    The JSF Operational Test Team (JOTT) completed a test plan using
    evaluation criteria developed by Air Force Air Education and Training
    Command (AETC) in mid-2011. The JSF PEO certified the system ready for
    test following an Operational Test Readiness Review in July 2012,
    leading to the start of the OUE in September.
        The JOTT, JSF Program Office, and Air Force Air Education and
    Training Command designed the Ready for Training OUE to assess whether
    the F-35A aircraft and the training system were ready to begin training
    pilots in the Block 1A syllabus. The Block 1A syllabus includes basic
    aircraft systems training, emergency operating procedures, simulated
    instrument flying procedures, ground operations (taxi), and six flights
    in the F-35A, the last of which is a qualification and instrument
    procedures check ride.
        The Block 1A training syllabus used during the OUE was
    substantially limited by the restrictions of the aircraft. Aircraft
    operating limitations prohibited flying the aircraft at night or in
    instrument meteorological conditions; hence, pilots needed to avoid
    clouds and other weather. However, the student pilots are able to
    simulate instrument flight in visual meteorological conditions to
    practice basic instrument procedures. These restrictions were in place
    because testing has not been completed to certify the aircraft for
    night and instrument flight. These restrictions are still in place on
    the training system.
        The aircraft also were prohibited from flying close formation,
    aerobatics, and stalls, all of which would normally be in this early
    familiarization phase of transition training that typically is an
    introduction to aircraft systems, handling characteristics throughout
    the aircraft envelope, and qualification to operate/land in visual and
    instrument meteorological conditions. This familiarization phase is
    about one-fourth of the training in a typical fighter aircraft
    transition or requalification course. In a mature fighter aircraft, the
    familiarization phase is followed by several combat-oriented phases,
    such as air combat, surface attack, and night tactical operations.
    During the OUE, the F-35A did not have the capability to train in these
    phases, nor any actual combat capability, because it is still early in
    system development. The first F-35A aircraft configured in the Block 2A
    capability, which will possess a limited ability to simulate weapons
    deliveries, are being delivered to Eglin AFB this month. This may
    enable more combat-oriented training, albeit still limited by envelope
    restrictions and lacking integrated mission systems capability.
        During the OUE, sustainment of the six Block 1A F-35A aircraft was
    sufficient to meet the student training sortie requirements of the
    syllabus, but with substantial resources and workarounds in place. Some
    aircraft subsystems, such as the radar, did not function properly
    during the OUE, although they were not required for accomplishing the
    basic syllabus events. Had the syllabus been more expansive, where
    these subsystems were required to complete training, these subsystem
    problems would have hampered the completion of the OUE. Three
    additional F-35A aircraft in the Block 1B configuration were also flown
    during the OUE, by the instructor pilots, to meet sortie requirements.
        The limitations, workarounds, and restrictions in place in an air
    system this early in development limit the utility of training. Also,
    little can be learned from evaluating training in a system this
    immature. However, the evaluation indicated areas where the program
    needs to focus attention and make improvements. The radar, the pilot's
    helmet mounted display system, and the cockpit interfaces for
    controlling the radios and navigational functions should be improved.
    Discrepancies between the courseware and the flight manuals were
    frequently observed, and the timelines to fix or update courseware
    should be shortened. The training management system lags in development
    compared to the rest of the Integrated Training Center and does not yet
    have all planned functionality.
        Since the OUE completed in November 2012, all six of the Block 1A
    F-35A aircraft have been modified to the Block 1B configuration.
    Training is ongoing at Eglin in the 9 Block 1B F-35As for the Air Force
    and in the 11 Block 1B F-35Bs assigned to the Marine Corps.
    Additionally, Eglin accepted its first Block 2A-configured F-35A in
    May, which will be used for training in an expanded syllabus currently
    under development. The Air Force intends to start training pilots in a
    Block 2A syllabus in early 2014.

                                SHIP INTEGRATION

        The program plans to conduct the second set of ship trials with two
    F-35B test aircraft in August 2013. Test objectives for this deployment
    include conducting night operations, carrying stores, evaluating the
    carrier landing system, and expanding the take-off and vertical landing
    envelope for varying wind-over-deck conditions and for a broader range
    of aircraft weight and center of gravity conditions. Flying qualities
    with an updated version of control software, based on data taken during
    the first deployment, will be assessed. Two SDD test aircraft will be
    operated by program test pilots during the test. Minimal changes to USS
    Wasp are anticipated, as this will be the second deployment to the
    ship. Some restrictions to the electromagnetic environment on the ship
    may be necessary as a result of the electromagnetic environmental
    effects testing on the aircraft. The logistics support environment will
    not be representative of fleet operations; rather, it will be similar
    to that used in the first ship trials in 2011 that employed workarounds
    to reach back to land-based systems and personnel as necessary to
    sustain operations.
        The test center also plans to train additional test pilots to be
    qualified in STOVL operations for the deployment, and for conducting
    land-based work-up maneuvers.
        The program intends to conduct the first set of carrier-based ship
    trials with two F-35C test aircraft in the summer of 2014. The
    prerequisite activity with the aircraft leading up to the sea-borne
    trials is extensive. The new arresting hook system--which has yet to
    start the planned verification, structural, or durability testing--will
    have to be installed on both aircraft, and shore-based roll-in testing
    and hook engagement testing completed with one aircraft, which will
    compose approximately 6 months of testing. An improved nose landing
    gear drag brace, required for catapult launches, will also be a part of
    the pre-deployment set of modifications. Both aircraft will need to
    undergo electromagnetic environmental effects testing prior to
    deployment. For the carrier, the Department of the Navy is working
    integration issues that will need to be resolved prior to the first
    operational deployment, but will not necessarily be solved prior to the
    first set of ship trials. Examples of integration issues include
    storage of the lithium-ion batteries on the carrier, resupplying
    engines while underway, and integration of the autonomic logistics
    information system. Some initial noise and thermal effects testing have
    been completed at land-based test facilities, and will be a part of the
    test activity during the first ship trial period. Modifications of the
    jet blast deflector system on the carrier may be necessary prior to the
    ship-borne trials to ensure adequate cooling of the deflector during
    JSF operations.

                         LIVE FIRE TEST AND EVALUATION

        F-35 survivability is heavily dependent on its low-observability
    features, advanced electronic systems (e.g., advanced sensors for
    situational awareness, multispectral data fusion, datalinks, etc.), and
    its advanced countermeasures. These features work together to reduce F-
    35 threat susceptibility. However, no amount of susceptibility
    reduction can eliminate the possibility of an F-35 being successfully
    engaged, either by ground-based threats or by enemy aircraft,
    particularly during high-risk missions such as visual close air support
    and within-visual-range air-to-air combat (i.e., ``dog fighting''). In
    such cases, the F-35 survivability can largely depend on its ability to
    tolerate threat-induced damage; that is, its vulnerability reduction
    features.
        Live fire tests and analyses conducted during the last year focused
    on the threats involved in these types of high-risk engagements to
    assess the vulnerability of the F-35 propulsion system and to identify
    any risks to propulsion integration, flight transition, stability and
    control, and airframe structure:
      --A range of operationally realistic threat encounter conditions were
            considered in tests that evaluated engine vulnerability to fuel
            ingestion events. Tests have shown that the engine can tolerate
            ingestion of fuel leak rates representative of single-missile
            fragment-induced damage to fuel tanks surrounding the engine
            inlet. Further analysis is required to assess the impact of
            multiple fragments, which are probable in any case where a
            missile achieves a near miss on the aircraft, on engine
            response to fuel ingestion. A Concept Demonstrator Aircraft
            engine test in fiscal year 2005 showed that the engine could
            not tolerate ingestion of fuel leak rates representative of
            damage from a larger gun projectile impacting at low-altitude,
            high-speed and high-engine thrust--a type of encounter that
            might be expected on a close-air support mission.
        The program made no design changes in response to these test
    results. This vulnerability, accepted by the program leadership,
    remains in the final, production engine design. The implications of
    this vulnerability are exacerbated by the program's previous decision
    to remove a fuel tank ballistic liner during its weight-reduction
    efforts, saving 48 pounds. The ballistic liner could have reduced
    threat-induced fuel leakage to levels this single-engine aircraft can
    tolerate. A follow-on ballistic test is planned to re-evaluate
    vulnerability to fuel ingestion.
      --F-35B lift system live fire testing showed the system is tolerant
            to selected single missile fragments. The single fragment-
            induced damage to the lift fan produced in this test did not
            degrade the overall propulsion system performance. Nonetheless,
            analysis predicts that fragment-induced damage could result in
            more severe effects that could lead to catastrophic lift system
            failure (e.g., more than 25 percent lift fan blade loss leading
            to fan disintegration) as a consequence of certain engagements.
            To preserve the test article for future engine tests, such
            engagement conditions were not tested. Other more severe
            threats expected to be encountered in low-altitude flights or
            air-to-air gun engagements, considered likely to cause critical
            system failures leading to aircraft loss, were not tested
            because their effects are well understood. Additional testing
            of the sensitivities of the F-35B propulsion system to clutch
            and shaft damage needs to be conducted.
      --The tests also considered diagnostics to inform the pilot of
            propulsion system damage. Damage to the static lift system
            received in combat may not be detectable until the lift system
            is engaged for a landing. The quickly accelerating fan might
            fail catastrophically before the pilot can react and return the
            aircraft to wing-borne flight. There are no sensors to warn the
            pilot of damage to the system to prevent this situation.
            Sensors in the Prognostics and Health Monitoring system monitor
            rotating component vibrations for maintenance purposes and
            could provide some warning, but they are not sufficiently
            qualified to provide information to the pilot nor any timely
            warning regarding damage to the vast majority of lift system
            components. To ensure no aircraft is lost due to lift system,
            engine, or control failures, it is imperative that the pilot be
            aware of damage that occurred during regular flight to the F-
            35B propulsion system at the earliest possible time when
            converting to STOVL flight. Data analyses are ongoing to
            identify controllability and damage indications that might be
            available to the pilot.
        Live fire test and evaluation (LFT&E) activities have also focused
    on other concerns:
      --On-Board Inert Gas Generator System (OBIGGS).--The program
            completed the OBIGGS/lightning protection Critical Design
            Review in February 2013. F-35B fuel system simulator testing
            and ground tests on all three variants will be conducted in the
            near term to verify that the redesigned system can provide fuel
            tank protection from lightning and from threat induced fuel
            tank explosion. Testing will include a spectrum of mission
            profiles including high decent-rate dives to ensure OBIGGS
            effectiveness without compromising fuel tank and wing structure
            integrity. Inflight inerting protects the aircraft against
            catastrophic fuel tank explosions, but not against damage to
            the airframe resulting from lightning-induced currents. While
            most line-replaceable units (e.g., actuators, components of the
            electrical power system) have passed lightning tolerance
            qualification testing, the existing F-35 airframe fasteners,
            selected to satisfy weight reduction criteria, are not
            lightning tolerant. Airframe inspections will be required
            following known lighting strikes, which may be costly since
            access to many fasteners is limited and penetrations though the
            aircraft skin will be required. Lightning tolerance
            qualification testing for any remaining components, along with
            current injection tests, still need to be completed before
            lifting the current restrictions upon aircraft operating within
            25 miles of known lightning. The concept for providing
            lightning protection for aircraft on the ground requires
            periodic re-inerting of static aircraft using nitrogen bottle
            carts to purge combustible air that diffuses back into the fuel
            system over time. This approach could be very resource
            intensive for an operational F-35 unit, requiring manpower and
            sufficient nitrogen to re-inert each aircraft as often as every
            24 hours. The program is evaluating the practicality of this
            approach before considering its implementation.
      --Polyalphaolefin Shut-Off Valve.--In fiscal year 2012, following
            live fire tests that demonstrated F-35 vulnerability to
            polyalphaolefin (PAO) fire (underneath the cockpit area), the
            program re-evaluated installing a PAO shutoff system. In 2008,
            the previous Director, Operational Test and Evaluation
            recommended retaining this design feature after the program
            decided on removal for weight reduction. Lockheed Martin is
            working to design a PAO shutoff system providing the
            sensitivity to detect leaks and respond with shutoff that
            testing has demonstrated is needed. However, the design
            solution details, results from cost/benefit studies, and the
            official decision to reinstate this vulnerability reduction
            feature, are not yet available.
      --Fueldraulic Fuses.--A live fire test in fiscal year 2012
            demonstrated the fueldraulics system is vulnerable to missile
            fragments resulting in potential fire and loss of aircraft. An
            F-35B engine fueldraulics line failure during a routine test
            flight in January 2013 demonstrated a similar safety-related
            concern with the fueldraulics system. The F-35 program should
            reinstate an effective fueldraulics shutoff to inhibit fuel
            flow in the event of a system leak. The fueldraulic shutoff
            feature would mitigate a vulnerability that could be a result
            of either threat-induced damage or system/mechanical failure.
      --Chemical/Biological Vulnerability.--The program continues to make
            progress in the development of the decontamination system in
            preparation for the fiscal year 2017 full-up system-level test.
            The Joint Service Aircrew Mask variant for the F-35, however,
            has a high schedule risk because of the requirements for
            integration with the F-35's helmet mounted display system.
      --Gun Ammunition Lethality.--The U.S. Air Force is leading an
            evaluation of a new frangible armor piercing design for the F-
            35A ammunition; the Navy is evaluating existing PGU-32 semi-
            armor piercing high explosive incendiary ammunition for the F-
            35B and F-35C; and the Norwegian Ministry of Defense is
            evaluating a new armor piercing explosive ammunition for its F-
            35A variant and possibly the U.S. F-35B and F-35C variants.
            Terminal ballistic tests of all ammunition variants against
            common vehicle armor and masonry wall designs will start in
            fiscal year 2013 and continue in fiscal year 2014. All test
            data will feed Joint Munitions Effectiveness Models.

                                  SUITABILITY

        A logistics test and evaluation of the initial fielded release of
    the Autonomic Logistics Information System (ALIS) version 1.0.3,
    required to support the acceptance and flight operations of Block 1B
    and 2A aircraft at Eglin, Edwards, Yuma and Nellis AFBs, was conducted
    between September and October 2012. The test was conducted at Edwards
    using two of the mission systems test aircraft updated with software to
    be compatible with the new version of ALIS. The first version of ALIS
    software used in the test, version 1.0.3A3, was found to be deficient
    in response times at the beginning of the evaluation period, and an
    updated software version--1.0.3A3.1--was developed and fielded to
    permit the evaluation to proceed. Subsequent testing revealed numerous
    significant deficiencies in ALIS, such as inaccurate recording of
    component life--a key component of the prognostic health function--as
    well as the health management component of the system requiring
    unneeded, excessive grounding of aircraft. Post-flight delays in data
    transfer lengthened aircraft turnaround time. Overall, 58 deficiency
    reports were submitted from the evaluation, 4 of which were critical
    (designated as Category 1) and the test team recommended not fielding
    ALIS 1.0.3A3.1. The program developed and released another version of
    the ALIS 1.0.3 software, version 1.0.3A3.2, to address some of the
    deficiencies and more testing was accomplished in December 2012. The
    software update allowed for manual data entries, vice relying on
    automated processes embedded in the aircraft, to transfer data to ALIS.
    Although the test team considered the software to be adequate for
    fielding--and the 1.0.3A3.2 version is in use at Yuma, Nellis, and
    Edwards AFBs (for the operational test aircraft)--the reliance on
    manual data entry is laborious, prone to error, and not consistent with
    the lean design of maintenance support expected for fielded operations.
        The most recent reliability data for the F-35 fleet indicate that
    all variants are currently below planned reliability performance for
    failures directly chargeable to the primary contractors as well as for
    flying hours between critical failures. The F-35A's demonstrated flying
    time between critical failures is below 50 percent of the planned
    level, while the F-35B and F-35C are just over 70 percent of the
    planned level. The following subsystems have been problematic:
      --Upper lift fan door actuator (F-35B only);
      --Thermal management system fan;
      --Nose landing gear brake assembly (F-35A/B only);
      --270 volt DC battery;
      --80 kW inverter/converter/controller;
      --Augmentor fuel pump;
      --Open-loop compressor isolation valve;
      --Sensor for display processor, thermal management system;
      --Ventilation nacelle fan; and
      --Display management computer/helmet.
        The direct time maintainers currently spend working on each
    aircraft per flying hour is less than required for the full operational
    system. However, fielded aircraft currently have very few functional
    mission systems and no weapons capabilities, which resulted in fewer
    failure modes and less demands on maintainer time. Additionally, direct
    maintenance time does not include time spent on Action Requests
    maintainers submit to Lockheed Martin when they cannot find a solution
    to a maintenance problem in the aircraft technical data, or if they do
    not trust results from the prognostic health management system.
    Maintainers cannot proceed without a response to an Action Request. As
    both the technical data and prognostic health management system are
    immature, maintainers required a great deal of unreported time to deal
    with Action Requests. As the program matures, the time needed to
    fulfill Action Requests should decrease.

                               ELECTRONIC WARFARE

        Early in 2012, I identified several critical shortfalls in test
    resources needed to faithfully replicate current threats to JSF and
    other weapon systems. These deficiencies in test capability prevent
    adequate developmental and operational testing of the F-35. The
    Department's budget now includes resources for improvements to open-air
    range capabilities, an anechoic chamber, and the JSF electronic
    warfare-reprogramming laboratory. We need to maintain a high degree of
    urgency within the offices that have been made responsible for
    delivering these resources to assure they will be available in time to
    support JSF Block 3F operational testing in 2018; otherwise, that
    testing will be delayed.

        Senator Durbin. Thank you very much, Dr. Gilmore.
        Mr. Sullivan.

    STATEMENT OF MICHAEL J. SULLIVAN, DIRECTOR, ACQUISITION
                AND SOURCING MANAGEMENT TEAM, U.S.
                GOVERNMENT ACCOUNTABILITY OFFICE
        Mr. Sullivan. Thank you, Mr. Chairman, Senator Cochran,
    Senator Shelby. It is a pleasure to be here this morning to
    discuss the F-35 Joint Strike Fighter acquisition program.
        As the chairman pointed out, the program is now 12 years
    old, having begun in 2001. Since then, its development cost has
    grown by more than $20 billion, and the estimated average cost
    to buy one F-35 has doubled from about $69 million to $137
    million. Clearly, the program's original business case was
    deeply flawed.
        In 2012, after the program breached its cost estimate, the
    Department did reset its business case. You talked about that
    in the first panel. They added significant dollars to the cost
    estimate, more time to deliver aircraft, and since then, the
    manufacturing process appears to have stabilized and has shown
    progress in delivering F-35 aircraft.
        Today, however, we are here to discuss risks to this reset
    business case moving forward, and from our perspective, there
    are three. These are software development, concurrency between
    flight testing and production, and the funding assumptions from
    the program that underpin the current business case.
        In the area of software development, the F-35 will depend
    on about 24 million lines of software code, both on and off the
    aircraft, to be able to fly and to meet its missions. Today
    software delivery has continued to lag behind, and the
    contractor continues to struggle to meet schedules. As long as
    software delivery is questionable, the initial capability of
    the aircraft is at risk.
        With regard to concurrency, the program is now negotiating
    its sixth and seventh production lots of aircraft. When that
    negotiation is complete, it will have invested about $34
    billion to procure 150 aircraft with less than half of the
    flight testing completed. As we have heard repeatedly on the
    first panel and from Dr. Gilmore, this creates risks that
    problems found during testing will force design changes that
    will have to be retrofit onto aircraft in production or already
    delivered at additional cost to the Government.
        Finally, the program's current cost estimate assumes annual
    funding of more than $12 billion on average for development and
    procurement over the next 24 years and continues to estimate
    operation and support costs at over $1 trillion across the F-
    35's 30-year lifecycle. The Department has already deemed this
    unaffordable. It is setting targets to try to reduce this, and
    the Congress may want to consider whether these funding
    assumptions are reasonable in our current fiscal environment.

                               PREPARED STATEMENT

        From our perspective, these are the risks that this
    committee must weigh as the program moves forward. As it stands
    today, the Department plans to buy almost 2,500 aircraft to
    replace and improve upon today's fleet. If these risks are not
    controlled and the cost of the F-35 grows much more, the
    program is in danger of falling into a much too familiar cycle
    of quantity reductions in order to meet budget, and that will
    result in less buying power for the Department. It would also
    force decisionmakers to consider other options for maintaining
    our tactical fleet.
        With that, I will conclude, Mr. Chairman. I would be happy
    to answer questions.
        [The statement follows:]

                   Prepared Statement of Michael J. Sullivan

    F-35 JOINT STRIKE FIGHTER: RESTRUCTURING HAS IMPROVED THE PROGRAM, BUT
                AFFORDABILITY CHALLENGES AND OTHER RISKS REMAIN

        Chairman Durbin, Ranking Member Cochran, and members of the
    subcommittee: Thank you for the opportunity to discuss our work on the
    F-35 Lightning II, also known as the Joint Strike Fighter (JSF). At a
    cost approaching $400 billion, the F-35 is the Department of Defense's
    (DOD) most costly and ambitious acquisition program. The program is
    developing and fielding three aircraft variants for the Air Force,
    Navy, and Marine Corps and eight international partners. The F-35 is
    the linchpin of U.S. and partner plans to replace existing fighters and
    support future combat operations. In a time of austere Federal budgets,
    DOD continues to project significant long-term sustained funding
    requirements for the F-35 while, at the same time, pursuing several
    other expensive systems. Over the past 3 years, DOD has extensively
    restructured the F-35 program to address poor cost, schedule, and
    performance outcomes. Most recently, in March 2012, DOD established a
    new, more realistic, F-35 acquisition program baseline that reflects
    increased costs, longer schedule times, and deferred procurement of 410
    aircraft to the future. Appendix I tracks program baseline changes
    since the start of system development in 2001.\1\
    ---------------------------------------------------------------------------
        \1\ See GAO Highlights at the end of this statement.
    ---------------------------------------------------------------------------
        We have reported annually on F-35 issues since 2005.\2\ My
    testimony today is largely based on the results of our latest
    review,\3\ and addresses (1) the progress the F-35 program made in 2012
    and (2) the major risks that the program faces going forward. To
    conduct our work, we reviewed program status reports and briefings,
    management objectives, test plans and results, and internal DOD
    analyses with a focus on accomplishments in calendar year 2012 compared
    to original plans for that year. We obtained manufacturing data and
    cumulative outputs from the start of production in 2007 through the end
    of 2012, and discussed development and production issues and results to
    date, future expansion plans, and improvement efforts with DOD, F-35
    program, and contractor officials. We toured the aircraft manufacturing
    plant, obtained production and supply performance indicators,
    identified cumulative and projected engineering changes, and discussed
    factory improvements and management controls with members of the
    contractor's work force and DOD plant representatives. We evaluated
    DOD's restructuring actions and impacts on the program, tracked cost
    and schedule changes from program start to the March 2012 baseline, and
    determined factors driving the changes. We obtained current projections
    of acquisition funding needs through 2037 and estimated lifecycle
    sustainment funding requirements. We conducted this work in accordance
    with generally accepted government auditing standards.
    ---------------------------------------------------------------------------
        \2\ See related GAO products at the end of this statement.
        \3\ GAO, F-35 Joint Strike Fighter: Current Outlook Is Improved,
    but Long-Term Affordability Is a Major Concern, GAO-13-309 (Washington,
    DC: March 11, 2013).
    ---------------------------------------------------------------------------
                   F-35 PROGRAM PERFORMANCE IMPROVED IN 2012

        The F-35 program made progress in 2012 on several fronts. The
    program met or substantially met most of its key management and
    development testing objectives for the year. We also found that the
    program made progress in addressing key technical risks, as well as
    improving software management, manufacturing, and supply processes.
    Most Management and Development Testing Objectives Were Achieved
        The F-35 program met or substantially met most of its key
    management objectives established for calendar year 2012. The program
    office annually establishes major management objectives that it wants
    to achieve in the upcoming year. The F-35 program achieved 7 of its 10
    primary objectives in 2012. Those included, among other things, the
    completion of development testing on early increments of software, the
    beginning of lab testing for both variations of the helmet mounted
    display, the beginning of pilot training for two aircraft variants, and
    the completion of negotiations on the restructured development
    contract. Although the program did not complete its software block 3
    \4\ critical design review as planned in 2012, it did successfully
    complete its block 3 preliminary design review in November 2012 and the
    critical design review in late January 2013. The program did not meet
    its objectives to (1) deliver 40 production aircraft in 2012 and (2)
    receive approval from the Defense Contract Management Agency of the
    contractor's plan for correcting deficiencies in its system for
    tracking and reporting cost and schedule progress.\5\
    ---------------------------------------------------------------------------
        \4\ Software capabilities are developed, tested, and delivered in
    three major blocks. Block 3 is to provide the F-35 its full warfighting
    capability.
        \5\ This specifically refers to the contractor's Earned Value
    Management System, which has been found to be deficient. Earned value
    management is a disciplined process for tracking, controlling, and
    reporting contract costs and schedule. DOD requires its use by major
    defense suppliers to facilitate good insight and oversight of the
    expenditure of Government dollars.
    ---------------------------------------------------------------------------
        The F-35 development flight test program also substantially met
    2012 expectations with some revisions to original plans. The program
    exceeded its planned number of flights by 18 percent, although it fell
    short of its plan in terms of test points \6\ flown by about 3 percent,
    suggesting that the flights flown were not as productive as expected.
    Test officials had to make several adjustments to plans during the year
    due to operating and performance limitations with aircraft and late
    releases of software to test. As a result, none of the three variants
    completed all of their planned 2012 baseline points, but the test team
    was able to add and complete some test points that had been planned for
    future years. Testing accomplished on each of the aircraft variants in
    2012 included:
    ---------------------------------------------------------------------------
        \6\ Flight test points are specific, quantifiable objectives in
    flight plans that are needed to verify aircraft design and performance.
    ---------------------------------------------------------------------------
      --Conventional Takeoff and Landing Variant (F-35A).--Accomplished
            high angle of attack testing, initial weapons separation,
            engine air start, expansion of the airspeed and altitude
            envelopes, and evaluated flying qualities with internal and
            external weapons.\7\
    ---------------------------------------------------------------------------
        \7\ Due primarily to operating restrictions and deficiencies in the
    air refueling system, the F-35A did not accomplish as many flights as
    planned and fell short of planned test points by about 15 percent.
    ---------------------------------------------------------------------------
      --Short Takeoff and Vertical Landing Variant (F-35B).--Accomplished
            the first weapons release, engine air start tests, fuel dump
            operations, flight envelope expansion with weapons loaded,
            radar signature testing, and tested re-design air inlet doors
            for vertical lift operations.
      --Carrier Suitable Variant (F-35C).--Conducted speed and altitude
            range verification and flights with external weapons, prepared
            for simulated carrier landings, and conducted shore-based tests
            of a redesigned arresting hook.

    Progress Made in Addressing Key Technical Risks
        In 2012, the F-35 program also made considerable progress in
    addressing four areas of technical risk that if left unaddressed could
    substantially degrade the F-35's capabilities and mission
    effectiveness. However, additional work remains to fully address those
    risks. These risk areas and the actions taken in 2012 are discussed
    below:
        1.  Helmet Mounted Display (HMD).--DOD continued to address
    technical issues with the HMD system. The original helmet mounted
    display, integral to mission systems, encountered significant technical
    deficiencies and did not meet warfighter requirements. The program is
    pursuing a dual path by developing a second, less capable helmet while
    working to fix the first helmet design. In 2012, DOD began dedicated
    ground and flight testing to address these issues. Both variations of
    the helmet mounted display are being evaluated and program and
    contractor officials told us that they have increased confidence that
    the helmet deficiencies will be fixed. DOD may make a decision in 2013
    as to which helmet to procure.
        2.  Autonomic Logistics Information System (ALIS).--ALIS is an
    important tool to predict and diagnose aircraft maintenance and supply
    issues. ALIS systems with limited capability are in use at training and
    testing locations. More capable versions of ALIS are being developed
    and program and contractor officials believe that the program is on
    track to fix previously identified shortcomings and field the fully
    capable system in 2015. Limited progress was made in 2012 on developing
    a smaller, transportable version needed to support unit level
    deployments to operating locations.
        3.  Arresting Hook System.--The carrier variant arresting hook
    system was redesigned after the original hook was found to be
    deficient, which prevented active carrier trials. The program
    accomplished risk reduction testing of a redesigned hook point to
    inform this new design. The preliminary design review was conducted in
    August 2012 and the critical design review in February 2013. Flight
    testing of the redesigned system is slated for late 2013.
        4.  Structural Durability.--Over time, testing has discovered
    bulkhead and rib cracks on the aircraft. Structural and durability
    testing to verify that all three variants can achieve their expected
    life and identify life-limited parts was completed in 2012. The program
    is testing some redesigned structures and planning other modifications.
    Officials plan to retrofit and test a production aircraft already built
    and make changes to the production line for subsequent aircraft.
    Current projections show the aircraft and modifications remain within
    weight targets.

    Software Management and Output Improved
        In 2012, the F-35 aircraft contractor and program office took steps
    to improve the program's software management and output. The program
    began the process of establishing a second system integration
    laboratory, adding substantial testing and development capacity. The
    program also began prioritizing and focusing its resources on
    incremental software development as opposed to the much riskier
    concurrent development approach. In addition, the program began
    implementing improvement initiatives recommended by an independent
    software review, and evaluated the possible deferral of some of the
    aircraft's capabilities to later blocks or moving them outside of the
    current F-35 program altogether. At the same time, program data
    regarding software output showed improvement. For example, program
    officials reported that the time it took to fix software defects
    decreased from 180 days to 55 days, and the time it took to build and
    release software for testing decreased from 187 hours to 30 hours.

    Manufacturing Process Metrics Improved
        Key manufacturing metrics and discussions with defense and
    contracting officials indicate that F-35 manufacturing and supply
    processes improved during 2012. While initial F-35 production overran
    target costs and delivered aircraft late, the latest data through the
    end of 2012 shows labor hours decreasing and deliveries accelerating.
    The aircraft contractor's work force has gained important experience
    and processes have matured as more aircraft are built. We found that
    the labor hours needed to complete aircraft at the prime contractor's
    plant decreased, labor efficiency since the first production aircraft
    improved, time to manufacture aircraft in the final assembly area
    declined, factory throughput increased, and the amount of traveled work
    declined. In addition, program data showed that the reliability and
    predictability of the manufacturing processes increased while at the
    same time aircraft delivery rates improved considerably. Figure 1
    illustrates the improvement in production aircraft delivery timeframes
    by comparing actual delivery dates against the dates specified in the
    contracts.

      FIGURE 1: F-35 PRODUCTION AIRCRAFT DELIVERIES COMPARED TO CONTRACT
                                     DATES

    Source: GAO analysis of DOD data.

    Note: The numbered aircraft are in order of delivery. AF = U.S. Air
    Force F-35A, BF = U.S. Marine Corps F-35B, CF = U.S. Department of the
    Navy F-35C; and BK = United Kingdom F-35B.

                         F-35 PROGRAM STILL FACES RISKS

        Ensuring that the F-35 is affordable and can be bought in the
    quantities and timeframes required by the warfighter will be of
    paramount concern to the Congress, U.S. military and international
    partners. As we recently reported, the acquisition funding requirements
    for the United States alone are currently expected to average $12.6
    billion per year through 2037, and the projected costs of operating and
    sustaining the F-35 fleet, once fielded, have been deemed unaffordable
    by DOD officials. In addition, the program faces challenges with
    software development and continues to incur substantial costs for
    rework to fix deficiencies discovered during testing. As testing
    continues additional changes to design and manufacturing processes will
    likely be required, while production rates continue to increase.
    Long-Term Affordability Remains a Concern
        We recently concluded that while the March 2012 acquisition program
    baseline places the F-35 program on firmer footing, the aircraft are
    expected to cost more and deliveries to warfighters will take longer
    than previously projected. The new baseline projects the need for a
    total of $316 billion in development and procurement funding from 2013
    through 2037, or an average of $12.6 billion annually over that period
    (see figure 2). Maintaining this level of sustained funding will be
    difficult in a period of declining or flat defense budgets and
    competition with other ``big ticket items'' such as the KC-46 tanker
    and a new bomber program. In addition, the funding projections assume
    the financial benefits of the international partners purchasing at
    least 697 aircraft. If fewer aircraft are procured in total or in
    smaller annual quantities--by the international partners or the United
    States--unit costs will likely rise according to analysis done by the
    Office of the Secretary of Defense (OSD) Cost Assessment and Program
    Evaluation (CAPE) office.

      FIGURE 2: F-35 PROGRAM BUDGETED DEVELOPMENT AND PROCUREMENT FUNDING
                      REQUIREMENTS, FISCAL YEARS 2013-2037

    Source: GAO analysis of DOD data.

    Note: Development and procurement of the Marine Corps variant is
    included in the Department of the Navy budget accounts.

        In addition to the costs for acquiring aircraft, we found that
    significant concerns and questions persist regarding the cost to
    operate and sustain the F-35 fleet over the coming decades. The current
    sustainment cost projection by CAPE for all U.S. aircraft, based on an
    estimated 30-year service life, exceeds $1 trillion. Using current
    program assumptions of aircraft inventory and flight hours, CAPE
    recently estimated annual operating and support costs of $18.2 billion
    for all F-35 variants compared to $11.1 billion spent on legacy
    aircraft in 2010. DOD officials have declared that operating and
    support costs of this magnitude are unaffordable and the department is
    actively engaged in evaluating opportunities to reduce those costs,
    such as basing and infrastructure reductions, competitive sourcing, and
    reliability improvements.
        Because of F-35 delays and uncertainties, the military services
    have made investments to extend the service lives of legacy F-16 and F-
    18 aircraft at a cost of $5 billion (in 2013 dollars). The Navy is also
    buying new F/A-18E/F Super Hornets at a cost of $3.1 billion (in then-
    year dollars) to bridge the gap in F-35 deliveries and mitigate
    projected shortfalls in fighter aircraft force requirements. As a
    result, the services will incur additional future sustainment costs to
    support these new and extended-life aircraft, and will have a difficult
    time establishing and implementing retirement schedules for existing
    fleets.

    Software Development Challenges Remain
        Our report found that over time, F-35 software requirements have
    grown in size and complexity and the contractor has taken more time and
    effort than expected to write computer code, integrate it on aircraft
    and subsystems, conduct lab and flight tests to verify it works, and to
    correct defects found in testing. Although recent management actions to
    refocus software development activities and implement improvement
    initiatives appeared to be yielding benefits, software continued to be
    a very challenging and high-risk undertaking, especially for mission
    systems.\8\ While most of the aircraft's software code has been
    developed, a substantial amount of integration and test work remain
    before the program can demonstrate full warfighting capability. About
    12 percent of mission systems capabilities have now been validated, up
    from 4 percent about a year ago. However, progress on mission systems
    was limited in 2012 by contractor delays in software delivery, limited
    capability in the software when delivered, and the need to fix problems
    and retest multiple software versions. Further development and
    integration of the most complex elements--sensor fusion and helmet
    mounted display--lie ahead.
    ---------------------------------------------------------------------------
        \8\ Mission systems are critical enablers of F-35's combat
    effectiveness, employing next generation sensors with fused information
    from on-board and off-board systems (i.e., electronic warfare,
    communication navigation identification, electro-optical target system,
    electro-optical distributed aperture system, radar, and data links).
    ---------------------------------------------------------------------------
        F-35 software capabilities are being developed, tested and
    delivered in three major blocks and two increments--initial and final--
    within each block. The testing and delivery status of the three blocks
    is described below:
      --Block 1.0, providing initial training capability, was largely
            completed in 2012, although some final development and testing
            will continue. Also, the capability delivered did not fully
            meet expected requirements relating to the helmet, ALIS, and
            instrument landing capabilities.
      --Block 2.0, providing initial warfighting capabilities and limited
            weapons, fell behind due to integration challenges and the
            reallocation of resources to fix block 1.0 defects. The initial
            increment, block 2A, delivered late and was incomplete. Full
            release of the final increment, block 2B, has been delayed
            until November 2013 and will not be complete until late 2015.
      --Block 3.0 providing full warfighting capability, to include sensor
            fusion and additional weapons, is the capability required by
            the Navy and Air Force for declaring their respective initial
            operational capability dates. Thus far, the program has made
            little progress on block 3.0 software. The program intends
            initial block 3.0 to enter flight test in 2013. This is rated
            as one of the program's highest risks because of its
            complexity.

    Design Changes and Rework Continue to Add Cost and Risk
        Although our recent review found that F-35 manufacturing, cost, and
    schedule metrics have shown improvement, the aircraft contractor
    continues to make major design and tooling changes and alter
    manufacturing processes while development testing continues.
    Engineering design changes from discoveries in manufacturing and
    testing are declining in number, but are still substantial and higher
    than expected from a program this far along in production. Further, the
    critical work to test and verify aircraft design and operational
    performance is far from complete. Cumulatively, since the start of
    developmental flight testing, the program has accomplished 34 percent
    of its planned flights and test points. For development testing as a
    whole, the program verified 11.3 percent of the development contract
    specifications through November 2012. As indicated in table 1, DOD
    continues to incur financial risk from its plan to procure 289 aircraft
    for $57.8 billion before completing development flight testing.

                                                 TABLE 1: F-35 PROCUREMENT INVESTMENTS AND FLIGHT TEST PROGRESS
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       2007    2008    2009    2010    2011    2012    2013    2014    2015    2016    2017
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Cumulative procurement (then-year dollars in billions)..........    $0.8    $3.5    $7.1   $14.3   $21.3   $27.6   $33.8   $40.1   $47.9   $57.8   $69.0
    Cumulative aircraft procured....................................       2      14      28      58      90     121     150     179     223     289     365
    Percent total flight test points completed......................      --     <1%     <1%      2%      9%     22%     34%     54%     74%     91%    100%
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Source: GAO analysis of DOD data.
    Notes: Years listed denote fiscal years. Flight test data reflects the percentage of total flight test points completed in time to inform the next
      year's procurement decision. For example above, the F-35 program accomplished about 22 percent of total planned flight test points through the end of
      calendar year 2011 that could help inform the fiscal year 2012 procurement decision. The program intends to complete developmental flight test points
      in 2016 and would be in a position to fully support the 2017 procurement buy.

        This highly concurrent approach to procurement and testing
    increases the risk that the Government will incur substantial costs to
    retrofit (rework) already produced aircraft to fix deficiencies
    discovered in testing. In fact, the F-35 program office projects rework
    costs of about $900 million to fix the aircraft procured on the first
    four annual procurement contracts. Substantial rework costs are also
    forecasted to continue through the 10th annual contract (fiscal year
    2016 procurement), but at decreasing amounts annually and on each
    aircraft. The program office projects about $827 million more to rework
    aircraft procured under the next 6 annual contracts.

       DEPARTMENT OF DEFENSE ACTIONS ON GOVERNMENT ACCOUNTABILITY OFFICE
    RECOMMENDATIONS HAVE VARIED, BUT F-35 RESTRUCTURING WAS A POSITIVE STEP

        We have reported on F-35 issues for over a decade and have found
    that the magnitude and persistence of the program's cost and schedule
    problems can be largely traced to (1) decisions at key junctures made
    without adequate product knowledge; and (2) a highly concurrent
    acquisition strategy that significantly overlapped development,
    testing, and manufacturing activities.\9\ Over that time, our reports
    included numerous recommendations aimed at reducing risk in these areas
    and improving the chances for successful outcomes.\10\
    ---------------------------------------------------------------------------
        \9\ We have an extensive body of work looking at knowledge-based
    best practices in successful private and public acquisitions of new
    technology. Defense policy and the Weapon Systems Acquisition Reform
    Act of 2009 incorporate elements of the knowledge-based approach. For
    an overview of the best practices criteria and methodologies, and how
    current defense programs including the F-35 fared, see GAO, Defense
    Acquisitions: Assessments of Selected Weapon Programs, GAO-12-400SP
    (Washington, DC: March 29, 2012).
        \10\ See related GAO products for a list of previous F-35 reports.
    ---------------------------------------------------------------------------
        DOD has implemented our recommendations to varying degrees. For
    example, in 2001 we recommended that DOD delay the start of system
    development until the F-35's critical technologies were fully mature.
    DOD disagreed with that recommendation and chose to begin the program
    with limited knowledge about critical technologies. Several years
    later, we recommended that DOD delay the production decision until
    flight testing had shown that the F-35 would perform as expected, and
    although DOD partially concurred with our recommendation, it chose to
    initiate production before sufficient flight testing had been done.
    Citing concerns about the overlap--or concurrency--among development,
    testing, and production, we have recommended that DOD limit annual
    production quantities until F-35 flying qualities could be
    demonstrated. Although DOD disagreed with our recommendation at the
    time, it has since restructured the F-35 program and, among other
    things, deferred the production of hundreds of aircraft into the
    future, thus addressing the intent of our recommendation and reducing
    program risk. Appendix II lists these and other key recommendations we
    have made over time, and identifies the actions DOD has taken in
    response.
        In conclusion, while the recent restructuring of the F-35 program
    placed it on a firmer footing, tremendous challenges still remain. The
    program must fully validate the F-35's design and operational
    performance against warfighter requirements, while at the same time
    make the system affordable so that the United States and partners can
    acquire new capabilities in the quantity needed and can then sustain
    the force over its lift cycle. Ensuring overall affordability will be a
    challenge as more austere budgets are looming.
        Chairman Durbin, Ranking Member Cochran and members of the
    subcommittee, this completes my prepared statement. I would be pleased
    to respond to any questions you may have.
                                     ______

                 APPENDIX I: CHANGES IN REPORTED F-35 PROGRAM QUANTITY, COST, AND DELIVERIES, 2001-2012
    ----------------------------------------------------------------------------------------------------------------
                                                October 2001    December
                                                   (system        2003       March 2007     June 2010    March 2012
                                                 development    (approved     (approved      (Nunn-       (approved
                                                   start)       baseline)     baseline)     McCurdy)      baseline)
    ----------------------------------------------------------------------------------------------------------------
                Expected Quantities

    Development quantities....................            14            14            15            14            14
    Procurement quantities (U.S. only)........         2,852         2,443         2,443         2,443         2,443
                                               ---------------------------------------------------------------------
      Total quantities........................         2,866         2,457         2,458         2,457         2,457
                                               =====================================================================
                  Cost Estimates
          (then-year dollars in billions)

    Development...............................         $34.4         $44.8         $44.8         $51.8         $55.2
    Procurement...............................         196.6         199.8         231.7         325.1         335.7
    Military construction.....................           2.0           0.2           2.0           5.6           4.8
                                               ---------------------------------------------------------------------
      Total program acquisition...............        $233.0        $244.8        $278.5        $382.5        $395.7
                                               =====================================================================
                Unit Cost Estimates
          (then-year dollars in millions)

    Program acquisition.......................           $81          $100          $113          $156          $161
    Average procurement.......................            69            82            95           133           137

      Estimated Delivery and Production Dates

    First production aircraft delivery........          2008          2009          2010          2010          2011
    Initial operational capability............     2010-2012     2012-2013     2012-2015           TBD           TBD
    Full-rate production......................          2012          2013          2013          2016          2019
    ----------------------------------------------------------------------------------------------------------------
    Source: GAO analysis of DOD data.
    Note: TBD means to be determined.

                APPENDIX II: PRIOR GAO REPORTS AND DOD RESPONSES
    ------------------------------------------------------------------------
                Est.
                dev.
                costs
       GAO      dev.       Key program       Primary GAO    DOD response and
     report    length         event            message           actions
              aircraft
                unit
                cost
    ------------------------------------------------------------------------
    2001      $34.4     Start of system   Critical          DOD did not
    GAO-02-3   billion   development and   technologies      delay start of
     9        10 years   demonstration     needed for key    system
              $69        approved.         aircraft          development and
               million                     performance       demonstration
                                           elements not      stating
                                           mature. Program   technologies
                                           should delay      were at
                                           start of system   acceptable
                                           development       maturity levels
                                           until critical    and will manage
                                           technologies      risks in
                                           mature to         development.
                                           acceptable
                                           levels.

    2005      $44.8     The program       We recommended    DOD partially
    GAO-05-2   billion   undergoes re-     that the          concurred but
     71       12 years   plan to address   program reduce    did not adjust
              $82        higher than       risks and         strategy,
               million   expected design   establish         believing that
                         weight, which     executable        its approach is
                         added $7          business case     balanced
                         billion and 18    that is           between cost,
                         months to         knowledge-based   schedule and
                         development       with an           technical risk.
                         schedule.         evolutionary
                                           acquisition
                                           strategy.

    2006      $45.7     Program sets in   The program       DOD partially
    GAO-06-3   billion   motion plan to    planned to        concurred but
     56       12 years   enter             enter             did not delay
              $86        production in     production with   start of
               million   2007 shortly      less than 1       production
                         after first       percent of        because it
                         flight of the     testing           believed the
                         nonproduction     complete. We      risk level was
                         representative    recommended       appropriate.
                         aircraft.         program delay
                                           investing in
                                           production
                                           until flight
                                           testing shows
                                           that JSF
                                           performs as
                                           expected.

    2007      $44.5     Congress reduced  Progress was      DOD nonconcurred
    GAO-07-3   billion   funding for       being made but    and felt that
     60       12 years   first two low-    concerns          the program had
              $104       rate production   remained about    an acceptable
               million   buys thereby      undue overlap     level of
                         slowing the       in testing and    concurrency and
                         ramp up of        production. We    an appropriate
                         production.       recommended       acquisition
                                           limits to         strategy.
                                           annual
                                           production
                                           quantities to
                                           24 a year until
                                           flying
                                           quantities are
                                           demonstrated.

    2008      $44.2     DOD implemented   We believed new   DOD did not
    GAO-08-3   billion   a Mid-Course      plan increased    revise risk
     88       12 years   Risk Reduction    risks and DOD     plan or restore
              $104       Plan to           should revise     testing
               million   replenish         it to address     resources,
                         management        testing,          stating that it
                         reserves from     management        will monitor
                         about $400        reserves, and     the new plan
                         million to        manufacturing     and adjust it
                         about $1          concerns. We      if necessary.
                         billion by        determined that   Consistent with
                         reducing test     the cost          a report
                         resources.        estimate was      recommendation,
                                           not reliable      a new cost
                                           and that a new    estimate was
                                           cost estimate     eventually
                                           and schedule      prepared, but
                                           risk assessment   DOD refused to
                                           is needed.        do a risk and
                                                             uncertainty
                                                             analysis.

    2009      $44.4     The program       Moving forward    DOD agreed to
    GAO-09-3   billion   increased the     with an           report its
     03       13 years   cost estimate     accelerated       contracting
              $104       and adds a year   procurement       strategy and
               million   to development    plan and use of   plans to
                         but accelerated   cost              Congress and
                         the production    reimbursement     conduct a
                         ramp up.          contracts is      schedule risk
                         Independent DOD   very risky. We    analysis. The
                         cost estimate     recommended the   program
                         (JET I)           program report    completed the
                         projects even     on the risks      first schedule
                         higher costs      and mitigation    risk assessment
                         and further       strategy for      with plans to
                         delays.           this approach.    update semi-
                                                             annually. The
                                                             Department
                                                             announced a
                                                             major
                                                             restructuring
                                                             reducing
                                                             procurement and
                                                             moving to fixed-
                                                             price
                                                             contracts.

    2010      $49.3     The program was   Costs and         DOD continued
    GAO-10-3   billion   restructured to   schedule delays   restructuring,
     82       15 years   reflect           inhibit the       increasing test
              $112       findings of       program's         resources and
               million   recent            ability to meet   lowering the
                         independent       needs on time.    production
                         cost team (JET    We recommended    rate.
                         II) and           the program       Independent
                         independent       complete a full   review teams
                         manufacturing     comprehensive     evaluated
                         review team. As   cost estimate     aircraft and
                         a result,         and assess        engine
                         development       warfighter and    manufacturing
                         funds             IOC               processes. Cost
                         increased, test   requirements.     increases later
                         aircraft were     We suggest that   resulted in a
                         added, the        Congress          Nunn-McCurdy
                         schedule was      require DOD to    breach.
                         extended, and     tie annual        Military
                         the early         procurement       services are
                         production rate   requests to       currently
                         decreased.        demonstrated      reviewing
                                           progress.         capability
                                                             requirements as
                                                             we recommended.

    2011      $51.8     Restructuring     The               DOD concurred
    GAO-11-3   billion   continued with    restructuring     with all three
     25       16 years   additional        actions are       of the
              $133       development       positive and if   recommendations
               million   cost increases;   implemented       . DOD lifted
                         schedule          properly,         STOVL
                         growth; further   should lead to    probation,
                         reduction in      more achievable   citing improved
                         near-term         and predictable   performance.
                         procurement       outcomes.         Subsequently,
                         quantities; and   Concurrency of    DOD further
                         decreased the     development,      reduced
                         rate of           test, and         procurement
                         increase for      production is     quantities,
                         future            substantial and   decreasing
                         production. The   provides risk     funding
                         Secretary of      to the program.   requirements
                         Defense placed    We recommended    through 2016.
                         the STOVL         the program       The initial
                         variant on a 2    maintain          independent
                         year probation;   funding levels    software
                         decoupled STOVL   as budgeted;      assessment
                         from the other    establish         began in and
                         variants; and     criteria for      ongoing reviews
                         reduced STOVL     STOVL             are planned
                         production        probation; and    through 2012.
                         plans for         conduct an
                         fiscal years      independent
                         2011 to 2013.     review of
                                           software
                                           development,
                                           integration,
                                           and test
                                           processes.

    2012      $55.2     The program       Extensive         DOD partially
    GAO-12-4   billion   established a     restructuring     concurred with
     37       18 years   new acquisition   places the        conducting an
              $137       program           program on a      analysis on the
               million   baseline and      more achievable   impact of lower
                         approved the      course. Most of   annual funding
                         continuation of   the program's     levels and
                         system            instability       concurred with
                         development,      continues to be   assessing the
                         increasing        concurrency of    supply chain
                         costs for         development,      and
                         development and   test, and         transportation
                         procurements      production. We    network.
                         and extending     recommend the
                         the period of     Cost Assessment
                         planned           Program
                         procurements by   Evaluation
                         2 years.          office conduct
                                           an analysis on
                                           the impact of
                                           lower annual
                                           funding levels;
                                           JSF program
                                           office conducts
                                           an assessment
                                           of the supply
                                           chain and
                                           transportation
                                           network.
    ------------------------------------------------------------------------
    Note: Est. dev. is abbreviation of estimated development.
    Source: DOD data and GAO analysis in prior reports cited above.

               RELATED GOVERNMENT ACCOUNTABILITY OFFICE PRODUCTS

    Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-13-
    294SP. Washington, DC: March 28, 2013.

    F-35 Joint Strike Fighter: Current Outlook Is Improved, but Long-Term
    Affordability Is a Major Concern. GAO-13-309. Washington, DC: March 11,
    2013.

    Joint Strike Fighter: DOD Actions Needed to Further Enhance
    Restructuring and Address Affordability Risks. GAO-12-437. Washington,
    DC: June 14, 2012.

    Joint Strike Fighter: Restructuring Added Resources and Reduced Risk,
    but Concurrency Is Still a Major Concern. GAO-12-525T. Washington, DC:
    March 20, 2012.

    Joint Strike Fighter: Implications of Program Restructuring and Other
    Recent Developments on Key Aspects of DOD's Prior Alternate Engine
    Analyses. GAO-11-903R. Washington, DC: September 14, 2011.

    Joint Strike Fighter: Restructuring Places Program on Firmer Footing,
    but Progress Still Lags. GAO-11-325. Washington, DC: April 7, 2011.

    Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting
    Warfighter Requirements on Time. GAO-10-382. Washington, DC: March 19,
    2010.

    Joint Strike Fighter: Accelerating Procurement before Completing
    Development Increases the Government's Financial Risk. GAO-09-303.
    Washington DC: March 12, 2009.

    Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.
    GAO-08-388. Washington, DC: March 11, 2008.

    Joint Strike Fighter: Progress Made and Challenges Remain. GAO-07-360.
    Washington, DC: March 15, 2007.

    Joint Strike Fighter: DOD Plans to Enter Production before Testing
    Demonstrates Acceptable Performance. GAO-06-356. Washington, DC: March
    15, 2006.

    Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike
    Fighter Program with Different Acquisition Strategy. GAO-05-271.
    Washington, DC: March 15, 2005.

                  GOVERNMENT ACCOUNTABILITY OFFICE HIGHLIGHTS

    June 19, 2013

        Highlights of GAO-13-690T, a testimony before the Subcommittee on
    Defense, Committee on Appropriations, United States Senate

    F-35 JOINT STRIKE FIGHTER: RESTRUCTURING HAS IMPROVED THE PROGRAM, BUT
                AFFORDABILITY CHALLENGES AND OTHER RISKS REMAIN

    Why GAO Did This Study
        The F-35 Lightning II, the Joint Strike Fighter, is DOD's most
    costly and ambitious aircraft acquisition. The program is developing
    and fielding three aircraft variants for the Air Force, Navy, Marine
    Corps, and eight international partners. The F-35 is critical to long-
    term recapitalization plans as it is intended to replace hundreds of
    existing aircraft. This will require a long-term sustained funding
    commitment. Total U.S. investment is nearing $400 billion to develop
    and procure 2,457 aircraft through 2037. Fifty-two aircraft have been
    delivered through 2012. The F-35 program has been extensively
    restructured over the last 3 years to address prior cost, schedule, and
    performance problems. DOD approved a new acquisition program baseline
    in March 2012.
        This testimony is largely based on GAO's recently released report,
    GAO-13-309. This testimony discusses (1) progress the F-35 program made
    in 2012, and (2) major risks that program faces going forward. GAO's
    work included analyses of a wide range of program documents and
    interviews with defense and contractor officials.

    What GAO Recommends
        GAO's prior reviews of the F-35 made numerous recommendations to
    help reduce risk and improve outcomes. DOD has implemented those
    recommendations to varying degrees.

    What GAO Found
        The new F-35 acquisition baseline reflects positive restructuring
    actions taken by the Department of Defense (DOD) since 2010, including
    more time and funding for development and deferred procurement of more
    than 400 aircraft to future years. Overall, the program progressed on
    several fronts during 2012 to further improve the current outlook. The
    program achieved 7 of 10 key management objectives and made substantial
    progress on one other. Two objectives on aircraft deliveries and a
    corrective management plan were not met. The F-35 development test
    program substantially met expectations with some revisions to flight
    test plans and made considerable progress addressing key technical
    risks. Software management practices and some output measures improved,
    although deliveries to test continued to lag behind plans.
    Manufacturing and supply processes also improved--indicators such as
    factory throughput, labor efficiency, and quality measures were
    positive. While initial F-35 production overran target costs and
    delivered aircraft late, the latest data shows labor hours decreasing
    and deliveries accelerating.
        Going forward, the F-35 program still faces considerable challenges
    and risks. Ensuring that the F-35 is affordable and can be bought in
    the quantities and time required by the warfighter will be a paramount
    concern to the Congress, DOD, and international partners. With more
    austere budgets looming, F-35 acquisition funding requirements average
    $12.6 billion annually through 2037 (see below). Once fielded, the
    projected costs of sustaining the F-35 fleet have been deemed
    unaffordable by DOD officials; efforts to reduce these costs are
    underway. Software integration and test will be challenging as many
    complex tasks remain to enable full warfighting capability. The program
    is also incurring substantial costs for rework--currently projected at
    $1.7 billion over 10 years of production--to fix problems discovered
    during testing. With two-thirds of development testing still to go,
    additional changes to design and manufacturing are likely. As a result,
    the program continues to incur financial risk from its plan to procure
    289 aircraft for $57.8 billion before completing development flight
    testing.

           F-35 JOINT STRIKE FIGHTER ACQUISITION FUNDING REQUIREMENTS

    Source: GAO analysis of DOD data.

        Senator Durbin. Thanks, Mr. Sullivan.
        Mr. O'Hanlon.

    STATEMENT OF MICHAEL O'HANLON, SENIOR FELLOW AND
                DIRECTOR OF RESEARCH FOR THE FOREIGN POLICY
                PROGRAM, BROOKINGS INSTITUTION
        Mr. O'Hanlon. Good morning, Senators. It is an honor to be
    here.
        I would like to do something a little different with my
    testimony and that is just to sketch out an alternative way to
    think about the F-35 and how many we might buy instead of the
    program of record of close to 2,500. And what I want to do is
    form a premise of acknowledging the need for the program and,
    frankly, the excellence of the plane. I think we have heard a
    lot of very good technical discussion that you in the Congress
    pushed the Pentagon to continually work on, which is to make
    this plane operationally effective, to make it realistically
    priced, and to take this very difficult concept and make it
    work. And all that is challenging and all that is hard. There
    have been mistakes along the way, but I support the plane.
        Having said that, I think there was a fundamental
    assumption in the way the overall procurement buy was sized
    that I would challenge, and I think to put it simply, we came
    up with a number of planes to replace existing force structure,
    close to one for one, not exactly one for one, but we
    essentially looked at aircraft like the Harrier jet and the F-
    16 and the F-18 and several others, and we said how many of
    them do we have. We want to keep the majority of the force
    structure that those different types of planes, roughly half a
    dozen, currently populate, and that takes close to 2,500
    aircraft. Now, I think there was an assumption that the F-35
    could be a little better and produce a little more
    effectiveness, maybe a little higher sortie rate or kill rate
    per sortie. But, nonetheless, you essentially were replacing
    force structure. And the hope was that if you had all three
    Services cooperate and you bought a lot and you got
    international partners, you could drive down unit cost.
        But, Senator Durbin, I do have some sympathy for your image
    of creating a program that is too big to fail not because I am
    opposed to this program but because I think we have put a
    tremendous number of eggs in one basket, and we have done it in
    this hope or in this expectation that we can drive down unit
    cost so much as to make that logic work.
        I would come up with a different approach to sizing the
    number of planes I would buy, which is a threat-based approach.
    In other words, what parts of the world, which potential
    adversaries and scenarios are going to require us to have a lot
    of fifth generation ground attack aircraft and also air
    superiority aircraft? And I think primarily of advanced
    aircraft made by Russia and China, as was mentioned in the
    first panel, as well as some of the advanced air-to-air and
    surface-to-air capabilities. And we hear about those even in
    conflicts like Syria. So I acknowledge that it would be nice to
    have F-35s everywhere for everything because you never know
    where there is going to be an advanced SAM. But realistically
    speaking, we have done a lot of operations around the world the
    last two decades with extremely low attrition rates to our
    airplanes with fourth generation planes, and I think a lot of
    our future military missions will continue in that vein.
        So I would recommend sizing the future purchases of this F-
    35 plane primarily to the threat environment and principally to
    the possibility that China could be an adversary. I do not
    expect that. I certainly do not hope that, but it is a
    possibility we have to plan for. And also, of course, Iran.
    Those would be the two most prominent cases. There could be
    others. I would basically want to have enough high-end
    airplanes that for a scenario that I can imagine and war game,
    that for the bases that we are going to have available to us in
    that region of the world, that we can fill them up with as many
    F-22s and F-35s as we think appropriate. That is the way I
    would size it. It is a threat-based approach.
        Now, once you accept that premise, then you can have a more
    detailed conversation about what do you do to each of the three
    variants. And in my testimony, I spell out one specific
    proposal. It is certainly debatable. Even if you accept that
    main premise, there are different ways you could implement it.
    I could go through it, but maybe I will save most of that for
    discussion.
        I will point out that I do support the F-35B, the Marine
    Corps variant, because I worry about runways being threatened
    in the future and being damaged. And I like the idea of a short
    take-off vertical landing airplane. But people can debate that
    as well.

                               PREPARED STATEMENT

        The overall point here is--I will conclude on this simple
    observation--if you were to cut the purchases in half overall--
    I am recommending we buy about 1,200, 1,250 instead of 2,450--
    you are only going to save about maybe 20-25 percent of the
    total program cost because most of that force structure you
    still want to keep, which means you have to buy something else
    or refurbish something else to keep it going. And so those
    refurbished F-16s and so on are still going to cost money. So I
    do not consider this to be an easy way to lop off hundreds of
    billions of dollars from expected Pentagon spending, but I
    think you might be able to save, let us say, 20 percent in the
    acquisition costs of the program, something in that
    neighborhood, with this approach.
        Thank you.
        [The statement follows:]

                     Prepared Statement of Michael O'Hanlon

        Thank you for the opportunity to testify today on the important and
    impressive Lightning II aircraft. The bottom line of my testimony is
    that I favor purchasing roughly half the number of jets now scheduled
    to be acquired by the Department of Defense over the next two
    decades.\1\
    ---------------------------------------------------------------------------
        \1\ This testimony is drawn largely from my recent Brookings book,
    Healing the Wounded Giant: Maintaining Military Preeminence While
    Cutting the Defense Budget.
    ---------------------------------------------------------------------------
        In other words, while I am a supporter of the program, I am also a
    critic about the scale of the planned procurement. Even as drones have
    become much more effective, even as precision-guided ordnance has
    become devastatingly accurate, and even as real-time surveillance and
    information grids have evolved rapidly, plans for modernizing manned
    combat systems have remained essentially at previous quantitative
    levels.
        All together, the Air Force, Navy, and Marine Corps still plan to
    buy nearly 2,500 F-35 combat jets at a total acquisition price of more
    than $300 billion in constant 2013 dollars. Production is just
    beginning at low rates, with the big ramp-up expected in the next few
    years. The Pentagon will spend about $15 billion annually on the plane
    starting in mid-decade. Three-fourths of the projected funds are yet to
    be spent. The Pentagon's independent cost assessment office believes
    the average unit procurement price could be 15 to 20 percent higher
    than official estimates, exceeding $115 million per plane in 2013
    dollars. And once purchased, the same office estimates that the F-35
    will also cost one-third more to operate in real terms than planes like
    the F-16 and F-18 that it is replacing.\2\
    ---------------------------------------------------------------------------
        \2\ Statement of Christine H. Fox, director of cost assessment and
    program evaluation, Department of Defense, before the Senate Armed
    Services Committee, May 19, 2011 (www.armed-
    services.senate.gov/e_witnesslist.cfm?id=5213); and Andrea Shalal-Ela,
    ``Exclusive: U.S. Sees Lifetime Cost of F-35 Fighter at $1.45
    Trillion,'' Reuters, March 29, 2012 (www.reuters.com/
    article/2012/03/29/us-lockheed-fighter-idUSBRE82S03L20120329).
    ---------------------------------------------------------------------------
        It is important to acknowledge some strengths of the F-35, though,
    and to challenge some common criticisms. Some have opposed the Marine
    Corps variant of the plane (the F-35B), with its extra engine as needed
    for short or vertical take offs and landings. But in fact, that variant
    has value for an era in which airfields are increasingly vulnerable to
    precision ordnance of the types that countries such as Iran and China
    are fielding. The United States needs enough F-35Bs to be able to
    populate bases nearest potential combat zones, such as the Gulf States
    (for scenarios involving Iran) and Okinawa (in regard to China). As
    Marine Corps Commandant General James Amos has noted, there are 10
    times as many 3,000 foot runways in the world adequate for such short-
    takeoff jets as there are 8,000 foot runways suitable for conventional
    aircraft--and the Marines can lay down an expeditionary 3,000 foot
    runway in a matter of days in other places.\3\
    ---------------------------------------------------------------------------
        \3\ See Statement of General James F. Amos before the House Armed
    Services Committee on the 2011 Posture of the United States Marine
    Corps, March 1, 2011, p. 13 (http://armedservices.house.gov/index.cfm/
    files/serve?File_id=6e6d479e-0bea-41a1-8f3d-44b3147640fe).
    ---------------------------------------------------------------------------
        An alternative concept for F-35 production could be as follows:
      --Purchase a total of 1,250 instead of 2,500.
      --Leave the Marine Corps plan largely as is, scaling back only by 10
            to 20 percent to account more fully for the proven capacity of
            unmanned aerial vehicles to carry out some missions previously
            handled by manned aircraft.
      --Cancel the Navy variant (the F-35C), with its relatively limited
            range compared with likely needs--buying more F/A-18 E/F Super
            Hornets in the meantime while committing more firmly to
            development of a longer range unmanned carrier-capable attack
            aircraft.\4\ The X-47B unmanned system, which completed
            demonstration tests on a carrier in 2012, is scheduled to
            conduct flight operations from an aircraft carrier in 2013, so
            this capability is progressing.\5\
    ---------------------------------------------------------------------------
        \4\ See Captain Henry J. Hendicks and Lt. Col. J. Noel Williams,
    ``Twilight of the $UPERfluous Carrier,'' Proceedings (U.S. Naval
    Institute, May 2011) (www.usni.org/magazines/proceedings/2011-05/
    twilight-uperfluous-carrier).
        \5\ Northrop Grumman, ``X-47B UCAS,'' (Washington: 2013)
    (www.as.northropgrumman.com/products/nucasx47b/index.html). An
    additional virtue of unmanned systems is the ability to conduct
    training for pilots less expensively.
    ---------------------------------------------------------------------------
      --Reduce Air Force numbers, currently expected to exceed 1,700 F-35
            planes, by almost half.
        Of the 800 planes that the Air Force was counting on, but would not
    get under this approach, the difference can be made up in the following
    ways. First, cut back 200 planes by eliminating two tactical fighter
    wings. Second, view the 200 large combat-capable unmanned aerial
    vehicles (UAVs) currently owned by the Air Force, together with the 300
    or more on the way, as viable replacements for some manned fighter
    planes. The Air Force is buying the equivalent of five wings of large
    UAVs; perhaps it could transform two manned combat wings into unmanned
    combat aircraft wings as a result.\6\ For the remaining planes, employ
    further purchases of F-16 jets and refurbishments of existing F-16s to
    make up the difference as needed.\7\
    ---------------------------------------------------------------------------
        \6\ See U.S. Air Force, Fact Sheet on MQ-9 Reaper, January 2012
    (www.af.mil/information/
    factsheets/factsheet.asp?id=6405); and Congressional Budget Office,
    Policy Options for Unmanned Aircraft Systems (Washington: June 2011),
    pp. ix-x (www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/
    doc12163/06-08-uas.pdf).
        \7\ These are ongoing; see Bill Carey, ``F-35 Delay Forces $3
    Billion Upgrade Request for U.S. Air Force F-16s'' AINOnline, November
    4, 2011 (www.ainonline.com/aviation-news/ain-defense-perspective/2011-
    11-04/f-35-delay-forces-3-billion-upgrade-request-us-air-force-f-16s).
    ---------------------------------------------------------------------------
        This approach will produce net savings of some $60 billion in Air
    Force aircraft purchase costs. The F-16 option is still available since
    the production line is currently making aircraft for Morocco and Oman
    among others, but it may not remain open for more than a couple years,
    so this option could have to be exercised fairly promptly to make
    economic sense.\8\ Additional savings in the Marine Corps and Navy will
    add up to another $20 billion to $25 billion.
    ---------------------------------------------------------------------------
        \8\ Leithen Francis, ``Mission Impossible,'' Aviation Week and
    Space Technology, August 15, 2011, p. 27.
    ---------------------------------------------------------------------------
        Average annual savings from this alternative approach to F-35
    production might be $5 billion. Over time up to another $2 billion a
    year or so in savings would be achievable in operating accounts from
    the sum total of all these changes in tactical aircraft. These savings
    will not kick in right away, since it is important to get the F-35
    production line working efficiently to keep unit costs in check. More
    of the savings will accrue in the 2020s.
        It should also be remembered that a fair amount of risk is inherent
    in this alternative plan, since entirely canceling the F-35C Navy
    version of the plane will leave the Navy with less stealthy aircraft
    over the next decade. This is probably a tolerable risk but is not a
    trivial one.\9\ In an era of fiscal austerity and defense budget cuts,
    we need to take calculated risks in defense planning as a nation--not
    reckless risks, but calculated and reasonable ones. I believe that
    halving the size of the planned overall F-35 buy follows that
    philosophy properly and prudently.
    ---------------------------------------------------------------------------
        \9\ The chief of naval operations, while not abandoning support for
    the F-35C, has nonetheless voiced some doubts about the central role of
    stealth in future force planning. See Admiral Jonathan W. Greenert,
    ``Payloads over Platforms: Charting a New Course,'' Proceedings, vol.
    138, no. 7 (U.S. Naval Institute, July 2012) (www.usni.org/magazines/
    proceedings/2012-07/payloads-over-platforms-charting-new-course).

        Senator Durbin. Thanks, Mr. O'Hanlon. And that gets to the
    question I would like to ask.
        This committee has been handed the baton on one of the last
    legs of the race. We hope it is the last leg of the race on the
    F-35. And the question, obviously, looking back on the earlier
    stages of the race, how could we have done this better, how
    could we be further ahead, less cost?
        Going back to the beginning, Mr. Sullivan, looking at what
    we were trying to achieve 12 years ago, anticipating a threat,
    anticipating technology changes, how did we miss it by so much
    where the unit cost of the airplane is almost double what we
    thought it would be? And what could we have done differently to
    be in a better place today?
        Mr. Sullivan. First of all, I would say that this program
    is not unique in many ways. A lot of the major acquisitions go
    down this exact same road. I think it is very complex why
    programs get off to this kind of start, but if you look at the
    mechanics of a program, just the best way to set a business
    case, I think where this program went wrong when it set
    requirements and it did not do enough due diligence up front
    before it had its milestone B in 2001 and the requirements
    were, more or less, not achievable with the resources that they
    were estimating at that time. So they made a cost estimate
    based on parametric analysis, no real actuals, quantum leap in
    capability. It is very hard to model. You know, they talk about
    modeling and simulation to prove that you can do things, but
    you cannot really model some of the capabilities that they had
    here.
        So they had very immature technologies when they started. A
    number of the technologies--there were eight critical
    technologies on this aircraft in 2001 that they knew they would
    have to have to be capable to meet requirements.
        Senator Durbin. Let me go to the point that Dr. Gilmore
    raised and perhaps Mr. O'Hanlon also alluded to. This notion
    that you would somehow put this aircraft in the hands of those
    who will ultimately use them, let them respond and tell you how
    it is functioning and what it needs and the like, really seems
    to me to be thinking that might have applied a long time ago
    when technology was moving at a much slower pace.
        Mr. Sullivan. Well, and that is ``fly before you buy'' is
    kind of the term that they use for that. But when you have
    requirements that are so demanding with such immature
    technologies and you start a program before you understand
    that, the development program will really be at a loss for a
    long time. There is going to be a lot of churn as you wait for
    those technologies to mature. In some cases, we are talking
    about technologies that were just concepts. They did not even
    have a component for the technology----
        Senator Durbin. So, Dr. Gilmore, how would you address that
    part of it, this ``fly before you buy'' versus concurrency?
        Dr. Gilmore. There is always going to be a certain amount
    of concurrency in the programs, as Mr. Kendall mentioned. This
    was an extreme case that I think he accurately characterized as
    acquisition malpractice.
        But to get back to the question you asked about what caused
    this to happen, I guess I have a little bit different
    perspective than Mr. Sullivan. I actually think it is pretty
    simple. The Department has a long history of deceiving itself
    early on in programs about their costs, schedule, and
    difficulty. In this particular case, there were a number of
    assumptions that were made, for example, that there would be
    high commonality in the structural parts among the various
    aircraft. That not surprisingly over time--and I was a career
    person in the Department when the program started, and there
    were plenty of people who were indicating warnings at the time
    that, well, you know, you are making some unrealistic
    assumptions here about commonality in order to drive the unit
    cost down in the analyses that you are doing, because at that
    point everything was just on paper and was being done by
    analysis. And, of course, those assumptions on commonality
    turned out to be unrealistic.
        But those kinds of unrealistic assumptions, which then
    carried through into the program when it decided to start
    production without any flight test--you know, one of the
    assumptions at that point was that the modeling and simulation,
    the structural modeling and simulation, the modeling and
    simulation of fusion capabilities and of how the sensors would
    respond and so forth and so on, was going to be so exquisite
    that there would be no surprises in the flight test program.
    And, of course, that has turned out not to be the case.
        And I would point out in the flight test program up to this
    point, we have not actually tested any combat capability. We
    have tested the handling characteristics of the aircraft. We
    have done necessary precursors to testing actual combat
    capability. But the first time we will be flight testing combat
    capability is in Block 2B. When we finally get the Block 2B
    software released to the test program, then we will be flight
    testing some actual combat capability, although it will be
    limited and we will have to wait till Block 3F.
        So my perspective is that what happened here is,
    unfortunately, at the onset of the program back in the 1990s
    was what happens frequently, and that is that everyone got
    together in the Department and basically deceived themselves
    about how hard the job was going to be and how expensive it was
    going to be. And then reality intruded, and reality always
    wins.
        Senator Durbin. You used the word ``deception.'' We heard
    the word ``optimism'' before. It seems like they brought us to
    the same place.
        Mr. O'Hanlon, just briefly. I looked at this, too, from the
    viewpoint of America's industrial base, our capacity to build
    what we need next, our capacity to sustain this innovation,
    creative spirit, and keep it in a safe place so that we can
    really entrust to the people who are doing it our national
    security, which in the last week or two has again been brought
    into question.
        How do you view this in terms of what we should have done
    with F-35 and what we may need in the future and whether we
    would be ready for it?
        Mr. O'Hanlon. I guess, Senator, one observation I would
    have is that I do not want to depend too much on just one
    company or just one airplane. And it goes back to your point
    about ``too big to fail.''
        I think Lockheed has done, generally, a good job, and
    Lockheed is making a wonderful F-16 still, which is part of the
    airplane in my alternative. I want to make more F-16s for the
    United States. We are making them primarily or exclusively now,
    I think, for foreign customers. So I have nothing against
    Lockheed, but I do think the idea of having more than one
    airplane, more than one modern airplane in the works is a good
    one. And part of the alternative, therefore, that I propose is
    to focus on this X-47, this naval unmanned, carrier capable
    plane that is getting some attention, some resources right now,
    but the service's commitment to it, the Navy's commitment, is
    probably a little bit shaky partly because their budget is so
    overstressed by the F-35. And so one of the lessons I would
    draw is make sure you have a couple or three things in the
    works when it comes to something as important as combat
    aircraft.
        Senator Durbin. Senator Cochran.
        Senator Cochran. Mr. Sullivan, Government Accountability
    Office (GAO) has noted the improved performance and outlook for
    the F-35 program but continues to identify long-term
    affordability as a major concern. What work are you doing to
    identify savings in the projected cost to sustain the F-35 once
    it is fielded?
        Mr. Sullivan. Well, right now, as has been stated earlier,
    the operations and support (O&S) costs--you are referring to
    the lifecycle costs, the sustainment cost. We are reviewing
    what the Program Office has now in this review that we are
    undertaking right now, and in addition to that, we are talking
    with the Cost Assessment and Program Evaluation group, known as
    CAPE, in the Department to see what kind of assumptions they
    are using to determine future O&S costs and what targets they
    are using to try to reduce those. So we, more or less, are
    relying on the initial data that they are providing us and
    reviewing that.
        Senator Cochran. What do you believe are the key factors
    that must be achieved for the program to meet affordability
    targets?
        Mr. Sullivan. Reduction of the O&S costs would be number
    one, and I think the things that they have to look at--the
    first panel discussed a lot of efforts. Reliability on the
    aircraft is very critical to sustainment, and right now, they
    are not quite meeting their reliability targets that they were
    supposed to achieve at this point in the program. And in fact,
    they are about halfway to achieving the kind of reliability
    growth that they have to do on the aircraft. So I think Mr.
    Kendall pointed out that is one of his top concerns, and I
    would agree with him on that.
        In addition, they need to look at fuel costs. They need to
    look at how they man the aircraft, how they train. You know, I
    think General Bogdan said that when you do the concept of
    operations on this, you have to pay a lot of attention to how
    much time you are going to fly the aircraft, things like that.
        Senator Cochran. What is your current assessment of the F-
    35 manufacturing process?
        Mr. Sullivan. Right now, last year when we visited--we
    actually toured the process last year, and we gathered data on
    a number of different things that indicate manufacturing, like
    efficiency rates, the labor hours that they take to deliver
    aircraft, the span times between deliveries. And in every case,
    even in the engineering changes that are the result of
    concurrency, the program looks like it is trending in an
    improved way, and we would like to see that continue. We think
    probably it will. They have worked through about 40 percent of
    the flight tests. So they understand the flight envelope, and
    most of those design changes are probably behind them. So we
    think that the manufacturing processes will continue to
    improve.
        Senator Cochran. Comparing this process with others, how is
    it similar or not in the various stages of development and
    production?
        Mr. Sullivan. The manufacturing process?
        Senator Cochran. Yes.
        Mr. Sullivan. Well, the first thing about this one that is
    unique to most every manufacturing process I have looked at is
    the fact that they have three variants going through final
    assembly on the same line. So it is more complex in that
    regard. And I think they have done a pretty good job of working
    that out.
        Other than that, on the major acquisitions I have looked
    at--F-22 was one of those, B-2 bomber, and some other ones--it
    is very similar in that the concurrency on the program causes--
    I would say that concurrency between flight testing and
    production--it does have a cost of design changes that you have
    to go back and retrofit aircraft on, but in addition to that,
    it creates an awful lot of chaos on the manufacturing floor. I
    do not know how you capture those costs of concurrency, but
    this program probably has been much less efficient than it
    could be if it were less concurrent.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Durbin. Senator Shelby.
        Senator Shelby. Thank you.
        Dr. Gilmore, you have a very important job. You are the
    Director of Operational Test and Evaluation at DOD, and you
    have talked about the plane today.
        Modeling and simulation are very important, as far as not
    just planes but anything else that comes along. Is there any
    real substitute once you pass that for testing and evaluation
    once you get into that?
        Dr. Gilmore. Senator, we use modeling and simulation in
    numerous operational test activities because we have no choice.
    In the particular case of Joint Strike Fighter, it is currently
    under development. It is an analog to what is currently called
    the air combat simulator down in Marietta that was used during
    F-22 operational testing, and it is being used for all the
    follow-on development that is being done to improve the
    capabilities of the F-22 where you have a full-up effect space
    simulation of the aircraft and you can take operational pilots
    into the simulator and have them fly the aircraft as
    realistically as you can in a simulator.
        We are going to be doing the same thing with the Joint
    Strike Fighter. However, those simulations must be rigorously
    verified, validated, and accredited based on open air flight
    test data. If they are not, then they are meaningless. So there
    is----
        Senator Shelby. You are fooling yourself if they are not,
    are you not?
        Dr. Gilmore. Pardon me?
        Senator Shelby. You are fooling yourself if they are not
    real evaluative tests.
        Dr. Gilmore. Correct. And so we are pushing the flight test
    program to give us the data to verify, validate, and accredit
    rigorously what is called the verification simulation for the
    Joint Strike Fighter, which is under development. There will be
    a version that is used in developmental tests and an even more
    capable version that is used in operational tests.
        But again, we must get data out on the open air test
    ranges, the western test range, where they are doing
    developmental testing and where we will be doing the open air
    operational testing, which will take a year, to validate that
    model. We can only do, even in that year, a relatively small
    number of open air sorties under limited conditions.
        For example, we will not, on the open air test ranges, be
    able to fly the aircraft against the dense integrated air
    defense systems that actually the aircraft is being designed to
    be able to penetrate on the first day of war. But we can fly
    against selected air defense assets and take that data, use it
    to verification, validation, and accreditation (VV&A) the
    simulations, and then in the simulations, fly against the
    simulated, very dense integrated air defense systems. And then
    we can also do many more simulated flights in the simulator
    than we can open air, thereby getting a statistically
    significant sample of data. But the linchpin for all of that is
    the VV&A from the actual open air flight test data. If we do
    not have those data, then the simulation, as you point out, is
    not meaningful.
        Senator Shelby. You have to have it.
        Mr. Sullivan, how do we get the cost down? Is it, as we
    call it, economy of scale? Mr. O'Hanlon was talking about
    recommending half the purchase, whereas most people who deal
    with economics as a rule--the more you make, the price comes
    down. I mean, I think that is just basic. Explain your views.
        Mr. Sullivan. Well, if you are talking about total program
    cost, you can reduce the total amount of expenditure in
    procurement by reducing the quantities, but each one you buy is
    going to cost more. So there is a difference, you know, looking
    at the unit cost and the overall total program cost.
        For example, on the F-22 program, the F-22 program roughly
    estimated that it would cost about $70 billion to develop and
    procure 750 aircraft. They started cutting costs on that by
    reducing aircraft. They wound up with about 180 aircraft for
    $70 billion. So the cost of the program did not go up, but the
    cost of each aircraft did.
        You know, that is the one way to save budget on this
    program, and this is a program that is going to cost, if you
    just look at acquisition costs, as I said in my statement, over
    $12 billion a year for the next 25 years. You can try to get
    efficiencies, and I am sure they are going to continue to drive
    the learning curve down, but in the end, this happens with most
    programs. You have to start reducing quantities.
        Senator Shelby. This is not new, as was brought up earlier.
    This is not new to probably any development of a weapons system
    we have seen over the years.
        Mr. Sullivan. The B-2 bomber was supposed to be 132
    aircraft. They wound up 20 tanks, same thing. It is part of
    this legendary death cycle that you hear about on acquisition
    programs where too much is promised. They cannot budget for all
    of it. They have trouble meeting the requirements, and
    eventually they are spending too much money and they cannot buy
    as much.
        Senator Shelby. Mr. Sullivan, do you believe that more
    competition in the acquisition process will help solve some of
    the structural problems that we have had?
        Mr. Sullivan. I think more competition always results in
    not only a better price, but better responsiveness. You know,
    this is a sole source engine, as well as aircraft. So there is
    not going to be any competition in the engine here either, and
    we have seen in the past where when you have competition at
    that level, you get reduced costs and better responsiveness
    from the industrial base.
        Senator Shelby. We had some votes on that, did we not?
        Mr. Sullivan. Yes, we did.
        When you are talking about a fighter like this, it is
    pretty hard to have competition with something this complex,
    but you can maintain competition in some cases longer than at
    the start of the program. Sometimes you should think more about
    competing up to a critical design review, for example, you
    know, when you have a stable design, things like that.
        Senator Shelby. Mr. O'Hanlon, you mentioned the F-16, which
    we know is a good plane. Of course, it had a few bumps along
    the road too. But that is a current generation of plane, a
    great one. It has been. But technology moves on either with us
    or with our would-be adversaries. Have you considered that in
    your recommendation?
        Mr. O'Hanlon. Yes, Senator.
        And by the way, I also agree with your earlier point, even
    though you might not have guessed that I would, because I think
    you have to factor this in. If you are going to have a smaller
    buy and try to construct a portfolio of airplanes that winds up
    purportedly being cheaper, you have to factor in a higher unit
    cost as part of the calculation. And I have acknowledged that
    in my work. But that is part of why, even though I am proposing
    a much smaller F-35 program, the savings are nothing close to
    50 percent. And so, again, that is an important thing to bear
    in mind.
        And by the way, a compromise idea here could be keep trying
    to see if the F-35 cost curve comes down the way that Lockheed
    Martin hopes it will. If it does, then maybe you discard my
    backup plan in a couple of years, and if it does not, then you
    keep that in mind.
        In terms of capability, Senator, your last question, what I
    tried to do when I sized my alternative was to say let me
    imagine, even though I am fairly hopeful on U.S.-China
    relations, that they do not go well for a number of years and
    we wind up with a number of bases in Southeast Asia, including
    some we do not even have now, that might be needed to carry out
    some kind of a containment policy, which is not our current
    policy, as you know, and I hope it will never have to be. But
    let us imagine it might. So I think about bases in the
    Philippines, bases in Vietnam, ongoing capability in Okinawa
    and other parts of Japan, Guam, maybe even Taiwan itself if
    there has been a Chinese attack.
        Senator Shelby. Korea.
        Mr. O'Hanlon. And Korea.
        And if I do that and I imagine, let us say, up to a couple
    of wings in each of those places, then I get up to the kind of
    numbers that I am proposing. So it is a threat-based approach,
    and it is a fairly rigorous one in that regard. It is just not
    populating the entire force structure with F-35s.
        Senator Shelby. I will pose this last question. The
    chairman has been generous with me. My last question: Is it not
    important to this country and the decisions we make right here
    on funding or not funding things that will make this country
    secure to not just think about tomorrow--I mean, 2 years from
    now but 10 years from now, 15 years from now when we are
    building weapons systems and acquiring them for the future. And
    we look around the world--I mean, I hope we stay in peace
    always, but we realize that China has become a huge economic
    power. Following that throughout history there has been a build
    up of military strength and a possible notion of establishing
    some kind of a hegemony in that area. Does that concern all of
    you when we are thinking about weapons not just for today but
    for tomorrow?
        Mr. O'Hanlon. I can give a one-sentence answer to get out
    of the way. That is why I am ultimately a strong supporter of
    the F-35. So we are talking about the numbers. But in terms of
    the capability, especially in the western Pacific, I think it
    is quite important.
        Dr. Gilmore. Senator, I would say that I agree with Frank
    Kendall and the service chiefs. I do not think we have an
    alternative but to develop this plane and make it work.
        My caution is just that at this point anyone who projects
    when we will have certain capabilities is probably being a bit
    optimistic based on what I have seen so far in the program. And
    again, it has improved its performance substantially, but
    still, these are very complex undertakings. I easily see a 6-
    to 12-month slip relative to what the program schedule is now.
    But that is a marked improvement from where we were in 2009.
    And so it is going to take a while to get this capability. It
    has taken a while to get all the capabilities in the F-22 that
    we wanted. In fact, we are still working on that. That has
    turned out to be a very capable aircraft, but it was also a
    program that was rather troubled and went through some of the
    same troubles that this one is going through. I agree that it
    is needed. But go ahead.
        Senator Shelby. Mr. Sullivan.
        Mr. Sullivan. Yes, I think that the acquisition process for
    major weapons system acquisitions that the Department uses is
    broken in that when they set requirements for big bang, quantum
    leap kind of capabilities--you know, they project that they
    will take 10 years and they wind up taking 15. The world
    changes dramatically, as the chairman pointed out, in 15 years.
        So one of the things we have looked at is that you need an
    acquisition process that can deliver much more quickly and be a
    lot more agile and maybe have incremental improvements to
    requirements so you can deliver added capability, maybe not the
    big bang, but in the next block maybe you get there.
        The commercial world operates that way, and they make
    pretty good revolutions incrementally over a 10-year period. If
    you look at some products and look at how long it takes for a
    weapons system to deliver anything, there is an awful lot of
    electronics and things out there that just deliver, deliver,
    you know, it is an incremental kind of an approach. And you are
    in production a lot more than you are in development that way
    too.
        So that would be a major change in the acquisition process
    to be able to look at a 5-year kind of production capability
    but maintain the vibrant tech base that we need. Right now, the
    acquisition process--it is not only concurrency between testing
    and production. It is also concurrency between technology
    development and product development, and that gets very
    inefficient.
        Senator Shelby. Mr. Chairman, thank you.
        Senator Durbin. Thank you very much, Senator Shelby and
    Senator Cochran.
        I want to thank the staff for their preparations in this
    hearing and the panel for their valuable testimony, along with
    the first panel.
        When I took over as chairman of this subcommittee, I knew I
    had a lot to learn, and this was one of the hearings that I
    asked for. This is the most expensive acquisition project
    underway. We are making sacrifices in the name of deficit
    reduction that relate to the number of troops, the training of
    our troops, suggested base closures, perhaps not equipping our
    Guard and Reserve units the way they need to be equipped,
    having just relied on them so much in the conflicts in Iraq and
    Afghanistan. Over and over again, we are being asked to make
    some hard decisions in the subcommittee, and I did not want the
    acquisition process to be separate from that conversation. And
    I wanted to start with the obvious big dog on the block, the F-
    35.

                         ADDITIONAL COMMITTEE QUESTIONS

        Your point, Mr. Sullivan, at the end is one I tried to make
    earlier and just keep returning to. When people sit down in my
    office and say, well, we started thinking about 12 years ago
    about battlefield communications and what our troops will need,
    we are still working on it, and I am thinking, my goodness,
    what has changed in this world in terms of communications in 12
    years. And it is a challenge for us, a challenge we have to
    meet.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                 Questions Submitted to Hon. Frank Kendall, III
                Questions Submitted by Senator Patrick J. Leahy

        Question. Senator Reed asked you about the security of the F-35
    from cyber threats, and your response indicated that you took it as a
    question about industrial espionage and the theft of F-35 design
    secrets by near peer powers.
        Leaving aside the question of industrial espionage, given that the
    F-35 is the most software- and information technology-enabled aircraft
    in our Nation's history, what are your plans to protect it from
    operational cyber security threats? During the hearing General Bogdan
    called the jet ``virtually a flying computer.''
        Answer. As Lieutenant General Bogdan indicated, the F-35 is
    remarkable in its extensive computer processing power and can be
    depicted as a ``flying computer.'' As such, the F-35 aircraft, as well
    as its ground components, are monitored and managed like other
    Department of Defense (DOD) high-value computer networks and systems.
    U.S. Cyber Command, as well as other agencies, monitors emerging
    threats to DOD computer systems and issues warnings and alerts. The F-
    35 Joint Program Office (JPO) receives these warnings and alerts,
    develops appropriate patches and upgrades to the air system to counter
    the threat, and integrates those into the mission system and ground
    support software.
        Likewise, the F-35 JPO, in concert with other security agencies,
    takes great care to analyze the persistent long-term threats to the F-
    35 air system and takes corrective actions when appropriate.
        Question. It is not science fiction to imagine an enemy of the
    United States would seek to hack into and disable our fleet of F-35s.
    And the jet's information technology means that they have an avenue to
    do so.
        You recently issued a DOD Instruction about assured
    microelectronics. How do you plan to assure the microelectronics and
    networked functionality of the F-35 from operational cyber attack? What
    is your trusted electronics plan for the F-35, and how will you protect
    that plan from downward budgetary pressures?
        Answer. We issued DOD Instruction 5200.44, ``Protection of Mission
    Critical Functions to Achieve Trusted Systems and Networks (TSN)'' to
    ensure that all DOD programs apply risk management practices throughout
    the product lifecycle to minimize the risks mentioned above. The F-35
    Joint Program Office (JPO) is also working closely with the Office of
    the Deputy Assistant Secretary of Defense for Systems Engineering to
    address all Program Protection Plan (PPP) elements to include
    criticality analysis, identification of Critical Program Information
    (CPI), and Supply Chain Risk Management (SCRM). The PPP is a living
    document, and the F-35 JPO is periodically updating the PPP and
    integrating a revised CPI and critical component list over the F-35
    program lifecycle.
        A primary concern with regard to a cyber attack on a platform like
    the F-35 is that mission capability would be impaired as a result of
    vulnerabilities in system design or subversion within the supply chain
    that affects a system's mission critical functions or critical
    components. The F-35 program has worked diligently to reduce
    vulnerabilities in the system design through sound system security
    engineering and through implementation of DOD 8500.2, JAFAN 6/3, and
    Telecommunications Electronics Material Protected from Emanating
    Spurious Transmissions (TEMPEST) requirements into the air system. The
    program utilizes Information System Security Engineering Working Groups
    (ISSEWG) and Technical Interchange Meetings (TIM) as regular forums to
    address, discuss, and resolve system security engineering concerns/
    topics relating to system design. The outputs of these discussions are
    used to guide program design changes and/or system security
    architecture improvements.
        With regard to detecting, reducing and mitigating the consequences
    of products containing counterfeit components or malicious functions,
    the F-35 program has taken some proactive actions. First, all Lockheed
    Martin's (LM) suppliers are contractually required to comply with the
    best practices outlined in key Aerospace Standards AS-5553 and AS-6174,
    which while not a panacea, does provide a risk assessment framework for
    identifying potential problem areas and ensuring a full understanding
    of the specific risks. The F-35 JPO has further stipulated that as part
    of LM's Seller Plan, a Seller shall only purchase products directly
    from the Original Component or Equipment Manufacturer (OCM/OEM) or from
    an OCM/OEM authorized distributor chain, Aftermarket Manufacturer, or
    Authorized Reseller. In the few instances where items need to be
    purchased from independent distributors or brokers such as in cases of
    diminishing material supply (DMS) or obsolescence, the parts will be
    subjected to a screening process appropriate to the commodity as
    documented in the Program Counterfeit Parts/Material Prevention and
    Control Plan. On a recurring basis, Lockheed Martin Supplier Quality
    Management personnel will audit the suppliers' counterfeit parts
    prevention and as further mitigation, the F-35 suppliers are required
    to mask the intended use of the parts or components for use on the F-35
    program.
        In dealing with potential vulnerabilities within custom or
    commodity hardware/software, the F-35 program is taking some
    significant steps to mitigate those threats. We currently require
    compliance to Aerospace Standard 9120 which requires traceability of
    parts from receipt until delivery, as well as evidence of conformance
    to ensure the part has been rigorously tested and the likelihood of it
    being a counterfeit is minimized. For various components on the
    aircraft that are customized for F-35 uses, such as Application
    Specific Integrated Circuit (ASIC) components, the program is
    investigating the use of a Trusted Foundry for procuring those
    components.
        Additionally, the program has been in discussions with the Defense
    Microelectronics Activity to investigate the potential sourcing of
    other components currently procured overseas from Trusted Domestic
    Sources. The current criticality analysis underway and the resulting
    vulnerability assessment outcome will influence the JPOs' risk
    assessment and decision whether to pursue that route. The outcome of
    the vulnerability assessment will also influence future decisions
    (Block Upgrades, Tech Refreshes and DMS Redesigns) to design vulnerable
    components out of the system.
        Funding availability in a shrinking budget environment provides
    challenges to maintaining the current plan. The Department is dedicated
    to ensuring secure and effective microelectronics and networked
    functionality and will continue to prioritize these areas. The
    expanding and increasingly competitive Trusted Supplier network should
    provide an avenue to mitigate threats while lessoning budget pressures.
        Question. ``To start over, to go back 10 years, 20 years and invest
    $20 billion or $30 billion in the development of another aircraft in
    replacement of the F-35 just doesn't make any sense.''
        I agree. However, are there any plans to diversify the fighter
    fleet in line with alternative proposals, such as those made by Michael
    O'Hanlon of the second panel of witnesses?
        Answer. Currently there are no plans to diversify the Department's
    Tactical Strike Fighter (TACAIR) fleet in line with any alternative
    proposals. The Department's TACAIR priority is to acquire 5th
    generation fighter/attack aircraft as quickly and efficiently as
    practical, while maintaining sufficient legacy aircraft inventory to
    meet current and near-term commitments. Legacy fighter/attack aircraft
    are important today, as evidenced by their involvement in ongoing
    operations in Afghanistan. However, the 4th generation aircraft are
    limited in their ability to combat adversaries employing Anti-Access
    and Area Denial threats. The Department is committed to transitioning
    to 5th generation capability and the F-35 will constitute the bulk of
    that inventory.
        Question. Please explain how the cost of the F-35 program will not
    deprive the military of vital modernization in other areas.
        Answer. Every element of the Department's budget represents an
    attempt to balance all the competing needs of the Department, the F-35
    program is no exception.
        To that end, F-35 production costs are coming down. Unit costs
    continue to go down with each successive production lot we have on
    contract. The Low Rate Initial Production (LRIP) Lot 5 contract was 4
    percent lower than the LRIP Lot 4 contract. We expect that trend to
    continue provided we can ramp up to more economical production rates.
    These cost reductions are a result of an aggressive transition to fixed
    price-type contracts and agreements with the contractor that more
    equitably share in the risks associated with concurrency and overruns.
    The LRIP Lot 6 and 7 contracts will place the entire burden for any
    overruns on the contractor.
        We are actively pursuing opportunities to reduce the long-term
    lifecycle costs as well. The Department, F-35 Program Office, and
    Services are reviewing increased opportunities for competitive
    sustainment in the areas of global supply chain, support equipment, and
    training. Additionally, sustainment business case analyses are
    assessing the appropriate mix of contractor and government maintenance
    and support to find the most cost effective way to reduce Operations
    and Support (O&S) costs. The F-35 Program Office estimate for O&S costs
    has come down in the last year, and the Department's independent
    estimate will be updated later this year.
        Finally, the multirole F-35 is the cornerstone of the Department's
    future air dominance and precision attack capabilities. The F-35 will
    replace numerous aging legacy aircraft for the Air Force, Navy, and
    Marine Corps. The capabilities that the F-35 will bring to the
    warfighter are absolutely required to meet the projected threats in the
    future, and worth the investment required to modernize the fleet. My
    focus is to ensure that we deliver the required capability at the right
    cost.
                                     ______

              Questions Submitted to Admiral Jonathan W. Greenert
                    Questions Submitted by Senator Jack Reed

        Question. Will you have to modify existing carriers to accommodate
    the F-35 (e.g. arrested landing gear, catapults, elevators)? If so, how
    much will this cost, has any of this work begun in the planning stage,
    and when do you expect this work will have to be funded?
        Answer. The current modernization plan for Nimitz-class carriers
    includes 16 separate ship alterations designed for integration of the
    F-35C. Nine of the 16 modifications have been developed while the
    remaining alterations are in varying stages of development, but will be
    complete in time to support Initial Operational Capability (IOC) for
    the F-35C. A number of the identified ship modifications are designed
    specifically for F-35C compatibility, and others will both enable F-35
    sea-basing and improve support for the rest of the aircraft in the
    carrier air wing, including the E-2 Hawkeye, F/A-18 Hornet and Super
    Hornet, EA-18 Growler, and the Unmanned Carrier Launched Airborne
    Surveillance and Strike (UCLASS) system.
        USS Abraham Lincoln (CVN 72) will be the first carrier to be ``JSF-
    Ready.'' She will receive all 16 alterations, either as part of her
    current Refueling Complex Overhaul (RCOH), or in future planned
    incremental availabilities or modernization periods. The total cost of
    all 16 modifications for CVN 72 is estimated to be $53 million. The
    alterations for the remaining Nimitz-class carriers are expected to be
    similar in cost, and will be incrementally-funded between now and
    fiscal year 2022 to meet F-35C deployment schedules.
        The nine ship alterations already fully developed are incorporated
    into the baseline design of Gerald R. Ford (CVN 78), the lead ship of
    the Ford class of carriers. The remaining seven modifications are
    planned for installation after CVN 78 has been delivered to the Navy.
        Question. With respect to CVN-78 USS Gerald R. Ford--is the new
    Electromagnetic Aircraft Landing System (EMALS) being designed to
    accept both F-18s and F-35s? Is the EMALS system being tested with the
    F-35C and F-18s?
        Answer. EMALS is being designed to launch all air wing aircraft,
    including F-35C and all variants of the F/A-18. Aircraft Compatibility
    Testing completed to date included the F-35C, F/A-18E, T-45C, C-2A, and
    E-2D. Additional testing will include all variants of the F/A-18.
                                     ______

                    Questions Submitted by Senator Roy Blunt

        Question. What is the total lifecycle cost to operate and sustain
    the F-35C program, and do you believe these costs are sustainable?
        Answer. OSD CAPE has estimated operating and sustainment (O&S) cost
    for the entire F-35 program at $671 billion (fiscal year 2012). This
    O&S estimate is for all three United States variants based on an
    estimated 30-year service life and predicted attrition and usage rates.
    The F-35C estimate is approximately 15-18 percent of the total DOD F-35
    O&S cost estimate. The estimate will be updated for the annual Defense
    Acquisition Board review of the F-35 program.
        The program continues to make progress toward reducing sustainment
    costs. The Services continue to support the F-35 Joint Program Office
    (JPO) in its disciplined approach to analyzing and reducing sustainment
    costs.
        Question. The recently released Select Acquisition Report (SAR)
    estimated the cost per flying hour of the F-35A, the conventional
    aircraft, to be approximately $32,000 per hour. Costs were not provided
    for the F-35C, the Navy variant. Will the harsh carrier environment in
    which these aircraft operate increase the cost per flight hour above
    the AF variant?
        Answer. Concurrent with F-35A cost estimation, several F-35C cost
    per flight hour estimates have been developed by the Joint Program
    Office. F-35C costs are projected to be about 3 percent higher or about
    $1,000 more per hour.
        Factors causing the higher cost per hour are due to increased
    complexity required to operate in the carrier environment. The F-35C is
    substantially different in aircraft structure than the F-35A. Among the
    changes, the F-35C has a significantly larger wing area, 620 square
    feet, compared to 460 square feet for the F-35A. This larger wing poses
    higher costs to repair and maintain due to material costs and higher
    low observable maintenance manpower requirements. The F-35C has a
    folding wing, which is more complex, more expensive, and adds to repair
    cost. The F-35C requires reinforced landing gear and a tailhook to
    accommodate carrier landings and landing loads. Tire and wheel
    replacement will also be more frequent and more expensive.
        Question. Do you have an estimate of the cost per flight hour of
    the F-35C at initial Operational Capability (IOC)?
        Answer. Based on the current F-35 schedule, the F-35C will reach
    the IOC milestone between August 2018 (objective) and February 2019
    (threshold). The F-35 Joint Program Office (JPO) and Department of the
    Navy (DON) continue to develop estimates for the F-35 cost per flight
    hour. Estimates for cost per flight hour at IOC are not available.
    However, at maturity, the F-35C cost per flight hour is estimated to be
    approximately $33,000.
        Question. Can you compare the cost per flight hour of the F-35C at
    initial Operational Capability with the cost of the current fleet,
    which I understand has the lowest per hour in the Navy inventory?
        Answer. At maturity, which is defined as operations with the peak
    number of aircraft in service, the F-35C total operating and support
    costs, less indirect costs, are estimated to be approximately $33,000
    per hour compared to approximately $20,000 for the F/A-18E/F. This F-
    35C cost is a projected estimate, whereas the F/A-18E/F figure is an
    actual, observed cost. The F/A-18E/F program has significantly
    benefited from F/A-18A-D Fleet operational experience and numerous
    initiatives to reduce its sustainment costs. The Navy and the Joint
    Strike Fighter Joint Program Office remain committed to identifying
    efficiencies to reduce sustainment costs for the F-35C.
        Question. I applaud the Navy for investing in additional airborne
    electronic attack capability this year to overcome our adversaries'
    evolving capabilities, particularly because we are investing in stealth
    technology that may already be vulnerable to new radars and weapons
    systems. Our adversaries are getting much better at detecting and
    countering stealth technology with new capabilities. One of the ways to
    overcome these technology improvements includes airborne electric
    attack. Can you discuss the importance of this capability?
        Answer. Future conflicts will be fought and won in the
    electromagnetic spectrum and cyberspace, which are converging to become
    one continuous environment. This environment is increasingly important
    to defeating threats to access, since through it we can disrupt
    adversary sensors, command and control and weapons homing.
        It is important to make investments that will allow us to shape the
    electromagnetic (EM) spectrum to our advantage. For more than a half
    century the Department of the Navy has been the leader in Airborne
    Electronic Attack and this naval capability remains in high demand.
    This is why the Navy has invested in airborne electronic attack systems
    such as the EA-18G Growler and the Next Generation Jammer. The Next
    Generation Jammer will operate over a wider frequency range and have
    greater flexibility than today's airborne jammers because of its
    digital processing and tunable antennae. This capability will allow it
    to do much more than jam enemy sensors; the Next Generation Jammer will
    be able to deceive, decoy, and inject false signals into enemy sensors.
    These are all ways we need to employ the spectrum to our advantage.
        Future investments will continue to leverage our airborne
    electronic attack capability as part of a fully netted warfare concept,
    which will provide EM spectrum dominance by merging EM spectrum
    capabilities with cyberspace.
        Question. You've been a thoughtful leader in exploring affordable
    alternatives to meet advancing threats. For example, you've discussed
    the importance of keeping today's aircraft platforms lethal by
    upgrading their payloads, such as stand-off weapons and sensors. Can
    these types of advanced payloads on current platforms serve as
    affordable alternatives while still maintaining a qualitative edge over
    our adversaries?
        Answer. Upgrading payloads for existing platforms offers a rapid
    and cost-effective way to improve or integrate new capabilities into
    proven platforms. Aircraft naturally lend themselves to a payload focus
    because they are designed with hard points and junctions into which a
    number of modular payloads can be connected. We also need a deliberate,
    comprehensive, and effective process to design advanced platforms to
    recapitalize existing ships and aircraft. The key in designing new
    platforms is to control their cost and incorporate the space, weight,
    power, and cooling margin needed to host a range of new platforms over
    its life. Payloads extend the effectiveness of platforms and are an
    important part of the mix in balancing capability and capacity.
        Upgrading current aircraft enables us to maintain a qualitative
    edge, while developing and producing new aircraft allows the Navy to
    provide the necessary capabilities in the future. A complementary mix
    of upgraded F/A-18E/F and future F-35C squadrons will provide the air
    wing the proper balance of capability, responsiveness and affordability
    across the spectrum of military operations. Both F/A-18 E/F and F-35C
    carry or will carry a wide range of payloads and Navy will continue to
    develop and expand additional payload capability to pace threat
    development.
                                     ______

               Questions Submitted to General Mark A. Welsh, III
                Questions Submitted by Senator Patrick J. Leahy

        Question. In your comments to the committee, you stated, ``. . . we
    need to determine when do we need [the F-35], how much of it do we
    need, and then how do we mix it with a fourth generation capability
    that we will have in our fleet for years?''
        Answer. The Air Force remains committed to the F-35, but budget
    reductions are forcing the Air Force to seek a balance between
    investing in new aircraft and sustaining/modernizing our aging fighter
    fleet. Under any reasonable forecast, the Air Force will continue to
    field a mix of 4th and 5th generation fighters for the next two
    decades; however, as long as potential adversaries pursue advanced
    threats to our fighter forces we see no alternative to the F-35. The
    fiscal year 2014 President's budget, as submitted, funds F-35
    procurement and legacy fighter modernization to include F-16 service
    life extensions. However, under sequestration budget levels, some 4th
    generation modernization programs will have to be slowed or terminated.
        Question. Does this statement signal any lessening of the Air
    Force's commitment to the F-35 in the future? Specifically, do you
    intend to service-life extend F-16s beyond their current sunset date,
    or to maintain a future Air Force that will fly both F-35s and F-16s
    for the foreseeable future?
        Answer. The Air Force remains committed to the F-35, but budget
    reductions are forcing the Air Force to seek a balance between
    investing in new aircraft and sustaining/modernizing our aging fighter
    fleet. Under any reasonable forecast, the Air Force will continue to
    field a mix of 4th and 5th generation fighters for the next two
    decades; however, as long as potential adversaries pursue advanced
    threats to our fighter forces we see no alternative to the F-35. The
    fiscal year 2014 President's budget, as submitted, funds F-35
    procurement and legacy fighter modernization to include F-16 service
    life extensions. However, under sequestration budget levels, some 4th
    generation modernization programs will have to be slowed or terminated.
        Question. During the hearing, you mentioned that ``. . . [F-35s]
    can't fly within 25 miles of lightning. They can't fly in the weather
    yet. That's going to require software development that's due and is on
    track to be delivered. By the time we reach our initial operational
    capabilities at the end of 2016 for the Air Force, those problems will
    be in the past.''
        These are clearly major operational deficiencies. What other
    capability gaps do you perceive in the aircraft that will be resolved
    by future block updates to software or hardware? When do you anticipate
    they will be resolved? What capability gaps will never be resolved by
    future engineering changes?
        Answer. The F-35 development program delivers incremental
    capability through hardware and software block upgrades. Initial
    operational capability for the Air Force includes basic close air
    support (CAS), Air Interdiction, and limited Suppression and
    Destruction of Enemy Air Defense (SEAD/DEAD) operations in a contested
    environment. The Joint Program Office conducted a Critical Design
    Review for the final capability block on 25-27 June. Based on the
    current program schedule, the F-35 Joint Program Office is moderately
    confident the F-35A will meet those capabilities by the initial
    operational capability date in 2016. The final block of capability in
    the F-35 System Development and Demonstration program is anticipated
    for August 2017. It is expected to include full warfighting capability,
    including close air support, Air Interdiction and Strategic Attack,
    SEAD/DEAD, Offensive and Defensive Counter Air, with an expanded flight
    envelope and array of weapons.
        Question. What air forces and what defense systems is the F-35
    designed to counter? What planes will those countries fly in opposition
    to the F-35? In what ways is the F-35 superior to those planes?
        Answer. Countries like Russia and China continue to make tremendous
    leaps in the technology and capability within their own air forces.
    Fighters, such as the SU-30 and SU-35, are equipped with improved
    targeting systems, cutting edge electronic jammers, and advanced air-
    to-air weapons. These aircraft are on par to our own legacy fleet and
    are already deployed in significant numbers. These fighters are offered
    for sale worldwide to any potential adversary. The SU-35 was ``center
    stage'' at this year's Paris Air Show, marketed as the counter to
    America's air superiority advantage.
        Russia and China are also developing their own fifth generation
    fighters such as the PAK-FA, J-20, and J-31. With improved aerodynamic
    performance, reduced radar cross sections (i.e., ``stealth''),
    sophisticated digital radar systems, and networked targeting solutions,
    these aircraft are designed to challenge our F-22 and F-35 for control
    of the skies.
        The F-35, however, will hold the advantage against these advanced
    fighter threats. Its fifth generation capabilities in stealth,
    electronic attack and protection, combined with a networked and sensor
    fused targeting solution, ensure our F-35s will ``see first, shoot
    first, kill first'' in any future air-to-air conflict. Details on these
    capability advantages are classified, but can be provided upon request.
        Question. What air defense systems and equipment will the F-35 be
    expected to attack, and is it capable of doing that job? How vulnerable
    is the F-35 to surface-to-air missiles? Which radar systems now
    manufactured, installed and exported by Russia, by China, and by other
    countries are incapable of detecting the F-35?
        Answer. The F-35, with its fifth generation capabilities of
    advanced stealth, improved electronic attack and protection, and fused
    and networked sensors for enhanced situational awareness, achieves
    unmatched levels of survivability and lethality against the most
    advanced integrated air defense systems. Because of this, the Air Force
    expects to employ the F-35 in the most challenging threat environments;
    areas our current legacy fleet simply cannot operate in and survive.
    This allows the Air Force to hold the enemy's most defended targets at
    risk, while we maintain the ability to protect the U.S. military
    personnel in the air and on the ground.
        When the F-35 is fielded in the Block 3F configuration, it will
    have the full complement of capabilities and weapons needed to ensure
    mission success in the most contested, anti-access and area denied
    environment. The Air Force fully expects it will perform superbly in
    the role of suppression and destruction of enemy air defenses and it
    will ensure our air advantage in any potential future conflict.
        Details on the F-35's performance against specific adversary radar
    systems are classified, but can be provided upon request. However, in
    general terms, the F-35's fifth generation capabilities of improved
    stealth, advanced electronic attack and protection, and fused and
    networked sensors will ensure it can detect, target, track, and destroy
    the most advanced air defense systems that Russia or China are fielding
    or exporting well before they can detect and target the F-35 in return.
        Stealth and signal management are not just ``magic paint'' we add
    to an airplane to make it invisible to an enemy's radar. It is a
    combination of inherent design features including aircraft shape,
    internal weapons and fuel, and special coatings, designed to
    significantly reduce the radar energy return coming from the F-35. When
    used in combination, these design features provide the reduced radar
    cross section needed to reduce the adversary's ability to detect and
    engage the F-35, providing the freedom of movement needed to hold
    targets at risk in these heavily defended environments. Without them,
    as is the case for our legacy fourth generation fleet, we simply cannot
    survive and operate in these environments.
        Question. Please explain how the F-35 will perform its role of
    close ground support. How vulnerable is the F-35 to destruction by
    rifle fire?
        Answer. The U.S. Air Force cannot provide detailed descriptions of
    how the F-35 will perform close air support (CAS) in an unclassified
    forum. However, we can provide a general discussion of the capabilities
    that make the F-35 a superb platform for CAS and provide detailed
    information on operational procedures in a more appropriate forum if
    requested.
        The F-35 provides increased survivability and lethality with its
    fused sensors, precision weaponry, large payload and fuel load, and
    data-link capability, all offering distinct advantages in a CAS role.
    The F-35 can provide precision fire on CAS targets while remaining out
    of range of returning small arms fire and tactical surface-to-air
    threats. In addition, the F-35's advanced stealth and improved
    electronic attack and protection capabilities will allow it to conduct
    CAS missions in areas where legacy platforms cannot operate and
    survive.
        To ensure survivability when conducting CAS, the F-35 program is
    conducting extensive live-fire testing of the aircraft's ability to
    survive battle damage, the most exhaustive live-fire testing the U.S.
    military has ever conducted for a tactical fighter. This live-fire
    testing includes extensive analysis of the impacts to the F-35's
    survivability due to small arms fire.

                              SUBCOMMITTEE RECESS

        Senator Durbin. Thank you for your testimony. Thanks,
    everyone, for attending.
        And this meeting of the subcommittee stands adjourned.
        [Whereupon, at 11:35 a.m., Wednesday, June 19, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]