[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\
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    \1\ See GAO Highlights at the end of this statement.
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    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.
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    \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).
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               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\
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    \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.
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    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.
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    \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).
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    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.]
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