Tactical Aircraft: DOD Needs a Joint and Integrated Investment	 
Strategy (02-APR-07, GAO-07-415).				 
                                                                 
The Department of Defense (DOD) plans to invest $109 billion in  
its tactical air forces between 2007 and 2013. Long term, DOD	 
plans to replace aging legacy aircraft with fewer, more expensive
but more capable and stealthy aircraft. Recapitalizing and	 
modernizing tactical air forces within today's constrained budget
environment is a formidable challenge. DOD has already incurred  
substantial cost and schedule overruns in its acquisition of new 
systems, and further delays could require billions of dollars in 
additional investments to keep legacy aircraft capable and	 
sustainable. Because of the large investments and risk, GAO was  
asked to review investment planning for tactical aircraft. This  
report describes the current status of DOD's new tactical	 
aircraft acquisition programs; identifies current impacts on	 
legacy aircraft modernization programs and retirement schedules; 
and assesses DOD's overall investment plan for tactical aircraft.
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-415 					        
    ACCNO:   A67626						        
  TITLE:     Tactical Aircraft: DOD Needs a Joint and Integrated      
Investment Strategy						 
     DATE:   04/02/2007 
  SUBJECT:   Cost analysis					 
	     Cost overruns					 
	     Defense budgets					 
	     Defense cost control				 
	     Fighter aircraft					 
	     Legacy systems					 
	     Military aircraft					 
	     Procurement planning				 
	     Schedule slippages 				 
	     Tactical air forces				 
	     Budget outlays					 
	     EA-6B Aircraft					 
	     F-22 Raptor Aircraft				 
	     F-35 Aircraft					 
	     F/A-18 E/F Aircraft				 
	     Joint Strike Fighter				 
	     Prowler Aircraft					 

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GAO-07-415

   

     * [1]Results in Brief
     * [2]Background

          * [3]Tactical Air Forces Costs

     * [4]New Acquisition Programs Are Spending Significantly More Dol

          * [5]DOD Plans for New Aircraft and Their Implications for the To
          * [6]Cost, Schedule, and Performance Issues for New Acquisition P

     * [7]New Acquisition Costs and Delays Have Made Resourcing Decisi

          * [8]The Air Force Is Increasing Investments in Legacy Systems to
          * [9]Plans for Navy and Marine Corps Legacy Systems Are Evolving

     * [10]A Joint Enterprise- Level Investment Strategy for Tactical A

          * [11]Services Plan Tactical Aircraft Investments Independently

               * [12]Department of the Navy Future Tactical Aircraft Plans

                    * [13]Shortfalls Forecast by Navy and Marine Corps
                      Officials

               * [14]Department of the Air Force Future Tactical Aircraft
                 Plans

                    * [15]Shortfalls Forecast by Air Force Officials

          * [16]Affordability of Long-Range Plans Is Questionable
          * [17]Efforts to Build Forces from a Joint Perspective Continue, b

               * [18]New Planning Efforts Show Promise
               * [19]Joint Studies Have Not Been Very Directive
               * [20]Joint Tactical Radar Jamming Mission May End

     * [21]Conclusions
     * [22]Recommendations for Executive Action
     * [23]Agency Comments and Our Response

          * [24]Mission
          * [25]Program Status
          * [26]GAO Observations
          * [27]Mission
          * [28]Program Status
          * [29]GAO Observations
          * [30]Mission
          * [31]Program Status
          * [32]GAO Observations
          * [33]Mission
          * [34]Program Status
          * [35]GAO Observations
          * [36]Mission
          * [37]Program Status
          * [38]GAO Observations
          * [39]Mission
          * [40]Program Status
          * [41]GAO Observations
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          * [55]Program Status
          * [56]GAO Observations

     * [57]GAO Contact
     * [58]Acknowledgments
     * [59]GAO's Mission
     * [60]Obtaining Copies of GAO Reports and Testimony

          * [61]Order by Mail or Phone

     * [62]To Report Fraud, Waste, and Abuse in Federal Programs
     * [63]Congressional Relations
     * [64]Public Affairs

Report to the Chairman, Subcommittee on Air and Land Forces, Committee on
Armed Services, House of Representatives

United States Government Accountability Office

GAO

April 2007

TACTICAL AIRCRAFT

DOD Needs a Joint and Integrated Investment Strategy

GAO-07-415

Contents

Letter 1

Results in Brief 2
Background 3
New Acquisition Programs Are Spending Significantly More Dollars and
Delivering Fewer Tactical Aircraft Later Than Originally Planned 7
New Acquisition Costs and Delays Have Made Resourcing Decisions for Legacy
Systems Reactive and Less Efficient 13
A Joint Enterprise- Level Investment Strategy for Tactical Aircraft Is
Lacking As Services Plan Independently 20
Conclusions 33
Recommendations for Executive Action 34
Agency Comments and Our Response 35
Appendix I Scope and Methodology 38
Appendix II Comments from the Department of Defense 39
Appendix III Tactical Air Forces Funding Fiscal Years 2006 to 2011 43
Appendix IV A Summary of Tactical Aircraft Systems Ongoing and Future
Efforts 44
Appendix V GAO Contacts and Staff Acknowledgements 78
Related GAO Products 79

Tables

Table 1: New Aircraft Replacing Legacy Fleets 5
Table 2: New Systems Acquisition Costs and Quantities 8
Table 3: Changes in Acquisition Quantities for New Tactical Aircraft
Systems 9
Table 4: Changes in Key Outcomes of New Tactical Systems 11
Table 5: Total Investments in New and Legacy Tactical Aircraft from Fiscal
Years 2007 to 2013 13
Table 6: Air Force Legacy Aircraft Modernization Costs 17
Table 7: Navy Legacy Aircraft Modernization Costs 19
Table 8: Changes in Tactical Aircraft Inventories Fiscal Years 2006 to
2025 21
Table 9: F-22A Fiscal Year 2008 Defense Budget 47
Table 10: Navy JSF Fiscal Year 2008 Defense Budget 51
Table 11: Air Force JSF Fiscal Year 2008 Defense Budget 51
Table 12: F/A-18 Fiscal Year 2008 Defense Budget 55
Table 13: EA-18G Fiscal Year 2008 Defense Budget 58
Table 14: A-10 Fiscal Year 2008 Defense Budget 61
Table 15: F-15 Fiscal Year 2008 Defense Budget 64
Table 16: F-16 Fiscal Year 2008 Defense Budget 67
Table 17: F-117A Fiscal Year 2008 Defense Budget 69
Table 18: EA-6B Fiscal Year 2008 Defense Budget 74
Table 19: AV-8B Fiscal Year 2008 Defense Budget 77

Figures

Figure 1: DOD Investment in Tactical Air Forces 6
Figure 2: Original Planned and Current Procurement Quantities for New
Tactical Aircraft 10
Figure 3: Operating Costs per Flying Hour for Air Force Tactical Aircraft
15
Figure 4: Navy and Marine Corps Tactical Aircraft Force Structure 23
Figure 5: Air Force Tactical Aircraft Force Structure 25
Figure 6: Projected Budgets for Tactical Aircraft 29
Figure 7: F-22A Raptor 45
Figure 8: F-35 Joint Strike Fighter (JSF) 48
Figure 9: F/A-18E/F Super Hornet 52
Figure 10: EA-18G Growler 56
Figure 11: A-10 Warthog 59
Figure 12: F-15A/B/C/D Eagle and F-15E Strike Eagle 62
Figure 13: F-16 Fighting Falcon 65
Figure 14: F-117A Nighthawk 68
Figure 15: F/A-18A/B/C/D Hornet 70
Figure 16: EA-6B Prowler 72
Figure 17: AV-8B Harrier II 75

Abbreviations

DOD Department of Defense
ICAP III Improved Capability electronic suite modification
IOC initial operational capability
JCIDS Joint Capabilities, Integration, and Development System
JSF Joint Strike Fighter
OSD Office of Secretary of Defense
QDR Quadrennial Defense Review
RDT&E Research, Development, Test and Evaluation
STOVL short field take-off and vertical landing

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United States Government Accountability Office

Washington, DC 20548

April 2, 2007

The Honorable Neil Abercrombie
Chairman, Subcommittee on Air and Land
Forces
Committee on Armed Services
House of Representatives

Dear Mr. Chairman:

Over the past three decades, the Department of Defense (DOD) has spent
$534 billion to develop, procure, and modify its tactical air forces.
Tactical air forces are critical to achieving and maintaining air
dominance during combat operations and account for a significant share of
the defense dollar. After procuring large numbers of fighter and attack
aircraft in the 1970s and 1980s, DOD shifted its emphasis to procuring
bombers, airlifters, and other systems. DOD now seeks to recapitalize and
modernize its tactical air forces to ensure the total force has sufficient
capabilities and capacity to meet operational requirements today and in
the future. Over the next 20 years, DOD plans to replace several thousand
aging tactical aircraft with a substantially smaller number of more
expensive but more capable and stealthy new aircraft, while continuing to
modify and sustain its current fleets in order to keep them operationally
viable until sufficient numbers of the new systems are fielded. Over the
past three decades, the Department of Defense (DOD) has spent $534 billion
to develop, procure, and modify its tactical air forces. Tactical air
forces are critical to achieving and maintaining air dominance during
combat operations and account for a significant share of the defense
dollar. After procuring large numbers of fighter and attack aircraft in
the 1970s and 1980s, DOD shifted its emphasis to procuring bombers,
airlifters, and other systems. DOD now seeks to recapitalize and modernize
its tactical air forces to ensure the total force has sufficient
capabilities and capacity to meet operational requirements today and in
the future. Over the next 20 years, DOD plans to replace several thousand
aging tactical aircraft with a substantially smaller number of more
expensive but more capable and stealthy new aircraft, while continuing to
modify and sustain its current fleets in order to keep them operationally
viable until sufficient numbers of the new systems are fielded.

Recapitalizing and modernizing tactical air forces to meet the
warfighter's needs within today's constrained budget environment is a
formidable challenge. Our work in this area has shown that DOD has
incurred substantial cost increases and delays in its acquisition of new
systems. Further delays in delivering these aircraft, cost increases, and
cuts in quantity could easily occur, meaning billions of dollars in
additional investments could be needed to keep current (legacy) aircraft
both capable and sustainable for longer periods of time than currently
planned. Recapitalizing and modernizing tactical air forces to meet the
warfighter's needs within today's constrained budget environment is a
formidable challenge. Our work in this area has shown that DOD has
incurred substantial cost increases and delays in its acquisition of new
systems. Further delays in delivering these aircraft, cost increases, and
cuts in quantity could easily occur, meaning billions of dollars in
additional investments could be needed to keep current (legacy) aircraft
both capable and sustainable for longer periods of time than currently
planned.

Because of the costs, complexities, and interrelationships of the tactical
air forces, and the need for greater insight, the Chairman of the Air and
Land Forces Subcommittee, House Committee on Armed Services, asked GAO to
look at DOD's investment planning for recapitalizing and modernizing its
tactical fighter and attack aircraft force portfolio. This report
addresses (1) current risks for DOD's new tactical aircraft acquisition
programs; (2) impacts on legacy aircraft modernization programs and
retirement schedules; and (3) the extent to which DOD has Because of the
costs, complexities, and interrelationships of the tactical air forces,
and the need for greater insight, the Chairman of the Air and Land Forces
Subcommittee, House Committee on Armed Services, asked GAO to look at
DOD's investment planning for recapitalizing and modernizing its tactical
fighter and attack aircraft force portfolio. This report addresses (1)
current risks for DOD's new tactical aircraft acquisition programs; (2)
impacts on legacy aircraft modernization programs and retirement
schedules; and (3) the extent to which DOD has developed an overall
investment plan for future tactical aircraft that addresses capability
gaps, limits redundancies, and considers the timing and affordability of
planned actions. To conduct our work, we evaluated new acquisition and
legacy modification plans, budgets, retirement and delivery schedules, and
results to date for recapitalizing and modernizing tactical air forces. We
analyzed Air Force, Navy, and Marine Corps plans and processes for
establishing force and capability requirements and reviewed joint efforts
and initiatives to look at integrated DOD-wide solutions. We also drew
extensively on work conducted under other GAO engagements concerning
weapon systems and force structure. We performed our work from June 2006
through March 2007 in accordance with generally accepted government
auditing standards. Appendix I further discusses this report's scope and
methodology.

Results in Brief

During the next 7 years, the military services plan to spend about $109.3
billion to acquire about 570 new tactical aircraft and to modernize
hundreds of operational aircraft. Substantial cost increases, schedule
delays, and changes in requirements have significantly reduced procurement
quantities of new aircraft. For example, since its start, the development
period for the F-22A doubled, threat conditions changed, new ground attack
and intelligence-gathering requirements were added, and its unit costs
more than doubled, resulting in a steady decline in the number of aircraft
the Air Force can now procure. Similar conditions and risk of poor
outcomes seem to be emerging for the Joint Strike Fighter (JSF). The JSF
is the linchpin for future modernization efforts because of its sheer size
and plans to replace hundreds of operational systems in all three
services. However, its development costs have increased by $31.6 billion
since 2004, and procurement and delivery schedules are slipping.

Funding needs and plans for new and legacy aircraft are by nature
interdependent. Legacy systems must be sustained and kept operationally
relevant until new systems complete development and are ready to replace
them. If quantities of new aircraft are reduced and/or deliveries slip
further into future years, significantly more as yet unplanned money will
be required to sustain, modernize, and extend the life of legacy systems
to ensure that the total force is both capable and sufficient in numbers.
Uncertainty about new systems costs and deliveries makes it challenging to
effectively plan and efficiently implement modernization efforts and
legacy retirement schedules. Over the next seven years, the services are
investing an average of about $1.7 billion per year on legacy
modifications, but there are large pent up demands--billions more--for
unfunded requirements and potential life extension programs identified by
program officials. Officials said the time is approaching when hard
decisions on retiring or extending the life of legacy aircraft must be
made.

Looking forward, DOD does not have a single, comprehensive, and integrated
investment plan for recapitalizing and modernizing fighter and attack
aircraft. Lacking an integrated DOD-wide view of requirements, it is
difficult to determine the extent of capability gaps and shortfalls, or,
alternatively, duplication of capability. Rather, each military service
operates largely within its own stovepipe to plan and acquire the
resources needed to fill its individual force structure construct. In the
Air Force's case, it is the forces deemed necessary to fill its air and
space expeditionary wings; for the Navy, its carrier strike forces; and
for the Marines, its expeditionary forces. Collectively, the services have
underperformed to date in terms of delivering aircraft within desired
costs and quantities, and future plans are likely unaffordable within
projected funding levels. Individual service plans are largely dependent
on favorable assumptions about the cost, quantity, and delivery schedules
for new acquisitions and the ability to increase and sustain future
funding levels substantially above current levels. These favorable
assumptions are not realistic when juxtaposed with projected decline in
future federal discretionary spending (including defense investment
accounts), continued operational support requirements for the global war
on terror, and looming start-ups of other big-ticket defense items, such
as a strategic tanker aircraft and next generation long-range strike
systems, competing for the same funds. Recent efforts to examine joint
requirements on an integrated, DOD-wide basis have not significantly
affected service plans and investments.

In order to recapitalize and sustain capable and sufficient tactical air
forces that reflect what is needed and affordable from a joint service
perspective and that has high confidence of being executed as planned, GAO
is recommending that DOD (1) take decisive actions to shorten cycle times
in developing and delivering new tactical aircraft and (2) develop an
integrated enterprise-level investment strategy for tactical air forces.

Background

Tactical air forces are critical to achieving and maintaining air
dominance during combat operations. These forces include Air Force, Navy,
and Marine Corps fixed-wing fighters and attack aircraft with air-to-air
combat, air-to-ground attack, and defense suppression1 missions, and
related equipment and support activities. These forces operate in the
first days of a conflict to penetrate enemy air space, defeat air
defenses, and achieve air dominance. This allows follow-on ground, air,
and naval forces freedom to maneuver and attack in the battle space. Once
air dominance is established, tactical aircraft continue to vigorously and
persistently strike ground targets for the remainder of the conflict. Some
tactical aircraft are also essential to protect the homeland by defending
against incoming missiles or enemy aircraft.

Current operational tactical aircraft (referred to as legacy systems) are
the Air Force's F-15, F-16, F-117A, and A-10 systems and the Navy and
Marine Corps F/A-18, EA-6B, and AV-8B. Most of these aircraft were
purchased in the 1970s and 1980s and are considerably aged as measured by
the number of flying hours accumulated by an aircraft compared to its
estimated life expectancy. Weapon systems also tend to cost more to
operate and maintain as they age. To meet national defense security
requirements, DOD sustains its legacy fleets and also modernizes some with
new capabilities and enhanced structures to keep aircraft operationally
viable until new systems can be delivered in sufficient quantities and the
legacies can be retired.

DOD is continuing efforts to recapitalize its tactical air forces (replace
legacy with new) by acquiring and fielding the Air Force's F-22A, the
Navy's F/A-18E/F and EA-18G, and the joint service F-35 Joint Strike
Fighter (JSF) weapon systems. Recapitalization plans began 20 years ago
with the start-up of the F-22A program and are now expected to take
another 20 years or more to fulfill culminating with the final JSF
procurements. The JSF is being developed in three variants for the U.S.
and allied forces.2 The Air Force's version, a conventional take-off and
landing aircraft, is intended to replace the F-16 and A-10 and complement
the F-22A. The Navy's carrier-capable version is intended to replace
F/A-18C/D aircraft and complement the F/A-18E/F. The Marines Corps is
acquiring a short field take-off and vertical landing (STOVL) variant to
replace its AV-8B and F/A-18D fleets. Table 1 shows the new aircraft with
the legacy systems they are expected to replace.

1Defense suppression is the neutralization, destruction, or temporary
degradation of enemy air defenses, either by physical attack with
munitions or by electronic means to jam and confuse enemy radar.

2JSF is being developed jointly with eight other nations: United Kingdom,
Italy, the Netherlands, Turkey, Canada, Australia, Denmark, and Norway.

Table 1: New Aircraft Replacing Legacy Fleets

Source: DOD.

Tactical Air Forces Costs

Tactical air forces account for a significant share of the defense budget.
DOD spends billions of dollars every year to develop, procure, and
modernize its tactical air forces. Figure 1 shows the trend in actual and
projected investment over the 36-year period from fiscal year 1976 to
2011. To reflect the trend in relative buying power, we normalized the
data to express costs in fiscal year 2007 dollars. The total investment
for research, development, test and evaluation (RDT&E) and procurement
during this time period approaches $1 trillion in constant dollars. The
figure illustrates the large investments throughout the 1980s when most of
the legacy fleets were acquired and the subsequent decrease in investment
during the 1990s as DOD focused on other procurement priorities. The rise
in investment starting in the mid-1990s reflects the build up and
acquisition of the new systems. This data does not include another $3.3
billion requested by DOD for tactical aircraft in the fiscal year 2007
supplemental and fiscal year 2008 budget request for the Global War on
Terror.

Figure 1: DOD Investment in Tactical Air Forces

In addition to the large expenditures for development and procurement, the
services spend billions more annually to operate, support, maintain, and
man the tactical air forces. Over the past decade, the tactical air forces
share of the total defense budget has stayed remarkably consistent,
annually receiving about 11 to 12 percent of the total DOD budget and
about 15 to 16 percent of the investment appropriations. DOD programmed a
total of $331.6 billion for personnel, operations and maintenance,
military construction, and acquisition costs for the tactical air forces
for fiscal years 2006 to 2011, an annual average of $55.3 billion.
Appendix III shows the breakdown by military service and by appropriation.

New Acquisition Programs Are Spending Significantly More Dollars and Delivering
Fewer Tactical Aircraft Later Than Originally Planned

Midway through a 40-year effort to recapitalize and modernize its tactical
air forces, DOD's efforts have been blunted by relatively poor outcomes in
its cornerstone new acquisition programs. Increased costs, extended
development times, requirement changes, and budget pressures have reduced
DOD's buying power, and DOD now expects to replace legacy aircraft with
about 1,500 fewer new tactical aircraft than it had originally planned--a
reduction of one-third. Additionally, delivery of these new systems has
lagged far behind original plans, not only delaying the fielding of
capabilities to the warfighter, but also increasing operating and
modernization costs to keep legacy aircraft relevant and in the inventory
longer than expected.

DOD Plans for New Aircraft and Their Implications for the Total Force

DOD's recapitalization plans center on the acquisitions of the JSF, F-22A,
F/A-18E/F, and its electronic attack variant, the EA-18G. Collectively,
these programs are expected to cost about $400 billion--with almost
three-fourths still to be invested--to acquire about 3,200 aircraft (see
table 2). Through the end of fiscal year 2006, Congress has appropriated
about $111 billion, and the services have taken delivery on 480 new
aircraft. Table 2 also shows that about 72 percent of the expected
investment and 85 percent of the planned procurement quantity is in the
future. The F-22 and the F-18 series acquisition programs are expected to
be mostly completed over the next five years, but the JSF program is only
halfway through development with procurement starting in 2007 and
continuing until 2034. With most of its program still ahead, its sheer
size, and its tri-service impact, the JSF is, in many ways, the linchpin
of DOD's tactical aircraft future.

Table 2: New Systems Acquisition Costs and Quantities

(In millions of current year dollars)

Source: Selected Acquisition Reports, Dec. 31, 2005.

Note: F/A-18E/F and EA-18G costs include prorated shares of development
costs for the Active Electronically Scanned Array Radar, funded in its own
Navy program.

Increased costs, schedule delays, and budget pressures have combined to
decrease procurement quantities of new tactical aircraft. Total quantities
have been reduced by one-third compared to original plans at each
program's inception (see table 3).

Table 3: Changes in Acquisition Quantities for New Tactical Aircraft
Systems

Source: DOD data, GAO analysis.

Note: Current F-18 quantities include 462 F/A-18E/Fs and 90 EA-18G
electronic attack variant.

The cumulative impacts of delayed deliveries and reduced quantities on the
total force (see fig. 2) have slowed the recapitalization of the legacy
force and made it more expensive to modernize, operate, and maintain.
Collectively, this means that the warfighters will have fewer of the
newest and most capable aircraft throughout the recapitalization period.
With fewer buys of new systems, legacy aircraft will make up a larger
proportion of the future force and for a longer period of time than
originally envisioned. Although legacy aircraft are still very
capable--and will be expected to remain so through upgrades and life
extension efforts--they are becoming increasingly more expensive to
operate and maintain. Service officials are confident that new systems
will provide improved capabilities compared to legacy systems they
replace, but worry whether the numbers of aircraft acquired are sufficient
to meet national security requirements at an acceptable level of risk.
They are also concerned with managing risks using legacy systems in the
near- and mid-terms.

Figure 2: Original Planned and Current Procurement Quantities for New
Tactical Aircraft

Cost, Schedule, and Performance Issues for New Acquisition Programs

Over the years, our extensive reviews of DOD's major weapon system
acquisitions have usually found positive outcomes when programs follow the
evolutionary, knowledge-based strategy espoused by the best practices of
leading commercial firms and now established in DOD policy. This includes
establishing a solid business case that accurately and realistically
matches available resources (technologies, money, expertise, and time) to
warfighter needs. The Defense Acquisition Performance Assessment report in
January 2006 also found that a disciplined business approach was needed to
improve DOD's weapon system acquisition process. One particular and key
practice recommended was for time-certain development programs--delivery
of the first unit to operational forces within about six years from the
Milestone A decision point.3 We have usually found poorer
outcomes--significant cost increases, reduced procurement quantities, and
schedule delays--in programs not following these practices. For example,
immature technologies, design problems, and changes in threats and
requirements underpinning the original business case, contributed to major
cost increases for the F-22A program, a doubling of its years spent in
development, and a sharp reduction in quantities deemed affordable. We are
concerned that the JSF is on a similar risky path with highly concurrent
plans to begin production while still early in development and with little
testing completed. On the other hand, the F/A-18E/F program is employing a
more evolutionary approach and is experiencing better cost and schedule
outcomes. We have some concerns that its new electronic attack variant,
the EA-18G, is pursuing a too-aggressive and more concurrent strategy,
increasing its risks of poor program outcomes in the future. Table 4
summarizes outcomes to date on these four tactical aircraft programs.

3A project enters technology development at Milestone A. The purpose of
this phase of development is to reduce technology risk and to determine
the appropriate set of technologies to be integrated into a full system.

Table 4: Changes in Key Outcomes of New Tactical Systems

Source: DOD data, GAO analysis.

Notes: Outcome measures compare costs and plans established at the start
of system development with current costs and plans.

Cycle time delays show added months required to reach initial operational
capability.

An overview of key observations on each new system follows. More details
on each system's mission, program status, major work activities, and
funding are provided in appendix IV.

           o The F-22A "Raptor" needs a new business case that more
           accurately and realistically supports the changed conditions and
           the program of record, including justification for additional
           investments of $6.3 billion to incorporate more robust ground
           attack and intelligence-gathering capabilities. There is a 198
           aircraft difference between the Air Force's stated need for 381
           aircraft and the 183 aircraft the Office of Secretary of Defense
           (OSD) says is affordable. We have previously recommended that DOD
           develop a new business case for the F-22A program before further
           investments in new aircraft or modernization are made. DOD has not
           concurred with this recommendation, stating that an internal study
           of tactical aircraft has justified the current quantities planned
           for the F-22A. Because of the frequently changing OSD-approved
           requirements for the F-22A, repeated cost overruns, significant
           remaining investments, and delays in the program we continue to
           believe a new business case is required and that the assumptions
           used in the internal OSD study be validated by an independent
           source.

           o The JSF "Lightning II" acquisition strategy's high degree of
           concurrent development and production weakens its business case
           and poses substantial risks for cost overruns, schedule slips, and
           late delivery of promised capabilities to the warfighter. The
           program has contracted to deliver full capabilities for the three
           different variants in a single-step, 12-year development program
           and plans to begin production in 2007 with immature technologies,
           incomplete designs, undemonstrated system integration, and little
           knowledge about performance and producibility. Costs have
           increased another $31.6 billion from the fiscal year 2004
           rebaselined amount. Due to affordability pressures, DOD is
           beginning to reduce annual procurement quantities; recent plans
           indicate a 28 percent decrease in maximum annual buy quantities
           compared to last year's program of record.

           o The F/A-18E/F "Super Hornet" program adopted a more evolutionary
           and less risky approach, having substantial commonality with its
           predecessor C/D models and leveraging previous technology. Planned
           upgrades incrementally add new capabilities, some of which are
           having performance problems and delays according to OSD testers.
           Over half of the planned fleet has been delivered, and some have
           been used in combat. The mature and stable production program is
           on its second multiyear contract and is delivering aircraft ahead
           of the contract schedule and within cost targets.

           o The EA-18G "Growler" is the newest program and shares the same
           F/A-18F platform, but incorporates airborne electronic attack
           capabilities. Its acquisition schedule is very aggressive and
           concurrent. Only two of its five critical technologies are fully
           mature to best practice standards even though the program is well
           into development and plans to start producing electronic
           attack-capable aircraft this year. OSD's Director of Operational
           Test and Evaluation also cites its aggressive schedule to achieve
           an initial operational capability and special risks in integrating
           the electronic attack capabilities onto the F/A-18F platform.

New Acquisition Costs and Delays Have Made Resourcing Decisions for Legacy
Systems Reactive and Less Efficient

The problems and delays encountered by the new tactical aircraft
acquisition programs have direct and significant impacts on legacy systems
plans and costs. Funding needs and plans for new and legacy aircraft are
by nature interdependent, and decisions to sustain, modernize, or retire
legacy systems are largely reactive to the outcomes of new systems. The
military services accord new systems higher funding priority, and the
legacy systems tend to get whatever funding is remaining after the new
systems' budget needs are met. If new aircraft consume more of the
investment dollars than planned, the buying power and budgets for legacy
systems are further reduced to remain within DOD budget limits. However,
as quantities of new systems have been cut and deliveries to the
warfighter delayed, more legacy aircraft are required to stay in the
inventory and for longer periods of time than planned, requiring more
dollars to modernize and maintain aging aircraft. Table 5 summarizes
budgeted investments (development and procurement funding) for new and
legacy systems. Over the next 7 years, DOD plans to invest about $109.3
billion in tactical aircraft to acquire about 570 new systems and
modernize hundreds of legacy systems.

Table 5: Total Investments in New and Legacy Tactical Aircraft from Fiscal
Years 2007 to 2013

(In millions of dollars)

Source: DOD data, GAO analysis.

Notes: The Navy consolidates budgets for the F-18 series aircraft;
accordingly, investment amount shown above for the new E/F models includes
some development funding for the legacy A-D models, and the investment
amount for the legacy models includes some modification funding for the
new models.

Total investments also include $3,320.0 million for tactical aircraft
funding requested in the pending Fiscal Year 2007 Global War on Terrorism
supplemental and the Fiscal Year 2008 Global War on Terror budget
requests.

Uncertainty about new systems costs and deliveries makes it difficult to
effectively plan and efficiently implement modernization efforts and
legacy retirement schedules. With unpredictable quantities and delivery
schedules of the new systems, program managers for legacy aircraft are
challenged to balance reduced funds for modifications with requirements to
keep legacy systems operational and relevant longer than they had planned.
Stable retirement plans are critical to effective management and efficient
resource use, but in this environment retirement plans keep changing.
Program managers are hard-pressed to allocate funds or set sunset
schedules4 for legacy fleets until the outcomes of new acquisitions are
known. Furthermore, the longer the services retain legacy systems in their
inventories, the more money they will need for operation and maintenance
costs in order to keep legacy aircraft operational and relevant. DOD has
become increasingly concerned that the high cost of keeping aging weapon
systems relevant and able to meet required readiness levels is a growing
challenge in the face of forecast threat capabilities and is depleting
modernization accounts, reducing the department's flexibility to invest in
new weapons.

Operating costs per flying hour for Air Force legacy systems are shown in
figure 3. It illustrates that operation and maintenance costs typically
increase as weapons systems age. It also shows the relatively high
operating costs for the F-117A, a factor in the decision to retire that
fleet early. Some officials believe that operating costs for new systems
will be less expensive than the legacy systems they replace, but others
challenge that notion, citing such factors as the higher technology,
stealth characteristics, and private sector support arrangements.

4Sunset schedules can be impacted by a statutory prohibition (10 U.S.C.
2244a) on making modifications to a weapon system within five years of its
planned retirement.

Figure 3: Operating Costs per Flying Hour for Air Force Tactical Aircraft

Since legacy programs typically receive less funding than requested,
program managers must prioritize and fund first those modifications that
are absolutely necessary--ones that are related to safety of flight or
that will cause the aircraft to be grounded. As a result, there are large
pent up demands of unfunded requirements the warfighters report as
necessary to meet their mission requirements. Current estimates for
unfunded modernization and sustainment requirements on legacy systems
total several billions of dollars. The services are considering
substantial service life extension programs and additional modernization
enhancements for several of the legacy fleets, but many of these costs are
not reflected in current programmed budgets or have yet to be estimated.

Some of these issues and concerns about legacy systems are not new, but
perhaps have gained more immediacy because of their interdependency with
the large scale new systems recapitalization efforts. GAO has previously
reported on the condition, program strategies, and funding for key
existing DOD weapon systems, including tactical aircraft. Our 2005 report5
found that the military services had incomplete long-term strategies and
funding plans for some systems, in that future requirements are not
identified, studies are not completed, funding for maintenance and
upgrades was limited, or replacement systems were delayed or not yet
identified. We recommended that DOD reassess and report annually on its
near- and long-term programs for key systems until replacements are
fielded. DOD partially concurred to reassess programs stating that it
already does this in its planning, programming, budgeting, and execution
process. It did not concur that additional annually reporting to Congress
of this information was necessary as they stated the annual budget
submission already includes a balanced overall program within available
resources.

The Air Force Is Increasing Investments in Legacy Systems to Keep Them Relevant
and Capable

The Air Force plans to invest more than $7.1 billion from fiscal year 2007
to 2013 to modernize legacy aircraft (table 6). These investments are
heavily influenced by the ability of the Air Force to complete its
recapitalization strategy for the F-22A and the JSF aircraft as currently
planned. Further reductions in quantities and delays in delivering these
new aircraft will impact the number of legacy aircraft retained and the
amount of time they must remain in service. Future investments beyond
those shown, including service life extension efforts costing billions of
dollars, may be required to keep legacy fleets relevant and operational
longer. Officials said the time is approaching when hard decisions on
retiring or extending the life of legacy aircraft must be made.

5GAO, Military Readiness: DOD Needs to Identify and Address Gaps and
Potential Risks in Program Strategies and Funding Priorities for Selected
Equipment, [65]GAO-06-141 (Washington, D.C.: Oct. 25, 2005).

Table 6: Air Force Legacy Aircraft Modernization Costs

(In millions of current year dollars)

Source: DOD data, GAO analysis.

The following provides an overview of key observations on the Air Force
legacy systems. Additional details on these systems are in appendix IV.

           o The Air Force will retain the A-10 "Warthog" fleet in its
           inventory much longer than planned because of its relevant combat
           capabilities--demonstrated first during Desert Storm and now in
           the ongoing Global War on Terror. However, because of post-Cold
           War plans to retire the fleet in the early 1990s, the Air Force
           had spent little money on major upgrades and depot maintenance for
           at least 10 years. As a result, the Air Force faces a large
           backlog of structural repairs and modifications--much of it
           unfunded---and will likely identify more unplanned work as older
           aircraft are inspected and opened up for maintenance. Major
           efforts to upgrade avionics, modernize cockpit controls, and
           replace wings are funded and underway. Program officials
           identified a current unfunded requirement of $2.7 billion,
           including $2.1 billion for engine upgrades, which some Air Force
           officials say is not needed. A comprehensive service life
           extension program (if required) could cost billions more.

           o F-15 "Eagles" will not be fully or as quickly replaced by F-22As
           as planned. For years, the Air Force modification efforts and
           funds have been concentrated on about half the fleet--the number
           projected as required to complement the new F-22A aircraft. With
           the F-22A quantities now reduced, more F-15s need to be modernized
           and retained for longer periods of time. Officials identified
           near-term unfunded requirements of $2.3 billion and much more if
           life extension efforts are needed. The newest F-15E aircraft with
           enhanced strike capabilities will be retained even longer. The Air
           Force deferred the start up of a major radar upgrade effort
           costing $2.3 billion, and program officials identified another
           $1.7 billion in unfunded requirements to address avionics,
           structural, and engine concerns among other efforts proposed for
           the F-15E.

           o Newer F-16 "Falcon" aircraft may be needed to stay viable and
           operational longer due to JSF schedule delays and deferrals. The
           F-16 fleet consists of several different configurations that were
           acquired in a long and successful evolutionary program. The Air
           Force has invested billions over the years to upgrade
           capabilities, engines, and structural enhancements needed to
           achieve its original life expectancy of 8,000 hours. The program
           office estimated $3.2 billion in unfunded requirements, including
           radar upgrades to the aircraft capable of suppressing enemy air
           defenses, the Air Force's only platform for that mission.
           Significant unknowns exist about extending the life beyond 8,000
           hours should that be necessary. This makes any additional JSF
           schedule delays, deferrals, and cost growth very problematic for
           the overall Air Force fighter structure.

           o The Air Force plans to retire the F-117A "Nighthawk" stealth
           fighter in fiscal years 2007 and 2008, stating that there are
           other more capable assets that can provide low observable,
           precision penetrating weapons capability. Program Budget Decision
           720, dated December 2005, directed the Air Force to develop a
           strategy to gain congressional support for this plan. Program
           officials estimate that the drawdown of the fleet and the shutdown
           of government and contractor offices and facilities would cost
           approximately $283 million. There is currently no funding
           allocated for these retirement costs of the F-117A. This cost does
           not include storage and maintenance of the fleet after such a
           retirement.

Plans for Navy and Marine Corps Legacy Systems Are Evolving and Likely to
Require More Funding

The Navy plans to invest about $4.6 billion in its legacy tactical
aircraft over the next seven years (table 7). Officials are relying
heavily on the acquisition of the F/A-18E/F Super Hornet and the JSF as
planned to complete its recapitalization strategy. Delays in the JSF
program could require additional modifications beyond those already
budgeted for the F/A-18C/D and AV-8B aircraft. Work on EA-6B aircraft is
dependent on the timely delivery of the EA-18G Growler, its naval
replacement, and on evolving Marine Corps plans for its future electronic
attack capability.

Table 7: Navy Legacy Aircraft Modernization Costs

(In millions of current year dollars)

Source: DOD data, GAO analysis.

Note: The Navy consolidates budgets for the F/A-18 series; funding above
includes some procurement modification funding for the new F/A-18E/F as
well as the legacy F/A-18A/B/C/D aircraft.

The following provides an overview of key observations on the Navy and
Marine Corps legacy systems. Additional details on these systems are in
appendix IV.

           o The F/A-18C/D "Hornet" fleet may be given extra life to
           ameliorate a fighter shortfall projected by Navy officials.
           Service officials are considering efforts to extend the life of
           the legacy aircraft until replaced by the JSF. A service life
           assessment effort to be completed in December 2007 will determine
           the feasibility, scope of work, and total costs for extending the
           life of the system. A preliminary estimate, including the costs of
           the assessment, is about $2 billion, but officials said that
           number could very well increase substantially as the assessment
           progresses and cost estimates mature. Also included in the above
           estimate is the Center Barrel Replacement to eliminate structural
           limitations caused by cracking in the central fuselage. This
           effort is about half completed and will cost about $970 million. A
           Naval Air Systems Command official said they could very well
           identify additional modifications and structural work required
           beyond what is funded. Further delays in JSF could exacerbate
           problems.

           o The Navy will retire its EA-6B "Prowler" aircraft by 2013 and
           replace them with the new EA-18G, but the Marine Corps's future
           plans are still evolving. The Navy will transition its most
           capable aircraft to the Marines who will operate and maintain them
           until retirement. The Marine Corps had planned to retire its EA-6B
           fleet starting in 2015, but officials said plans could change
           depending on the transition of aircraft from the Navy and that
           they may need to keep these aircraft in the inventory longer
           depending on the JSF delivery schedule. The Marine Corps has not
           yet made firm plans as to its future electronic attack capability
           and is considering employment of the JSF and other assets. The
           Marine Corps has requested a total of $379 million in the fiscal
           year 2007 global war on terrorism supplemental and the fiscal year
           2008 global war on terror request to upgrade an additional 18
           EA-6Bs with the Improved Capability III electronic attack suite
           and for other modernization enhancements.

           o The Marine Corps wants to replace its entire AV-8B "Harrier"
           fleet with the JSF STOVL aircraft as expeditiously as possible.
           The Harrier--the original STOVL aircraft--is costly to maintain,
           and has a relatively high attrition rate. Program officials have
           budgeted very little future funds for Harrier modifications, but
           delays in JSF deliveries and possible cutbacks in quantity may
           require some redirection. Harriers may need to be retained in
           inventory longer than expected, but officials have not determined
           the extent of work required, nor the potential cost. Between 1994
           and 2001, the majority of AV-8Bs were remanufactured with new
           fuselages to add structural life and to accommodate night attack
           modifications and a higher performance engine. Currently, five day
           attack aircraft are being upgraded to night attack capability, and
           two training aircraft are being refurbished.

A Joint Enterprise- Level Investment Strategy for Tactical Aircraft Is Lacking
As Services Plan Independently

DOD does not have a single, integrated investment plan for recapitalizing
and modernizing its tactical air forces. Rather, each service
independently develops its requirements and programs its resources to size
and shape its individual force structure. These plans to date have
underperformed in terms of higher acquisition costs and fewer quantities
delivered, and officials from each service forecast near-term and future
shortfalls in the capabilities and numbers of aircraft. Moving forward,
projected plans are likely unaffordable given competing demands from
future defense and nondefense budgets.

Efforts to build a more joint position continue with some promise, but
recent studies did not significantly impact service acquisition plans.
Without a joint, integrated investment strategy for tactical aircraft that
plans and addresses requirements on a DOD enterprise-wide basis, it is
difficult to evaluate the efficacy and severity of capability gaps or,
alternatively, areas of redundancy. Also, it is difficult to fully account
for and assess real and potential contributions from other current and
future non-tactical systems providing similar capabilities, including
bombers, missiles, and unmanned aircraft.

Services Plan Tactical Aircraft Investments Independently

The national defense strategy, which comes from an enterprise level in
DOD, requires the services to be able to successfully and simultaneously
defend the homeland, win two overlapping major contingencies, operate in
forward locations around the world to deter aggression, and handle lesser
operations as needed such as humanitarian and peace-keeping missions.
Defense strategy continues to evolve with an increased emphasis on the
"long war"--the Global War on Terror--and other asymmetric operations and
a reduced emphasis on major theater combat and conventional adversaries.

While OSD and the joint staff provide oversight and may make adjustments,
each military service is primarily responsible for assessing tactical
aircraft requirements, sizing its force structure, developing investment
plans, and programming resources to meet its individual assignments within
the total national defense policy requirements.6 The future forces planned
by the military services will be smaller than today's force, but more
capable and stealthier, according to officials (see table 8). Even so,
Service officials are forecasting shortfalls in force structure
capabilities and numbers throughout this period.

Table 8: Changes in Tactical Aircraft Inventories Fiscal Years 2006 to
2025

Source: DOD data, GAO analysis.

Note: These numbers are approximate to show relative changes.

Two important factors in sizing and shaping forces are the types of forces
and systems needed (capabilities) and the overall size of the force to
meet operational demands (capacity). This means maintaining a force
structure that not only has modern systems with advanced capabilities to
meet projected threats, but also has enough assets to cover assigned
targets, threats, and territories. Each Service also wants to size their
force structure to enable them to employ rotational plans that cycle force
packages through sequential phases of active deployment, return from
deployment to reconstitute, and preparation for the next deployment.

6While aircraft investment budgets are consolidated at the Department of
the Navy level, the Navy and Marine Corps largely plan independently to
fill individual force structure requirements.

  Department of the Navy Future Tactical Aircraft Plans

The Navy sizes and shapes its tactical fighter requirements to fill 10
carrier strike forces. Each future force would comprise 44 aircraft-- 24
F/A-18 E/Fs and 20 carrier capable Joint Strike Fighters--with equivalent
capabilities and a mix of stealthy and non stealthy aircraft. EA-18Gs will
also be assigned to carriers to provide tactical jamming support for the
strike force.

Marine Corps fighter squadrons are attached to Marine expeditionary units
and are sized and positioned to provide direct fire support and protection
to front-line forces and reinforcements. The future Marine Corps combat
air force is tied to success of the JSF acquisition program as officials
plan to have an all-JSF force in the future. The future force will also
have 40 percent fewer aircraft assigned to each infantry battalion.

In 2003, the Department of the Navy began implementing a tactical air
integration plan to address affordability concerns. The plan was aimed at
more closely integrating Navy and Marine Corps strike fighter inventories,
in effect managing tactical air assets as a common pool. The Navy
projected net savings of $18.5 billion through fiscal year 2021 by
reducing the number of operational legacy fighters required and, in turn,
the number of new aircraft needed for recapitalization. This reduced
future procurement plans by 409 JSFs and 88 F/A-18E/F aircraft. At the
same time, it was recognized that integration would increase operating and
maintenance costs because the smaller number of aircraft would need to be
maintained at higher rates of readiness in order to meet emergency surge
deployments.

Actual and planned inventory levels for combined Navy and Marine Corps
tactical aircraft from fiscal year 1990 through fiscal year 2025 are shown
in figure 4. The Department of the Navy tactical aviation forces peaked in
the early 1990s at about 1,800 aircraft and shrunk to about 1,200 by 2006,
principally through retirement of the A-6 fleet and beginning draw downs
on the F-14 fleet. By 2025, the total tactical inventory is slated to
decrease another 300 aircraft, or 25 percent (refer back to table 8).
Therefore, the total inventory in 2025 is projected to be one-half the
inventory in the early 1990s. Legacy aircraft would be virtually replaced
by the more capable new systems.

Figure 4: Navy and Marine Corps Tactical Aircraft Force Structure

    Shortfalls Forecast by Navy and Marine Corps Officials

Navy officials are projecting persistent future shortfalls in both legacy
and new FA-18 aircraft. The amounts of the shortfall vary depending on two
key variables--the rate of procurement on the Joint Strike Fighter and
service life estimates for F/A-18s. Navy and Marine Corps officials told
us that buying the JSF at the current planned rate--requiring a ramp-up to
50 aircraft per year by fiscal year 2015--will be difficult to achieve and
to afford, particularly if costs continue to increase and schedules slip.
According to one study, a likely scenario assumes acquiring fewer JSFs
annually and achieving a modest increase in flying hour life for legacy
F/A-18C/Ds; this scenario would project shortfalls starting in 2010 and
peaking at 167 legacy strike fighters by 2017. Navy officials also project
a shortfall of 131 F/A-18E/Fs by 2024 based on estimated usage, attrition,
and assuming an increase in flying hour life from 6,000 to 9,000 hours.
Options to erase these shortfalls include buying more new aircraft and
extending the life of legacy aircraft.

Marine Corps officials project a near-term shortfall in the AV-8B fleet
ranging from 8 to 14 aircraft between fiscal years 2006 to 2011. Erasing
this shortfall after 2011 depends upon acquiring the JSF STOVL in the
numbers and time frames currently planned. According to officials, a
one-year slide in the JSF schedule increases the shortfall by
approximately three aircraft per year. As a result, the fleet would need
to examine squadron structure and additional reductions to aircraft would
be expected to negatively impact deployment capabilities.

  Department of the Air Force Future Tactical Aircraft Plans

The Air Force sizes its tactical air forces to meet warfighting
requirements. In order to fill peacetime defense needs, the Air Force
schedules ten air and space expeditionary forces, the planned
organizations of Air Force aircraft, personnel, and support for operations
and deployments. These individual force constructs are applied against
rotational national security requirements. The Air Force's future plan for
combat aircraft that is believed affordable is termed the programming
force and is shown in figure 5.

This plan assumes buying the 183 F-22As deemed affordable by OSD and the
current program of record for the JSF, but with a slowdown in fielding.
The programming plan projects the total number of tactical aircraft
decreasing by about 700 aircraft--from 2,500 currently to about 1,800 in
2025 (refer back to table 8). This plan continues the overall decline in
inventory since 1990 when the Air Force fielded about 4,000 tactical
aircraft. The programming force shows significant quantities of A-10 and
F-15C/D/E aircraft remaining in the force by 2025 with phased drawdown of
all F-16s. The 2025 force is now projected to be roughly 60 percent new
systems and 40 percent legacy systems. This is a significant shift from
earlier projections which had planned on an almost all new force. This
shift reflects changes due to the cuts in total F-22A purchases and the
reduced annual buys of JSF with consequent slowdown in fielding.

Figure 5: Air Force Tactical Aircraft Force Structure

    Shortfalls Forecast by Air Force Officials

Officials at Air Combat Command--the requirement-setting command that
supports the warfighter--told us that the programming (funded) force is
not sufficient to meet national security requirements at acceptable levels
of risk. According to these officials, the funded program would support
only 100 combat aircraft (tactical fighters and bombers) in each air and
expeditionary force compared to 150 aircraft today. While the new systems
are expected to provide improved capabilities compared to the legacy
systems they replace, officials do not think the force would have
sufficient capacity to cover future security needs with acceptable risks.

Air Combat Command develops another force plan known as the vision force
(later reworked into a planning force by Air Force headquarters) that the
requiring command believes provides the right mix and numbers to meet
future needs at an acceptable level of risk. This plan would procure the
full complement of JSFs and the Air Force's stated requirement for 381
F-22As, which would allow a full operational squadron to be assigned to
each of the 10 air and space expeditionary forces. Under this plan, almost
all legacy aircraft would be retired by 2025 with the exception of the
F-15E, the latest model in the F-15 series that has an enhanced strike
capability. This plan is not constrained by resources, and command
officials estimated it would cost more than $100 billion over the funding
levels currently expected through 2025.

Affordability of Long-Range Plans Is Questionable

Looking forward over the next 20 years, DOD's collective tactical aircraft
recapitalization plans are likely not affordable as currently planned.
Acquisition strategies and plans assume favorable assumptions about cost
and schedule and the ability to sustain funding at high levels over a
considerable period of time. Historically, however, costs increase;
quantities are reduced; and delivery schedules are delayed. The JSF
program represents 90 percent of the investments to go for new tactical
aircraft and projected plans are likely unaffordable given projected
future budget constraints and competing demands.

First, plans for new systems are based on conservative estimates of future
cost growth to complete the programs but optimistic estimates on the
availability of future funding, production rates, and quantities of new
aircraft delivered to the warfighter on time. While it is understandable
to project that programs will execute to cost and quantity targets as
planned, the prevailing and historical evidence suggests otherwise. In
1997 we reported7 that the historical average cost growth of major
acquisition systems was at least 20 percent. Our annual assessment of
weapon systems8 continue to show today that many programs cost more, take
longer to develop, and deliver fewer assets than planned. While the
F/A-18E/F program has generally executed to schedule, the F-22A did not,
and we believe the recent cost escalation and potential delays in
production indicate that the JSF is on a similar path. Air Force and
Marine Corps officials told us that the planned maximum procurement rates
for the JSF will be very difficult to sustain and there are already
pressures to reduce or delay procurement before it even begins. The fiscal
year 2008 budget has reduced near-term quantities and current planning
projections suggest that the Air Force will significantly reduce annual
procurement quantities midterm in the program and defer these aircraft to
later years, extending the procurement period by 7 years.

7GAO, Aircraft Acquisition: Affordability of DOD's Investment Strategy,
[66]GAO/NSIAD-97-88 , (Washington, D.C.: Sept. 8, 1997).

8GAO, Defense Acquisitions: Assessments of Selected Weapon Programs,
[67]GAO-07-406SP (Washington, D.C.: Mar. 30, 2007).

Second, the tactical aircraft plans do not consider billions in potential
added costs for legacy systems. As discussed earlier in this report,
substantial service life extension programs and additional modernization
enhancements are under serious consideration for many of the legacy
fleets. Some of these costs are not reflected in current programmed
budgets or have yet to be estimated. For example, the Navy is considering
options to extend the life of its F/A-18 fleets, but has not yet developed
comprehensive cost estimates. An initial estimate is for $2 billion, but
an official told us the cost will likely be much larger. The Air Force is
now planning to keep the A-10 in inventory for a longer period of time,
but the full costs to extend the life are not known, and some other
potential costs, including $2.1 billion to improve the engines, are not
funded. One estimate for extending the A-10's life in total was $4.4
billion. We also learned that $283 million to retire the F-117A during
fiscal years 2007 and 2008 has not yet been funded, and given officials'
comments about unstable divestiture schedules and changing retirement
dates, it may be the case that other programs have also not factored in
retirement costs to close contractor facilities and government programs.
Furthermore, as legacies remain in the operational force longer,
substantial funding for additional sustainment costs and annual operating
and maintenance costs will be necessary, particularly if plans to defer
JSF procurements are implemented.

Third, tactical aircraft plans will face increasing competition for the
defense dollar from other new procurements and from continuing costs for
the Global War on Terror. DOD is planning the start-up of several
big-ticket items including a new strategic tanker aircraft, a next
generation strike aircraft, unmanned aircraft, and other more
transformational programs. Projected costs for ongoing military operations
in the Global War on Terror will continue to put pressure on defense
investment accounts and are also expected to increase the share of the
total budget going to ground forces which could decrease the share for
aviation programs. Flat or lower funding levels and future systems that
can perform the same or similar tactical air missions may substantially
alter the ultimate mix, timing, and rate at which combat aircraft are
acquired.

Fourth, any questions on affordability must be viewed in a larger context
relative to federal spending, demographic trends, and impacts on
discretionary funding. The Comptroller General testified9 last year on the
nation's unsustainable fiscal path and its large and growing structural
deficit due primarily to known demographic trends, rising health care
costs, and lower federal revenues as a percentage of the economy. Federal
discretionary programs, including defense spending, will face serious
budget pressures. Even so, defense programs are commanding larger budgets.
Over the past 5 years, the department has doubled its planned investments
in new weapon systems from about $700 billion in 2001 to nearly $1.4
trillion in 2006.

The Congressional Budget Office evaluated the long-term implications of
defense plans and determined that current investment plans would require
sustained funding levels at higher real (inflation-adjusted) amounts than
since mid-1980s, due to sustained purchase of new equipment, increased
costs for new capabilities, increased operations and maintenance costs for
aging legacy systems, and costlier new systems. At the same time, the
Congressional Budget Office notes that increased medical and operating
support costs competing for the defense dollar and national demographic
trends will continue to put pressure on federal discretionary spending.

Figure 6 illustrates the affordability challenge. It contrasts DOD's
optimistic future-funding plans with a more conservative estimate. DOD's
plan (top-line in figure 6) assumes funding levels well above historical
amounts. The spike in funding required starting in 2008, clearly shows the
typical bow wave effect in which weapon system budget requirements tend to
move to the right (delayed to future years) as programs fail to receive
full funding or do not execute as planned. DOD's projections show an
optimistic bent that tactical aircraft procurement will be able to
significantly increase its share of defense funding, exceeding historical
levels when many project flat or falling funding levels. The lower line
(shaded portion of fig. 6) assumes funding at the same level as fiscal
year 2006 carried forward with annual inflationary increases. This more
conservative projection is in line with historical experience. Our
analysis of future-year defense plans indicates that the military services
in total and the tactical aircraft procurement in particular have received
similar shares of the defense dollar over time, a finding that argues
against a strategy that requires a substantial increase in order to
succeed. The gap between the lines thus represents DOD plans that are
likely unaffordable.

9GAO, Defense Acquisitions: Actions Needed to Get Better Results on
Weapons Systems Investments, [68]GAO-06-585T (Washington, D.C.: Apr. 5,
2006).

Figure 6: Projected Budgets for Tactical Aircraft

Efforts to Build Forces from a Joint Perspective Continue, but Recent Studies
Have Not Had Substantial Impacts on Acquisition Plans

DOD continues broad efforts to improve jointness and bring a more
integrated cross-service perspective to its plans and programs. There are
promising, but still rather new efforts to enhance capabilities-based
planning and portfolio management that could be used to better integrate
and hone joint tactical aircraft requirements. However, recent efforts to
apply jointness to tactical aircraft have not had much direct impact on
service investment plans and strategies. We also note that one of the few
mission capabilities that have been provided jointly, the tactical
airborne electronic attack mission carried out by the EA-6B, is now
expected to be replaced in the future by separate and unique aircraft for
each of the services.

  New Planning Efforts Show Promise

DOD has several promising efforts to enhance jointness and bring a
capabilities-based approach to defense investments. The Joint
Capabilities, Integration, and Development System (JCIDS), portfolio
management, and other initiatives are evolving mechanisms designed to
bring top commanders' needs up-front and take a more joint,
enterprise-wide view of requirements and funding decisions. Continuing
efforts to develop joint capabilities-based assessment and planning
methodologies will be essential to understand contributions to the
warfighter, develop DOD-wide priorities, and craft investment strategies
to mitigate shortfalls or eliminate duplication.

JCIDS is a major, but relatively new initiative to shift from a
service-centric focus on individual acquisition programs to a more
top-down and joint view of warfighting capabilities and effects. JCIDS is
intended to involve a wide range of stakeholders, including combatant
commanders, in identifying capability needs and alternative solutions.
JCIDS introduces new methodologies intended to foster jointness and groups
warfighting needs into eight functional areas based on warfighting
capabilities--such as, force application, battle-space awareness, and
focused logistics10--that cut across the military services and defense
agencies. JCIDS process emphasizes early attention to the fiscal
implications of newly identified needs, including identifying ways to pay
for new capabilities by divesting the department of lower priority or
redundant capabilities. Our recent report11 discusses JCIDS and other
steps DOD is taking to better identify and prioritize joint warfighting
needs, but finds that DOD's service-centric structure and fragmented
decision-making processes hinder successful implementation.

Another promising and related initiative is joint capability portfolio
management. The intent is to manage groups of like capabilities across the
enterprise to improve interoperability, minimize capability redundancies
and gaps, and maximize capability effectiveness. This would help build
budgets around a set of capabilities instead of traditional military
accounts. The idea is to take a more joint look at what capabilities
combatant commanders and warfighters need, as opposed to the current more
service-centric way in which the services independently buy and field
capabilities they deem important. By shifting the focus from
service-specific programs to joint capabilities, DOD should be better
positioned to understand the implications of investment and resource
trade-offs among competing priorities. In September 2006, DOD management
selected four test cases for experimentation with the joint capability
portfolio management concept. Depending on this outcome, tactical aviation
would appear to be an excellent candidate for portfolio management by
cross-decking similar capabilities in each service. Although the
implementation of these portfolio management initiatives seems to have the
potential for improving interoperability and minimizing capability
redundancies and gaps, DOD still has a long way to go before the
effectiveness of this capability-based planning and management effort can
be determined.

10The other capability areas are command and control, net centric warfare,
force management, force protection, and joint training.

11GAO, Best Practices: An Integrated Portfolio Management Approach to
Weapon System Investments Could Improve DOD's Acquisition Outcomes,
[69]GAO-07-388 (Washington, D.C.: Mar. 30, 2007).

The Air Force is also implementing a new "associate wing" concept that is
similar in its aims as the Navy-Marine Corps integration effort. Associate
wings would pair up active and reserve component units to share the same
aircraft and facilities, while retaining separate chains of command.
Rather than each unit's operating and maintaining its own wings, the two
would now operate and maintain just one wing in common. While still very
new, the expected outcomes would be reduced inventories, reduced operating
costs, and fewer future replacements needed.

  Joint Studies Have Not Been Very Directive

Despite the Quadrennial Defense Reviews (QDR) and other studies, there are
many unanswered questions about whether services can achieve overarching
goals for modernizing aging tactical aircraft fleets. In testimony on the
results of the department's 2006 QDR, the Secretary of Defense stated that
continued U.S. air dominance depends on a recapitalized fleet.
Surprisingly, however, DOD's 2006 QDR report, issued in February 2006, did
not present a coherent joint investment strategy for tactical aircraft
systems that addressed needs, capability gaps, alternatives, and
affordability. The Joint Strike Fighter, the largest aircraft acquisition
program, was not mentioned and the F-22A only in relation to multi-year
contracting. The QDR report did include some non prescriptive direction
for joint air capabilities, emphasizing systems with greater range and
persistence, larger and more flexible payloads, and the ability to
penetrate and sustain operations in denied areas.

In a 2005 testimony,12 we suggested that the QDR would provide an
opportunity for DOD to assess its tactical aircraft recapitalization plans
and weigh options for accomplishing its specific and overarching goals. By
not specifically addressing these issues, the DOD missed an opportunity.
With limited information contained in the QDR report, many questions are
still unanswered about the future of DOD's tactical aircraft modernization
efforts.

12GAO, Tactical Aircraft: F/A-22 and JSF Acquisition Plans and
Implications for Tactical Aircraft Modernization, [70]GAO-05-519T
(Washington, D.C.: Apr. 6, 2005).

In addition, DOD conducted a joint air dominance study that looked at
current acquisition plans and capabilities. While it validated the need
for three JSF variants, the study did not receive wide services support.
Air Force officials said they submitted their own recommendations that
were not adopted. Another consultant study, directed by the Deputy
Secretary of Defense and intended to replicate the Navy-Marine Corps
integration effort on a DOD-wide basis, also appears not to have had much
direct impact on altering service acquisition plans going forward.

  Joint Tactical Radar Jamming Mission May End

In conducting military operations, U.S. and allied aircraft can be at
great risk from enemy air defenses, such as surface to air missile
systems. The airborne electronic attack mission employs specialized
aircraft to suppress, destroy, or temporarily degrade enemy radars and
communications and is a critical enabler to successful tactical air
operations. Because these specialized aircraft protect aircraft of all
services in hostile airspace, the electronic attack mission crosses
individual service lines. DOD considers airborne electronic attack to be a
key capability for many contingencies and predicts increasing roles and
missions for aircraft with these capabilities. Since 1995, the EA-6B has
been DOD's only tactical standoff radar jammer aircraft and has provided
support to all services during numerous joint and allied operations
against both traditional and nontraditional threats.

This capability--one of the few examples of a truly joint asset shared by
the military services--is now expected to diminish, to be replaced by
separate and unique aircraft for each of the services. Concerned about a
gap in defense suppression capabilities as a consequence of increasing
modernization of enemy air defenses and aging of the EA-6B, DOD conducted
an analysis of alternatives for airborne electronic attack. The May 2002
report concluded that the EA-6B inventory would be insufficient to meet
DOD's future needs and identified many potential platform combinations to
address capability shortfalls. DOD adopted a system-of-systems approach in
which a multitude of systems are needed to provide required capabilities
across the electronic spectrum. The report stated that before a service
can begin a formal acquisition program, services decisions should consider
whether one service will provide DOD's core capability and whether it
would reside in a single platform.

Subsequent to the report, the Navy, Air Force, and Marine Corps each
decided to develop individual and unique electronic attack capabilities to
replace the EA-6B in the stand-off tactical jamming role. The Navy is
developing the EA-18G, but plans to procure only enough to support its
carrier strike forces. The Air Force initially proposed a modified B-52
for the standoff radar jamming role. With OSD concurrence, the Air Force
cancelled this program because of its high estimated costs, and is now
considering other options. In the near-term, the Marine Corps will
continue to use upgraded EA-6B aircraft, but anticipates using in the
future an electronic attack-capable Joint Strike Fighter integrated with
unmanned aerial systems. There is an OSD directed study underway to
validate the services' requirements.

While DOD continues to tout joint capabilities, it is a concern that one
area of success is being curtailed. A September 2004 memorandum of
understanding between the military services and joint staff stated that
the Navy expeditionary EA-6B squadrons will decommission between fiscal
years 2009 and 2012 to be replaced by indigenous Navy, Air Force, and
Marine Corps electronic attack capability. DOD continues to assess
requirements and options.

Conclusions

Tactical air recapitalization and modernization is a costly and very
challenging enterprise, requiring a delicate and dynamic balancing of
funding, fielding schedules, and retirement plans between new system
acquisitions and legacy aircraft to ensure that current and future forces
can meet national security requirements at reasonable levels of risk. New
tactical aircraft programs, for the most part, have not adequately
employed evolutionary, knowledge-based acquisition strategies--resulting
in escalating costs that undercut DOD's buying power, reduces aircraft
purchases, and delays delivering needed capabilities to the warfighter.
Because funding needs and plans for new and legacy aircraft programs are
interdependent, cost, schedule, or performance problems experienced in
acquiring new systems cause perturbations in modernization costs and
retirement schedules throughout the operational fleets. Dependent largely
on the future course of the Joint Strike Fighter, legacy programs are
placed in reactive modes with uncertain and changeable future
requirements, unstable retirement plans, and potential unfunded
requirements in the billions of dollars. While the services strive to
reduce war-fighting risks by fielding new systems and limiting investment
in legacy systems, they are faced with increased prices and schedule risks
for new aircraft while maintaining aging, capability-limited legacy
aircraft. In the past, we have recommended the department use an
evolutionary acquisition approach to develop weapon system programs
coupled with a process that ensures at the start of development that
requirements have been reduced to match mature technologies, a feasible
design, and a reasonable expectation of available funding. While the
department's acquisition policy has included such practices, DOD has not
fully embraced the use of these practices as it executes current
acquisition programs.

Despite DOD's repeated declaration that recapitalizing its aging tactical
aircraft fleet is a top priority, the department does not have a single,
comprehensive, and integrated investment plan to adequately craft joint
priorities, identify critical capability gaps, and allocate scarce funds.
Instead, planning has been separately done by the services. Each military
service independently plans and resources individual programs that,
collectively, are likely unaffordable and that make it difficult to
identify and quantify DOD-wide capability gaps or duplication. DOD needs
to bring overall tactical aircraft investments into line with more
realistic, long-term projections of overall defense funding and the amount
of procurement funding expected to be available for aircraft purchases,
and then establish and adhere to a plan that is militarily justified and
can be executed within that amount. Efforts to improve joint
capabilities-based planning and to manage tactical air assets as a
portfolio should be encouraged.

Recommendations for Executive Action

In order to recapitalize and sustain capable and sufficient tactical air
forces that reflect what is needed and affordable from a joint service
perspective and that has high confidence of being executed as planned, we
are making two recommendations to the Secretary of Defense. The Secretary
should

           o take decisive actions to shorten cycle times in delivering
           needed combat capabilities to the warfighter including

                        o adopting a time-certain development cycle that can
                        deliver an increment of new capability within 5 to 6
                        years after the start of system design and
                        development; and
                        o reassessing requirements for ongoing weapon system
                        acquisition programs to identify ways to reduce
                        requirements and speed up delivery of initial
                        capabilities; and

           o develop an integrated enterprise-level investment strategy that

                        o is based on a joint assessment of warfighting needs
                        and a full set of potential and viable alternative
                        solutions, considering not only new acquisitions but
                        also modifications to legacy aircraft to achieve this
                        balance within realistic and affordable budget
                        projections for DOD;
                        o strikes a balance between maintaining near-term
                        readiness and addressing long-term needs; and
                        o considers the contributions of bombers, long range
                        strike aircraft, unmanned aircraft, missiles, and
                        other weapons currently in the inventory and those
                        planned that can be employed to attack the same type
                        targets as the tactical aircraft.

Agency Comments and Our Response

DOD concurred with both recommendations in written comments on a draft of
this report. These comments appear in appendix II. They also provided
technical comments that we incorporated in the final report as
appropriate.

Regarding our first recommendation that DOD take decisive actions to
shorten cycle times in developing and delivering weapon systems, DOD
stated that this is consistent with a major initiative of the Under
Secretary of Defense for Acquisition, Technology, and Logistics intended
to put military capability into the hands of the warfighters faster and
more affordably. The Department is also pursuing other efforts supporting
such actions, including acquisition personnel pay incentives, acquisition
policy changes, focused research and engineering investments in
technology, and revised, earlier in-process reviews of requirements and
proposed solutions by OSD and Joint Staff. At the same time, however, DOD
stated that aircraft development is a highly complex engineering challenge
and that it would be unreasonable to uniformly apply a six year cycle time
to complex programs like the JSF.

We think that it is precisely because of complexity that programs like the
JSF could stand to benefit most from adopting a more evolutionary
acquisition process to develop and evolve weapon systems through small,
time-phased development increments. DOD's history of substantial cost
growth and extended development times for major weapon systems
acquisitions were factors driving recent policy changes to require a more
knowledge-based evolutionary process with time-phased development
increments--key recommendations also in the Defense Acquisition
Performance Assessment report. We note that the JSF's predecessor, the
F-16 fighter program, delivered an initial increment of capability to the
warfighter within about 4 years after development began and then
successfully delivered 2,200 aircraft with incremental improvements as
technology became available over the span of about 30 years. We believe
this alternative, less risky and more evolutionary approach is feasible
and still available to the JSF as it seeks to develop multiple variants to
recapitalize aging tactical fleets involving three services and
international partners.

Regarding our recommendation that DOD develop an integrated and affordable
enterprise-level investment strategy for tactical aviation, DOD concurred
but stated it already had elements of such a strategy. Officials cited key
decisions to invest in fifth generation systems such as the JSF and F-22,
prudent life extension programs for selected legacy aircraft, the Joint
Air Dominance study conducted during the 2006 QDR, and new processes--the
Joint Capabilities Integration and Development System and portfolio
management--as bringing integrated capabilities-based approaches in
formulating a tactical aircraft investment strategy. We agree that the
Department is making strides toward an integrated enterprise-wide
investment strategy but that key processes are still in their beginning
stages and that annual budget decisions are still primarily driven on a
service-centric, weapon system-specific basis. The new Joint capability
portfolio management initiative is a reaction to the current environment
in which the services independently budget, buy, and field capabilities.
It has the potential to bring a joint warfighter, cross-service view and
disciplined budgeting over sets of mission area capabilities, but test
cases for experimenting and proving the concept are just beginning. The
2006 QDR had the potential, but did not present a coherent joint
investment strategy that addressed needs, capability gaps, alternatives,
and affordability. These are critical, but now largely missing, elements
to the comprehensive and integrated investment strategy we are
recommending.

We are sending copies of this report to the Secretary of Defense, the
Secretary of the Air Force, the Secretary of the Navy, the Commandant of
the Marine Corps, and the Director, Office of Management and Budget.
Copies will also be made available to others upon request. In addition,
the report will be available at no charge on the GAO web site at
http://www.gao.gov.

Please contact me at (202) 512-4841 if you or your staff have any
questions concerning this report. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Major contributors to this report are listed in appendix
V.

Sincerely yours,

Michael J. Sullivan
Director, Acquisition and Sourcing Management

Appendix I: Scope and Methodology 

To determine current risks and future plans for DOD's new tactical
aircraft acquisition programs, we evaluated plans, budgets, delivery
schedules, and results to date on the JSF, F-22A, F/A-18E/F, and EA-18G.
We compared cost, schedule, and performance data to prior estimates to
identify significant changes and their causes. We discussed concerns and
emerging issues with officials from the program offices, the requiring
commands, and service headquarters. To limit impacts on the services and
leverage our work, we drew extensively upon prior and ongoing GAO
engagements on the JSF, F-22A, and EA-18G.

To determine impacts on legacy systems and retirement schedules, we
reviewed work content and funding requirements for ongoing and projected
modernization and sustainment projects for tactical aircraft. We discussed
future plans for legacy systems, retirement schedules, and the degree they
have been affected by cost, schedule, and performance outcomes for new
acquisition systems. We compiled lists of unfunded requirements and
estimates of costs for service life extension programs.

To determine the extent to which DOD has developed an integrated
investment plan for future tactical aircraft, we analyzed Air Force, Navy,
and Marine Corps plans and processes for establishing force and capability
requirements, the factors used to size and shape future force structure to
meet national security requirements, and how capability gaps or
redundancies are addressed. We reviewed OSD and joint staff
responsibilities and processes for exercising program management and
oversight of service programs and new initiatives intended to improve
enterprise planning and look for integrated DOD-wide solutions.

In performing our work, we obtained information and interviewed officials
from the F-22A System Program Office, Wright-Patterson Air Force Base,
Ohio; F/A-18 System Program Office, Patuxent River, MD; program offices
for Air Force legacy systems, Wright-Patterson Air Force Base, Ohio;
program offices for Navy and Marine Corps legacy systems, Patuxent River,
MD.; Air Combat Command, Langley Air Force Base, VA; Naval Air Systems
Command, Patuxent River, MD; Navy, Marine Corps, and Air Force
headquarters offices, OSD, and Joint Chiefs of Staff offices, Washington,
D.C. We performed our work from June 2006 through March 2007 in accordance
with generally accepted government auditing standards.

Appendix II: Comments from the Department of Defense

Appendix III: Tactical Air Forces Funding Fiscal Years 2006 to 2011

Dollars in thousands

Source: DOD's 2007 Future Years Defense Program.

Appendix IV: A Summary of Tactical Aircraft Systems Ongoing and Future
Efforts

This appendix provides more details on new and legacy tactical aircraft to
expand upon summary information provided in the body of this report. We
include a brief description of each aircraft's mission, program status,
and our observations on program execution and outcomes. Where applicable,
we also highlight recent GAO work on some systems. The appendix also
includes a funding table for each aircraft that consolidates the budget
requests in the Fiscal Year 2008 Defense Budget, the Fiscal Year 2007
Global War on Terrorism Supplemental, and the Fiscal Year 2008 Global War
on Terror request. The budget information in these tables is expressed in
current (then year) dollars and the totals may not add exactly because of
rounding. The fiscal year 2007 funding shown in these tables has been
appropriated by Congress except for the supplemental requests.

Figure 7: F-22A Raptor

Mission

The F-22A is the Air Force's next generation air superiority fighter and
incorporates a stealthy and highly maneuverable airframe, advanced
integrated avionics, and a supercruise engine. It will replace or
complement the F-15 as the Air Force's primary air-to-air fighter and was
originally intended to counter threats posed by the Soviet Union. The Air
Force has decided to add more robust air-to-ground and
intelligence-gathering capabilities not previously envisioned at program
start, but now considered necessary to increase its utility.

Program Status

Demonstration and validation began in October 1986 and system development
in June 1991. Low-rate initial production was approved in August 2001 and
full-rate production in March 2005. The first production aircraft was
delivered in June 2003 and, as of October 2006, 78 aircraft had been
delivered to the operational forces. The program of record is to acquire a
total of 183 aircraft at a total cost of $62.6 billion. The Air Force
plans to complete procurement in 2010 under a multiyear contract.

Initial operational capability was declared in December 2005. In its
December 2006 annual report, DOD's Director of Operational Test and
Evaluation has determined that the F-22A is operationally effective in the
air-to-air mission role and in the air-to-ground mission against fixed
targets using the Joint Direct Attack Munition. The aircraft is not yet
operationally suitable due to reliability and maintainability
deficiencies. Operational users report that the aircraft has performed
excellently in military exercises against representative threats and
represents a large advantage over the F-15.

The Air Force is implementing a modernization and reliability improvement
program and plans to invest another $6.3 billion to develop and integrate
more robust ground attack, intelligence-gathering, and other new
capabilities. Formally established in 2003, the F-22A's modernization
program is currently being planned for three increments of increasing
capability to be developed and delivered over time, from fiscal year 2007
to 2013. Additional modernization is expected, but the content and costs
have not been determined or included in projected budgets beyond 2013.

GAO Observations

The Air Force's current stated need is for 381 F-22As. However, because of
past cost overruns and current budget constraints, OSD states that 183 are
all that is needed and affordable. This leaves a 198-aircraft gap with the
Air Force's stated need. We have reported on F-22A issues for many years
and have recommended that a new and executable business case be prepared
that more accurately and realistically supports the current program of
record and which resolves a capability gap between what the Air Force
requires and what DOD can afford.1 During the more than 20 years the
aircraft has been in development, the conditions underpinning the original
business case substantively changed--threat and employment plans changed,
costs increased, the development period doubled, and new mission
requirements were added. Without a new relevant business case--on the
appropriate number of F-22As for our national defense--it is uncertain
whether additional investments in the modernization program are advisable.

The Air Force is working with the contractor to fix structural
deficiencies on the F-22A. Fatigue testing identified cracks in the
aircraft near the horizontal section tail of the aircraft. The Air Force
is planning modifications to strengthen the structure to get the
8,000-hour service life. The Air Force estimates the costs to modify 72
F-22As will be approximately $124 million. These modifications will not be
fully implemented until 2010.

1The latest report is GAO, Tactical Aircraft: DOD Should Present a New
F-22A Business Case before Making Further Investments, [71]GAO-06-455R
(Washington, D.C.: June 20, 2006).

At the start of modernization, all three critical technologies essential
to achieving capability requirements were considered mature by best
practice standards. Since that time, however, the program added three
additional critical technologies, all of which are immature. Immature and
untested technologies, as the program pushes forward, significantly
increase the risk of poor cost and schedule outcomes.

Table 9: F-22A Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 8: F-35 Joint Strike Fighter (JSF)

Mission

The JSF program goals are to develop and field an affordable, highly
common family of stealthy, next-generation strike fighter aircraft for the
Navy, Air Force, Marine Corps, and U.S. allies. The carrier suitable
variant will provide the Navy a multirole, stealthy strike aircraft to
complement the F/A-18E/F. The conventional take-off and landing variant
will primarily be an air-to-ground replacement for the Air Force's F-16
and the A-10 aircraft, and will complement the F-22A. The short take-off
and vertical landing (STOVL) variant will be a multi-role strike fighter
to replace the Marine Corps' F/A-18 and AV-8B aircraft.

Program Status

The JSF program is DOD's most costly aircraft acquisition program. DOD
estimates that the total cost to develop and procure its fleet of aircraft
will be $276 billion, with total costs to maintain and operate the JSF
adding another $347 billion over its life cycle. It is also DOD's largest
cooperative development program. Eight partner countries are providing
funding for system development and demonstration: Australia, Canada,
Denmark, Italy, the Netherlands, Norway, Turkey, and the United Kingdom.

Concept demonstration began in November 1996. The program entered system
development and demonstration in October 2001 and is expected to run
through fiscal year 2013. Manufacture and assembly of test aircraft is
continuing, and first flight of the Air Force's variant occurred in
December 2006. Overall, the cost estimate to develop the JSF has increased
from $34.4 billion in 2001 to $44.5 billion in 2005--about 29 percent.
Procurement costs have increased from $196.6 billion in 2001 to $231.7
billion in 2005--about 18 percent. Since program start, JSF quantities
have been reduced by 530 aircraft. Current estimated program acquisition
unit costs are about $112 million, a 38 percent increase since 2001.

GAO Observations

We recently issued our third annual report on the JSF acquisition.2 The
development team has achieved first flight and has overcome major design
problems found earlier in development. However, the current acquisition
strategy still reflects very significant risk that both development and
procurement costs will increase and that aircraft will take longer to
deliver to the warfighter than currently planned. Even as the JSF program
enters the midpoint of its development, it continues to encounter
significant cost overruns and schedule delays. As a result of the program
reporting a Nunn-McCurdy unit cost breach, a new baseline was established
in 2004 with additional costs of $19.4 billion; since then, estimated
costs to complete the acquisition have increased another $31.6 billion.
OSD cost analysts are concerned about worsening cost performance and
believe the cost to complete the program will further escalate. The
program has also experienced delays in several key events, including the
start of the flight test program, delivery of the first production
representative development aircraft, and testing of critical missions
systems.

Our past reports have found that the acquisition program is not following
a knowledge-based evolutionary approach that places it at risk of
continued poor program outcomes. The degree of concurrency between
development and production in the JSF's acquisition strategy includes
significant risks for cost and schedule overruns or late delivery of
promised capabilities to the warfighter. For example, at the time of the
low-rate initial production decision, only one aircraft will have flown;
less than 1 percent of the flight test program will have been completed;
and none of the three variants will have a production representative
prototype built. The 7-year flight test program of more than 11,000 hours
of testing just began in December 2006. It will not be until 2011 that a
fully capable, integrated JSF is scheduled to begin flight testing. By
that time, DOD expects to have committed to buy 103 production aircraft
for $20 billion. Therefore, almost all of critical flight testing remains
to confirm the aircraft will indeed deliver the required performance.
Manufacturing and technical problems can delay the completion of the
flight test program, may necessitate design changes, increase the number
of flight test hours needed to verify the system will work as intended,
and affect when the capabilities are delivered to the warfighter.

2GAO, Joint Strike Fighter: Progress Made and Challenges Remain,
[72]GAO-07-360 (Washington D.C.: Mar. 15, 2007).

DOD appears to be taking some actions to lessen funding risk--the ability
to sustain funding in times of austere budgets or against competing
priorities. DOD's plan in 2006 assumed extremely high annual funding rates
averaging $14 billion between 2012 and 2023. This is an extremely large
annual funding commitment that carries a correspondingly high level of
funding risk as the program moves forward and must annually compete with
other programs for the defense dollar. Due to affordability pressures, DOD
is beginning to reduce procurement budgets and annual quantities. The
recently released fiscal year 2008 defense budget shows declining
procurement quantities for the first years of production. To meet future
constrained acquisition budgets, Air Force and Navy officials and planning
documents suggest a decrease in maximum annual buy quantities from 160
shown in the current program of record to about 115 per year, a 28 percent
decrease. While this will reduce annual funding requirements, it will also
stretch the procurement program at least seven years to 2034, assuming buy
quantities are deferred rather than eliminated.

Table 10: Navy JSF Fiscal Year 2008 Defense Budget (in millions of
dollars)

Source: DOD budget data.

Table 11: Air Force JSF Fiscal Year 2008 Defense Budget (in millions of
dollars)

Source: DOD budget data.

Figure 9: F/A-18E/F Super Hornet

Mission

The F/A-18E/F Super Hornet program was approved as a major modification in
the F-18 series in May 1992. It is a twin engine, single- and two-seat,
multi-mission tactical aircraft designed to perform fighter escort,
interdiction, fleet air defense, and close air support missions. The
F/A-18E/F is replacing the F/A-18A/B/C, has improved range and payload,
and is less detectable. In addition to the procurement quantity of 462 E/F
aircraft, the Navy is also procuring 84-90 airframes for the EA-18G
program (total acquisition up to 552 aircraft).

Program Status

Development began in 1992, procurement in 1996, and initial operational
capability was declared in September 2001. Through fiscal year 2006, the
Navy has taken delivery of 272 aircraft and has 210 aircraft on a 5-year
multiyear contract.3 The Navy has received an unsolicited draft proposal
for a third multiyear contract that would complete the planned program.
Navy officials believe this could reduce unit costs, but told us to be
effective the contract would need a quantity higher than the 70 aircraft
remaining to be bought. This would seemingly require an increase in Navy
buys or the addition of potential foreign military sales.4

Super Hornet aircraft have flown over 340,000 hours by the end of December
2006 and have been employed in combat operations. The Navy originally
planned to buy 1,000 aircraft, but the quantity was reduced to 548 by the
1997 Quadrennial Defense Review, expecting to transition more quickly to
the JSF, but with provisions for additional procurement if the JSF is
delayed. In 2003, the quantity was further reduced to 462 when a study
showed closer integration of Navy and Marine Corps aviation fleets would
provide greater efficiency for common assets.

GAO Observations

The F/A-18E/F acquisition program is mature and has had relatively good
procurement cost and schedule outcomes. One substantive reason for good
outcomes is the low risk, evolutionary acquisition strategy adopted. The
E/F variant is part of the F/A-18's family of aircraft that has gradually
upgraded capabilities since delivery of the original F-18 in the late
1970s. It has substantial commonality with its predecessor C/D models and
leveraged previous technologies. For example, the initial release of the
E/F models incorporated the avionics suite from the C/D models with
provisions for upgrades to occur subsequent to the basic air vehicle
development. Planned upgrades to the F/A-18E/F continue to incrementally
add capabilities. Current production is phasing in block upgrades
including the active electronically scanned array radar, advanced crew
station, network-centric operation, and time-critical strike
modifications. Navy program officials cited that, for the past three
years, full rate production aircraft have been consistently delivered up
to 3 months ahead of schedule, that the program is mature, and its current
costs remain well-defined and within targets.

3This multiyear procurement contract, the program's second of this
contract type, includes 154 F/A-18E/F and 56 EA-18G airframes for a total
of 210.

4There are currently seven foreign counties that have F/A-18A/B/C/Ds in
their fleets: Australia, Canada, Finland, Kuwait, Malaysia, Spain, and
Switzerland.

While platform production and fielding has been successful, the December
2006 report of the Director of Operational Test and Evaluation identified
ongoing tests and deficiencies in several of the aircraft's major systems,
including radar, defensive countermeasures, and weapons. The report states
it is paramount that all systems interoperate properly in order to allow
for optimal operational effectiveness and suitability.

The program has reported two Nunn-McCurdy (10 U.S.C. 2433) breaches in
unit cost since 1999, but these are attributable more to external factors
than to system development, production, or management problems. The first
breach occurred in 1999 when the procurement quantity was significantly
reduced by the QDR. The second breach occurred in 2005 when the quantity
was again reduced. Also, the OSD Comptroller decided to break out program
reporting for the EA-18G aircraft separate from the E/F models. In doing
so, common support costs for both programs were budgeted in the E/F
program.

Prior to this review, we last reported on the E/F program specifically in
our 2003 annual weapon systems' assessment.5 At that time program
officials noted that the aircraft demonstrated two to three times the
quality of the F/A-18C/D and have provided measurable improvements to
squadron readiness. In addition, all F/A-18E/F preplanned upgrades
continued to track to their program schedules. Program officials also
stated that the active electronically scanned array radar program
continues to execute as planned, and the program received the first
engineering and manufacturing development unit in 2003.

5GAO, Defense Acquisitions: Assessments of Major Weapon Programs,
[73]GAO-03-476 (Washington, D.C.: May 15, 2003).

Table 12: F/A-18 Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Note: This table includes all F/A-18 series budget data as the Navy
consolidates investment funding for all models. Procurement funds
requested are for the purchase of the new F/A-18E/F, while RDT&E and
modification funds include amounts for both new and legacy F/A-18A/B/C/D
aircraft.

Figure 10: EA-18G Growler

Mission

The EA-18G is the replacement for the Navy's EA-6B Prowler and will
provide carrier strike forces with electronic attack and tactical jamming
capabilities to defeat enemy air defenses and to protect strike fighters
and the carrier group. Derived from the combat proven F/A-18F aircraft,
the EA-18G incorporates advanced airborne electronic attack avionics for
the suppression of enemy air defenses, including accurate emitter
targeting for employment of onboard weapons such as the High-Speed
Anti-Radiation Missile.

Program Status

The two-seater EA-18G airframe is about 90 percent common with the F/A-18F
airframe and is procured under the same multiyear contract. The two models
diverge at a point in the production line and airframes destined to be
Growlers receive the electronic attack subsystems. System demonstration
and design was about 70 percent complete by October 2006. Two test
articles were delivered in 2006 and first flight was in August 2006. The
low-rate initial production decision is scheduled for late April 2007 and
initial operational capability is planned for the last quarter in 2009.

The Navy is proposing to reduce the total quantity of EA-18Gs from 90 to
84. The reduction is a result of re-evaluating inventory requirements in
association with the Navy's fiscal year 2008 budget and the application of
tiered readiness, as well as a reduction of four aircraft from the first
low-rate production buy. The Navy expects to receive its first EA-18G in
2009.

GAO Observations

We reported in 2006 on the EA-18G's acquisition schedule for integrating
the electronic attack subsystems.6 Our analysis showed that the program
was not fully following the knowledge-based approach espoused in best
practices and DOD's acquisition guidance, thus increasing the risk of cost
growth, schedule delays, and performance problems. None of its five
critical technologies were fully mature when system development started,
and, at the time of our review, flight testing hadn't begun. The Navy
proposed buying one-third of the total quantity as low-rate initial
quantity aircraft based on limited demonstrated functionality. We
recommended DOD consider outfitting additional EA-6Bs with the improved
electronic suite for an interim capability, which would allow the
restructuring of EA-18G production plans to begin procurement after full
functionality was demonstrated.

This year, our follow on review as part of our annual assessments of major
weapon systems determined that progress has been made but that three of
the five critical technologies are still not fully mature to best
practices standards with production slated to start in 2007.7 Flight
testing is underway and, until full functionality is demonstrated, there
are risks of redesign and retrofit. Fifty-six aircraft are already on the
F-18 multiyear contract, most procured as low-rate initial production
aircraft based on limited demonstrated functionality. A fully functioning
Growler, one that meets or exceeds the upgraded EA-6B capability, will not
complete operational testing until January 2009, 20 months after
production starts and after more than one-third of the total fleet has
already been bought.

6GAO, Electronic Warfare: Option of Upgrading Additional EA-6Bs Could
Reduce Risk in Development of EA-18G, [74]GAO-06-446 , (Washington, D.C.:
Apr. 26, 2006).

7 [75]GAO-07-406SP .

Navy officials agree that EA-18G's schedule is aggressive, but disagreed
with our overall assessment of the EA-18G. Officials reported that the
program has been stable since its schedule was developed in 2003 and is
meeting or exceeding all cost, schedule and performance parameters.
Furthermore, officials stated that some technologies are evolutionary
upgrades of systems previously tested on its EA-6B aircraft with
demonstrated effectiveness. We note, however, that these technologies are
in new environments with form and fit challenges, including space
constraints, which could impact performance and ultimate design. The
December 2006 annual report from the Director of Operational Test and
Evaluation stated that the schedule remains aggressive with plans to fully
assess risk areas to achieve initial operational capability in fiscal year
2009. The Director reported that the primary risks include the integration
of multiple components of the electronic attack system onto the F/A-18E/F
platform and the operator workload for the two-man crew in missions
currently performed by the four-person EA-6B aircraft.

Table 13: EA-18G Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 11: A-10 Warthog

Mission

The A-10 was the first Air Force aircraft specially designed for close air
support of ground forces. It is a simple, effective and survivable
twin-engine jet used against all ground targets, including tanks.
Officials cite exceptional combat results during Desert Storm and the
Global War on Terror. Some aircraft are specially equipped for airborne
forward air control.

Program Status

Because of the A-10's relevant combat capabilities--demonstrated first
during Desert Storm and recently in the Global War on Terror--the Air
Force now plans to keep it in the inventory longer than anticipated. How
long and with what upgrades is also dependent on whether the JSF aircraft
are delivered on schedule. The Air Force is pursuing several major
modifications to upgrade systems and structures on the A-10 fleet. A major
re-winging effort is planned for 2007 through 2016 that will replace the
"thin skin" wings on 242 aircraft at an estimated cost of $1.3 billion.
This effort will help to extend the A-10's service life to 16,000 hours.
Precision Engagement modernizes cockpit controls and upgrade avionics and
weapons. All 356 aircraft in the force are slated to receive the Precision
Engagement suite. Total cost to complete the modification is estimated to
be $420 million.

GAO Observations

Significant investments are underway and others planned or proposed to
modernize 356 A-10s and to extend service life from 8,000 to 16,000 flying
hours in order to achieve the goal of keeping the aircraft in service
until 2025 or later. However, because of post-Cold War plans to retire the
aircraft starting in the early 1990s, the A-10 fleet received no money for
major modifications or programmed depot maintenance during the 1990s. As a
result, the Air Force is now faced with a very large backlog of
maintenance, structural repairs, and extensive modifications to modernize
the A-10 fleet and keep it viable. Officials have begun major upgrades to
modernize the cockpit and major subsystems and to replace the wings on
most of the fleet. Officials are also finding that as older aircraft are
inspected and opened up for modification, additional and more costly
structural and sustainment work is being identified beyond initial plans.

Even with the higher priority accorded the aircraft, program officials
identify at least another $2.7 billion in unfunded requirements.8 Chief
among these are an engine upgrade program estimated at $2.1 billion. It is
intended to provide the A-10 with significantly improved engine
capabilities. However, the proposal was deferred by the requiring command
because of limited funding and higher warfighter priorities. The Air
Force's Fleet Viability Board, which assesses aging aircraft fleets and
recommends to the Secretary and Chief of Staff of the Air Force whether
aircraft should be retired or continued in service, recently determined
that the A-10 is still viable and validated many of the modifications and
repairs already underway. The Board recommended funding this engine
upgrade in order to extend the A-10's service life until 2030. The Board's
assessment identified mission limitations due to insufficient thrust to
maximize survivability in the current threat environment with existing
engines. Although agreeing that the engine upgrade would be desirable if
funds were available, the requiring command continues to defer this
program as a lower priority. We note that the Air Force has requested
development funding of $230 million for the engine upgrade program in the
2008 supplemental request.

8We obtained another preliminary estimate that suggests a service life
extension program for the A-10 could cost $4.4 billion, which may include
some of these unfunded requirements.

Table 14: A-10 Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 12: F-15A/B/C/D Eagle and F-15E Strike Eagle

Mission

The F-15A/B/C/D Eagle is a single- and two-seat, twin-engine, all-weather
tactical fighter designed to gain and maintain air supremacy over the
battlefield. The F-15E Strike Eagle is a two-seater dual-role fighter
designed to perform air-to-air and air-to-ground missions. An array of
avionics and electronics systems gives the F-15E the capability to strike
targets at low altitude, day or night, and in all weather.

Program Status

The Air Force has a number of ongoing improvement efforts for the F-15
fleet, including

           o helmet mounted cueing system,
           o a new identification friend-or-foe system,
           o various computer upgrades, and
           o new radar for the F-15E

The Joint Helmet Mounted Cueing System is planned for several DOD systems
and provides pilots the capability to aim weapons and sensors by looking
at the intended target. The new friend-or-foe identification system will
solve obsolescence issues, add capability, and be upgradeable for the
future. Computer upgrades also resolve obsolescence issues, enhance
on-board computers, and improve avionics performance. The F-15E model will
receive the improved active electronically scanned array radar.

GAO Observations

For years, modernization efforts and funding for the F-15C/D aircraft had
been concentrated on about half the fleet--178 aircraft of its total
inventory of 391. These were the number of aircraft the Air Force
projected was needed to provide sufficient force structure to meet defense
requirements and to complement the F-22A. That projected number was
predicated upon the Air Force receiving its full F-22A stated requirement
of 381 aircraft. However, due to affordability, the Air Force now faces a
198 aircraft shortfall in the quantity of F-22As it is slated to receive.
As a result, officials expect more F-15C/Ds need to be modernized and
retained for longer periods than planned. Originally planned for
retirement by 2015, the Air Force now needs to keep substantial numbers of
F-15C/D aircraft operational to 2025 and perhaps beyond.

A multi-staged improvement program for the 178 aircraft, including recent
upgrades of the engines and radar, is mostly complete. Officials
identified near-term unfunded requirements on these aircraft totaling $2.3
billion, including new radars and countermeasure sets. In addition,
potential service life extension efforts on the fleet and backlogged
unfunded requirements to modernize aircraft in addition to the 178 may be
needed but the full costs have not been identified.

The Air Force also plans to keep 224 F-15Es in service beyond 2025. These
are the newest F-15s with enhanced strike capabilities. The major upcoming
upgrade effort on the F-15E is a radar modernization program to add active
electronically scanned array radar. Estimated to cost $2.3 billion, the
Air Force has delayed funding for this effort and now plans to start
procurement in 2010. Program officials identified unfunded requirements
totaling about $1.7 billion, including upgraded radar warning receivers,
helmet mounted cueing system, and long-term sustainment efforts to address
electrical, structural, and power plant concerns to keep the aircraft
viable for another 25 or more years.

Table 15: F-15 Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 13: F-16 Fighting Falcon

Mission

The F-16 Fighting Falcon is a single engine multi-role fighter with full
air-to-air and air-to-ground combat capability. It provides a relatively
low cost, high-performance weapon system for the United States and allied
nations. The F-16 currently comprises more than half of the Air Force's
fighter force. The fleet includes several different configurations or
blocks. The newest blocks incorporate the high-speed anti-radiation
missile targeting system, the Air Force's only platform specifically for
the suppression of enemy air defenses.

Program Status

The Air Force is not currently purchasing any new F-16's, but the
contractor is still producing them for foreign sale. The production is
slated to continue past 2009 to accommodate recent sales. If the Air Force
were to buy new aircraft, officials estimated that it would cost $380
million for development and about $50 million per aircraft procured.

The Air Force has a number of ongoing improvement efforts for the F-16,
including

           o structural airframe modifications,
           o avionics and capabilities upgrades,
           o engine service life extension program, and
           o new engines for some F-16 models.

Falcon STAR is an effort to modify the airframe to allow the F-16 to reach
the original 8,000 hours estimated for its flight life. Due to increased
workload and weight that exceed the original specifications of the
aircraft, the F-16 must be structurally modified to compensate for the
increases. A number of common avionics and capabilities upgrades are
necessary to provide increased processor speed and memories, color
displays, and incorporate the Joint Helmet Mounted Cueing System. The F110
engine service life extension program addresses safety, reliability and
maintainability concerns and new engines for the Block 42 aircraft will
provide needed thrust improvements.

GAO Observations

With over 1,300 aircraft, the F-16 fleet comprises more than one-half the
Air Force's fighter and attack forces. The fleet includes several
different configurations that were acquired and upgraded in evolutionary
fashion over a considerable period of time. Reduced annual buy quantities
on the JSF and deferred deliveries to the warfighter means that F-16s
slated to be replaced by the JSF and retired will need to remain operable
and relevant for additional years. Already investing several billions of
dollars to keep the fleet operable, improve capabilities, and sustain it
to meet its original expected service life, a preliminary unfunded cost
estimate to increase the life expectancy of the newer fighters is $4.5
billion.

Without improvements, almost 90 percent of the fleet would exceed design
limits on engines by 2010. High usage, increased stresses, and more weight
than planned threatened to cut life expectancy in half. Significant
unknowns exist about extending the life beyond 8,000 hours should that be
necessary. This makes any additional JSF schedule delays, deferrals, and
cost growth very problematic for the overall Air Force fighter structure.

If it becomes necessary to enable the newest F-16 aircraft to reach a
10,000 flying hour life, a program official estimated an additional cost
of $2.2 billion for structural enhancements. The program office also
identified another $3.2 billion in unfunded requirements, including radar
upgrades to aircraft capable of suppressing enemy air defenses. The oldest
F-16s are to be retired over the next few years, and the Air Force has
halted modifications and funding for these aircraft.

Table 16: F-16 Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 14: F-117A Nighthawk

Mission

The F-117A Nighthawk is the world's first operational aircraft designed to
exploit low observable stealth technology. This precision strike aircraft
penetrates high-threat airspace and uses laser-guided weapons against
critical targets.

Program Status

As part of its transformation plans, the Air Force proposed retiring the
F-117A aircraft in 2007 and 2008, stating that there are other more
capable assets that can provide low observable, precision penetrating
weapons capability. Program Budget Decision 720, dated December 2005,
directed the Air Force to develop a strategy to gain congressional support
for this plan. Congress has agreed, with certain limitations, mandating
that the Air Force retire F-117As in "pristine" storage in case the
aircraft would need to be recalled into service.

GAO Observations

Program officials estimate that the drawdown of the fleet and the shutdown
of government and contractor offices and facilities would cost
approximately $283 million. However, there is currently no funding
allocated for these retirement costs of the F-117A. This cost does not
include long-term storage and maintenance of the fleet after such a
retirement.

Table 17: F-117A Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 15: F/A-18A/B/C/D Hornet

Mission

The F/A-18A/B/C/D is an all-weather fighter and attack aircraft also known
as the Hornet. It is a single- and two-seat, twin engine, multi-mission
fighter/attack aircraft that can operate from either aircraft carriers or
land bases. The F/A-18 fills a variety of roles: air superiority, fighter
escort, suppression of enemy air defenses, reconnaissance, forward air
control, close and deep air support, and day and night strike missions.

Program Status

The major modification effort ongoing is the Center Barrel Replacement to
eliminate structural limitations caused by cracking in the central
fuselage. This effort is expected to cost about $970 million. During
scheduled inspections of the aircraft, the Navy also identified cracks in
the wing structure in about 40 percent of the aircraft. These could cause
safety of flight issues in the future but are not thought to be serious
enough at this time to ground the aircraft or to require immediate repair.

GAO Observations

The F/A-18s are the backbone of the naval tactical aircraft fleet, but are
quickly running out of service life. The Navy plans to soon retire the A
and B models, and the Marine Corps plans to transition entirely to the JSF
for its future strike force. The Navy's modernization efforts are focused
on the remaining 421 F/A-18C/D aircraft. The Navy has an ongoing
assessment of the service life of this aircraft that is expected to be
completed in December 2007. At this time, it is not clear as to the need
for or extent of future modifications, but a Naval Air Systems Command
official said the assessment could very well identify additional
modifications and structural work required beyond what is funded. Further
delays in JSF could exacerbate funding shortfalls to sustain and modernize
the operational fleet.

While the F/A-18C/D legacy aircraft are currently meeting both the Navy's
and Marine Corps's force structure requirements and readiness levels,
inventory reductions though the Navy-Marine Corps tactical aircraft
integration plan, JSF delays, and better defined structural limits of the
F/A-18C/D have created a shortfall starting in 2011 in the number of
aircraft that Navy officials project as needed to support its war-fighting
plans. One option the Navy is considering would be the purchase of
additional F/A-18E/F models to resolve this shortage.

Another option under consideration is extending the life of its F/A-18C/D
fleets to mitigate projected shortfalls. The full cost of the life
extension program is not known at this time. The service life assessment
effort to be completed in December 2007 will determine the feasibility,
scope of work, and total costs for extending the life of the system.
Current estimate for extending service life, including the costs of the
assessment, is about $2 billion, but officials said that number could very
well increase substantially as the assessment progresses and cost
estimates mature.

Concerned over the looming gap in the Navy's inventory, in May 2006, the
Senate Committee on Armed Services recommended that the Navy consider
buying more F/A-18E/Fs to mitigate any possible shortfall in aircraft
until JSF aircraft are delivered.

Note: Budget information for the F/A-18A/B/C/D is included earlier in this
appendix with the discussion of the F/A-18E/F (see table 12, p. 50). The
Navy consolidates investment budgets for all models of the F-18.

Figure 16: EA-6B Prowler

Mission

The primary mission of the EA-6B Prowler is the suppression of enemy air
defenses in support of strike aircraft and ground troops by interrupting
enemy electronic activity and obtaining tactical electronic intelligence
within the combat area. The Prowler is a long-range, all-weather aircraft
with advanced electronic countermeasures capability, and enhances combat
survivability of strike force aircraft and weapons by denying, delaying,
and degrading the acquisition of friendly forces by enemy air defense
systems. Both the Navy and Marines maintain Prowler assets.

Program Status

In 1995, the EA-6B was selected to become the sole tactical radar support
jammer for all services after the Air Force decided to retire its fleet of
EF-111 aircraft. This decision resulted in increased use of the EA-6B, as
the Prowler provided airborne electronic attack capability during numerous
joint and allied operations since 1995. The Navy plans to start retiring
its EA-6B in 2008 and replace it with the EA-18G as its core airborne
electronic attack component. The Marine Corps had expected to retire their
EA-6B assets in 2015, but that could change as future plans for its
replacement are still evolving.

Three significant upgrades to the EA-6B are

           o the Improved Capability electronic suite modification (ICAP
           III), which provides the EA-6B with greater jamming capability;
           o an upgrade to the aircraft's current electronic pods, which
           improves frequency band capability; and
           o replacement of the wing center sections of the entire fleet and
           outer wing panel replacement on portions of the fleet.

The ICAP-III modification includes the addition of software to allow the
EA-6B to automatically pinpoint enemy signals and better receive and
utilize data. Aircraft not receiving ICAP III are having the current
electronic attack systems upgraded. Funding to replace the wing center
sections was added by Congress. To date, 114 wings have been procured and
100 have been installed on aircraft. In addition forty-seven EA-6Bs are
also in need of an outer wing panel replacement; Navy officials said that
the first four pairs have already been delivered, and procurement will be
ramped to 18 sets per year in order to receive deliveries through 2008.

GAO Observations

In 2006 GAO reported9 that, as a result of DOD's decision to move to an
electronic attack system of systems, the EA-6B would be able to meet the
defense suppression needs of the Navy until 2017 and those of the Marine
Corps until 2025 if the aircraft were fitted with the ICAP-III electronic
suite upgrade. Because the EA-18G's five critical technologies were not
fully mature and posed a costly risk for design changes, GAO recommended
that DOD consider outfitting additional EA-6Bs with the ICAP III suite,
which would allow the Navy to slow EA-18G low rate production until its
technologies become fully mature and functionality demonstrated.

The Navy and Marine Corps operate the EA-6B, which provides electronic
attack support DOD-wide at this time. The EA-6B has been upgraded over
time to increase its reactive jamming capability. The most important
on-going effort to the EA-6B is the ICAP-III electronic suite
modification, which provides more rapid emitter detection, selective
reactive jamming, and expanded coverage. The Navy has two squadrons
currently deployed with ICAP-III and plans to equip a total of 15 of its
EA-6Bs with the ICAP-III suite. The Navy plans to start decommissioning
the EA-6B from its fleet starting in 2008 and retire all aircraft by 2013,
replacing them with the new EA-18G that will provide electronic attack
support to its carrier strike forces.

9 [76]GAO-06-446 .

The Navy will start transferring aircraft to the Marine Corps in fiscal
year 2010 and complete transfers in 2013 with delivery of the ICAP III
aircraft. The Marines Corps planned to retire its EA-6Bs by 2015, but
officials said plans could change depending on the transfer schedule and
that they may need to keep these aircraft in the inventory longer
depending on the JSF delivery schedule. The Marine Corps has not yet made
firm plans for its future electronic attack capability and is considering
employment of the JSF and unmanned aircraft systems. We note that the
Marine Corps has requested a total of $379 million in the fiscal year 2007
and 2008 global war on terror requests to upgrade an additional 18 EA-6Bs
with the ICAP-III suite and for other modernization enhancements.

Table 18: EA-6B Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Figure 17: AV-8B Harrier II

Mission

The AV-8B Harrier II is a short field take-off and vertical landing
(STOVL) jet aircraft that deploys from naval ships, advanced bases, and
expeditionary airfields. Its mission is to attack and destroy surface
targets and escort friendly aircraft, day or night, under all weather
conditions during expeditionary, joint or combined operations. The Harrier
is responsible for conducting close air support, armed reconnaissance and
air interdiction, offensive and defensive anti-air warfare, including
combat air patrol, armed escort mission, and offensive missions against
enemy ground-to-air defenses. The first Harrier squadron is expected to be
replaced by the JSF starting in fiscal year 2011.

Program Status

The AV-8B, a more powerful and longer range model, than its predecessor
the AV-8A, was introduced in 1985. The AV-8Bs were originally designed as
day attack only aircraft, but some were later upgraded to add night attack
and radar capabilities. The night attack and radar upgrades enhance the
pilot's ability to locate and destroy targets under various weather
conditions and at night. Some of the AV-8Bs received an upgrade to enhance
night attack with improved multimode radar in 1991-1992. Between 1994 and
2001, the majority of AV-8Bs were remanufactured with new fuselages to add
structural life to the airframe and to accommodate the new radar upgrade.

Currently there are several on-going efforts to add capabilities and
improve sustainment for the AV-8B until replaced by the JSF, including

           o remanufacturing 5 old, day attack aircraft to receive the night
           attack capability and refurbishing 2 training aircraft;
           o using a more accurate method to track the useful life of the
           aircraft; and
           o continuing efforts to improve sustainment through a readiness
           management plan for the airframes and an engine life management
           plan.

The AV-8B was originally designed to last for 6,000 flying hours. This
estimate was based on engineering fatigue projections on a 20 year service
life, flying 300 hours per year, on very rigorous mission profiles.
However, the aircraft have typically not been flown in such stressful
flight envelopes and the Marines estimate they will be able to exceed the
original 6,000 hour service life and maintain an additional 66 aircraft in
service through 2015. In addition, the Marine Corps plans a set of
modifications, largely unfunded, that would add important capabilities by
2012 or later to enable the Harriers to be more effective in future threat
environments.

GAO Observations

The AV-8 aircraft was DOD's first STOVL system. The aircraft is costly to
maintain and has a relatively high attrition rate. The Marine Corps has
134 AV-8Bs in its current fleet and plans to replace them all with STOVL
JSFs by 2025. The new fuselages increased the estimated service for the
AV-8Bs from 6,000 to 9,000 flight hours. Further, the AV-8Bs have not been
used as vigorously as mission profiles used to project its useful life and
officials believe that the fleet can remain in inventory well beyond the
expected delivery dates of the JSF, if necessary.

Ongoing and planned modernization efforts are minimal. The Marines are
upgrading five AV-8Bs that did not get previous upgrades so that they will
now have the night attack capability, and refurbishing two training
aircraft In fiscal year 2007, the Marine Corps began repairs on four
aircraft damaged during combat operations using supplemental funding. As
another step to mitigate potential slips in JSF production, officials are
also increasing the amount of depot level maintenance on the AV-8B fleets
to ensure sufficient numbers are available and capable. The Harrier is
scheduled to remain in service until at least 2021, but its retirement is
dependent upon the delivery of the JSF.

Table 19: AV-8B Fiscal Year 2008 Defense Budget (in millions of dollars)

Source: DOD budget data.

Appendix V: GAO Contacts and Staff Acknowledgements

GAO Contact

Michael J. Sullivan (202) 512-4841

Acknowledgments

Principal contributors to this report were the Assistant Director Michael
Hazard, Bruce Fairbairn, Marvin Bonner, Erin Clouse, Matthew Lea, Sara
Margraf, Robert Miller, and Karen Sloan.

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Washington D.C.: March 3, 2005.

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www.gao.gov/cgi-bin/getrpt?GAO-07-415 .

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Highlights of [108]GAO-07-415 , a report to the Chairman, Subcommittee on
Air and Land Forces, Committee on Armed Services, House of Representatives

April 2007

TACTICAL AIRCRAFT

DOD Needs a Joint and Integrated Investment Strategy

DOD's efforts to recapitalize and modernize its tactical air forces have
been blunted by cost and schedule overruns in its new tactical aircraft
acquisition programs: the Joint Strike Fighter (JSF), the Air Force F-22A,
and the Navy F/A-18E/F. Collectively, these programs are expected to cost
about $400 billion--with about three-fourths still to be invested. The JSF
program, which is expected to make up the largest percentage of the new
fleet, has more than 90 percent of its investments still in the future.
Increased costs and extended development times have reduced DOD's buying
power, and DOD now expects to replace legacy aircraft with about one-third
fewer new aircraft compared to original plans at each program's inception.

The outcomes of these acquisition programs directly impact existing
tactical aircraft systems. Until new systems are acquired in sufficient
quantities to replace legacy fleets, legacy systems must be sustained and
kept operationally relevant. Continual schedule slips and reduced buys of
new aircraft--particularly in the F-22A and JSF programs--make it
difficult for program managers to allocate funds for modifying legacy
aircraft to meet new requirements or to set retirement dates for legacy
aircraft. Lengthening the life of legacy systems also impacts DOD's new
tactical aircraft acquisition programs. DOD has become increasingly
concerned that the high cost of keeping aging weapon systems relevant and
able to meet required readiness levels is a growing challenge in the face
of forecast threats and reduces the department's flexibility to invest in
new weapons.

DOD's tactical aircraft investments are driven by the services' separate
acquisition planning. Moving forward, these plans are likely unexecutable
given competing demands from future defense and non defense budgets. The
EA-6B--providing tactical radar jamming capabilities for all services and
one of the few examples of a joint asset--is also expected to be replaced
by separate and unique aircraft for each of the services. Without a joint,
DOD-wide strategy for tactical aircraft investments, it is difficult to
identify potential areas where efficiencies might be achieved or where
capability gaps might occur in DOD's tactical aircraft acquisitions.

Planned Changes in Tactical Aircraft Inventories

Source: DOD data, GAO analysis.

Note: These numbers are approximate to show relative changes in amounts.

The Department of Defense (DOD) plans to invest $109 billion in its
tactical air forces between 2007 and 2013. Long term, DOD plans to replace
aging legacy aircraft with fewer, more expensive but more capable and
stealthy aircraft.

Recapitalizing and modernizing tactical air forces within today's
constrained budget environment is a formidable challenge. DOD has already
incurred substantial cost and schedule overruns in its acquisition of new
systems, and further delays could require billions of dollars in
additional investments to keep legacy aircraft capable and sustainable.

Because of the large investments and risk, GAO was asked to review
investment planning for tactical aircraft. This report describes the
current status of DOD's new tactical aircraft acquisition programs;
identifies current impacts on legacy aircraft modernization programs and
retirement schedules; and assesses DOD's overall investment plan for
tactical aircraft.

[109]What GAO Recommends

To achieve better outcomes in acquisition programs and investment
planning, GAO recommends that DOD (1) take decisive actions to shorten
cycle times in developing and delivering new weapon systems and (2)
develop an integrated and affordable enterprise-level investment strategy
for tactical air forces.

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