Program Was Nearing Possible "Nunn-McCurdy" Cancellation Deadline

Defense Department leaders and Lockheed Martin executives explained changes that have been made in the Joint Strike Fighter program to their international partners this week. Ashton B. Carter, the department's undersecretary for acquisition, technology and logistics, and Robert Stevens, chief operating officer for Lockheed Martin, the prime contractor for the program, explained what measures Defense Secretary Robert M. Gates has taken to right the program.

A department study of the program completed in October found the development phase of the revolutionary aircraft had slipped by 30 months. Gates has made changes that will reduce the slippage to 13 months, Carter said Thursday.  He was able to report to the partners that the Joint Strike Fighter program now has a realistic plan and "not a blindly optimistic one" or a "fatalistic one."

The undersecretary also said the study identified management measures to improve performance over the coming years. "I want to emphasize that this process of independent review and aggressive management to specific milestones will continue," he said.

Carter emphasized that the review turned up no fundamental technological or manufacturing problems with the JSF program and no failure to make military capabilities. He reiterated that the Joint Strike Fighter will be the backbone of collective air superiority for the next generation.

The report showed the JSF program was taking longer and costing more than either the government development office or the contractor had predicted, Carter said. "This schedule and cost trend was unacceptable for the taxpayers of the U.S. and for the other eight nations," he said. "The schedule slip was estimated at 30 months in the development program. The cost of the airplanes had grown since 2002 and that for a variety of reasons the JSF program would breach the Nunn-McCurdy threshold." The Nunn-McCurdy law requires that Congress be notified of a cost growth of more than 15 percent in a program. It also calls for cancellation of programs for which total cost grew by more than 25 percent over the original estimate.

"We didn't wait for the Nunn-McCurdy paperwork to play out," the undersecretary said. "We began to review and restructure the JSF program as though it were already in Nunn-McCurdy breach and the results of that review and restructuring were subsequently described by Gates."

Gates announced the restructuring of the JSF program, which is the most expensive acquisition in U.S. military history, in early February. The objective is to restore the schedule in the development program. "We assessed that this was feasible and was possible to reduce the slip in the development program from 30 months to 13 months and that we could realistically plan on that basis provided we took some immediate management steps," Carter said. That means procuring one more carrier variant aircraft and additional regular aircraft to conduct flight testing "with the idea of hastening the completion of the program," he said.

The changes also call for development of aircraft software capability. "All of these steps were directed in the restructuring and that's the first steps in the effort to buy back some of the slips in the development program," Carter said.

The defense secretary did not believe it was reasonable for the customers to bear all the costs of those actions, and decided DoD would withhold $614 million of the award fee from the contract, Carter said. "We will be adjusting contract structures in the future to align contractor performance to what we need," he said.

The restructuring allows for contractors to adopt a more realistic schedule and production ramp, and gives Lockheed Martin and subcontractors every opportunity "to accelerate production and make affordable aircraft, faster," he said.

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