Yesterday’s F-35 Joint Strike Fighter (JSF) hearing, requested by Senator John McCain (R-AZ), revealed that the program is at risk of not delivering the promised number of aircraft, in part because the costs of the program have risen approximately 50 percent (i.e. possibly over twice as much in 2002-dollars as the Pentagon expected).
But even these numbers are not final — both the Government Accountability Office (GAO) noted, and Senator Claire McCaskill (D-MO) confirmed, that the Pentagon lacks a comprehensive cost estimate for completing the program.
Both the committee and the witnesses seemed to be most deeply shaken by the results of the Independent Manufacturing Review Team (IMRT) — a team of professional production people set up by the Director of Acquisition & Technology, Dr. Ashton Carter — which found that “Affordability is no longer embraced as a core pillar” of the JSF program, and that the program’s planned production rate was unachievable absent significant improvements.
As a result of this report, and two reports by the Joint Estimate Team (JET) — an evaluation led by the office of Cost Assessment and Program Evaluation (CAPE) — the JSF program was recently significantly restructured to manage the program risk and try to reduce program concurrency (i.e. overlap of development, testing, and production).
And while this restructuring is a big improvement, the GAO and several Senators worried that it’s not enough.
Chairman Levin asked Dr. Carter if he thought that the program’s concurrency was now reasonable. “It’s unprecedented,” Dr. Carter admitted. And he wouldn’t say that it was necessarily acceptable, but it was reduced. He also testified that ultimately the problems with procurement come down to a lack of discipline and not having the right people in place to really keep cost and schedule under control.
Looking over the recent history of the program, nearly everyone admits that it turns out that the JET report — dismissed at the time as “but one view” rooted in legacy-based assumptions — was right.
At last week’s Senate Armed Services committee’s hearing on the Air Force budget, Senator Saxby Chambliss — one of the biggest defenders of the F-22 fighter jet — asked Air Force Chief of Staff General Norton A. Schwartz why the JET report wasn’t disclosed to the Committee when they were discussing terminating the F-22 program. General Schwartz replied that he was unmoved by the findings, saying that “the independent estimates at that time had not received a level of validation that I felt was compelling.”
Dr. Carter disagreed slightly, saying that the first JET report only became important after the second, which confirmed that the findings of the first report were part of a long-term trend. So, after two reports from independent analysts, an industry report (the IMRT), and an assessment by a Joint Assessment Team (JAT) they restructured the program.
Ok, so what? Part of me wonders if the JET reports would have continued to be ignored and dismissed if not for the production expert analysis that essentially stated that, as it stood, meeting the program’s timeframe was practically impossible. It’s obviously important for acquisition officials to analyze many aspects of a program when deciding how to manage it, but at least as a thought exercise, what if Dr. Carter hadn’t requested the IMRT? Would the program be restructured, or would the GAO have reported completely untenable concurrency? The Director of Cost Assessment and Program Evaluation, Christine Fox, repeatedly mentioned the influence of the IMRT in her testimony on the program’s restructuring.
This raises the question whether independent cost analysts, like those that made up the JET team, are heard at the Pentagon. In the case of the JSF program, the Pentagon adjusted their budget request according to JET, but not much else until the other reports came in. Did it take production experts to convince the Pentagon that the program office was wrong, since they always knew that the findings of the independent cost estimators would be bad news? And if so, how can independent cost analysis — an essential tool for realistic program planning — be effective?
Again, as Dr. Carter says, the system doesn’t need new bureaucratic structures, but it does need discipline. As he admitted, at the Pentagon it has been too easy to paper over program problems with money.
One final wonky note: Dr. Carter pledged that one of the ways he was going to force the contractor to control costs was to make sure that the contract for the next block of jets was based on a “should-cost” analysis. For those of you unfamiliar with the work of Pentagon whistleblower Ernie Fitzgerald, in a lot of ways the idea of should-cost is his baby. The approach advocates setting contracts based on what something should cost, rather than basing the pricing on things like what programs have historically cost — essentially, a price that doesn’t consider waste and fraud to be the cost of doing business.
Since definitions of words change frequently in the Department of Defense, I’m particularly curious if Dr. Carter means the same thing. (signed: Mandy Smithberger)
