Defense acquisitions : recent F22 production cost estimates exceeded congressional limitation

Book excerpt: The Air Force F-22 Raptor is an air superiority aircraft being developed to replace F-15 fighter aircraft. Lockheed Martin Corporation and Pratt & Whitney Corporation are the contractors for the airframe and engine, respectively. Development, which started in 1991, is scheduled to be completed in August 2003. The Air Force plans to enter low-rate initial production in December 2000. Projections of higher production costs have been a source of concern for several years. In 1996, because of potential cost increases, the Air Force established a team-known as the Joint Estimating Team-to review the total estimated cost of the F-22 program. The team concluded that the cost of production could grow substantially from the amounts planned, but that cost reduction initiatives could be implemented to offset that cost growth. The Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics generally adopted the team's recommendations to change certain aspects of the program as well as a plan to define and implement cost reduction initiatives. F-22 production costs were also discussed in the National Defense Authorization Act for Fiscal Year 1998 (P.L. 105-85, Nov. 18, 1997). That act limited the total cost of F-22 production but did not specify the total number of aircraft to be procured. The most recent production costs estimates were completed by the Air Force and the Office of the Secretary of Defense in late 1999. The Air Force's estimate of $40.8 billion and the Office of the Secretary's estimate of $48.6 billion both considered the potential impact of cost reduction initiatives known as production cost reduction plans. The airframe and engine contractors had identified about 1,240 of these plans-totaling $21 billion-in participation with the Air Force's F-22 program office. The Under Secretary of Defense for Acquisition, Technology, and Logistics reviews the status of the F-22 program quarterly, including its cost and affordability.