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i
THE JOINT STRIKE FIGHTER (JSF) AS A MODEL DEFENSE ACQUISITION
PROGRAM? CONTESTING VALUES AND POLICY
A Thesis Submitted to the Faculty of
The School of Continuing Studies and of
The Graduate School of Arts and Sciences In partial fulfillment of the requirements for the
degree of Masters of Arts
in Liberal Studies
By Robert A. Wilkerson B.S.
Georgetown University Washington, D.C. January 25, 2010
ii
THE JOINT STRIKE FIGHTER (JSF) AS A MODEL DEFENSE ACQUISITION PROGRAM? CONTESTING VALUES AND POLICY
Robert A. Wilkerson B.S.
Mentor: Joseph P. Smaldone Ph.D.
ABSTRACT
The Joint Strike Fighter, or JSF, is a fighter jet airplane being developed for the
US Navy, Air Force and Marines in cooperation with eight partner countries. This
acquisition strategy is unique. There is no other example of a US major prime
contractor co-developing and co-producing a US combat aircraft with foreign
countries. The program is based on a complex arrangement of stakeholders with
sometimes clashing priorities. The current Department of Defense international
acquisition strategy considers international armament cooperative programs to be the
future of weapons systems acquisition strategies. This type of strategy poses some
very significant security and ethical challenges for the US. Consequently, the
consideration of the JSF program is an excellent way to evaluate the US security and
ethical challenges associated with an international acquisition strategy. This paper
seeks to analyze the JSF program and how it affects US and partner security, political
and economic interests and the possible ways to improve the JSF program. These
issues are relevant because future US weapons acquisition programs will be directly
affected by the success or failure of the JSF program. The potential benefits of this
program could improve future US acquisition programs if it can successfully overcome
iii
the program’s potential negative consequences. Conversely, serious unresolved
problems could severely impact the JSF program, the national security of the US and
its partners, future defense cooperation, and alliance relationships. The paper will
identify barriers that are caused by US policy/law and JSF program acquisition
strategy. The paper will conclude with recommendations intended to improve the JSF
program and future international armament programs.
iv
CONTENTS
ABSTRACT ii LIST OF ILLUSTRATIONS v LIST OF TABLES vi LIST of ABBREVIATIONS vii GLOSSARY ix CHAPTER 1. INTRODUCTION 1 CHAPTER 2. THE STRUCTURE OF JOINT STRIKE FIGHTER
PROGRAM 4 CHAPTER 3. DEFINITION AND DISCUSSION OF JSF
PROGRAM BENEFITS 17 CHAPTER 4. DEFINITION AND DISCUSSION OF JSF PROGRAM CHALLENGES 42 CHAPTER 5. LEVERAGING JSF ADVANTAGES WHILE
MINIMIZING CHALLENGES 68 ENDNOTES 99 BIBLIOGRAPHY 113
v
LIST OF ILLUSTRATIONS
Fig. 1, JSF Program Schedule 7
Fig. 2, JSF Participant Acquisition Plan 7
Fig. 3, JSF Family of Aircraft 9
Fig. 4, Structure of JSF Program 11
Fig. 5, JSF Management Structure 13
Fig. 6, JSF Designed for Interoperability 25
Fig. 7, National Defense Spending as a Percentage of GDP from 1962-2007 27
Fig. 8, Global Production System 34
Fig. 9, Countries that fly the F-16 47
Fig. 10, Countries that fly the F-18 47
Fig. 11, JSF Key Performance 64
Fig. 12, DSB Recommendations to Increase IACP Opportunities for Success 90
vi
LIST OF TABLES
1. Summary of international participation xi
2. Industrial Participation or Work Share 14
3. Estimated Allocation of Shared Production
and Non-recurring costs 56
4. Changes in JSF Program Cost, Quantity, and Delivery Estimates 71
5. Estimated Cost and Schedule for
System Development and Demonstration (SDD) 72 6. Projected Procurement Funding required
for FY2010-2015 73
vii
LIST OF ABBREVIATIONS AECA Arms Export Control Act
ASTOVL Advanced short-takeoff and vertical landing
BUR Bottom-Up Review
C4ISR Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance
CAIG Cost Analysis Improvement Group
CDP Concept demonstration phase
CLS Contractor logistics support
CTOL Conventional takeoff and landing
CV Carrier variant
DARA Defense Aviation Repair Agency
DARPA Defense Advanced Research Projects Agency
DoD Department of Defense
DSCA Defense Security Cooperation Agency
DSB Defense Science Board
DTI Department of Trade and Industry
DTSI Defense Trade Security Initiative
ECA Enhanced Capital Allowance
ECS Environmental Control System
FoD Follow-on Development
JAST Joint Advanced Strike-Fighter Technology
viii
SDD System Development and Demonstration
STOVL Short Takeoff and Vertical Landing
LRIP Low Rate Initial Production
PAUC Program Acquisition Unit Cost
APUC Average Procurement Unit Cost
OUSD AT&L Office of the Secretary of Defense (Acquisition, Technology & Logistics)
PSFD MOU Production Sustainment and Follow-on Development Memorandum of
Understanding FACO Final Assembly and Check-out
ix
GLOSSARY
Autonomic Logistics (AL) An integrated, knowledge-based system that encompasses JSF maintenance planning, manpower and personnel, supply support, support equipment, training, technical data, computer resource support, facilities, packaging, handling, storage and transportation, prognostics and health management, and design interface while coordinating with mission planning, engineering, safety, command and control functions, within a respective logistics infrastructure to support mission execution. Autonomic Logistics Global Sustainment (ALGS) The worldwide cooperative sustainment system for the JSF Air System consisting of a predominantly shared common logistics enterprise tailored to the Participants' needs. It consists of both Government and industry sustainment efforts, including interfaces, as determined by the Participants, between ALGS and Participants' national support capabilities outside of ALGS.
Best Value Maximizing affordability consistent with broader Project objectives Classified Information Official Information that requires protection in the interests of national security and is so designated by the application of a security classification marking. This Information may be in oral, visual, magnetic, or documentary form or in the form of equipment, material or technology. Composite Share Ratio A formula used to calculate the Participants' proportionate share of the costs under this MOU, based on the Participants' estimated JSF Air Vehicle procurement quantities. Contract Any mutually binding legal relationship under national laws that obligates a Contractor to furnish supplies or services, and obligates one or more of the Participants to pay for them. Intellectual Property In accordance with the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights of April 15, 1994, all copyright and related rights, all rights in relation to inventions (including Patent rights), all rights in registered and unregistered trademarks (including service marks), registered and unregistered designs, undisclosed Information (including trade secrets and know-how), layout designs of integrated circuits, and geographical indications, and any other rights resulting from creative activity in the industrial, scientific, literary, and artistic fields.
x
International Armament Cooperative Programs Cooperative programs can be defined as an agreement between two or more countries that share in development and production costs. JSF Cooperative Project Personnel (CPP) Military members or civilian employees of a Participant assigned to the facilities of another Participant who perform managerial, engineering, technical, administrative, contracting, logistics, financial, planning or other functions in furtherance to the Project. JSF Production Sustainment and Follow-on Development (JSF PSFD) The portion of the JSF Program that will produce, sustain, and provide follow-on development for the JSF Air System. Operational Requirements Document (ORD) The document originally developed during the JSF concept demonstrations phase and subsequently modified during the JSF system development and demonstration phase that defines the overall JSF Air System level operational requirements. Participant One of the original 8 countries (United Kingdom, Australia, Canada, Denmark, Netherlands, Norway, Italy, Turkey) which has agreed to purchase JSF and has signed the PSFD MOU. Partially Common Common to more that one but less that all Participants. Level I Partners (collaborative development partners) have significant access to most aspects of the program as well as the ability to influence requirements and the design solutions. The UK is the only nation in this category. The total UK funding contribution makes up about 10 percent of the SDD budget. The UK has 10 staff members fully integrated in the program office. The development nonrecurring recoupment charges are waived for the UK, and they will receive a share of the levies on sales to third parties. (The purpose of these levies is a partial distribution of the development costs to those nations who did not contribute towards the cost of JSF SDD.)
Level II Partners (associate partners) have limited access to the core program and technologies. Italy and the Netherlands are in this category. Their funding contribution is about 5 percent of the SDD budget each. They will receive a proportional share of levies on sales to third parties. These partners are allowed to have three to five staff members integrated into the program office.
xi
Level III Partners (informed partners) are provided enough information to evaluate the utility of the JSF family for their specific needs. Australia, Canada, Denmark, Norway, and Turkey fall in this category. Their funding contribution ranges from 1 to 2 percent of the SDD phase. They will receive a proportional share of levies on sales to third parties. The office representation is limited to one national deputy. Level III partnership opportunities officially closed on July 15, 2002. Security Cooperation Participation (SCP) will be based on a letter of offer and acceptance (LOA) with individual countries. This involvement will be valued at approximately $50 million of tasks for each participating country. The JSF program will provide individual countries enough information to evaluate the JSF family of aircraft as potential FMS purchases to meet their security needs. Singapore and Israel are in this category. Third Party A government other than the Government of a Participant and any person or other entity whose government is not the government of a Participant. Table 1. Summary of international participation JSF International Participation International
Level of
Type of
Date of
Participant Partnership Agreement Agreement Investment United Kingdom Italy
I II
MOU/PSFD MOU/PSFD
2002/2006 2002/2007
$2.06 billion $1.03 billion
Netherlands II MOU/PSFD 2002/2006 $800 million Turkey III MOU/PSFD 2002/2007 $175 million Canada Australia
III III
MOU/PSFD MOU/PSFD
2002/2006 2002/2006
$150 million $150 million
Denmark Norway Singapore Israel
III III SCP SCP
MOU/PSFD MOU/PSFD FMS/LOA FMS/LOA
2002/2007 2002/2007
2003 2003
$250 million ~$50 million tens of mil.
1
CHAPTER 1
INTRODUCTION
Long-standing alliance relationships will continue to underpin unified efforts to address 21st century security challenges. These established relationships continue to evolve, ensuring their relevance even as new challenges emerge. Wherever possible, the United States works with or through others: enabling allied and partner capabilities, building their capacity and developing mechanisms to share the risks and responsibilities of today’s complex challenges.
Quadrennial Defense Review, February 6, 2006
The JSF acquisition strategy is unique. There is no other example of a US
major prime contractor co-developing and co-producing a US combat aircraft with
foreign countries. The current international acquisition strategy considers international
armament cooperative programs to be the future of weapons systems acquisition
strategies. This type of strategy poses some very significant security and ethical
challenges for the US.
In order to debate these issues in a complex international environment it is
important to look at the issues through the lens of the stakeholders, specifically their
interests, responsibilities and risks. The three primary stakeholders are the United
States government, partner countries and Lockheed Martin. Each stakeholder has sub-
stakeholders with sometimes differing concerns, such as the US military services and
US Congress. Benefits and liabilities are not evenly distributed among stakeholders
and at times cause stakeholders to have conflicting views, goals and strategies.
2
This thesis will evaluate the JSF program by first outlining the structure of the
program to include historical development, technical aspects, and international partner
participation and delivery timelines. The JSF program is the largest acquisition
program in history at $300 billion. It is a multi-role strike-fighter being designed to
meet the requirements of the US Air Force, Navy, and Marine Corps, along with eight
other partner countries. It is using the latest stealth, software and manufacturing
technologies in order to develop an affordable, survivable and lethal aircraft.
The advantages of the JSF program will then be discussed. The US DoD
believes that collaborative international programs have the potential to generate
economic, industrial, geopolitical and military benefits. The JSF program structure
benefits the US, partners and industry at differing degrees and levels. A full
understanding of all potential benefits and their effects on participants needs to be
understood so that benefits can next be balanced against potential problems.
The next chapter will discus the challenges associated with the JSF program.
The JSF program is a complex arrangement of stakeholders with sometimes clashing
priorities. Expected military, economic, industrial and political benefits come with a
number of challenges and conflicting expectations. Partner countries expect a level of
industry participation and technology transfer that will bring financial and operational
benefits. The current strategy to determine industrial participation, “best value” and
current US disclosure policy may conflict with partner expectations. Also, current
program cost growth and the reduction of US aircraft purchases have increased the cost
3
of the aircraft, potentially making it unaffordable for some partners. The expanded
sale of JSF to additional countries may also strain political relationships and challenge
the current financial agreements between the US and partner countries.
The final chapter, taking into account both benefits and challenges, will outline
some recommendations for improving the current program. These recommendations
will not be all-encompassing but will attempt to outline some basic managerial and
structural changes. If adopted, these recommendations could benefit all stakeholders by
stabilizing cost and reducing bureaucratic inefficiencies, while still ensuring a fair and
open process that protects US political and security interests.
These issues need to be addressed because future US weapons acquisition
programs will be directly affected by the success or failure of the JSF program. The
potential benefits of this program could improve future US acquisition programs if it
can successfully overcome the potential negative consequences of the JSF program.
Conversely, serious unresolved problems could have severe adverse impacts on the
JSF program, the national security of the US and its partners, future defense
cooperation, and alliance relationships.
4
CHAPTER 2
THE STRUCTURE OF JOINT STRIKE FIGHTER PROGRAM
It is expected that the number of European nations operating and supporting the JSF will ultimately exceed the number of those operating the Eurofighter. I believe that this offers the best prospect for intensive cooperation in the short and the medium term.
Lt Gen Dirks Starink Commander-in-Chief Royal Netherlands Air Force January 2005
Historical Development
In 1993, the Clinton administration initiated a study called the Bottom Up Review
(BUR) to recommend a balanced US national military strategy and future force
structure. This study was meant to take into account the changing national security
environment created by the end of the Cold War.1 At the time, the current service plan
was to develop the following tactical aircraft:
1. The F-18E/F to replace the aging the USN F-18A-C models
2. The F-22 to replace the USAF F-15
3. The Multi-Role Fighter to replace the USAF F-16
4. Advanced Fighter Aircraft for the USN
At the same time the US Marine Corps was conducting a study on advanced short take-
off and vertical landing aircraft with the Defense Advanced Research Project Agency
(DARPA), a DoD agency responsible for the development of new technology. The
BUR determined that all four programs could not be supported within the future DoD
budget. Subsequently, the DoD cancelled the Multi-Role Fighter and the Advanced
Fighter Aircraft. However, recognizing that a future capability gap still existed, the
5
Secretary of Defense directed the establishment of the Joint Advanced Strike Fighter
Technology (JAST) program in July, 1993, incorporating the Multi-role Fighter and
Advanced Fighter programs.2 Congress later directed the USMC’s study to also be
merged into the JAST program.3 The JAST program would be renamed the JSF
program and would support the future fighter need for all three US Services.
Following establishment of the JAST Program, the Undersecretary of Defense
for Acquisition and Technology (OUSD AT&L) requested that the Defense Science
Board review the JAST program. The Defense Science Board (DSB) is a committee of
civilian experts appointed to advise the DoD on scientific and technical matters. The
DSB review would specifically look at the JAST program to determine the benefits and
disadvantages of international cooperation, and if international participation would
reduce the overall cost to the US. The study concluded that the JAST fighter should be
developed with the foreign market in mind, but should not adopt an international
cooperation model for development and production. The DSB felt that foreign
participation in co-development would complicate the program reducing the
probability of success.4 The board noted that co-development programs usually
produced “mixed results” and “expense and bad feelings” and worked only at a much
higher cost.5 However, the DoD decided to disregard the Defense Science Board
review and opted for international participation in the design development and testing
of the JSF. The reason for this decision will be discussed in Chapter 3. This is
supported by the Regulation for Defense Acquisition Systems DoDI 5000.02 which,
6
currently states all programs should consider international cooperation before any US
joint or service specific solution.6
The UK had been a full collaborative partner in the program since 1995 and in
October, 2001, the US and UK participated in the Concept Development phase of the
JSF program. During the Concept and Development phase the US and UK selected
Lockheed Martin over Boeing as the primary contractor responsible for producing the
JSF. In 2002, the program entered the $40B System Development and Demonstration
(SDD) phase.7 And during 2002-2004, six other NATO countries, Denmark, Norway,
the Netherlands, Italy, Canada, and Turkey, joined the partnership. During this time,
Australia, which is an ANZUS treaty country, not a NATO country, also joined the
program.
The JSF program, with procurement projected through 2034, is the largest
acquisition program in DoD history.8 System Development and Demonstration (SDD)
and acquisition are estimated to total $300B for the US DoD. According to the
Government Accountability Office, “Because of the program’s sheer size and the
numbers of aircraft it will replace, the JSF is the linchpin of DoD’s long-term plan to
modernize tactical air forces.”9 The DoD currently views the JSF program as a model
for 21st century acquisition that promises a joint solution for all three US services, as
well as international participants.
CY 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
FY 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
System Development
and Demonstration
(SDD)
Low-Rate Initial Production
(LRIP)
2015
20152014
USMC USAF USN
USN
USAF
AA-1 (15 Dec) USMC
LRIP 1 (2)LRIP 2 (12)
LRIP 3 (17)
Multiyear 1
Initial Operational Capability
Planned U.S. Production• Air Force 1,763 A/C• Dept of Navy 680 A/CPlanned International Production > 800
First Flights
BF-1 (11 Jun)
LRIP 5 (47)LRIP 4 (32)
LRIP 6 (114)LRIP 7 (126)
LRIP 8 (198)
DISTRIBUTION STATEMENT A: Approved for public release; distribution is unlimited
Program Schedule – March 2009
Figure 1. JSF Program Schedule10
28DISTRIBUTION STATEMENT A. Approved for public release; distribution is unlimited.
20102010 20112011 20122012 20132013 20142014 20152015 20162016 20172017 20182018 20192019 20202020CYCY
UKUK
The NetherlandsThe Netherlands
CanadaCanada
DenmarkDenmark
NorwayNorway
TurkeyTurkey
ItalyItaly
AustraliaAustralia
USMCUSMC
USAFUSAFUSNUSN
U.S. PACAF USAFE
STOVLSTOVLCTOLCTOL
IsraelIsrael
Singapore
Japan
South Korea
First Aircraft InFirst Aircraft In--CountryCountry
Initial Operating CapabilityInitial Operating Capability
First Training AircraftFirst Training Aircraft
FMS
Partners
US
FF--35 Participant Acquisition Plan35 Participant Acquisition Plan
Figure 2. JSF Participant Acquisition Plan11
7
8
The Technical Aspects of the JSF
The JSF, recently re-named the F-35 Lightning II, is a single-seat aircraft
designed to rapidly transition between air-to-air and air-to-ground missions. To
achieve its mission, the JSF will incorporate the latest low-observable technologies,
advanced sensor fusion, internal and external weapons, defense avionics, and advanced
prognostic maintenance capability.12 It is a 5th generation aircraft, which means it
combines stealth technology with advanced radar design, and super-sonic aircraft
performance. It is unique because it is the first and only aircraft to combine stealth
with weapons systems “fusion.” Fusion allows all the sensors on the aircraft to
correlate and exchange data, and then make recommendations to the pilot or directly
provide inputs to improve mission effectiveness.
The program will produce three JSF variants to replace four US military
aircraft (F-16, A-10, F/A-18A-D, and AV-8B). Additionally, the international partners
will use the JSF to replace eight different types of their own aircraft. For the US, the
three variants are: the Air Force Conventional Take Off and Landing (CTOL), the
Navy Carrier Variant (CV) and the USMC Short Take off and Vertical landing
(STOVL). Each variant is designed with a high degree of commonality, which helps
reduce the cost of non-recurring engineering, production tooling, and follow-on
logistics and sustainment. See Figure 2 “JSF Family of Aircraft.”
Figure 3. JSF Family of Aircraft13
Lockheed Martin is the prime contractor but has extensive partnerships with
Northrop Grumman (NG) and British Aerospace (BAe). The engine for the JSF will
initially be the F135 engine developed by Pratt & Whitney. The GE/Rolls Royce F136
engine will be an alternate engine for later aircraft. The F136 engine is executing its
planned development schedule which was designed to be 4 years behind the
development of the F135 engine.
9
10
nternational Partnership Structure
ilitary Aerospace Collaboration, “Partnerships
are a re
F is the
l
re part
n
o
I
According to the International M
lationship in which two or more nations attempt to engage in what they
perceive as mutually beneficial activity through actions and policies.” 14 The JS
DoD’s largest cooperative program, past and present. Its acquisition strategy is a
complex relationship between governments and industries of the eight internationa
partners. See Figure 4 “Outline of US and international partner relationship.”
International partners are providing about $4.8B total for SDD. Foreign firms a
of the industrial base and will produce sub-assemblies. Italy has signed an agreement
to perform final aircraft assembly starting in 2014. In February 2009, the Italian
government signed an understanding for the production, sustainment and follow-o
development (PSFD) phase of the JSF program which established a US government
approved final assembly and check-out (FACO) facility in Italy. Italy will be trying t
capitalize on its F-35 investments by expanding its industrial participation.15
Figure 4. Structure of JSF Program16
The JSF international partnership is structured through a series of
Memorandum of Understandings (MOUs) that have been established between the US
and each of the current eight individual participates. Individual country-specific
MOUs fall under a JSF Framework MOU, which has been signed by all participating
countries, including the US. The current MOUs break the program up into two phases,
SDD (System Development and Demonstration) and post-SDD. Post-SDD is also
referred to as Follow-On Development (FOD) or Post Sustainment and Follow-on
Development (PSFD).
11
12
In addition to the eight partner countries, there are also countries which may
decide to purchase the JSF but have not chosen to participate in the SDD phase.
However, currently no agreement has been established between these future Foreign
Military Sales (FMS) countries, and the US or its eight current partner nations.
SDD Phase Decisions
The MOUs have assigned each partner a tier level, tier I, tier II, or tier III,
based on their level of financial commitment to the JSF SDD program. A tier I country
would have the largest financial commitment would receive more benefits. For
example, the UK is a tier I partner and will be the first to pick its delivery schedule.
Lower tiers reflect a lower financial commitment, resulting in a less preferential
delivery schedule. Additionally, tiers define the level of insight into the design and
development process. For example, the UK is allowed 30 cooperative program
personnel during the SDD phase. These cooperative program personnel work directly
with US personnel and are imbedded across the program. They are allowed access to
information based on the current US National Disclosure Policy. However Italy,
which is a tier II partner, is only allowed 10 representatives and has relatively less
influence on the capabilities developed during SDD.
FOD Phase Decisions
For the FOD or Post-SDD phase, MOUs have assigned each partner a number
of votes based on the number of aircraft they plan to purchase. See Table 1, “Industrial
Participation or Work Share.” Participants will then cast their votes in support of their
desired follow-on capabilities in the Operational Advisor Group. See Figure 4, “JSF
Management Structure.” The follow-on capabilities receiving the highest number of
votes will be developed before others. FOD initial voting has taken place, but actual
contracting for follow-on development will not begin until fiscal year 2011. For
example, because the UK plans to purchase more aircraft than other partners it will
receive more votes than the other participating countries.
JSF Program Executive
OfficerAutonomic Logistics
Advisory Council
SustainmentProductionFollow-On
Development
JSF PSFD Functional Areas
Legend Executive Body
Advisory Body Interoperability
Advisory Council
Operational Advisory Group
JSF Executive Steering
Board (JESB)
Senior War Fighters Group
Requirements
Working Group
Figure 5. JSF Management Structure17
13
The US representatives on the JSF Executive Steering Board (JESB) have decided to
evenly split their number of votes between the Department of the Air Force and the
Department of the Navy (USN and USMC), giving each department approximately
700 votes. This means that under the current agreement the US will have the
significant say on FOD, making it virtually impossible for a partner country to have a
specific capability developed that is not supported by the US. Also, a plan does not
currently exist to incorporate FMS countries into the FOD decision process. How
FMS countries will be incorporated is a problem that will need to be solved.
Table 2. Industrial Participation or Work Share18
Partner Country
Partner Level
Financial contributio(in million
UK Level I $2,056 Italy Level II $1,028 Netherlands Level II $800 Turkey Level III $175 Australia Level III $144 Norway Level III $122 Denmark Level III $110 Canada Level III $100 Total Partner $4,535 USA $28,565
Industrial Participation or Work Shar
While the tiers and number of air
they do not determine the level of indust
SDD
n s)
Percentage of total costs
Projectquantit
6.2 150 3.1 131 2.4 85 .5 100 .4 100 .4 48 .3 48 .3 60 13.7 722 86.3 2,443
e
craft define the relationship
rial participation. Industria14
Production
ed iesPercentage of total quantities 4.7 4.1 2.7 3.2 3.2 1.5 1.5 1.9 22.8 77.2
in SDD and FOD,
l participation is
15
when a country’s local industries produce or manufacture parts of the JSF. Industrial
participation or work share is defined as the percentage of industrial participation each
partner secures based on “best value.” All sub-contractor industries, regardless of
country, must compete on this best value basis, which is a combination of performance
and price.
The JSF’s work share determination is revolutionary as there is no
predetermined work share for each partner country. The plan is to look worldwide to
find companies with specialized expertise to help keep costs down, providing the “best
value.”19 The three US prime contractors, Lockheed Martin, Northrop Grumman, and
Pratt & Whitney, have been tasked under the terms of their contracts to ensure that no
nation will be favored based on their financial contribution and that US and foreign
subcontractors will compete equally. This approach has it benefits and liabilities,
which will be addressed later.
By contrast, the European Fighter Program based work share directly to the
planned purchase of aircraft. For example, the UK was planning to purchase 20
percent of the production run so the UK received 20 percent of the work share.
Even with this approach all nine JSF countries currently have local companies
on contract which will allow them to more than recoup their initial investment. This
does not take into account future opportunities for additional subcontracts in the
production and sustainment phase of the program.20 For example, the UK will
manufacture the aft fuselage and horizontal stabilizers while Italy will build 50% of all
16
wings. Work share is one of the major advantages to the partners and has been critical
to their participation. All eight nations have cumulatively contributed $4.5B toward
SDD, and have negotiated in their MOU an opportunity to compete for work share.
Each nation is a stakeholder in the program and their level of satisfaction will be
determined not only by the performance of the aircraft but also by their level of
industrial participation. Identifying and addressing stakeholder interests are critical to
successful international programs, and JSF is no exception.21
17
CHAPTER 3
Definition and Discussion of JSF Program Benefits
The Joint Strike Fighter program represents for Italy, the United States and the other participants to this project, a significant step forward in the way of modernizing our air capability.
Admiral Giampaola Di Paola, Italian Secretary General of Defense and National Armaments Director
Background on JSF International Participation
As mentioned in Chapter 2, in 1994 the Undersecretary of Defense for
Acquisition and Technology requested that the DSB review the JSF, which at the time
was called the Joint Advanced Strike Technology (JAST) program. The DSB was
asked to look specifically at the benefits and disadvantages of international
cooperation, and if international participation would reduce the overall cost to the US.
The DSB study stated that foreign participation should be measured by realistic
expectations of “value added” and focused on “market exploitation.”1 It also noted
that versions of the JSF needed to be developed with capabilities and technologies that
could be adjusted for exportability. The study said that the JSF/JAST fighter should be
developed with the foreign market in mind, but should not adopt an international
cooperation model for development and production. It noted that co-development
programs usually produced “mixed results” and “expense and bad feelings” and
worked only at a much higher cost.2 The recommendation was that the JSF program
should follow the example of the F-5 and F-16, which were designed with the foreign
18
market in mind but were not co-developed. The DSB noted that the key to success was
designing an aircraft with the foreign market in mind and with a level of technology
that could be exported. The DSB concluded that, “foreign participation in co-
development of next-generation strike fighters, other than limited participation for
special reasons, would complicate the program to the point of reducing the probability
of success.”3
However, just two years later in 1996, the DSB conducted another study,
entitled “Report of the Defense Science Board Task Force on International Armaments
Cooperation.” This task force came to a completely different conclusion. The 1996
study concluded that “DoD should view collaborative international programs, first and
foremost, as an important means to attaining US geopolitical and military objectives.”4
The task force believed that collaborative programs had the potential to generate
economic, industrial, geopolitical and military benefits. These conclusions were based
on the fact that high-technology commercial industries have increasingly relied on
collaborative efforts with significant “payoffs.”5 They also noted that in a period of
constrained resources, a collaborative effort would be an attractive policy option. The
task force reported that a nation develops a majority of its own military equipment to
satisfy its unique requirements and that there would be a limited number of
opportunities for common armaments development. However, these limited
opportunities according to the task force must be “exploited.” In accordance with the
19
findings of the 1996 DSB study, the JSF program is currently trying to “exploit” these
opportunities.6
Benefits to the US and Partner Nations
The 2002 US National Security Strategy states that US security is dependent on
the cooperation of our allies, noting that, “there is little of lasting consequence that the
United States can accomplish in the world without the sustained cooperation of its
allies and friends in Canada and Europe.”7 The 2002 US National Security Strategy
goes on to say that international organizations and treaties like the North Atlantic
Treaty Organization (NATO) and the EU have facilitated improved security and helped
open world trade. Improved US security can be facilitated by US trade and investment
with our military allies.8 US security can be improved by the following objectives:
1. Ensuring that military allies have appropriate assets so that they can make combat contributions in coalition warfare
2. Exploiting all technological opportunities and economies of scale in US
defense spending to transform the military of the US and its allies so that we can dominate potential aggressors and diminish vulnerabilities
3. Increasing flexibility of command structures, streamlining training and
integration of forces in order to improve military effectiveness 4. Maintaining the ability to train, and fight together as allies as we modernize
our forces9
The National Defense Strategy is also in agreement that we must work with our
coalition partners to increase their capabilities in order to attain our strategic
objectives.10 The US hopes to achieve both tangible and intangible benefits from
20
partner participation. Tangible benefits come from sharing in the developmental costs
and from the reduction in the US price per unit facilitated by increased procurement.
Some of the intangible benefits will be increased interoperability and economic
integration. Benefits can be enjoyed in different areas with some parties seeing
political gains, while others benefit economically or operationally.11 For example,
international participation may not be the most cost-effective way for the US to
develop the JSF, but may pay dividends in foreign relations, regional stability,
operational effectiveness, and also help energize the US industrial base.12 A
comprehensive view of the benefits, taking all stakeholders into account, must
obviously be deliberated. This chapter will look at the advantages in five major areas:
military/operational, economic, industrial technological, and political. These
advantages will be viewed from the perspective of the three major stakeholders: the
United States government, partner countries, and Lockheed Martin.
Military and Operational Benefits
The US Secretary of Defense has made it a priority to strengthen and expand
alliances and partnerships. According to the current US National Defense Strategy, the
US must work with friends and allies to improve their capabilities across the “full
spectrum of warfare.”13 The “spectrum of warfare” ranges from low intensity conflicts
like counter insurgency operations to high-end conventional and nuclear operations.
The capacities of US partners vary across mission areas, and high-end conventional
operations are one of the most challenging for US partners. The US has consistently
21
fought high-end conventional operations with some level of partner participation since
the 1991 Gulf War. However, it was noted during the Gulf War that there was a
growing capabilities gap between the US and its allies.14
The US forged an impressive coalition during the Gulf War to help evict
Saddam Hussein form Kuwait. However, when it came time to incorporate coalition
countries’ capabilities into meaningful tasks, the US found that only the UK and a
limited number of NATO countries could fill critical missions. None of the coalition
countries were able to drop precision-guided munitions and none were capable of deep
strike, due to a lack of stealth. Coalition countries could not perform the mission of
suppression of enemy air defenses (SEAD), and only a few could perform adequate
offensive counter air (OCA) missions. Capability was lacking, but interoperability and
training was also lacking.15
Things had not improved much by the end of the decade. During operations
over Bosnia in 1999, which consisted almost entirely of air operations, four of the 19
NATO nations did not even participate because they lacked relevant capabilities.16
The US delivered 80% of the ordnance, and provided almost all the electronic warfare,
and provided all weather precision-guided munitions, aerial refueling, airborne
command and control and SEAD.17
The US has found it difficult to increase the capabilities of partner countries
because of finances and because of limitations on technology and capability transfer.
The cost of relevant weapon systems that can operate in high-end conventional
22
operations and also across the full spectrum of conflict has increased significantly. It is
not unusual for a single program to cost over $40 billion. The Government
Accountability Office (GAO) estimates the F-22 program will cost over $70 billion
and the JSF will cost over $300 billion.18 To counteract this high cost, the JSF
program will try and reduce expenses by increased partner procurement and partner
funding during development. The specific benefits of the JSF program on cost
reduction will be addressed later in this chapter. The JSF program office is working
closely with OSD to evaluate the dangers of exporting critical technology compared
against the benefits of exporting technology to improve partner capabilities. The
specific benefits and difficulties associated with technology transfer will be addressed
later. However, the desire of the US Combatant Commanders is to give their coalition
partners most of the capabilities associated with the JSF in order to avoid the
capabilities gap seen in the Gulf war, and later in Bosnia and Kosovo. The greatest
concern of the commanders was that partner countries would have systems that were
interoperable, sustainable, and had personnel adequately trained.19 The Combatant
Commanders each thought F-35 could provide the solution to partner capability,
sustainability, and personnel training.
The JSF will provide partner countries with significant military capabilities in
support of high-end conventional military operations. The JSF aircraft is designed to be
both lethal and survivable. It will give partner countries the same capabilities as the
US, allowing them to conduct the same missions as US forces.
23
The JSF will also facilitate seamless interoperability between US and JSF
partner countries by increasing the sustainability of partner aircraft and providing
partner pilot training equal to US pilot training. When a country purchases an F-35, it
is not just getting the aircraft, but also a complete pilot and maintenance training
system, logistical support system, and operational maintenance system on a par with
those of the US. This is beneficial to the US and its partners because it will allow for
closer military-to-military training and tactics, which will increase military
effectiveness in the event of actual joint combat. Improved joint military effectiveness
will be facilitated by the ability to train and fight together in the same aircraft, using
the same tactics and procedures. This will strengthen both the US and partner forces
when called upon.
This increased military capability will give partner countries an advantage over
neighboring countries that may be hostile to the US and its JSF partners. Having the
latest 5th generation fighter technology would allow partner countries to play a more
significant role in their own defense, possibly reducing the US military force dedicated
to their defense. These political and military benefits will be fully discussed later in
this chapter.
Partner countries and the US will also be able to sustain a higher operational
tempo because everyone will be sharing the same logistical support network. Under
the current conditions, if a US aircraft has equipment malfunctions overseas, parts and
personnel often must be transported long distances to make the necessary repairs. This
24
is expensive in man-hours, shipping and non-operational equipment time. Because
each country will be flying that same aircraft they will be able to share parts and
support equipment, thus making all countries more operationally effective and
reducing this type of expense. The US will also be able to work with partner countries
through maintenance and support training. This will facilitate even closer military to
military cooperation at all levels.
Another way to improve military effectiveness is to ensure that US and partner
countries have capabilities that are interoperable. Obviously partner JSF aircraft will
be interoperable with US JSF aircraft, but at the same time partner JSF aircraft will
also be interoperable with other US military systems. One of the key benefits of the
JSF is the instant interoperability that it provides. Interoperability is defined as
systems, forces providing and accepting data, information, material, and services to
and from other systems or forces. Effective interoperability will mean the exchange of
these items between US forces and JSF coalition partners.20
The JSF was designed with interoperability as one of its key elements and not
as an add-on requirement. The F-35 will be a Command Control and Communication
node in the sky, and will truly be a network-centric fighter going beyond a traditional
single-task capability.21 Partner countries that fly JSF will be able to receive and
contribute to the command, control and communication network. The JSF will be able
to contribute information from its impressive array of sensors like its Multi-Function
Array Radar, Advances Electronic Sensor Suite, an Electro-Optical Tracking Sensor,
and a Distributed Aperture System consisting of multiple infrared sensors. It will be
able to pass this information to a multitude of systems to include aircraft, satellites,
ground forces, and US military ships, see Figure 6 below.22
109/7/04 Docs #58950
JSF is a Key Node in the System of Systems NetworkJSF01664
Fully Interoperable LOS/BLOS Data-Paths for 2010 C4I• Link 4/ACLS, ICLS• Link 16
• LAN/WAN/Internet• UHF/VHF Voice/Data• SATCOM 2 Way Voice/Data
JSF Designed For Interoperability
DISTRIBUTION STATEMENT A. Approved for public release; distribution is unlimited.
Figure 6. JSF Designed for Interoperability23
The JSF will bring numerous military and operational benefits to both the US
and partner country’s military forces by improving military capabilities and
interoperability. These benefits will provide the US and its allies a tactical and
operational advantage during any future joint military operations, thus helping to
overcome past problems with coalition warfare.
25
26
Economic Benefits
As mentioned previously, the 1996 DSB report on “International Armaments
Cooperation” held to the premise that collaborative programs had the potential to
generate economic benefits. These benefits would come from sharing the costs of the
total development of the aircraft and from economies of scale afforded by international
cooperation. In fact, the US Department of Defense document that guides DoD
acquisition states,
Leveraging US resources through cost sharing and economies of scale afforded by international cooperative research, development, production, and logistics support programs should be fully considered when DoD components work with users to define needed capabilities as well as during the preparation of the technology development strategy and subsequent acquisition strategy.24
The US needs to take advantage of the economic benefit from collaborative programs
because the recent increase in weapons systems costs has significantly reduced the
total number of systems that the US can afford, and also the US has continued to
reduce its defense budget as a percent of total US GDP. The figure below shows
National Defense Spending as a Percentage of GDP from 1962-2007:
Figure 7. National Defense Spending as a Percentage of GDP from 1962-200725
The cost of a single program can be significant: the cost of the F-22 program is $70
billion and the JSF program is estimated at $300 billion. Also, the DoD has seen a
significant cost growth in its acquisition programs generally. The GAO studied 26
weapons programs and found that on average each program suffered from a 14.5%
increase in cost from “first estimate” to “final cost.”26 These cost increases have
resulted in a significant reduction in unit buys when compared to previous eras. For
example, in 1951 the US procured a total of 6,300 fighter aircraft for both the USAF
and USN. These 6,300 aircraft cost the US $7 billion. In 1999 the US procured only
322 aircraft, a reduction of 95%, at a total cost of $11 billion.27 An earlier example of
the P-51 aircraft highlights the advantage of economies of scale, which the US needs to
achieve. Between 1940 and 1945, the US produced over 15,000 P-51 aircraft, which
cost a mere $55,000 each, in then-year dollars. However, over the last 50 years, due to 27
28
reduced relative military spending and increased complexity, capabilities, and costs of
acquisition programs, unit buys have significantly decreased.
As unit buys decrease, the unit costs skyrocket. Lieutenant Colonel Stephen
DiDomenico gives a very good example of these skyrocketing costs when he compares
the cost of the three latest USAF aircraft, the B-1, B-2 and F-22. The USAF purchased
100 B-1s in the 1980s at the cost of more that its weight in silver. In the 1990s it
purchased only 21 B-2 aircraft at a cost more that its weight in gold, and in the 21st
century the plan is to buy 183 F-22s at four times it weight in platinum.28 Current
acquisition costs prompted Norm Augustine, former CEO of Lockheed Martin, to state
that at this rate in 2054 the DoD will only be able to afford one aircraft a year.29
Collaborative programs like the JSF will allow for the production of more aircraft, thus
reducing the total cost of each individual aircraft.
The US is trying to create economies of scale with the JSF program by
providing the same aircraft for all three US services as well as the partner countries.
The US is currently programming for 2,443 JSF aircraft, 1,763 for the USAF (CTOL)
and 680 (CV/STOVL) for the Department of the Navy including the Marine Corps.
The UK has agreed to purchase 150 STOVL, and has recently stated that it may
purchase an additional 100 CTOL. Other partner and Foreign Military Sales numbers
are estimated at over 2,000 aircraft. A production run of this magnitude would rival
the F-16, and is critical to maintaining the currently proposed Unit Recurring Fly-away
29
(URF), or average cost per unit, at $40 million for the USAF and $45-50 million for
the Navy and Marine Corps.
This relatively low cost, as compared to other aircraft, gives the JSF a
competitive advantage over other aircraft being produced. In the past two decades
there have been 26 export customers for aircraft in the $25-35 million range ( US F-16
and Harrier, French Mirage 2000, Swedish Gripen,), nine export customers in the $36-
45 million range (US F-18A-D and Russian Su-27/30), but only three export customers
in the $45 million an above range (US F-15 and British Tornado). For all aircraft,
producing more aircraft reduces the URF cost, but reduction in quantities significantly
increases production costs. The best example of this is the F-22. The USAF initially
planned to purchase 750 F-22s. That number has been reduced over time to 183,
causing the majority of the cost escalation with the F-22 program. Without a large
production buy, the JSF cost would increase, making the aircraft less affordable for the
US as well as current or future partner countries. By allowing partner countries to
purchase the JSF, the cost of each aircraft goes down for all partners, making in more
affordable for the US and all US allies.
Economic benefits from international sales also provide funding stability and
increase program management flexibility. Every year the DoD must make tough
funding choices, deciding how multiple acquisition programs will share a limited
amount of money. Programs that are not speeding their budget or cancelled will be
used to provide funding for more relevant and important programs. However, these
30
programs rarely provide all the money needed to cover the shortfalls. The OSD
comptroller usually solves this problem by spreading budget cuts across all DoD
programs. Unfortunately, cutting money from programs results in increased program
acquisition costs. A good example of this was the slip in F-15 fighter production. Due
to budget constraints, the USAF was forced to reduce F-15 production during the peak
of the production period. The total number of planned procurement remained constant
at 729, but the slip produced increased the cost of F-15s in the out-years by $2B. This
reduction in near year procurement below the optimum production numbers will
always increase the total cost of a program. In this example, the cost was an additional
$2B for the USAF for the same total number of aircraft. This also means that
theoretically there was $2B less for future USAF programs. This is a problem that
occurs in all programs that are not protected or “fenced” from budget cuts.30
While the JSF program is not “fenced” every year from budget cuts, it has been
protected. According to Rear Admiral Steven Eneworld, the past JSF Program
Manager, “people have a tendency not to tinker (re: cut budget) with us as much
because of the implications on the international side.”31 Budget cuts to the JSF
program that reduce the number of aircraft procured in any year will increase the
average price per aircraft. When the price of an aircraft goes up partner countries may
slide their procurement, or even pull out of the program. The effect of either one of
these actions would cause a further increase in the price of each aircraft, thus causing a
31
chain reaction of price increases. If the US does not stabilize program funding costs
may spiraling out of control, making the JSF program unaffordable.
Besides providing funding stability, international funding also provides the
program manager with more financial flexibility. The fact that international partner
contributions cannot be taken by the DoD or Congressional action makes the JSF
program more stable. International funds can be used by the program manager to fill
immediate shortfalls that occur outside the normal US DoD budget cycle. This
financial flexibility allows the program manager to apply international funds in a
timely manner, reducing future costs.32
Another economic benefit would come from the increased economic integration
of the countries. Partner countries will be able to participate in follow-on support
activities that would produce revenues for each country. In fact, the revenues projected
for the current partner countries range from about $4 billion to $40 billion, depending
on the country.33 And, according to a Department of Defense study, “JSF partner
countries will potentially earn approximately $5 to $40 of revenue in return for every
$1.00 invested into the program.”34
Industrial Benefits
International acquisition programs not only bring budgetary benefits to the US
and partner countries but they also bring economic benefits by strengthening and
building the industrial base for all participating countries. Since the end of the cold
war, the US has reduced its defense budget as a percent of US GNP35, industries have
32
merged, and collaborations between aircraft manufactures have become increasingly
more important. In 1985, US defense-related production accounted for 3.7 million
jobs. But by 1995, the US saw a 35% reduction in these jobs. In 1993, there were 20
US companies doing major defense work, but by the 21st century, this total was
reduced to five. Only three companies, Boeing, Lockheed Martin, and Northrop-
Grumman, currently build aircraft for the DoD.36 In 1993, the Undersecretary of
Defense, William Perry, urged the remaining defense industry CEOs to consolidate in
anticipation of the coming defense downturn. By 2005, the top 15 defense industries
had been reduced to four.37 The consolidation was needed because it increased
efficiency and improved profit margins. If returns on investment had declined, the
defense aerospace industries could have collapsed. This collapse would not have been
in the best interest of the US, which requires a strong defense industrial base to support
its national security strategy.
The DoD has realized that the US is in a fundamentally different acquisition
environment. This new environment is defined by less spending on DoD acquisition
programs. In 1985, the DoD had multiple new programs procuring equipment in large
numbers (585 aircraft, 2,031 vehicles, and 24 ships).38 Today the number of new
acquisition programs has slowed dramatically, and procurement rates in 2005 have
been reduced (188 aircraft, 190 vehicles, and 8 ships/subs).39 The only viable solution
to this problem was to secure additional markets through international participation.
For example, international participation in the F-16 program brought an additional
33
$36.5 billion in sales and allowed the USAF to continue production.40 According to
Defense Systems Daily, “in the era of globalization, United States Defense Companies
can no longer rely on their home market any more and need to secure an increasing
share of international markets to maintain their revenues, profits and share price.”41
Other governments had already been taking advantage of the international
market long before the US. For example, Europe has been building fighters using the
partnership model for over 30 years. In fact, it is rare that a European country will
develop any weapon system on its own. Defense industries from foreign countries
have increasingly relied on sales to foreign markets, and now 65-70% of European
defense industries sales are from exports.42 Countries like France, that developed the
Rafael fighter on its own, suffered higher aircraft costs because they were unable to
purchase enough aircraft to cover their overhead and development costs. International
cooperation in the defense industry has increased as more industries have used “cross-
border” relationships to maintain competitive. The US defense industrial base can no
longer rely solely on US DoD.
The F-16 program is an excellent example of the potential benefits of the JSF
program. International sales have sustained F-16 production for over 26 years. Over
5,000 F-16 aircraft have been produced, making it one of the most successful fighter
programs in history. This would not have been possible without securing international
sales. The JSF program has the potential to duplicate this level of production by
securing international participation. International sales will increase US and partner
market share away from competitors like the French (Rafael), European Eurofighter,
and the Saab-BAe Gripen.43 In fact Norway’s Ministry of Defense announced that it
selected the F-35 over the SaaB-BAe Gripen at a planned purchase price of 48 F-35As
at $2.5 billion.44 Shortly after Norway announced its selection of the F-35 the
Netherlands also recommended procurement of the F-35 over the Gripen.45 This
increase in market share by Lockheed Martin and other partner industries will
strengthen the industrial base for all JSF participates.
The Netherlands plans to us the JSF program to build a world-class aerospace
industry. All JSF partner countries have invested in the program and are actively
participating in the design, manufacturing, and sustainment of the aircraft, see Figure
8: Global Production System.
12DISTRIBUTION STATEMENT A. Approved for public release; distribution is unlimited.
DenmarkSystematic Software Engineering
Terma
Corena
Maersk Logistics
HiQ WiseDanish Aerotech
IFAD
GPV
Bruel & Kjaer
United KingdomSmiths
Aerospace
Martin Baker
GKN
Hamble StructuresGoodrich
BAE SYSTEMS
Microfiltrex
Helmut Integrated Sys.
Beaufort
Norway
Kongsberg
Techni Metronor
ApplicaKitron
DNV
Corena
EPM TechnologyFlextronics
Hexagon
Australia
GKN
Micro LTD
Varley
BAE Australia
GPC
Goodrich ServicesProduction Parts
Hawker de HavillandMarand
Cablex
LovittFerra Engr.
Adecel
Levett
MetaltechAerostaff
Broens
Canada
Magellan-Chicopee
FTG
Ben Marine
MindreadyCyclone
Honeywell Eng SysDRS Technologies
AvcorpCMC ElectronicsHerou Devtek
Megellan-BristolDishonDY4
Howmet
ASCO
The Netherlands
DAP
PHM ConsortiumFokker - Elmo
SP Aerospace
BrookxAxxiflexFokker - AerostructuresThales NederlandsThales Cryogenics
EurocastDutch Aero
Sun Electric
AeronamicDutch Space
Turkey
Gate ElektronikMikes
Havelsan
KalekalipAyesas
TAIALP Aviation
AselsanMilsoft
Vestel
ItalyCusinetti
MecearDatamatMarconi Sirio PanelPiaggio
UmbraUoPLogic
MagnaghiSegundo Mona
Marconi SeleniaOto Meleraia
Moog - SBCAerea
GalileoYork
AleniaAermacchiSamputensilli
TNO NLR
Global Production System
Figure 8. Global Production System46
34
35
Robert Trice, Senior Vice President for Lockheed Martin also noted that
successful aerospace and defense industries must adapt to the global market place.
According to Trice, if done correctly, a multinational aerospace and defense industry
will:
1. Provide a net positive to the US economy
2. Sustain the US industrial and technology edge
3. Enhance allied political, military and industrial partnerships47
International participation benefits all stakeholders and thus strengthens alliances. The
JSF program, according to the US Department of Defense, has given foreign countries
the opportunity to contribute to the global defense industrial base by expanding the
breadth of industrial participation.48 Partner benefits include lower unit costs, and the
receipt of funds from non-partner sales. The current agreement is for each partner
country to receive funds from the sale of JSFs to non-partner countries. The partner
countries will also benefit from acquisition of the latest weapon systems without
shouldering the entire burden of development. The US government benefits because
more sales means more US jobs. The US Services benefit from lower unit costs.
Lockheed Martin will expand market share and become more efficient by leveraging
the foreign industrial base.
Technological Benefits
A common argument against international programs is that only the
technologically inferior countries benefit. This would mean that it would almost never
36
be in the best interest of the US to transfer technology to partner nations, and that
international partners and their industry will benefit far more than the US. However,
many in government and industry leadership positions do not support this argument.
The JSF program office has already received numerous technological benefits from
foreign participation. According to JSF Program Manager Admiral Eenewold, “We
find stuff that other people are doing that we haven’t thought of, you get all ideas not
just US ideas. The perception in the system is that all technology is leaving shore, but
the truth of the matter is that there is stuff coming on shore also.”49
Warren Boley, Vice President for the F100 engine at Pratt and Whitney, is also
a believer in taking advantage of the global industrial market. He noted that Pratt
received direct benefit from Japanese F100 production methods like the Toyota
moving production line process. Pratt later adopted the same Japanese production
process control and lean manufacturing techniques.50
In the last two decades other countries have narrowed the technology gap and
in some cases have caught up to the US. These countries are now producing advanced
technology that is equal to or better than what is currently designed and manufactured
in the US. Military applicable technology is becoming more dual-use in nature. While
JSF stealth technologies, where the US enjoys significant market dominance, need to
be protected, the vast majority of other technology on the JSF can be shared between
partner countries utilizing the best from each. According to Mitchel Wallerstein, the
37
US can not continue to deny technology imports and exports without “suffering
significant costs to its prosperity and national security.”51
However, it is still critical that the US protect critical technologies and has
therefore erected safeguards to prevent that from happening. These safeguards come in
the form of anti-tamper technology, regulations, non-disclosure policies, and
prohibitions in public law. The goal of these safeguards is to protect US security,
critical military advantages, and industrial base. The challenge is to strike the right
balance between protecting critical technology while still allowing the US to take
advantage of the global industrial defense market and thereby achieve its national
security objectives.
Political Benefits
The military, economic and industrial benefits of the JSF program will
strengthen alliances and enhance US international relations. Partners and the US see
the JSF program as part of a grand strategy to improve international relations. When
the US sells or co-develops a weapon system such as the JSF with an ally, it links the
countries in a long-term relationship beginning with design and production and
extending through the life of the program. In the case of the JSF, this will provide at
least a 40-year link between the US and partner countries. This 40-year link will
ensure close coordination at all levels between the US and partner countries. This
coordination will support military-to-military cooperation, economic integration, and
political benefits between the US and F-35 purchasers. These links are important to
38
traditional allies like NATO countries and Australia which is already a JSF partner, but
are also important to newer allies like Israel and Singapore, both SCP countries, along
with potential JSF customers Japan, South Korea, and Spain.52
For example, traditional US allies like Australia, Japan, and South Korea have
had a strong relationship with the US and have been trusted allies for over 60 years.
But this relationship may be based more upon history than current benefits. These
three countries have developed mutually beneficial trade relationships with China,
since they are located in Asia and rely heavily on China for international trade. Any
potential conflict between the US and China would put a strain on our relationships
with these allies. The US can establish long-term financial investments through the
JSF program, which could counter China’s growing influence in Southeast Asia.
Overall, the political benefits for the US fall into two categories, improved US-
Australia, Japan and Singapore relations, and enhancement to the US-China “hedging”
strategy. As discussed previously, US-JSF partner relations would be strengthened as
a result of increased military-to-military cooperation. Another political benefit from
this closer relationship would come from the increased economic integration of the
countries. If Japan and Singapore were permitted to purchase the F-35, they would be
able to participate in follow-on support activities that would produce revenues for each
country. And, as mentioned earlier, each partner country will potentially earn
approximately $5 to $40 of revenue in return for every $1.00 invested into the
program.”53 This estimate was based on current partner industrial participation but
39
potentially could be applicable to SCP and FMS countries that negotiate for their own
industrial participation. According to Joshua Kurlantzick, “Washington must remain
engaged with SE Asia, which is now the engine of global economic growth and
potentially the world’s most dangerous security environment.”54 By selling the F-35 to
Australia, Japan and Singapore, the US will be able to engage both countries
economically while at the same time increasing security in the region. Also, these
stronger economic and military ties could possibly allow the US to swing more
influence inside Asia-Pacific Economic Cooperation (APEC) and the Association of
Southeast Asian Nations (ASEAN).
The increased economic and military cooperation among the US, Australia,
Japan and Singapore would also enhance the current hedging policy which the US
takes toward China. The current US strategy in regards to China is twofold, an
“engagement” policy combined with a “hedging” policy. The US “engagement”
policy goal is to connect China into the global economy and into international
organizations like the World Trade Organization. The objective is to make China a
responsible stakeholder in the global economy and more aligned with the United
States. As China becomes more integrated, it will have to follow global rules,
procedures and norms. A China that is increasingly being integrated into a global
community will pose less of a threat to the United States and its allies.55 In fact, this is
exactly what China has done over the last decade by joining the global economy and
receiving foreign direct investment from Europe, Japan, and the United States.56
40
But at the same time, the US policy of “hedging” is an attempt to pragmatically
balance the power in the region, to counter China. This hedging takes the form of US
security cooperation with Asian allies, including Australia, Japan and Singapore.
There are multiple motives behind US security cooperation with Asian allies but the
main objective is to limit Chinese influence in the region. The US also uses
cooperation to empower allies to resist Chinese coercion.57 One way for the US to
empower allies is to support the military modernization of other Asian states like
Australia, Japan and Singapore, as well as South Korea, and Taiwan. The US has
consistently tried to improve Japan’s military and diplomatic involvement in the
region, helping to address regional security challenges.58 By allowing Asian countries
Australia, Japan and Singapore to purchase the F-35, the US would be taking
advantage of an excellent opportunity to build on its hedging policy concerning China.
It would increase the military capability of each country, improving US-Australia, US-
Japan and US-Singapore operational effectiveness. This improved military capability
will help counterbalance Chinese rising military capability. This is consistent with the
current US policy to improve Japan’s military and diplomatic involvement in the
region, helping to address regional security challenges.59 Purchasing the F-35 would
allow Japan to better address regional security challenges. In addition, as former
Secretary of State Condoleezza Rice stated, “US-Japan, US-South Korea and US-India
relationships are important in creating an environment in which China is more likely to
play a positive role than a negative role.”60 It could also be assumed that improved
41
US-Singapore and US-Australia relations would serve this purpose. Therefore, as a
result of allowing Australia, Japan and Singapore to become F-35 partner countries, the
increase in military and economic ties could allow the US Department of Defense to
address one of its primary goals, “influencing strategic directions of key powers.”61 In
other words, it would reduce China’s ability to intimidate its neighbors.
The political and military benefit to be derived from selling the F-35 to
Australia, Japan and Singapore are significant, and is an excellent example of how the
US can use JSF to build political ties and regional influence. The attractiveness of the
economic, military, industrial and political benefits for all involved makes international
participation in JSF sound like a positive step. However, before making this step, the
US must consider some of the potential problems that need to be addressed.
42
CHAPTER 4
DEFINITION AND DISCUSSION OF JSF PROGRAM CHALLENGES
International participation also presents a number of challenges. Because of their contributions to the program, partners have significant expectations for financial returns, technology transfer, and information sharing. If these expectations are not met, their support for the program could deteriorate.
Government Accountability Office Report on JSF Acquisition, Managing Competing Pressures Is Critical to Achieving Program Goals, July 2003
The JSF program is based on a complex arrangement of stakeholders with
sometimes clashing priorities. The program is expected to benefit the US and partner
countries militarily, economically, industrially and politically. However with these
benefits come a number of challenges and expectations. Partner countries will expect
financial returns, technology transfer and information sharing. They will also expect
their industries to continue to win lucrative contracts in order for them to realize
financial benefits. As discussed, participants’ industry participation is not based on its
financial contribution to the program but on “best value.” This could mean that some
partner countries are excluded from participating in the industrial development and
support of the JSF, and do not receive financial benefits. US Disclosure Policy may
and probably will limit technology transfer to all partners. Restricted technology
transfer will limit competition for industrial contracts and exclude some countries
desiring participation. A large number of export authorizations are needed in a timely
manner to share project information and execute contracts. Without timely export
authorizations, partner industries will not have the opportunity to compete for
43
subcontracts. The need for commonality and interoperability, for military benefits,
may strain current US Disclosure Policy. In addition, current and future technical
challenges that are resulting in cost growth have threatened partner participation in the
program, and Italy, for example has postponed some of its aircraft purchases. By
postponing aircraft purchases, countries receive a better price per jet because the price
for each JSF goes down as more aircraft are produced. However, by delaying
purchases, the price of each JSF goes up for the remaining customers in that year.
Partners may choose to share in current or future cost increases but are not required to
do so. The burden of cost growth may fall entirely on the US. Partners may also want
a voice in future Foreign Military Sales (FMS). Partners may want the financial return
from FMS but may also want to help the US determine what aircraft capabilities will
be sold and to what specific countries, especially if unique partner technology is being
used for JSF development. If partner expectations are not met, their support for the
program could deteriorate. If efforts to meet any of these partner expectations come
into conflict with US interests or program execution, the US will have to make
decisions that balance these potentially competing stakeholder interests.1
For example, the US is interested in reducing the cost of the program by
sharing costs and risks with the international partners. But this is in conflict with the
risk associated with transferring crucial program technical data. This technical data
may be beneficial by invigorating industrial competitors. However, the risk is that it
could fall into the hands of US adversaries revealing vulnerabilities of the JSF system.
44
The partners are interested in increasing their capabilities and interoperability with the
US, but their primary interest may arguably be increased industrial work share and
technology transfer. As the primary contractor, Lockheed Martin will bear the burden
of managing partner work share expectations by keeping the playing field level. The
US will have to manage the technology transfer by managing National Disclosure
Policy. However, if partners do not secure what they consider to be a fair share of the
contracts or adequate technology transfer they may defect, or threaten to defect, from
the program. A threat to defect from the program may give a partner an advantage in
negotiating a better work share or technology transfer agreement. History has shown
that this is a significant risk to any international cooperative program. Any reduction
of partners will increase the risk and cost to the US and the remaining partners.
Lockheed Martin is concerned with program cost growth, but does not share the same
level of risk as the US since the US has assumed most of the risk with the current cost-
plus contract.2 Technology transfer will be a concern of both the US and Lockheed
Martin, but the US military may have the most to lose if vulnerabilities of the JSF
system fall into the hands of adversaries.
These and other challenges will be addressed in this chapter. The US needs to
understand these challenges so that it can develop solutions and mitigation plans,
which will be the focus of the next chapter.
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Military and Operational Challenges
The military and operational benefits to the US and partners center on the
common capabilities that JSF will bring to partner countries and how this commonality
will enhance coalition warfare. However, while the US National Security Strategy
celebrates the benefits of coalition warfare, the 2005 National Defense Strategy also
recognizes that “some allies and partners will decide not to act with us or lack the
capacity to act with us.”3
Early on in the development of the JSF acquisition strategy, the US Military
Joint Staff interviewed US Combatant Commanders in order to assess their desires on
what capabilities they would like regional coalition partners to posses. During these
interviews the US Combatant Commanders expressed concerns that even if partners
had the necessary capabilities, they still lacked the training and political will to
participate in a US-led coalition.4 Successful coalitions cannot be formed on quick
notice. They require joint training and doctrine, common command and control and a
common political agenda.5 US Combatant Commanders want partner countries to
possess advanced capabilities, but only for those countries that are willing to align
military doctrine and training with US, and share the same political will to deploy
along side the US.
While JSF will help to facilitate common training and capabilities, it does not
in any way guarantee the political will of partner countries to participate militarily with
the US. NATO countries and Australia have traditionally shown a higher political
alignment with the US and this is one of the factors that were used to determine the
current JSF partners. Counties outside this fraternity will pose a greater risk, both in
political alignment and also in how they will protect technology. The potential JSF
customers include Israel, Singapore, Japan, South Korea, Greece, Spain, Finland and
Belgium. It is clear that alignment of this expanded coalition of JSF partners would be
very politically challenging.6 Since the plan is for the JSF to replace the US Services’
F-16, F-18 and the AV-8B, it is not unreasonable to expect that all current countries
that fly one of those three aircraft could be interested in the JSF. This would mean that
it is possible that 26 other countries could eventually be JSF customers. The below
figures show the current countries that fly the F-16 and F-18. Italy, Thailand and Spain
also fly the AV-8.
• Bahrain • Belgium • Chile • Denmark • Egypt • Greece • Jordan • Indonesia • Israel • Italy • Morocco • Netherlands • Norway
• Oman • Pakistan • Poland • Portugal • Singapore • Republic of China (Taiwan) • South Korea • Thailand • Turkey • United Arab Emirates • Venezuela • United States
46
Figure 9. Countries that fly the F-167
Australia Kuwait Spain Finland Malaysia Switzerland United States
Figure 10. Countries that fly the F-188
In order to take advantage of economies of scale, there will be pressure to
continue to expand the number of potential customers. This could open the market to
47
48
Middle Eastern countries like Kuwait and Saudi Arabia, and Asian countries like
Taiwan, Thailand, and India and Pakistan. Each of these countries, except India,
which has expressed a recent interest in US F-16s or F-18s, currently flies one of these
three aircraft.9 Countries that are currently interested in purchasing or already possess
aircraft like Euro-Fighter and JAS-39 Gripen are also possible customers for JSF. This
would expand the potential customers to include Germany, France, Sweden and
Poland, as well as others. It could be impossible to align the political will of this JSF
coalition and next to impossible to keep critical JSF technologies secure.
Partner Selection and Approval
The minister of defense from each of the current group of eight partner
countries has signed the Production, Sustainment, and Follow-on Development
Memorandum of Understanding (JSF PSFD MOU) for the Joint Strike Fighter. It was
also signed by the former, US Deputy Secretary of Defense Gordon England. The
main goal of this memorandum is to outline the roles, responsibilities and expectations
for each country. It also establishes that the partners will:
1. Cooperate in order to satisfy the similar operational requirements
2. Recognize benefits of continued cooperation in the JSF program
3. Seek to establish a model for international cooperative acquisition programs
4. Maximize financial benefits
5. Reduce barriers to maximize technological and industrial cooperation
6. Recognize that industrial participation will be an important to all partners
49
While the current partners have agreed to work together to the mutual benefit of
all, the incorporation of additional partners into the long-term sustainment of the JSF
has not been formalized. According to the section 13 of the JSF PSFD MOU, the US
Government cannot sell, transfer title or sell any part of the JSF system to any “third
party” without prior consultation with the other partner countries. The PSFD MOU
specifically states that the US will take into account the “views on security matters
held by other participants,” prior to any third party sales.10 It goes on to state that any
third party sales will be subject to each participants’ “foreign policy, national security
considerations, and national laws, and regulations and policies.”11 The PSFD MOU
does outline a way to reimburse partner countries from additional JSF sales. The
memorandum recognizes that it will be financially beneficial to all participants to
expand the number of customers, but does not specifically formalize the how
additional customers will be selected. As mentioned earlier, there will be pressure to
expand the number of customers in order to recoup funds and also to reduce aircraft
costs. However, based on the guidelines set in the PSFD MOU, it will be difficult to
align the foreign policy and national security considerations prior to any third party
sales. For example, Turkey’s national security considerations may never allow for the
approval of the sale of JSF to Greece. Also the worsening relationship between
Turkey and Israel could cause future problems. As Daniel Levy, Senior Research
Fellow at the New American Foundation, a Washington, DC based think-tank, stated,
“Israel’s ideological and political dimensions continue to undermine the relationship
50
between Israel and Turkey.”12 Israel is already an approved Security Cooperative
Program country and has contributed funding to the program, so any objection to
Israel may be too late. However, this is not the case for Greece. The main concern
about JSF exports to Greece centers on their very tense relationship with Turkey,
mostly due to disputes over islands in the Aegean and Mediterranean Seas. Experts at
the Federation of American Scientists assert that “Greece considers Turkey is
principal military adversary,” and the relationship is further complicated by the US
arms export policy.13 The US arms export policy has tried to maintain the balance
between both countries by giving each country the same weapons. Under the PSFD
MOU, which requires consultation with Turkey prior to third party sales, it will be
challenging for the US to continue its export policy of giving each country the same
weapons.
The number of potential customers for JSF is extremely large, and there will be
pressure to expand the number of customers beyond the current list. As the number of
countries involved in the JSF program increases, it will become more and more
difficult to create consensus among the participants for the sake of decision-making.
In addition, the memorandum is not clear concerning how the additional countries will
be selected and how disagreements over this process will be addressed. If the US
wishes to use the JSF to accomplish its goal of improving coalition warfare, it will
have to resolve these problems. And as the group of countries grows, the control of
critical technology and political alignment will be extremely difficult to manage.
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Disclosure of Critical Military Technology
The DoD and the JSF Program Office must balance partner expectations for
commonality against the transfer of critical US military technology. As mentioned
earlier, commonality is an advantage for the JSF program because it helps reduce cost.
It also improves operational and military effectiveness during coalition operations.
However, the US disclosure policy will need to be expanded if commonality is to be
achieved. The program has already requested exceptions from the current National
Disclosure Policy. According to the July 2003 GAO report, DoD officials have stated,
“Technology transfer decisions have been influenced by JSF program goals, rather
than adjusting program goals to meet current disclosure policy.”14 US Government
and Lockheed Martin both agree that technology transfer issues need to be solved as
early as possible to allow the program to stay on schedule, and to allow for partner
industrial participation.
Historically, the US has faced technology transfer difficulties, especially
concerning technically advanced jet aircraft. For example, in 1979 Iran possessed 79
advanced US F-14 Tomcats.15 After the Iranian Islamic revolution, these 79 F-14s fell
into the hands of revolutionaries politically opposed to the US and its western allies.
The US was concerned that Iran would use these F-14s against the US or its allies, and
that they might share F-14 technology with other hostile countries. The US suspended
all F-14 spare part deliveries to Iran, but this did not stop criminals from trying to
obtain them for Iran before retired US F-14s could be destroyed.16 Fortunately, Iran
52
never used its F-14s against the US and the technology is now relatively outdated.
More recently, Venezuelan President Hugo Chavez threatened to sell some or all of
Venezuela’s 20 F-16s to China or Cuba because the US withheld spare parts.17
A few outdated F-14s or even the more modern Venezuelan F-16s would not
make a significant strategic difference in a conflict with the US. However, hostile
nations will not necessarily be intending to use the aircraft in a direct conflict with the
US. Instead, they could be trying to exploit technologies and determine their
vulnerabilities. In other words, the risk for the US is not that JSFs will be sold to a
hostile nation, which would in turn use it against the US. The more likely risk is that
JSF technology will be exploited by hostile nations. For example, Israel, a current JSF
Security Cooperative Partner, is a country with a history of illegally transferring
technology that could harm the US. On numerous occasions, Israel has taken US
technologies and transferred them to other weapon systems. In the 1990’s, Israel sold
missile and tank technology to China and advanced avionics, in the Israeli Python
missile, to India.18
With any high-end weapon system, the US is concerned about technology
transfer and information exploitation. If a hostile country could acquire the design or
material properties of the JSF, it would obtain a significant tool to use in designing a
weapon system to counter the JSF. This would be an example of information
exploitation, which can be defined as reverse engineering to determine vulnerabilities.
After the vulnerabilities of a system are determined, an effective countermeasure can
53
be developed. A potential advisory would probably not try to produce another tactical
aircraft to defeat the US because it would require a significant amount of resources.
Instead it would probably try to develop a less costly defense to the JSF. For example,
this could come in the form of a radar or missile system that could detect the JSF and
thus negate its Low Observable advantage.
In order for effective exploitation to occur, a country must have the capability,
intent, opportunity and time to exploit the weapons system.19 While none of the
current partner countries would find it in their best interest to transfer JSF technology
to nations with the intent to exploit the capabilities of JSF, the world political
environment is a dynamic place and a lot will change over the next 40 years, the
designed life of the JSF. Also, as the list of JSF customers grows, the potential for a
future JSF customer to sell JSF technology for financial or political leverage will
increase.
In order to reduce the risk of exploitation, the US is going to great lengths to
control critical JSF technologies such as sensors and low observable technology.
These technologies will be controlled, produced and maintained only by the US. The
US has also designed significant anti-tamper systems into the JSF. In addition, only
trusted allies have been approved to purchase the JSF. However, as mentioned before,
there will be significant financial incentives for the US, partners, and Lockheed Martin
to expand the number of JSF customers, thus increasing the risk of exploitation and
reducing the military and operational advantage of JSF.
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Program Cost Growth
Another serious potential program for the JSF program will be the risk of
partners delaying procurement or defecting out of the program. This could be caused
by cost increases, which result from a US reduction in total purchase, development
delays or production delays. In fact, the JSF program is currently experiencing all of
these problems. The JSF development program has been significantly delayed, adding
billions in cost. The US Department of the Navy has significantly reduced the number
of JSFs it planned to buy from 1,089 to now just 680.20 In 2008, the US Air Force,
Navy and USMC significantly delayed procurement and reduced the number of aircraft
that it planned to buy in the early years 2008-2013 by over a hundred. The latest cost
estimates by the US DoD forecast that the JSF program is under-funded by billions of
dollars and predict that it will take up to two additional years to complete testing,
finishing in 2016, rather than 2014.21 All of these factors have caused the current
partner countries to delay or reduce procurement of the JSF.
The increases in cost are a potential reason for partners to not just delay but to
defect from the program. European defense experts warned about this when they
stated, “If the F-35 does not meet its cost numbers and adhere to schedule, the foreign
partners will bail out of the effort and the export market for the aircraft would
disappear, causing what is called the “death spiral” of the program.”22 The “death
spiral” of a program is when cost increases cause a reduction in the number of aircraft
a country can afford to buy. This reduction in aircraft further increases the cost per
55
aircraft and the incentive to delay purchase, thus further increasing the cost of each
aircraft. The theory is that eventually the aircraft would become so expensive that no
one, including the US, would be able to afford to buy it, causing the entire program to
collapse.
The JSF program has seen a 40% increase in cost from the initial cost estimate,
forcing the US government to add billions of dollars to the program. Since 2002, the
total estimated acquisition cost of the JSF program has increased by almost $100
billion.23 The total JSF System Development and Demonstration, funding for non-
recurring shared costs has grown from $21.2 billion to $33.1 billion and the current
OSD Joint Cost Estimate forecasts that this number will grow by an additional $15
billion.24 Under the original SDD MOU signed by the partners, they were not required
to share in any of these costs because the changes are unrelated to partner actions or
requirements. The GAO report from 2003 stated, “International participants currently
have no requirement or incentive to share in cost growth.”25 The current signed PSFD
MOU allows the US to request additional funding from the partner countries and
allows for future negotiations to recoup all or part of cost growth. However, the
current method to recoup cost covered in the PSFD MOUs delineates the “maximum”
partner contribution to the total shared costs, which was based on an outdated cost
ceiling. The maximums are determined based on a financial cost ceiling of $21.8
billion in US dollars for shared production and non-recurring costs. The estimated
allocation of costs based on this arrangement is depicted in Table 1.26 The current cost
estimate for shared costs as grown to over $33 billion and might reach to well over $40
billion.
Table 3. Estimated Allocation of Shared Production and Non-recurring costs27
The partners are not required to share in any cost growth beyond the currently agreed
to levels and an amendment to the PSFD MOU must be agreed to before any of the
maximum amounts are increased.28
The US DoD will be forced to choose between shouldering the additional costs
or asking for partner contributions, accepting the risk that partners may further delay
production or defect. What this means is that the US is assuming all the risk for cost
growth. The US Congress is concerned that the US is responsible for the bulk of the
development risk, and have asked if international participations and technology sharing
is being managed to minimize risk and maximize benefits for the DoD.29 The JSF
program is experiencing unpredictable cost growth, schedule delays, and other
management challenges that will need to be successfully handled if the benefits of
international participation are to be realized.
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Competitive Contracting “Best Value”
Another challenge may come from the use of competitive contracting. Meeting
partner expectations for industrial participation while still controlling program cost
growth through the “best value” approach may exclude some partner countries. The
“best value” approach is a departure from other cooperative development programs
that guaranteed pre-determined levels of industrial participation based on financial
contributions or total number of planned aircraft purchases. The partner countries
generally agree with the “best value” approach but have emphasized that their
industries’ ability to win JSF contracts is important for their continued involvement in
the program. The JSF Program Office and Lockheed Martin have the responsibility to
provide insight into the subcontracting process and must provide the opportunity for
partner industries to bid for contracts.
In order of partner industries to be competitive they must receive timely data
and technology through the export control process. Due to large international
participation, a significant number of export authorizations and amendments are
required prior to partner industries soliciting bids or executing contracts. Export
authorizations need to be received in a timely manner to avoid schedule delays and
program cost increases. Some partner countries have been unable to bid due to the
time constraints involved in securing an export license. The principal problem is that
the US does not have a central decision-making authority within the export control
process.30 Export control is spread throughout the executive agencies and Congress.
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The JSF program must consult with numerous agencies and follow all congressional
notifications requirements. The US Department of State Case Act requires executive
agencies to consult with the State Department before signing any international
agreement. The DoD and US Commerce Department must also consider how
international armament programs will affect the US industrial base and its international
competitive position. The export control process can involve the Department of State,
DoD, Department of Energy, US Military Joint Staff, the military services, National
Security Council and the National Economic Council.
Once the international agreement is made numerous other agencies develop the
acquisition strategy and milestones. These agencies include the Advisory Committee
of Export Policy, the Economic Defense Advisory Committee, and the Committee on
Foreign Investment in the US. Along with these committees, three different
intelligence agencies and three enforcement agencies also are involved in the process.
The US National Disclosure Policy outlines the authorization process for DoD. The
process for JSF involves three committees, five major processes, and 23 agencies, as
well as numerous laws, executive orders, policies and regulations. Processes usually
do not run concurrently. Multiple competing and conflicting equities are involved and
the process may take several months to complete. The Secretary of Defense and the
Undersecretary are the adjudicators of export decisions.31
The disclosure policy starts at the service level and then moves up through a
long line for coordination. Export decisions for the JSF must first be approved at the
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service level, by the “Tri-Service.” The Tri-Service is the first level of review and is
made up by representatives from the US Departments of the Army, Navy, and Air
Force. The Tri-Service will review the request, which may take several months and
may do the following:
1. Refer issue to LO/CLO ExCom Depending on sensitivity
2. Charter Red/Blue teams (90 days to complete review)32
The Tri-Service will refer issues to the Low Observable/Counter Low Observable
Executive Committee (LO/CLO ExCom). The LO/CLO ExCom adjudicates transfer
of LO and CLO technologies, capabilities, and information to foreign governments and
international organizations. The Undersecretary of Defense for Acquisition
Technology and Logistics (USD (AT&L)) Director of Special Programs is the
executive secretariat for the ExCom. Decisions from the ExCom will then go to the
National Disclosure Policy Committee which:
1. Adjudicates requests that exceed service/agency delegated authority to disclose classified military information to foreign governments and international organizations
2. Approves or denies exception to National Disclosure Policy
Decisions by the National Disclosure Policy Committee usually take 30 days and can
be appealed to the Deputy Secretary of Defense. No single agency or USG official is
responsible for the overall management of foreign disclosure and export control
requirements. This process needs to be integrated and streamlined in order for partner
industries to compete for “best value” contracts while still rigorously protecting critical
60
military technology.33
Even when all the export authorizations are met, some partner countries may
still be disappointed with their level of industrial participation. In order to alleviate
their concerns, Lockheed Martin did an assessment to determine the possible level of
industrial participation from partner countries. In their assessment, the potential return
would far exceed the countries contribution levels. Lockheed Martin has even signed
agreements with some partner industries that delineate the requirements to participate
and opportunities that they would have to bid on JSF contracts, along with the
contracts’ potential values. The DoD and the JSF Program Office have left the
implementation of this contracting approach to Lockheed Martin. Lockheed Martin is
going to be shouldering the responsibility of balancing partner expectations while still
achieving program cost goals. Lockheed Martin’s actions indicate that it will be
conciliatory toward partner expectations, due to the fear that if partner participation is
not satisfactory they will decide to leave the program. If partner countries leave the
program Lockheed Martin will make less money. In fact in 2003-2004, Denmark,
Italy, the Netherlands, Norway and Turkey expressed dissatisfaction with their amount
of industrial participation and threatened to defect. The governments of Italy and the
United Kingdom have since lobbied for F-35 assembly facilities to be established in
their countries.34 Lockheed Martin has also agreed to allow additional industrial
participation in countries where contract awards have not met expectations. This is a
departure from the competitive approach and a move toward a prescribed work share.
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A direct work share often results in higher program costs. A good example is the F-16
program which paid higher manufacturing costs associated with the use of foreign
supplies.35 This puts the US government in a very delicate situation. The current
program is based on a cost-plus contract, which means that the US is responsible for
any cost growth. If these contracts increase the cost of the program, the additional cost
will be paid by the US.
As partner industries acquire more contracts, there is a fear that US jobs will be
lost to offshore defense contractors. Turkey legally secured co-production licenses and
produced 46 F-16s for Egypt under the Peace Vector agreement. Israel developed two
aircraft to sell on the international market, the KFIR and the Phantom 2000, both
directly competing against US production aircraft for lucrative foreign military sales.36
The KFIR was a modified French Mirage V developed in 1975. Israel sold the KFIR to
27 countries and leased the aircraft to the US Navy and Marine Corps to use as
aggressor aircraft.37 The US also lost business to Israel when they produced
modernization kits for Turkish F-4 Phantoms and a $20 million Radar Warning
Receiver upgrade to Venezuelan F-16B aircraft.38 While the total number of US jobs
lost in these examples may not be insignificant, the size of the JSF program poses the
potential for significant US job loss.
Laws such as the 1933 Buy American Act could be a way to protect US jobs.
But they also restrict the flexibility of international programs and may undermine
international industrial participation. The Buy American Act requires that
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manufactured end products must be manufactured in the United States and that the cost
of domestic components must exceed 50 percent of the cost of all components. Some
would argue that this is a leftover from an outdated protectionist era and that it makes
the playing field unfair. However, there are five waiverable conditions that US
industry often invokes. While these waivers usually work, they still make acquisition
more complicated and do not align with the current acquisition guidelines that require
DoD to evaluate all potential opportunities to co-develop systems with one or more
allies.39 Acts like this give the impression to partners that the US is not serious about
international industrial participation. That impression is reinforced when unions and
US Congressional leaders invoke the act to protect a perceived threat to US jobs.40
The Buy American Act limits a program manager’s ability to find the “best value”
solution in a global market.
Maintaining Common Requirements
Maintaining defined and agreed upon requirements for the JSF program is
important for cost stability, commonality and partner expectations. International
programs are especially susceptible to competing partner requirements.41
Requirements that change or increase during the development and production phase of
an acquisition program result in higher costs. The longer the development timeline, the
more likely requirements will change or increase. The JSF program is currently eight
years into a 12-year development timeline and has been successful in not allowing
additional capabilities to be added to its original requirements. Common capabilities
63
are also important because they reduce program costs and allow for common coalition
training and operational employment of the JSF. One of the remarkable achievements
of the JSF program was getting all three US services and the United Kingdom to agree
upon common requirements in the Joint Operational Requirements Document while
still maintaining a high degree of commonality. The US services and the United
Kingdom clearly plan to use the JSF for different types of missions and operate it from
different environments.42 For example, the US Navy plans to operate the aircraft from
a carrier; the USMC requires the aircraft to land vertically and the USAF will operate
from conventional airfields. Each service had to compromise in order to accommodate
the others. Compromises had to be made not only across the three US services and the
United Kingdom but also the other seven countries. This was accomplished by
including the partner countries in the process and agreeing on a common set of mission
capabilities. The common capabilities and Key Performance Parameter for the JSF are
shown in Figure 11.43
Net Ready Criteria
STO Distance
CV Recovery
VLBB
STOVL Performance
Combat RadiusCTOL
• Configuration 240-4.7 unless otherwise noted
• Contract Engine Deck• Projected IOC Weight Empty based on WSR 222 CE
• Data as of 2-23-09
Flat Deck
STOVL UKSTOVL USMC
CVCTOL
STOVL UKSTOVL USMC
CVCTOL
STOVL USMCCTOL
STOVL UK
STOVL USMCCV
STOVL UKSTOVL USMC
CV
Ski Jump
STOVLCV
Mission Reliability
Sortie Generation Rate
Logistics Footprint—C-17 Loads
Logistics Footprint—Volume
Logistics Footprint—Weight
Interoperability
RF Signature
Threshold RequirementCE Performance
Exceeds ORD ObjectiveMeets Rqmt/ExceedsTripwireMeets Rqmt/In Tripwire BandDoes Not Meet Requirement
Vpamin
(HMMH Fuel)
(HHH Fuel)
Key Performance Parameter Status
Figure 11. JSF Key Performance
It is going to be a challenge for the JSF program to continue to maintain common
capabilities while maintaining partner expectations with the current program cost
increases. One of the ways that a program can manage cost increases is to add more
money to the program in order to achieve the same capabilities. But another way is to
reduce the capabilities of the system in order to save money. The JSF program has
experienced cost increases due to delays in production and testing, and increases in
labor and material costs. These delays have extended the development of the program
by three years and have also put pressure on the US services to reduce the capabilities
of the JSF in order to save money. The US will be faced with not only asking the
partners for more money but also telling them that they may not be able to get the
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initially agreed upon capabilities, or may have to postpone receiving them. The US
will have to make choices between specific JSF capabilities in order to save money
while maintaining schedule. These capability trades may cause partner countries to
delay purchases. In other words, partners may wait to buy aircraft, thus allowing more
time for capabilities to be developed. Significant partner capabilities that are delayed
or removed may also cause partner countries to defect from the program.
Even if the current cost growth is managed, the future challenge will be
maintaining a common configuration over the life of the program. The US services
and the partner countries have agreed in the PSFD MOU that common aircraft
development will be shared; but country specific capabilities will be funded by specific
country or a group of countries. So if the capability is shared across all, then everyone
will contribute to the cost. Stated another way, partners will have to pay to be
different.44 While paying to be different has been agreed upon, some partners have
recently expressed a concern that it will be difficult to implement because it will be
challenging to isolate exact costs for specific requirements. For example, if country X
wants to improve the radar, it might take a new computer processor to implement.
This computer processor would also improve other aircraft functions thus benefiting
other systems. The benefits to other systems would be realized by all JSF participants
but would only be funded by the specific country that wanted the initial radar
improvement.
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The diversity of the coalition makes the arrangement challenging. First,
commonality is essential for joint operations and cost control. The more unique a
country makes its JSFs, the more it will pay, not only to develop that capability but
also to maintain those unique systems. Also, as stated earlier, common capabilities
also help in joint training and operational employment. However, due to fiscal
realities, each of the partner countries may not be able to afford all future JSF
improvements or will have an operational need for them. The many JSF
configurations are impossible to forecast but with every upgrade, the number of
differences between countries will increase, thus potentially negating one of the
benefits of international cooperation.
Competing US and partner priorities will reduce commonality, thus increasing
the costs for everyone and reducing operational effectiveness. The US will have to
work closely with partner countries to maintain political and military support for the
JSF. Agreements between parties that outline roles and obligations will need to be
worked out well in advance. This will force significant changes to the complex
policies, processes, regulations and laws that currently control international programs.
It will also take creative ideas and compromises by all partners. The US will have to
be the honest and ethical broker on many decisions. They will have to strike a balance
between US desires and partner expectations, and all decisions will need to be
coordinated and implemented in a complex political environment.
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With so many players involved in the JSF program, it will be incredibly
difficult to balance the political agendas of the participants. The US is committed to
the design, development, production, testing and fielding of the JSF with foreign
partners. And the limits of the US National Disclosure Policy currently define the
common configuration of the JSF design. In addition, the US Congress, Department of
Commerce, State Department and DoD have all approved the acquisition strategy.45
However, even within the US, each stakeholder will have his or her interests in mind as
the program matures. The US Congress and Department of Commerce will be
concerned with protecting US industries and jobs while still protecting critical military
technology transfers. They may support the multi-national industrial development of
the JSF, but not if it will invigorate industrial competition to the determent of US
companies. The State Department is concerned that industry is following the export
control process and that JSF will build partner capacity without upsetting regional
stability. The DoD is concerned that technology transfer and exploitation will reduce
the JSF’s military and operational benefits. Partner countries will be concerned with
purchasing JSF at the lowest cost and increasing their industrial participation.
Lockheed Martin will be trying to increase its profits by expanding the number of
customers while complying with export restrictions. This is an environment that is
wrought with potential political and operational challenges that will need to be
addressed in order for the JSF program to be successful.
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CHAPTER 5
LEVERAGING JSF ADVANTAGES WHILE MINIMIZING CHALLENGES
Globalization – Technology and industry are globalized; geo-politics and scope of threats requires security coalitions; DoD is no longer the leader in all military technologies; global financial markets enable borderless investing.
The Honorable Jacques S. Gansler (OSD AT&L 1997-2001) and Professor and Roger C. Lipitz Chair Center for Public Policy and Private Enterprise School of
Public Policy University of Maryland1
There is a broad perception in the defense community, here and in Europe, that the DoD does not view globalization as a policy tool to facilitate interoperability and competition.
Jeffery Balios, Defense News2
International armament programs demonstrate US commitment to coalition war
fighting and improvement of partner military capabilities. Cooperative programs like
the JSF could be the future model for US weapons procurement, if executed correctly.
Analysis of the JSF program demonstrates that there are many potential benefits to the
US, partner countries and the US and partners’ aerospace industries. These include
increased military and operational effectiveness, strengthened alliances, reduced
acquisition cost and a bolster of the US and partner industrial base. But no
international armament program is guaranteed to be successful, and there is not an
established model that will fit every program. In order to survive, there are some basic
conditions that the US has and must continue to meet. These include the following:
1. Partner countries must be politically and strategically aligned with the US
2. Partner countries must have a robust defense and technology base
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3. US and partner countries should be tied through treaties such as NATO
4. Partners should have no history of unauthorized third-party transfers
5. Partner and US domestic policies need to support arms transfers
Along with the above conditions, the international armament acquisition program must
also demonstrate minimal competencies in designing and producing the armament.
These include affordability or cost predictability, accurate scheduling with timely
delivery, and technical performance.3 The JSF program, with its current eight partner
countries, was developed with the above conditions in place. However, even though
the JSF program has demonstrated initial success, many challenges still remain. The
US will have to make many difficult choices while balancing US interests and policy
with partner requirements. This chapter will address the four challenges which the US
must overcome in order to continue the success of the JSF program. These challenges
are stabilization of cost, revamping the US disclosure policy, and determination of
industrial participation and FMS countries.
Stabilization of Cost
The first and possibly most important challenge that the US needs to address is
the JSF program’s skyrocketing cost. As mentioned previously, cost increases could
cause other countries to pull out of the program, leading to further dramatic increases
in the unit price of the JSF. This spiral of increasing costs could result in the price
becoming so high that no country could afford to buy the JSF, including the US. It
could also lead to programmatic failure if Congress must recertify the program due to
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exceeding “critical” cost growth. While unlikely, Congress could decide that it would
rather discontinue the JSF program due to the budgetary risks. All partners, especially
the US players, must commit to and play a part in controlling the cost increases.
In addition to ensuring programmatic survival, stabilizing JSF cost would
demonstrate the US’s commitment to the program and reduce partner uncertainty. This
would allow the US to solicit additional partner funding, which would contribute to the
health of the program. Current cost growth can be attributed to two significant factors,
contractor cost growth and US and partner delays in procurement.
Stabilization of Contractor Cost
In order to stabilize contractor cost growth, the US will most likely need to
require the primary contractors to share in the cost growth. Setting cost and schedule
goals, controlling development and production costs and maintaining production
schedules have proved to be highly problematic for the primary JSF contractors. The
JSF program has seen a more than 40% increase in cost from the initial cost estimate,
which has forced the US government to add billions of dollars to the program. The
total JSF System Development and Demonstration (SDD) funding has grown from $21
billion, in 2002 to over $40 billion, the latest OSD estimate from September 2009. The
latest OSD Joint Cost Estimate, by the Joint Estimating Team (JET), which was done
by an independent team, forecasts that the JSF program schedule will slip, or be
extended, by an additional two years, costing the US an additional $16 billion.4 Based
on the latest estimates, the JSF program is on pace to exceed 50% cost growth.
The March GAO report on the JSF summarizes the OSD Joint Cost Estimate
(JET) from 2008 and concurred with its findings. The 2008 OSD JET predicted that
the JSF program would need as much as $7.4 billion for development and a 3-year
schedule extension. According to the JET, the development costs would increase to
$51.8 billion, and SDD would not be complete until October 2016.5 In September of
2009 an updated JET report was briefed to OUSD AT&L. Officially this report has
not been released but information obtained by Aviation Week show that the JET still
supports its 2008 estimates.6 The first table below, from the March GAO report,
summarizes the changes in JSF program cost, quantity, and delivery estimates. The
second table, also from the March GAO report, compares the JSF program office and
the JET predictions.
Table 4. Changes in JSF Program Cost, Quantity, and Delivery Estimates7 8
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Table 5 Estimated Cost and Schedule for System Development and Demonstration (SDD).9 10
There are five factors that account for the differences between the JSF program
office and the JET for SDD.
• Alternate Engine. The JET team included $1.4 billion for complete funding of the F136 alternate engine. Congress as directed the DoD to develop the second source engine, which is being developed by GE. DoD does not think that an alternate engine is required and has twice removed its funding from the JSF program.
• Engineering Staffing. The JET predicted that Lockheed Martin will need to
retain more engineers and for a longer period of time than the program office estimated. These engineers will be needed to complete development, testing and correct problems.
• Software Development. The JET believes that software productivity will be
lower than predictions and anticipates growth in software requirements. The JSF is expected to require 7.5 million lines of computer code, compared to the F/A-18E/F with 1.1 million and the F-22A’s 2.2 million. Past programs have experienced a 30 to 100 percent growth in software requirements over time and the JSF Program Office currently has assumed no growth.
• Flight Testing. The JET predicts that flight testing will require more time
and effort than the current program office has in its current schedule. Current delays in delivery of test aircraft will further compress the test schedule.
• Manufacturing Production Hours. The JET believes that the aircraft will
take longer to produce based on the program’s current performance and recent experience on the F/A-18 E/F and F-22A programs.
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The JSF Program Office’s maintains that their estimates are more accurate and
that adding additional funding to the program is not necessary at this time. The
program office also believes that adding additional funding would undermine their cost
control incentives for Lockheed Martin.
The program office believes that its estimates are more accurate for several
reasons. First, the quality of JSF software and hardware laboratories will enable the
program to find discrepancies earlier, reducing the number found during more
expensive flight tests. This will also allow the program office to develop final software
infrastructure earlier and reduce software problems later. The program office points
out that engineers have been reduced on schedule and that software is being produced
at a rate higher than that of F-22A. The JSF program also notes that it is 18 months
ahead of where F-22A was at a similar point in development of missions systems.11
The JSF Program Office and the JET also disagree on the projected purchase
cost of the JSF. Below is a table from the March GAO report that highlights these
differences.
Table 6. Projected Procurement Funding required for FY2010-201512
The JET estimates an increase in the cost to purchase JSF for several
reasons. First, the program will not achieve its estimate for production efficiency. The
estimates of the program office are optimistic and production efficiency, which lowers
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unit costs over time as the workforce becomes more proficient, will take longer to
realize. Second, the JET does not agree with the program office’s estimates of savings
from commonality. As mentioned in chapter 3, one of the significant cost saving
techniques utilized with JSF was commonality between JSF variants and countries.
Commonality refers to the use of same or similar parts, structures, and subsystems that
can be shared by all three variants. Lastly, the JET predicts that labor and material
costs will be higher and production time will be greater. This is based on JSF
performance to date.13
Nunn-McCurdy “critical” Breach
A major concern with the rising costs is that exceeding the 50% cost growth
would trigger a Nunn-McCurdy critical breach. Nunn-McCurdy is legislation drafted
in 1982 by Senator Nunn and co-sponsored by Representative McCurdy. Nunn-
McCurdy legislation provides Congressional unit cost reporting for major defense
acquisition programs. Two unit cost measurements are monitored, Program
Acquisition Unit Cost (PAUC) and Average Procurement Unit Cost (APUC).14 The
formula to determine each is below and is in “base-year” dollars at acquisition
Milestone B or the beginning of System Development and Demonstration. Base year
dollars for the JSF program are fiscal year 2002.15
PAUC = (Total Development $ + Procurement $ + Construction $) / Total program quantity APUC = Total Procurement $ / Procurement quantity
PAUC and APUC from JSF Selected Acquisition Report (SAR) December 31, 200716
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Baseline 2002: PAUC = $177.1 billion / 2866 = $61.8 million APUC = $143.3 billion / 2852 = $50.25 million SAR 2007 PAUC = $210 billion / 2456 = $85.5 million (plus 38.4% from baseline 2002) APUC = $169.4 billion / 2443 = $69.3 million (plus 38% from baseline 2002)
The SAR 2007 numbers do not reflect the additional funding added to the program in
2010 or the additional funds estimated by the JET. If the DoD fully funded to the JET
levels, with no additional aircraft added to the program of record, PAUC and APUC
would most likely exceed 50% cost growth from the program 2002 baseline.
A “critical” cost growth threshold is exceeded if the PAUC or APUC is greater than
25% to the current acquisition program baseline or greater than 50% to the original
acquisition program baseline. A critical unit cost breach requires that the Secretary of
Defense notify Congress within 60 days. The program must then be recertified based
on the following four criteria:
1. Program is essential to national security.
2. There is no alternative which will provide equal capability at less cost.
3. New estimates of the PAUC and APUC are reasonable.
4. Management structure is adequate to control PAUC and APUC.
In addition to the four criteria required for recertification of the program, OUSD
(AT&L) must perform an assessment of:
1. Projected cost of completing the program if current requirements are not modified
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2. Projected cost of completing the program based on a reasonable modification of such requirements
3. Rough order of magnitude costs of any reasonable alternative system or
capability
Adopt More Accurate Cost Estimate
When a program has a critical Nunn-McCurdy breach, there is a risk that
Congress will cancel the program. But since the JSF program is strongly backed by
both the US government and military, chances are very high that cancellation would
not be an issue. Most government officials feel that it is a program that is critical for
national security and that there is no alternative at a lesser cost. Nothing has
significantly changed since Gordon England, Secretary of the Navy, and future Under
Secretary of Defense stated in 2004,
We support the Joint Strike Fighter program strongly. We continue to work the program as hard as we can...We need the airplane. The Navy needs the airplane. The Marines need the airplane.17
However, should a Nunn-McCurdy breach occur, a requirement to recertify the
program is the establishment of a reasonable PAUC and APUC. Adoption of the JET
funding levels would set a more realistic PAUC and APUC. So far OSD has funded
the program based on the JSF Program Office estimates. However, actual costs have
been closer to the JET predictions and continued cost growth in the program is
destabilizing partner and US service support. Also, the adoption of the independent
cost estimate would be in line with the recent Acquisition Reform Law, sponsored by
Senators Levin and McCain, signed into law on 22 May 2009. The Levin-McCain
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Acquisition Reform Act specifically directed the establishment of a Director of
Independent Cost Assessment.18 This directorate will be made up of a team of cost
estimators, like the JET and will likely recommended that additional funds should be
added to the JSF program. Funding levels would be based on the more accurate cost
estimates and actual costs would be aligned with funding, all but eliminating the
requirement to ask for additional funding every year.
New Contract to Share Cost Growth
Adding additional funding at JET levels must also be done with a new
acquisition contract that shares costs growth between the government and the
contractor. Ashton Carter, OUSD (AT&L), made the point in Aviation Week that, “We
don’t want to be in a situation where the government bears the cost of schedule slips all
by itself.”19 If the US has any hope of avoiding continued cost difficulties in the
future, before adding $16 billion to the program and accepting a two-year delay in
development, it should negotiate a new contract with Lockheed Martin and Pratt &
Whitney. The new contract would need to share any additional cost growth with the
prime contractors. If the JSF program is to get its cost growth under control, the US
government should not be responsible for all program cost growth. The JSF program is
operating under a “cost plus” contract, which means that the US government is
responsible for all cost growth. If the JSF program is to get costs under control, the US
must institute incentives for the contractors to provide realistic cost and schedule
estimates and fund only to those estimates.
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One way to improve cost management might be to adopt a modified fixed price
contract. A fixed priced contract places all project risks on the contractor. However, it
is impossible for the contractor and its project managers to foresee all the design
challenges of building a new weapon system. Instead of adopting a fixed price
contract, the French have introduced a “responsibility principle” into their fixed price
contracting.20 This means that the contract is bid as a fixed price contract and then,
knowing that cost may still increase, the French have added the flexibility to share cost
increases with industry. According to Ethan Kapstein, this “responsibility principle”
means “those who are actually responsible for failing to meet contractual obligations,
whether government of industry, must generally pay the costs.”21 For example, should
the contractor be determined to be responsible, such as with manufacturing delays in
JSF production, Lockheed Martin would assume the cost of the delay. However, if the
government increased aircraft requirements or delayed procurement, it would pay for
the cost increases. While this “responsibility principle” would not cover all examples
and some cost increases might be disputed, it could go a long way in stabilizing
program costs. A key component of any fixed price contract with a “responsibility
principle” would be the establishment of a sense of fairness and trust between the US
government and contactor. Such trust would have to be maintained.
By funding to the JET levels and requiring the primary contractors to share in
the cost growth, the US would stabilize cost growth and incentive for industry to set
more accurate cost and schedule goals, control development and production costs and
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maintain production schedules. By proactively adopting the independent cost estimate
and restructuring its contract with Lockheed Martin, it will demonstrate to Congress,
partners and future partners that the US is serious about program stability.
Additional Partner Funding
With a plan to stabilize cost in place, the US should also try to persuade partner
countries to increase their funding. Under the JSF PSFD MOU, the partners are not
required to contribute any additional funds to cover program cost growth. But the
maximum partner costs were determined based on a financial cost ceiling of the
original 2002 SDD cost estimate of $21 billion. At this time, the US is forced to
shoulder all the additional costs and is not sharing cost growth with either the
contractors or partner countries. Should the US be successful in obtaining this funding
from the partner countries, there should be an amendment to the PSFD MOU
concerning maximum cost ceilings.
Adding additional funds to the program while still maintaining the current US
procurement profile, the US might give the US a chance at persuading the partners to
contribute. If, however, the US reduces procurement and does not add additional funds
to the program, it would drive up the average price per aircraft for both itself and
partners. The current US budget process aligns the US funding levels but does not
adequately take into account the effect of US changes in the budget on partner
countries’ costs, which can be significant. For example, a reduction of 100 US aircraft
over a 5 year period can add millions of dollars to the unit cost of each partner aircraft.
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This would undermine the strategy, and reduce the likelihood that the partners would
add additional funds. It would also increase the likelihood that partners would delay
their procurement, further increasing aircraft costs, and possibly forcing the program
into a “death spiral.” The only way to avoid this is to stabilize cost, maintain the
optimum production schedule, and have a joint budgeting process with the partner
countries.
Maintain Current Production Schedule
The plan to maintain the same production schedule has critics. They argue that
a delay in production should occur with any slip in development. This is based on the
fear that problems found during development and testing would have to be retrofitted
into any aircraft that have previously been purchased. The cost of retrofitting would be
expensive and time consuming. The worst case would be a complete redesign of an
aircraft system that would force all previously purchased aircraft to be grounded or
operationally irrelevant until the retrofit was completed.22 This argument, however,
does not take into account that the program was developed with “concurrency,” which
allows for a cost optimized procurement schedule. Concurrency means that the
program would be testing and procuring aircraft at the same time. Sufficient modeling,
simulation and laboratory testing would be done prior to purchasing aircraft. The
accuracy and reliability of this modeling would allow developers to discover the
majority of problems prior to flight test. In fact, the US has made a significant
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investment in JSF labs and modeling infrastructure to ensure the early discovery of
problems.
One of the investments was the Cooperative Avionics Test Bird (CATB). The
CATB is a modified Boeing 737 that duplicates the JSF avionics, software and sensor
systems. The CATB allows Lockheed Martin to fly the exact JSF mission software
prior to incorporating it into the actual JSF test aircraft. To date, the CATB has flown
over 200 hours and is testing software versions ahead of the actual test aircraft.23
The JSF acquisition strategy was based on a robust lab infrastructure to support
concurrency in the program. This planned level of concurrency allows for the
purchase of aircraft early in development, reducing the average cost per aircraft. It was
determined early in the JSF program that this strategy, which incorporates
concurrency, in combination with robust labs, was the most cost effective way to
produce the JSF. As mentioned earlier, the US has already significantly delayed
procurement, and nothing so far in development supports the further reduction of
aircraft below the optimum production schedule.
After partners have contributed additional money to an international program,
the US needs to protect the program from further budget and cost instability. Another
way to do this would be to protect the program from “taxes” or reductions in funding
that have historically been spread across all programs based on a fixed percent. These
“taxes” tend to delay content and procurement in order to save money in the near-term
but end up costing the program more in the long-run. The US, working with the
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partners, also needs to continue to work on ways to save money, while still protecting
required capabilities.
Joint Capabilities Assessment
Another cost saving technique, and one required after a Nunn-McCurdy breach,
is an assessment of the cost savings associated with a reasonable modification of
requirements or capabilities.24 The JSF program office, in association with the US
services and partner countries, needs to establish a team to assess the agreed upon
common capabilities that the JSF is being developed to meet. This team of
requirements specialists from all partner countries and US services should look for
capabilities that can be modified or delayed in order to save money and reduce the time
of development. This needs to be done in conjunction with Lockheed Martin so that
specific cost and schedule savings can be assessed by all stakeholders. The best way to
perform this assessment is through a system engineering approach that breaks down all
JSF critical tasks required to perform its core missions. The US and partners may be
able to reduce requirements, saving time and money, if this detailed assessment shows
redundant or inefficient capabilities in the current design. The US may be tempted to
conduct this assessment by itself, but it needs to involve all eight partner countries.
While the US will have the final vote on what capabilities, if any, would be removed,
partner county requirements need to be taken into account. If the partners do not have
a say on what possible capabilities would be remove it would undermine the US plan
to request additional development funding from the partners. The US needs to ensure
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that the removal of capabilities does not give the partners an excuse to delay their JSF
purchases.
The current US policy has underfunded the program, which has produced
yearly budget shortfalls.25 The US contract with Lockheed Martin and Pratt &
Whitney has not done an adequate job of incentivizing the contractors, and places all
cost risk on the US government. The continued cost growth has forced the US and
partners to delay procurement, out of budget cycle with each other, which has further
increased the average price of the aircraft. The US needs to adopt the below changes
to policy and processes in order to better manage the JSF program.
1. Stabilize cost by
a. funding to the independent cost estimate
b. changing the contract to share cost growth with contractors
2. Reduce cost by jointly modifying or delaying capabilities
3. With reduced cost stabilized
a. Request additional funding from partners
b. Work to better align US and partner budget process/timeline
By adopting the recommendations above the US will be following the guidance given
by Representative by Maryland Roscoe G. Bartlett, the ranking subcommittee member
for Seapower and Expeditionary Forces, “Finally, as we examine these issues, I would
strongly urge the Department to maintain transparency with Congress regarding the
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true requirements for aviation programs. We need to know the real cost of fulfilling
these requirements.”26
Revamp US Disclosure Policy
The second major challenge which the US must overcome in order to assure the
success of the JSF program is revamping the US disclosure policy. A complicated
interagency disclosure policy with its many laws and regulations does not take
advantage of the global market environment and discourages international armament
programs. These policies discourage international competition and are overly
controlling of technology transfers, which directly affect the US defense industry and
unnecessarily increase program costs. A recent acquisition study concluded, “DoD has
not adequately addressed the globalization of the defense industry.”27 By not
addressing US export restrictions, the US is jeopardizing its security and reducing US
competitiveness.
Mitchel B. Wallerstein, in a recent article in Foreign Affairs, articulates four
reasons why export controls reduce US competitiveness and undermine national
security. First, small high-tech firms are unable and unwilling to accept the risk and
cost associated with long-export licensing delays. This eliminates the DoD from many
of the cutting-edge products and access to many of the most innovative technology
developers. Second, many non-US companies, who have technologies that rival US
companies, choose not to compete out of fear of being entangled in US export control
regulations. In fact, the British government threatened to cancel its participation in the
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JSF program due to difficulties it encountered with US export policy. Third, the US is
often not able to outsource the repair and maintenance of its deployed systems to
foreign companies, which are located closer to the battlefield, due to not having export
licenses for each piece of equipment. Finally, export restrictions reduce the two-way
sharing of technical data with other countries which can help the US learn about
foreign military capabilities.28
These export restrictions are even more cumbersome and inefficient in the JSF
program. The JSF program is based a high level of common capabilities and
international industrial participation. Overly restrictive and complicated disclosure
policy reduces the likelihood that JSF aircraft capabilities will be equal among all
partners. Capability differences reduce interoperability between the US and JSF
partners undermining military effectiveness during coalition warfare. Reduced
commonality increases the development and operational cost for all parties.
US export controls not only impact the US government but also US industry.
Industry leaders like Hewlett Packard, IBM, Boeing, United Technologies and others
have repeatedly expressed concern about the cost and time imposed by US export
control regulations, and about having to compete with foreign competitors that do not
face the same requirements. Critics claim that this is just the complaining of self-
interested US companies, but the fact is that since the Cold War the market position of
US firms has declined relative to foreign industries. These concerns, by industry, have
become increasingly more important as jobs and market share continue to move
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overseas.29 Export controls and technology transfer regulations need to be restructured
to take advantage of the global market environment. Under current export control
regulations, the US government is not able to foster global competition and it is
reflected in a high price for defense products.30
US firms are not competitive, first, because export controls impose
cumbersome compliance requirements that increase their costs relative to foreign
competitors. Second, US designed components are intentionally being left out of
products. This allows US and foreign firms to avoid compliance with US export
control laws. US export restrictions are looked upon so negatively by world markets
that some companies, such as the Swiss Propulsion Laboratory, even advertise that its
products are totally free of US content. According to Mitchel Wallerstein, “The
European space industry now explicitly claims to be an ITAR-free zone.”31 This
means that its companies and suppliers do not use any US content that is regulated by
the International Traffic in Arms Regulations, which is governed by the US Arms
Export Control Act.32 Lastly, US firms that have overseas research and development
facilities must “compartmentalize” development and restrict access to certain
technologies only to US citizens. This same thing must occur in US facilities that
employ foreign nationals, to include US universities, many of which work on DoD
contracts. This limits or deprives US industry and universities from utilizing some the
world’s leading engineers and scientists.33
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Critics of revamping US disclosure policy will argue that the current export
restrictions on the JSF are necessary in order to prevent near-peer countries like Russia
and China from exploiting US technology. Each of these countries is unique and will
require a tailored policy, but the majority of technology used in the JSF is dual use.
Other than JSF stealth and encryption technology, which should be closely controlled,
these countries already have unrestricted access to computers and other dual-use
military technologies.
Most experts do not believe that Russia has the resources or desire to rebuild its
military to compete with the US or its European allies. Russia has recently
demonstrated its ability to threaten its smaller neighbors, but is a long way from
returning to its Cold War military capabilities. President Obama has stated that the
US position is to “reset” the US-Russian relationship. A key component of this
strategy is to open a two-way flow of information, people, ideas and technology. The
continued denial of dual use technology would not be productive under this strategy.
China is the case most cited by defenders of the current US export restrictions
because it appears to be a potential military competitor with unclear regional goals.
However, the economic dependence between China and the US and the amount of
money spent on research and development by the US in China reduces the likelihood
that the US will be able to deny technologies. The argument can be made that by
sharing technologies with China the US will be able to improve transparency and that
will lead to greater interdependencies.34
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The key to controlling critical JSF or future international armament program
technologies is not to delay the exchange of information between the US and partner
countries. It is to identify critical technologies and to protect them with anti-tamper
and logistical agreements. International armament programs, by design, require
partner participation. At the basic level they require that a system be developed in
such a way that will allow for its sale to foreign governments. However, the JSF
program goes even farther in its requirement for partner participation. The JSF
program has been designed from the ground-up, with partner funding, to support
international industrial participation and to improve coalition warfare. The current US
export control laws, regulations, and processes restrict the management of the JSF
program, and increase cost by reducing the exchange of technology between the US
and partner countries.
This process needs to be changed and new controls that work need to be
implemented. Military technology that is dual use and is not controlled by other
nations should not be controlled by the US. A few specific technologies are still
enjoyed solely by the US, like stealth or advanced encryption software. These
technologies still must be controlled because the US still enjoys a considerable
advantage over competitors that should persist for a considerable period of time. A
recent study by the National Research Council’s Committee on Science, Security and
Prosperity concluded that the US should impose restrictions on technology only when
the below conditions are met:
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1. The technology provides identifiable military advantage.
2. This military advantage will persist for a significant period of time.
3. The technology can be controlled and transfer can be prevented.
4. Restrictions don’t impose cost and inefficiencies that are disproportionate to security benefits
5. Restrictions should be reevaluated at regular intervals, as technology
propagates and market conditions change35
The following recommendations for changes to the US export control process have
been expressed by the Defense Science Board Task Force on International
Armaments Cooperation in August 1996. The organization is annotated in the first
column along with its recommend action. The highlighted sections were also
recommendations from in Stephen G. DiDomenico’s 2006 paper for the Air War
College, “International Armament Cooperative Programs: Benefits, Liabilities, and
Self-inflicted Wounds – The JSF as a Case Study.”
Figure 12. DSB Recommendations to Increase IACP Opportunities for Success36
One of the reasons that these recommendations have not yet been implemented
is the “institutional inertia caused by bureaucratic unwillingness to relinquish authority
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that is not in their self-interest.”37 Also, Dr. Jacques C. Gansler, the task force
chairman for the DSD report, was just one of three principals that needed to adopt the
reports recommendations. Dr. Gansler was OUSD (AT&L), but per his
recommendations, OSD (Policy) was to give up control of two agencies to OUSD
(AT&L), both Defense Technology and Security Administration (DTSA), and Defense
Security Assistance Agency (DSAA), which is now called Defense Security
Cooperation Agency (DSCA). Without the support of US Congressional champions
and its enactment into law, it is very unlikely that an organizational change such as this
would be implemented by the DoD. An example of a DoD organizational change like
this is the Goldwater-Nichols Act, which has been recognized for its insightful
institutional changes.38 A similar congressional law that deals with acquisition reform
would have to be championed by Congress. It is unfortunate that the recent acquisition
reform act that was signed into law by President Obama on May 22, 2009, did not
address the cumbersome export control process that burdens the DoD and US
companies.39
US National Security and National Military Strategies stress the importance of
international alliances and coalitions, and the US needs to strengthen partner
capabilities. One way to do this is through international cooperative armament
programs, like the JSF. However, the current US export laws, policy, and regulations
are obstructing the success of the program. The policy in Europe has been to relax
export laws in order to encourage participation.40 The US has not yet adapted a
92
flexible export policy that encourages partner participation, but has clung to old
policies that protecting unnecessary technologies. Congressional law needs to enact
the 1996 DSB recommendations in order to taking full advantage of globalization and
the benefits from international cooperation.
Determining Industrial Participation
Determining industrial participation is another major hurdle that the JSF
program will have to cross. Currently there are few guidelines in effect and changes
will need to be made. Industrial participation in the program is based on a “best value”
approach between current partner industries. One limitation to a “best value” approach
is that Lockheed Martin will not be able to provide timely and necessary technical data,
due to US disclosure policy, and partner industries will not be able to compete. This
limitation should be resolved with the revamping of US disclosure policy that was
outlined in the previous section. However, re-tooling the US disclosure policy will not
ensure that each JSF partner receives a share of industrial participation. The Buy
American Act is another limitation on “best value” that needs to be addressed. It
restricts international trade and prevents fair competition between US and international
industries. It also restricts the US military from taking full advantage of a global
industrial base.
The US and partners have agreed to a “best value” approach, outlined in the
PSFD MOU. However, it can be expected that partners will continue to emphasize
that their industries’ ability to win JSF contracts is important to for their continued
93
involvement, and Congress will continue to scrutinize all international industrial
participation and its effect on US jobs. Also, there is not an agreement on how the
level of industrial participation for future JSF partner countries will be determined.
Lockheed Martin is currently responsible for balancing partner industrial participation
while still achieving program cost goals. This will put pressure on Lockheed Martin to
be conciliatory toward both current and future partners, due to the fear that if
participation is not satisfactory they will decide to leave the program or not purchase
JSF.
The sale of JSF to other partners may hinge on a countries’ level of industrial
participation. For example, Japan needs to start phasing out its remaining F-4s,
starting in 2014. By August of 2010, Japan is expected to make a decision on which
aircraft to procure in 2012 for a delivery date of 2015, as a replacement for the F-4s.
Japan has already stated that their amount of industrial participation will factor into
their aircraft selection decision. According to Aviation Week, Eurofighter Typhoon, “is
offering significant work sharing, and Boeing is also saying it has identified extensive
opportunities to reward Japan’s industry.”41 Boeing is basing its estimate on prior
military sales and the historical involvement of Japanese industry in building Boeing
airliners.42 Lockheed Martin has already started discussions with Japan about their
level of industrial participation with the F-35. One of the options proposed by
Lockheed Martin was the establishment of an in-country final assembly and check-out
facility (FACO). This FACO proposal would be similar to the one Lockheed Martin is
94
establishing in Italy that is ready to begin operations in 2015. The FACO in Italy will
be run by Alenia Aeronauticea and will be capable of completing two aircraft per
month. Major sections of the F-35 will arrive from partner countries, while Alenia will
provide the wings and then complete final assembly. Alenia will also apply radar
cross-section coating and conduct flight testing. A FACO such as this would fill the
Japanese requirement for industrial participation. The primary contractor would most
likely be Mitsubishi Heavy Industries, which currently works with Lockheed Martin on
the F-2 fighter. In addition, it is most likely that Japan would like its industries to also
manufacture parts for domestic F-35s. Any deal with Japan would have to be approved
by the US government.43 The question is whether or not it would also have to be
approved by the other JSF partners, who have already contributed to F-35 development
and have industrial participation. The PSFD MOU does not specifically address future
partner industrial participation.
The partner countries will be interested in the possibility of Japan purchasing
aircraft in 2012, because it will lower the cost of their aircraft. However, they will not
be excited about sharing the industrial participation with Japan. Also, there may be
debate concerning whether or not an additional FACO will even be necessary. Italy
may make the case that expanding production at its facility would be more economical
than an additional FACO in Japan. And if another FACO would be required in that
part of the world, the Australians could argue that it should be in their country.
95
Due to concerns like these about industrial participation, a formalized
agreement needs to be outlined. This agreement needs to build on the current
framework outlined in the PSFD MOU, and continue to emphasize the policy of “best
value.” It specifically needs to establish guidance about how future partners will
compete for industrial participation. Below are recommended US government policy
changes and key points that need to be added to the PSFD MOU.
1. OSD policy monitored by DSCA should prevent Lockheed Martin from presenting industrial participation estimates until they have been approved by the US government, and briefed to partner countries
2. OSD should put policy in place that directs all JSF industrial participation
to be “best value” and directs all future international armament programs to consider “best value”
3. OSD for the Executive Branch needs to persuade Congress to remove the
restrictions of the Buy American Act on JSF and other international armament programs
4. Industrial participation levels and plans need to be briefed annually at the
JSF Joint Executive Steering Board
US Determination of Future JSF partners or FMS countries
The final major challenge to the JSF program will be the determination of
future foreign military sales. Since there are so many diverse countries already
invested in the JSF program, the US will need to find a way to make decisions about
FMS in a fair and balanced way. As discussed earlier, there will be pressure to expand
JSF sales in order to reduce the average price per aircraft. The expansion of JSF sales
will also bring with it some potential problems both operationally and politically. The
96
current PSFD MOU states that the US will take into account the political views,
security and national laws and regulations of partner countries prior to the sale of JSF
to other countries. However, based on the general guidance outlined in the PSFD
MOU, it will be difficult to align the foreign policy and national security
considerations of all partners prior to third party sales. Ultimately, the PSFD MOU
does not specifically restrict the sale of JSF to any country or require the sale to be
approved by any of the partners. In spite of the wording of the PSFD MOU, the final
decision for third party sales rests with the US.
The JSF program was developed with partner funding and is being produced in
partner countries. Because of the level of partner participation, it would not be
unreasonable for partner countries to ask to be included in the decision process for
third party sales. The US may never allow the partners to have an actual “veto” on
third party sales, but certain policies need to be put in place to give priority to the
preferences of the original partners and take their contributions into account. These
policy changes also need to recognize that FMS countries will want to have some
influence on future JSF development and program management decisions. The current
agreement between the US and partner countries is based on a combination of funding
provided and planned aircraft purchases. A similar approach needs to be put in place
to address FMS countries. The following recommendation are to address FMS sales
and integration.
97
1. The JSF Program Manager should charter an “FMS working group” made up of partner countries, DSCA and US services to work out how FMS countries will be incorporated into the JSF decision-making bodies (OAG, SWG, and JESB)
2. Incorporate the FMS working group findings and recommendations into the
PSFD MOU
3. OSD and DSCA –
a. The DSCA should develop a formal process to keep partner countries informed on all information and purchase requests from third parties. At a minimum this information should consist of number of aircraft, industrial participation, proposed JSF capabilities, and regional security implications
b. Develop a formal process inside DSCA which would be managed
by the JSF program office for partners to address their FMS concerns
Summary / Conclusions
The current DoD acquisition regulations, stated in the July 2005 DoD 5000.1,
require all programs to consider an international cooperation approach and not just a
joint or service specific solution. An international program brings with it
complications, but also, if executed correctly, the ability to attain “US geopolitical and
military objectives.”44 If the JSF program fails it will hurt all stakeholders. Billions of
taxpayer dollars will have been wasted. The US might be faced with financial and
ethical problems due to the funds contributed by the partner countries. Politically, the
cancellation of the program would cause the US to appear extremely untrustworthy and
undependable. The US services and partner countries are relying on the JSF to replace
98
its aging tactical fighter inventory. Their industries are reaping significant financial
benefits from JSF development. Numerous jobs would be lost in all countries if the
JSF were cancelled. Also, operationally there would still be a significant capability
gap between the US and its coalition partners. The reasons the US developed the JSF
program in its current capacity remain valid, in spite of the difficulties associated with
the program. The JSF program has operational, economic, and political benefits. If
managed correctly it will facilitate efficient coalition operations, economically benefit
US and partner industries, reduce acquisition costs and improve regional stability.
However, numerous challenges remain, and current policy does not fully support
international armament programs like the JSF. Current US acquisition policy and
contractor performance has not stabilized program cost. This has caused partners to
delay procurement, further increasing costs. US disclosure policy and Congressional
Law do not fully support international armament programs and a globalized, highly
competitive armament industry. International armament programs also challenge US
policy and its obligations to partner countries. The US must be more attuned to the
cost and political challenges faced by partner countries if its goal is to strengthen
partner industries and truly build coalition war-fighting capabilities. There is not a
simple solution to every challenge associated with international armament programs,
but many of the problems JSF is encountering will apply to future programs. If
successful, the JSF program could establish the framework that other US international
programs will follow.
99
ENDNOTES
Chapter 2
1 Stephen G. DiDomenico, Lieutenant Colonel, USAF, “International
Armament Cooperative Programs: Benefits, Liabilities, and Self-inflected Wounds – The JSF as a Case Study” (February 2006), 5.
2 Ibid. 3 Joint Strike Fighter Program Office, “JSF History,”
http://www.jsf.mil/history/ (accessed 20 December 2009). 4 U.S. Department of Defense, Report of the Defense Science Board Task Force
on Joint Advanced Strike Technology Program, Sept 1994, Memorandum for Chairman, Defense Science board, Washington, DC, May 10, 1994, 49.
5 Ibid. 6 U.S. Department of Defense, Operation of the Defense Acquisition System
DoDI 5000.02, Washington, DC, December 8 2008, 72. 7 U.S. Government Accountability Office, Joint Strike Fighter Acquisition
Managing Competing Pressures Is Critical to Achieving Program Goals, Washington, DC, July 21, 2005, 3.
8 U.S. Government Accountability Office, Status of the F/A-22 and JSF
Acquisition Programs and Implications for Tactical Aircraft Modernization, Washington, DC, March 23, 2005, 3.
9 U.S. Government Accountability Office, Joint Strike Fighter: Accelerating
Procurement Before Completing Development Increases the Government’s Financial Risk, Washington, DC, March 2009, 5.
10 Joint Strike Fighter Program Office, “F-35 Program Overview 13 February
2008,” brief by General Charles R. Davis, http://www.jsf.mil/downloads/documents/AV_Week_Brief_-_2008_FEB_13.pdf (accessed 20 December 2009).
100
11 Charles R. Davis, Major General, “Brookings Institute Discussion,” 15
January 2009, slide 12. 12 Joint Strike Fighter: Accelerating Procurement Before Completing
Development Increases the Government’s Financial Risk, March 2009, 4. 13 Joint Strike Fighter Program Office, “Joint Strike Fighter Program Brief 13
September 2005,” brief by Rear Admiral Steven L. Enewold and Dan Crowley, http://www.jsf.mil/downloads/documents/AFA%20Conf%20-%20JSF%20Program%20Update%20-%2013%20Sep%2005.PDF (accessed 9 September 2009).
14 Christina Wood, and David S. Sorenson, International Military Aerospace
Collaboration, (Hants England: Ashgate Publishing Ltd, 2000), 1. 15 Flight Global website, “JSF Pays off for Italians, July 2007,”
http://www.flightglobal.com/articles/2007/07/31/215811/jsf-pays-off-for-italians.html (accessed 14 September 2009).
16 Joint Strike Fighter Acquisition Managing Competing Pressures Is Critical
to Achieving Program Goals, July 21, 2005, 2. 17 Joint Strike Fighter Program Office, JSF Post Sustainment and Follow-on
Development Memorandum of Understanding (PSFD MOU), 7 February 2007, 89, http://www.jsf.mil/downloads/documents/JSF%20PSFD%20MOU%20%2007%20Feb%2007.pdf (accessed 9 September 2009).
18 Joint Strike Fighter Acquisition Managing Competing Pressures Is Critical to Achieving Program Goals, July 21, 2005, 5.
19 DiDomenico, “International Armament Cooperative Programs,” 5. 20 Nick Cook., “JSF-A Model for International Cooperation?” Interavia (Feb
1999). 21 DiDomenico, “International Armament Cooperative Programs,” 8.
Chapter 3
1 Report of the Defense Science Board Task Force on Joint Advanced Strike
Technology Program, Sept 1994, ES-7.
101
2 Ibid., 49. 3 Ibid., 50. 4 U.S. Department of Defense, Report of the Defense Science Board Task Force
on International Armaments Cooperation, August 1996, Memorandum for Under Secretary of Defense (A&T), Washington, DC, July 31, 1996, i.
5 Ibid. 6 Ibid. 7 The National Security Strategy of the United States of America, September
2002, viii. 8 Thomas P.M. Barnett, The Pentagon’s New Map: War and Peace in the
Twenty-First Century, (New York: G.P. Putnam’s Sons, 2004), 196. 9 The National Security Strategy of the United States of America, September
2002, viii. 10 Ibid., viii. 11 Defense Institute of Security Assistance Management (DISAM), “The
Management of Security Assistance Manual,” Defense Institute of Security Assistance Management,” DISAM online Green Book, Chapter 13, http://www.disam.dsca.mil/pubs/DR/greenbook.htm (accessed 20 December 2009).
12 DiDomenico, “International Armament Cooperative Programs,” 13. 13 U.S. Department of Defense, National Defense Strategy of the United States
of America, June 2008, 15. 14 DiDomenico, “International Armament Cooperative Programs,” 24. 15 Ibid. 16 Ibid., 25.
102
17 David S. Yost, “The NATO Capabilities Gap and the European Union,”
Survival, (Winter 2000/2001): 103. 18 U.S. Government Accountability Office, Status of the F/A-22 and JSF
Acquisition Programs and Implications for Tactical Aircraft Modernization, Washington, DC, March 23, 2005, 1-26.
19 Each COCOM staff was first sent a questionnaire by the JSF program office
“Blue Team”. The “Blue Team” was tasked to look at possible benefits associated with JSF technology transfer. The results of the questionnaire were briefed by the “Blue Team” to each COCOM and each COCOM then concurred with the results.
20 U.S. Department of Defense, Operation of the Defense Acquisition System
DoDI 5000.02, Washington, DC, December 8 2008, 1-32. 21 Corinne Asti, “The F-35 JSF in Europe: The Consequences of Pragmatism,”
CeMiSS Quarterly, (Summer 2005): 95. 22 DiDomenico, “International Armament Cooperative Programs,” 27. 23 Joint Strike Fighter Program Office, “Joint Strike Fighter Program Brief 13
September 2005,” brief by Rear Admiral Steven L. Enewold, Mr. Dan Crowley, http://www.jsf.mil/downloads/documents/AFA%20Conf%20-%20JSF%20Program%20Update%20-%2013%20Sep%2005.PDF, (accessed 9 September 2009).
24 Operation of the Defense Acquisition System DoDI 5000.02, p 72. 25 The Heritage Foundation, “Defense Speeding as Percent of GDP”,
http://blog.heritage.org/2008/03/28/defense-spending-as-percentage-of-gdp-well-below-historical-average/# (accessed 7 October 2009).
26 Status of the F/A-22 and JSF Acquisition Programs and Implications for
Tactical Aircraft Modernization, March 23, 2005. 27 George C Wilson, This War Really Matters, (Washington D.C.: CQ Press),
191. 28 DiDomenico, “International Armament Cooperative Programs,” 17.
103
29 Norm Augustine, Augustine’s Laws, (Reston Virginia: American Institute of
Aeronautics and Astronautics Inc.), 111. 30 Ibid., 14. 31 DiDomenico, “International Armament Cooperative Programs,” 28. 32 Ibid., 29. 33 U.S. Department of Defense, JSF International Industrial Participation: A
Study of Country Approaches and financial Impacts of Foreign Suppliers, Washington, DC, June 2003, 4.
34 Ibid. 35 US Defense Speeding as a percent of US GDP increased after September 11
2001 but is still below the 45-year average see Figure 7. According to the Heritage Foundation the current “Obama’s Budget Would Return US Defense Speeding to Pre-911 Levels”, http://www.heritage.org/Research/Features/BudgetChartbook/Obama-Budget-Would-Return-Defense-Spending-to-Pre-911-Levels.aspx (accessed 5 December 2009.
36 Bruce G. Linster, Lt Col Stephen Slate, and Robert Waller, “Consolidation of
the U.S. Defense Industrial Base: Impact on Research Expenditures,” Acquisition review Quarterly (Spring 2002): 143.
37 DiDomenico, “International Armament Cooperative Programs,” 19. 38 John Deutch, “Consolidation of the U.S. Defense Industrial Base,”
Acquisition Review Quarterly (Fall 2001): 138. 39 Defense Acquisition Performance Assessment Executive Summary, 22 Dec
2005, https://acc.dau.mil/CommunityBrowser.aspx?id=32595 (accessed 6 October 2009).
40 Robert H Trice, “Trade and the Defense Industrial Base,”
http://www.dsca.mil/sc2004/Conference%20Agenda%20and%20Presentations/General%20Sessions/Thursday%2014%20Oct%2004/Dr%20TRICE%20DSCA%20Trade%20&%20Defense%20Industrial%20Base_files/frame.htm#slide0412.htm (accessed 6 Oct 2009).
104
41 Defense Systems Daily, “U.S. Defense Industry Global Partnerships,” 1 June
2005, http://www.defensedaily.com/ (accessed 6 October 2009). 42 Robert H. Trice, “Trade and the Defense Industrial Base,” slide 16. 43 DiDomenico, “International Armament Cooperative Programs”, 21. 44 European Defence.co.uk online, “Norway chooses the F-35,” November 21
2008, http://www.european-defence.co.uk/norway_chooses_the_F35.html (accessed 4 December 2009).
45 Military.com online, “Dutch Analysis Reafferms F-35 Choice, December 20
2008, http://www.military.com/features/0,15240,181549,00.html (accessed 5 December 2009).
46 Charles R. Davis, Major General, “Brookings Institute Discussion,” 15
January 2009, slide 28. 47 Robert H Trice, “Trade and the Defense Industrial Base,” slide 4.
48 JSF International Industrial Participation: A Study of Country Approaches
and financial Impacts of Foreign Suppliers, June 2003, 3. 49 DiDomenico, “International Armament Cooperative Programs,” 29. 50 Ibid., 30. 51 Mitchel B. Wallerstein, “Losing Controls: How US Export restrictions
Jeopardize National Security and Harm Competitiveness,” Foreign Affairs (November-December 2009): 18.
52 Reuters.com, “Singapore and Israel eye buying Lockheed fighter,” July 7,
2008,http://uk.reuters.com/article/UK_SMALLCAPSRPT/idUKN0744095420080707?sp=true (accessed 6 Oct 2009).
53 DiDomenico, “International Armament Cooperative Programs,” 4. 54 Joshua Kurlantzick, “Pax Asia-Pacifica? East Asian Integration and Its
Implications for the United States,” The Washington Quarterly, (Summer 2007): 68. 55 Barnett, The Pentagon’s New Map, 230.
105
56 Ibid., 101. 57 Evan S. Medeiros, “Strategic Hedging and the Future of Asia-Pacific
Stability,” The Washington Quarterly (Winter 2005-06): 149. 58 Ibid., 150. 59 Ibid. 60 Ibid. 61 US Department of State Diplomacy in Action, “Foreign Military Training in
Fiscal Years 2004 and 2005, Volume I,” April 2005, http://www.state.gov/t/pm/rls/rpt/fmtrpt/2005/ (accessed 1 September 2009).
Chapter 4
1 Joint Strike Fighter Acquisition: Managing Competing Pressures Is Critical to Achieving Program Goals, July 2003.
2 DiDomenico, “International Armament Cooperative Programs,” 11. 3 The National Defense Strategy of the United States of America, March 2005,
pp iii-iv and 1-20, Published by the Office of the Secretary of Defense, Washington DC, http://www.globalsecurity.org/military/library/policy/dod/nds-usa_mar2005.htm (accessed 26 Oct 2009).
4 DiDomenico, “International Armament Cooperative Programs,” 39. 5 Jeffery P. Bialos, “Last Supper Fallout: Can Defense Industry Meet
Tomorrow’s Challenges,” Defense News (November 2003). 6 John H. Tirpak, “Fighter of the Future,” Air Force Magazine (July 2009): 27. 7 The map is available at http://en.wikipedia.org/wiki/F-16 (accessed 22 Nov
2009), the list of countries was confirmed at http://www.f-16.net/units.html (accessed 23 Nov 2009).
106
8 The map is available at http://en.wikipedia.org/wiki/F-18 (accessed 22 Nov
2009), the list of countries was confirmed by Defense Industry Daily, “F-18 Hornet: Keeping Em’ Flying,” 8 Nov 2009, http://www.defenseindustrydaily.com/f18-hornets-keeping-em-flying-02816/ (accessed 20 Nov 2009).
9 Defense Industry Daily, “India’s MMRCA Fighter Competition, 22 Sep
2009,” http://www.defenseindustrydaily.com/mirage-2000s-withdrawn-as-indias-mrca-fighter-competition-changes-01989/ (accessed 26 Oct 2009).
10 JSF Post Sustainment and Follow-on Development Memorandum of
Understanding (PSFD MOU), 7 February 2007, 70. 11 Ibid., 71-72. 12 Hurriyet Daily News, “J Street and strained Turkey-Israel relationship, 2
November 2009,” http://www.hurriyetdailynews.com/n.php?n=j-street-and-strained-turkey-israel-relationship-2009-11-02 (accessed 6 November 2009).
13 Federation of American Scientists, “Greece Country Profile,”
http://www.fas.org/asmp/profiles/greece.htm (accessed 6 November 2009). 14 Joint Strike Fighter Acquisition: Managing Competing Pressures Is Critical
to Achieving Program Goals, July 2003, 9. 15 DiDomenico, “International Armament Cooperative Programs,” 40. 16 CBS News online, “Shredding F-14s to Keep Parts From Iran,” July 2, 2007,
http://www.cbsnews.com/stories/2007/07/02/national/main3006107.shtml (accessed 26 Oct 2009).
17 “Venezuela threatens US over f-16’s,” BBC News (2 November 2005). 18 Christina Wood and David S. Sorenson, International Military Aerospace
Collaboration, 18, 89, 95, 103. 19 DiDomenico, “International Armament Cooperative Programs,” 40. 20 In 1996, preliminary planning estimated over 3,000 F-35s for DOD and the
UK: 2,036 for the Air Force, 642 for the Marines, 300 for the U.S. Navy, and 60 for the Royal Navy. In May 1997, the QDR recommended reducing projected DoD procurement from 2,978 to 2,852: 1,763 for the Air Force, 609 for the Marines, and
107
480 for the Navy. (Quadrennial Defense Review Cuts Procurement in FY1999, 2000, Aerospace Daily, May 20, 1997, p 280) In 2003, the Department of the Navy (DON) reduced its planned procurement of 1,089 F-35s to 680 aircraft as part of the Navy/Marine Corps Tactical Aviation Integration Plan. (See CRS Report RS21488, Navy-Marine Corps Tactical Air Integration Plan: Background and Issues for Congress, by Christopher Bolkcom and Ronald O'Rourke).
21 Military.com online, “JSF Faces Showdown on F-35 Cost Estimates,”
August 03, 2009, http://www.military.com/features/0,15240,196817,00.html (accessed 4 November 2009).
22 Rueben F. Johnson, “JSF Puts Squeeze on its European Rivals,” Aviation
International News, (Farnborough 2002). 23 Ronald O’Rourke, Congressional Research Service, F-35 Joint Strike Fighter
(JSF) Program: Background and Issues for Congress, September 25, 2009, 12. 24 U.S. Government Accountability Office, Recent Decisions by DoD Add Risk
to the Program, Washington, DC, March 2008, 7. Joint Strike Fighter Acquisition: Managing Competing Pressures Is Critical to
Achieving Program Goals, July 2003, 1. 26 JSF Post Sustainment and Follow-on Development Memorandum of
Understanding, (PSFD MOU), 7 February 2007, 34. 27 Ibid. 28 Ibid. 29 John L. Hudson, Major General JSF Program Manager, Statement before the
Subcommittee on National Security Emerging Threats and International Relations of the Committee on government reform, House of Representatives, 108th Congress, July 21, 2003, Serial No. 108-94, 1.
30 Suzanne Patrick, DUSD(AT&L) Industrial Policy, Statement before the
Subcommittee on national Security, Emerging Threats, and International Relations, House of Representatives, 21 July 2003, 41.
31 DiDomenico, “International Armament Cooperative Programs,” 44.
108
32 Red team-blue team exercises take their name from their military
antecedents. The idea is simple: One group of security pros--a red team--attacks something, and an opposing group--the blue team--defends it. In this case the Red team will fight for the release of a specific technology, while the Blue team will support the protection of the technology.
33 Army.mil online, “Exceptions to National Disclosure Policy,”
https://www.alt.army.mil/portal/page/portal/oasaalt/SAAL-ZN-Disclosure_Exceptions (accessed 4 November 2009).
34 Ronald O’Rourke, F-35 Joint Strike Fighter (JSF) Program: Background
and Issues for Congress, 10. 35 U.S. General Accounting Office, F-16 Program: Reasonably Competitive
Premiums for European Coproduction, GAO/NSIAD-90-181, Washington, D.C., May 14, 1990.
36 Wood, Christina, and David S. Sorenson, International Military Aerospace
Collaboration, 172, 186. 37 Air Force technology.com, “F-21 Kfir Fighter Jet, Israel,”
http://www.airforce-technology.com/projects/kfir-jet/ (accessed 2 December 2009). 38 Wood, Christina, and David S. Sorenson, International Military Aerospace
Collaboration, 89. 39 Lt Col Joseph S. Smyth, “The Impact of the Buy American Act on Program
Managers,” Acquisition Review Quarterly (Summer 1999): 263. 40 DiDomenico, “International Armament Cooperative Programs,” 47. 41 Wood, Christina, and David S. Sorenson, International Military Aerospace
Collaboration, 75. 42 The United Kingdom is the only signatory country on the Joint Operational
Requirements Document. However, each of the other 7 countries did originally sign a SDD MOU that outlined their roles, responsibilities and requirements. Recently all of the eight partner countries have also signed a Post Sustainment and Follow-on Development MOU (PSFD MOU) that further defined the roles, responsibilities and requirements for all partner countries and the US.
109
43 Wade Knudson, Captain, USN, Deputy JSF Program Manager, brief given to
SAE 2009 Aerospace In the News, 30 April 2009, slide 6. 44 JSF Post Sustainment and Follow-on Development Memorandum of
Understanding, (PSFD MOU), 7 February 2007, 108. 45 John L. Hudson, Major General, JSF Program manager, Statement before the
Subcommittee on National Security Emerging Threats and International Relations of the Committee on government reform, July 21, 2003, 48.
Chapter 5
1 Jacques S. Gansler, OSD AT&L 1997-2001, and Lipitz, Roger C., “Globization”, presentation July 13 2007, http://www.acus.org/docs/Globalization_Atlantic%20Council_7.13.07_FINAL.ppt (accessed 4 December 2009).
2 DiDomenico, “International Armament Cooperative Programs,” 51. 3 Ibid., 52. 4 Amy Butler and Graham Warwick, “Pentagon May Restructure JSF Test
Program,” Aviation Week online, http://www.aviationweek.com/aw/search/basicsearch_articles.jsp?arct=273&wdct=1&wect=0&blogct=358&startIndex=1&sortType=date&OASKeyword=JSF (accessed 7 December 2009).
5 Joint Strike Fighter Accelerating Procurement before Completing
Development Increases the Government’s Financial Risk, March 2009, 2.
6 Amy Butler and Graham Warwick, “Pentagon May Restructure JSF Test Program.”
7 Joint Strike Fighter Accelerating Procurement before Completing
Development Increases the Government’s Financial Risk, March 2009, 6. 8 Data for this chart was from the annual acquisition reports that are dated in
December of each year but are not officially released and reported to the Congress in March or April of the following year. The December 2003 data reflect the last major restructuring of the program. The December 2007 data represent the official program of record at the time of the March GAO report.
110
9 Joint Strike Fighter Accelerating Procurement before Completing
Development Increases the Government’s Financial Risk, March 2009, 6. 10 The JET only projected costs through fiscal year 2015. Extending
development to October 2016, as the JET projects, would increase both cost figures. DoD data suggest that 1 year of additional flight testing and other government costs could be about $700 million.
11 Joint Strike Fighter Accelerating Procurement before Completing
Development Increases the Government’s Financial Risk, March 2009, 11.
12 Ibid. 13 Ibid. 14 Defense Acquisition University online, “Nunn-McCurdy Cost Reporting,”
May 10 2006, http://www.dau.mil/conferences/2006/documents/Session%202.pdf (accessed 5 December 2009).
15 Defense.gov online, “SAR Program Acquisition Cost Summary (Dollars in
Millions) As of September 30, 2008,” http://www.defense.gov/news/SAR%20Acquisition%20Cost%20Table%20(2).pdf (accessed 5 December 2009).
16 Ibid., 26. 17 Honorable Gordon England, Secretary of the Navy, 2004,
http://www.jsf.mil/program/prog_intl.htm, (accessed 6 December 2009). 18 The Center for Arms Control and Non-Proliferation, “Analysis of S. 454:
The Levin-McCain Acquisition Reform Act,” 30 April 2009, http://www.armscontrolcenter.org/policy/securityspending/articles/043009_c111_s454/ (accessed 7 December 2009).
19 Amy Butler and Graham Warwick, “Pentagon May Restructure JSF Test
Program” 20 Ethan B. Kapstein, “Smart Defense Acquisition: Learning from the French
Procurement Reform,” Center for a New American Security December 2009, http://www.cnas.org/node/3845 (accessed 20 December 2009).
111
21 Ibid., 3. 22 Recent Decisions by DoD Add Risk to the Program, March 2008, 3. 23 Jamie Hunter, “F-35 Joint Strike Fighter Review,” Combat Aircraft Monthly,
(November 2009): 46. 24 Defense Acquisition University online, “Nunn-McCurdy Cost Reporting,
May 10 2006, http://www.dau.mil/conferences/2006/documents/Session%202.pdf, (accessed 5 December 2009).
25 Joint Strike Fighter: Accelerating Procurement Before Completing
Development Increases the Government’s Financial Risk, March 2009, 1-10. 26 Roscoe G. Bartlett, Representative from Maryland, Ranking member,
Seapower, and Expeditionary Forces Subcommittee, Hearing on National Defense Authorization Act for Fiscal Year 2009, March 11, 2008, p 6.
27 DiDomenic, “International Armament Cooperative Programs,” 52. 28 Wallerstein, “Losing Controls,” 13. 29 Ibid., 14. 30 DiDomenic, “International Armament Cooperative Programs,” 53. 31 Wallerstein, “Losing Controls,” 14. 32 Ibid. 33 Ibid. 34 Ibid., 17. 35 Ibid., 18. 36 Report of the Defense Science Board Task Force on International
Armaments Cooperation, International Armaments Cooperation in an Era of Coalition Security, August 1996, 8.
112
37 DiDomenic, “International Armament Cooperative Programs,” 57. 38 National Defense University Library, “Goldwater Nichols Department of
Defense Reorganization Act of 1986,” http://www.ndu.edu/library/goldnich/goldnich.html (accessed 8 December 2009).
39 The Center for Arms Control and Non-Proliferation, “Analysis of S. 454:
The Levin-McCain Acquisition Reform Act.” 40 DiDomenico, “International Armament Cooperative Programs,” 64. 41 Douglas Barrie and Robert Wall “Starter Orders: With decision milestones
looming, a first quarter go-ahead for Japan’s fighter contest in now pending,” Aviation Week and Space Technology, (December 7, 2009): 37.
42 Ibid.
43 Siva Govindasamy, “Japan and Lockheed mull F-35 assembly plant,” July
22, 2009, http://www.flightglobal.com/articles/2009/07/22/329986/japan-and-lockheed-mull-f-35-assembly-plant.html (accessed 14 December 2009).
44 International Armaments Cooperation in an Era of Coalition Security, August 1996, i.
113
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