Case Study 12: From F-35 Sustainment, GAO-16-439, April 14, 2016

The F-35 is the most ambitious and expensive weapon system in Department of Defense’s (DOD) history, with sustainment costs comprising the vast majority of DOD’s $1.3 trillion cost estimate. Central to F-35 sustainment is the Autonomic Logistics Information System (ALIS)—a complex system supporting operations, mission planning, supply-chain management, maintenance, and other processes.

The F-35 program was approaching several key milestones: the Air Force and Navy were to declare the ability to operate and deploy the F-35 in 2016 and 2018 respectively, and full-rate production of the aircraft was to begin in 2019. However, ALIS had experienced developmental issues and schedule delays that put aircraft availability and flying missions at risk.

DOD was aware of risks that could have affected ALIS, but did not have a plan to ensure that ALIS was fully functional as key program milestones approached. ALIS users, including pilots and maintainers, in GAO’s focus groups identified benefits of the system, such as the incorporation of multiple functions into a single system. However, users also identified several issues that could have resulted in operational and schedule risks. DOD was taking some steps to address these and other risks such as resolving smaller ALIS functionality issues between major software upgrades and considering the procurement of additional ALIS infrastructure, but the department was attending to issues on a case-by-case basis. DOD did not have a plan that prioritized ALIS risks to ensure that the most important are expediently addressed and that DOD had a fully functional ALIS as program milestones drew close. By responding to issues on a case-by-case basis rather than in a holistic manner, there was no guarantee that DOD would address the highest risks by the start of full-rate production in 2019, and as a result, DOD may have encountered further schedule and development delays, which could have affected operations and potentially led to cost increases.

DOD had estimated total ALIS costs to be about $16.7 billion over the F-35’s 56-year life cycle, but performing additional analyses and including historical cost data would have increased the credibility and accuracy of DOD’s estimate. GAO’s cost estimating best practices state that cost estimates should include uncertainty analyses to determine the level of uncertainty associated with the estimate in order to be credible. In addition, credible cost estimates should include sensitivity analyses to examine how changes to individual assumptions and inputs affect the estimate as a whole. DOD’s guidance did not require the department to perform these analyses for ALIS, and DOD officials stated that they had not done so in part because ALIS constitutes less than 2 percent of the F-35’s estimated total sustainment costs. Program officials said that if ALIS was not fully functional, the F-35 could not be operated as frequently as intended, but a DOD commissioned plan found that schedule slippage and functionality problems with ALIS could have led to $20-100 billion in additional costs. Without uncertainty and sensitivity analyses, it was unclear how ALIS could affect costs. GAO also found that using historical cost data would have made DOD’s cost estimate more accurate.

GAO reported these findings on April 14, 2016 in F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its Central Logistics System, GAO-16-439.