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 ies

Percentage 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.

45

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.

54

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.

58

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.

61

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

62

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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