james, good morning. caller: until we as a nation except that racism still exists in america -- african americans are good enough to serve their country, give up their lives, come home disabled for the rest of their lives, no one wants to do anything to help them? this year by md 8100% service connected veteran. for 33 years i have served with many excellent african-americans in the military. there is nothing wrong with them. they do their jobs, just like a white man. the problem is that they do not want to give the jobs to african-american people in this country because they are saving them for the military. go fight for your country. when you come home, there will not be a job.

that is the problem. no one stands out. black, latino, white, anti-war poor -- and you are poor, undereducated, those of the people in africa and iraq, afghanistan, world war ii they were in -- host: thank you, we will wrap it up with john held. guest: i think that the caller's point that there still exists racial prejudice in the united states is true. we have made tremendous progress. much of what is happening now is about what kind of life you will have. pew came out with this a few months ago, largely it is determined by your zip code. if you live in a place where the schools are not functioning, it does not matter if you are white, black, or latino, your chances are greatly diminished.

part of the thing is that because we do not see the circumstances that people are in, then we see a large number of african-americans not been prepared. i am not saying that we do not sometimes contribute, but we have situations of discrimination, places where you cannot get insurance, not counting personal circumstances, insurance companies wanting certain neighborhoods. we have to look at all of this, not just individual ways that the policy structures work. this is particularly important, as we are spending billions of dollars in our money. we should do it in a way with a goal of bringing all americans forward, realizing that americans are situated differently. host: john powell, adding occur

when institute for race and -- heading the kervin institute for race and ethnicity. thank you for joining us this morning. guest: that -- thank you for having me. host: that will do it for us here on "washington journal." we will see you again tomorrow at 7:00 a.m. have a great day. ♪ . [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] . .

six bills are being considered today. also on the agenda of the house, congressional pay and extending faa programs. if possible, they will also discuss a tax extension bill the considers subsidies for an employment for unemployed workers. the senate gavels in at 2:00 p.m. eastern for more work on a jobs bill. it includes a payroll tax credit for businesses hiring new workers. it may also extend faa programs. also, on capitol hill, senate banking committee chair christopher dodd is set to unveil his financial reform plan.

that should get underway at 2:00 p.m. eastern on c-span3. >> the healthcare debate moves to the house budget committee today as members marked up their legislation. live coverage beginning at 3:00 -- 3:30 p.m. eastern. the budget meeting is part of an effort to put the matter to a vote by march 18. cq today says democrats want to have the committee approved a bill under reconciliation procedures. then on wednesday they will work out the structure for the debate. nancy pelosi hopes to begin debate on thursday with votes possible later in the week. stay tuned to c-span for the latest on health care debate, and visit our health care hub. you can read legislation and see what the president and members of congress are saying.

you can join in the conversation yourself on twitter. you can find cost estimates for the bills and hundreds of hours of video of house and floor debates. >> our mission is to make the world more open and connected. we do that by providing people a free tool whereby they can share information with anyone, anywhere, at any time. >> with more than 400 million users is the fastest-growing website in the world. facebook public policy director tonight on c-span2. >> this past thursday a senate committee looked at the f-35 joint air striker program which has suffered from cost overruns and delays. carl levin of michigan chairs the armed services committee.

this is about 2.5 hours. [gavel] >> the committee will come to order. i want to check with you. secretary courter, -- carter, is apparently your desire that you go through your entire opening statement. how long is your opening statement the? >> mr. chairman, i am at your disposal. if i did give the entire statement it would take about 10 or 12 minutes. i mention it because of the size of the program and all the different pieces. >> i understand, but if you keep that down to no more than 10 minutes police.

we will now shift to the second hearing of the morning, the f- 35 joint air striker program. i want to think senator john mccain for suggesting we have the meeting promptly, keeping the focus on the program so that we can get on top of what the department found in various independent reviews. wha actiont is the program has taken to ameliorate problems. and what is the best judgment available as to how these actions will be effective in preventing cost overruns and delays. today we have with us ashton carter under the secretary of defense for acquisition technology and logistics. christine fox, director of the office of cost assessment and program evaluation. michael gilmore, director of testing and evaluation. general clyde more, second in

the air force active program executive officer for the joint strike fighter program. and michael sullivan, director of acquisition and sourcing management team of the u.s. government accountability office. first, let me extend our welcome to our witnesses. thank you for coming before this committee today. we had a closed briefing in december 2009. secretary courter and director fox addressed the joint air striker. the potential scope of the problems facing the department, and some options the department has to deal with them. while both senator john mccain and i would have preferred to have that the an open hearing at the time, we agree to hold the close speaking in the because of the sensitive nature of some contracts data that was discussed.

the f-35 joint air striker program is currently the largest acquisition program within the portfolio with an expected cost before the recent announcement of nearly $300 billion. the schedule for performance of the program is that it intends to buy more than 2400 aircraft for air force, navy, and rings -- will have significant implications for the rest of the dodo's acquisition programs, and for its budget as a whole. i would note this committee strong effort on acquisition reform which became law made 22 of last year, including those changes to procedures required by implementation of the weapons systems acquisition reform act. it will not be judged

positively unless we can demonstrate some success of the dod's acquisition program. merely to say that th f-35' began before we enacted reform will not be an acceptable answer. there continue to be major disruptions and cost overruns in the program. delays producing the development of aircraft have cost an estimated 13-months slipped in the program for completing the testing. we have heard estimates that the delay initial offering capability in the air force could slip by as much as two years. that delay has both cost implications for the program itself and cost implications for the services they try to manage. we know that secretary gates announced he is asking that lockheed martin and the rest of the f-35 contractor team share

in pain for cost growth in the program. we want to hear more about the situation and whether this might be a way to ensure that contractor teams will be more cautious before bidding low on future acquisition programs, with the hope that they will more than be able to make it up at the government's expense later on down the road. it is not enough merely to say that the joint air striker live within its means by shifting production on the pay for the increased development costs because the latest delivery of aircraft and/or buying fewer aircraft will have a seriously negative impact on unit procurement costs as well as a significant effect on the ability to support the current force structure.

the department of the navy is facing a potential shortfall. it is a shortfall large enough that if it were realized could cause us to tie at aircraft carriers at the pier for lack of aircraft to send with them. two years ago the airforce testified they could face shortfalls even larger than that of the navy's. by 2024 with a fighter shortage of as many as 800 aircraft. secretary dates mentioned it last year that the quadrennial review would evaluate fighter requirements that could have caused those differences to change somewhat. however, the qdr did not change the structure requirements, and even if the department were to decide requirements should be changed, that is unlikely to erase those kinds of deficits.

we need to understand what some of the options are that the department may be evaluating to deal with those problems. another troubling matter revealed in some documentation from the independent reviews of the joint air striker -- one observation from the review team, the imrt report on the program said the following "affordability is no longer embraced as a core pillar." that surely raises grave concerns, not only about the potential for a non-recruiting priests now, but for continuing problems -- for a non-recruiting breach now. people should not conclude that we will be willing to continue the strong support without regard to increased costs coming from poor management, or lack of focus on affordability. we cannot sacrifice other

important acquisitions and the dod investment portfolio to pay for this capability. those are few of the issues this committee will be hearing more aboutn today moreow i call on senator john mccain. >> tanker, i asked my full statement be included in the record. i have been a strong supporter of this aircraft and weapons system, but am deeply concerned about the cost overruns and problems that have been associated with the joint air striker. could i remind you that just last august after meeting with the prime contractor in texas, secretary gates said of the good his impression is that most of the high risk elements associated with joint air striker's developmental program are largely behind us."

he went on to say that there was a good deal of confidence on the part of leadership here that the manufacturing process, supply chain, with all this has been or is being addressed. that is not the impression we got in the closed meeting. press reports say that the program would need at least $15 billion more in the funding through fiscal year 2015. the aircraft test and production with slip by at least two years. there will be, the joint air striker would most certainly suffer. the media reports have been very

brief. the staff has not been notified. according to secretary carter's statement on page 5 which is comprehensive, that i think should have been the opening paragraph, means the average price of the joint air striker aircraft as estimated by aircraftjet, overall cost averaged all years of production/number of aircraft would be more than 50% higher than inflation adjusted dollars than it was predicted to be back in 2001 when the program began. you went on to say that you hope that the secretary will formally notify congress within days. i have to tell you that we have not been kept up to speed as much as we should have been. it has been clear from media reports that there are serious problems. the most important thing is so

much of this was predicted. it is a much in keeping with cost overruns and behind schedule of the past 10 years and the impact it has on the legacy aircraft, ability to replace -- all of those have been based on certain assumptions that are clearly not, we were clearly not aware of. it is frustrating to hear the secretary of defense just last august tell us everything is ok. we are reading in the media reports that they're not. i respectfully ask secretary carter to begin your statement by beginning to say how much over cost the program will be and what will be the delay? the taxpayers are tired of this.

i cannot say at blame them. thank you, mr. chairman, for holding the hearing. welcome to the witnesses. >> thank you, senator, for your focus on this. it reflects the concerns of most members. the concerns from opening comments i hope will be addressed in the early part of your statement, secretary. we can summarize it and perhaps expand as to how you will deal with these questions, and how did we get here? >> thank you. i will give a brief, abbreviated version of the stigma. let me follow-up to what senator mccain said. when we met in december, i

described it was before the leadership of the department two estimates of with a program was going. one provided by the program office and contractor, another provided independently by ms. fox's office, the so-called jet estimate. there was a wide discrepancy between the two. we and secretary gates came to the view that the jet estimate , this one, was credible, carefully done, and should be the basis for the budgeting and programming plan going forward. that is the gist of the report i will give you today that underlines the disappointing news that there will be breaches in our largest program. if there is any silver lining is only this, that as between this

optimistic story, by addressing the reason for the difference, we have understood better what is driving poor performance, and we have found some steps, managerial steps we can take. some have been described by secretary gates. senator mccain mention one, steps taken to compress the development program that was stretching and costing more money and time. those investments as you, mr. chairman, have noted that we do not think the taxpayer should solely assume. we have asked contractors to

share in the investments required to get us back on schedule. so, by beginning a process of aggressive management of the program, we are trying to get to the point where the full consequences of the jet estimate which is very credible, that is the world i believe is a realistic estimate of for the program is going. i would like to do better and challenged contractors to do better. more jets faster, cheaper. i will describe the managerial steps we're trying to take. both in the development phase, in a full production, and in sustainment.

>> could you provide us with the cost overrun amount, and the number of months of delay you estimate now the? >> yes, absolutely. the measure of the lay which is a good measure of the technical performance is the slip in the time to completion of developmental testing, that is the no. i'm sure you have heard, which originally when i first talked we were predicting a 30- month slip, but as a result of the remedial steps, the director directed a 13-month slip -- as regards cost i will ask ms. fox who does these estimates. i assume that you are asking principally about the

calculation that drives the nunn-mccurdy bridge, the unit cost, the total cost of the entire program/the number of airplanes. then, secondarily, in every year of ramp up, as we negotiate as we are now, there will be a certain number of aircraft at a price -- next year with the 2011 funding we are asking for this year -- in the early years the order numbers are smaller. the line is not mature. the unit costs are different and higher earlier. we have the cost in the early ramp years and they're graded

over the entire program. >> the milestone 2001 units cost -- >> what was the original estimate of the cost of the program and the estimate now? let's start with that. >> $50 million in 2002 baseline- year dollars. the current program estimate based on jet two birds will be between $80.95 dollars million. we are refining the estimate now. >> this will be the overall -- the force was asking for $205 million for one aircraft in the

supplemental budget request? >> i'm sorry. >> that is unit cost -- >> yes, but at its early ramp. i think the number senator mccain was pointed to was the unit cost in a particular lot, the l-rip 3 lot. >> is that the same number of planes? >> no. l-rip 3 is 30. >> has that changed from the 2002 estimate? or has the number changed? >> the ramp moved before we go i'm talking about those in a particular segment.

are you dividing by the same number of planes the? >> yes, she is. >> the average unit where dividing by the certain number that has been since 2002. the l-rip numbers have changed, and i am sorry that i do not have those. >> maybe this could be helpful. i take it the reason why one aircraft is now $205 million and supplemental request is you are looking at the overall cost. you say the costs will decrease in later years as you ramp up production. the early cost and the aircraft in the first couple of blocks are much higher, is that correct? >> absolutely correct. >> do you have a number to compare to the $205 million? >> not off the top of my head, but i can get your number, sir.

good, white billion? >> um, i'll just go back to the beginning and agree with what was said. getting to the heart is what it is about. i just want to agree that this is the department's largest acquisition and it is obviously important, will be the backbone of our superiority in air come up for a long time. at the same time, this committee and secretary did have emphasized performance, not just the necessity to have them. a level described in more detail, the joint air striker has fallen short on performance over the last several years.

this is unacceptable to the taxpayer, the war fighters, all the military groups, and international partners depending on them. would describe this in december when we met notably, to put it on a more realistic schedule and budget. these are important steps. i would give you more detail today, but would also like to emphasize it has taken a couple of years for the joint air striker to fall behind. the department will need to aggressively manage this program years into the future, and particularly in the coming from a critical years as transitions from development and test into production. we will look for the program to show progress against a

reasonable set of objectives according to a realistic overall plan. the emphasis must be on restoring the key aspect of this airplane when the program was first launched over a decade ago. senator mccain, you have already spoken of affordability. we conducted several reviews. your staff have them. i will not repeat what they indicated at this time. just to rewind the clock a little and remind you, the very first jet estimate was done october 2008. at that time a projected essentially the same thing this one is, namely that the std phase of the program is taking longer and costing more than projected. in response to that october

estimate, secretary of defense gates added more in order to begin the process of catching it up. what got in october 2009 was jet two, the second analysis. it was substantially similar to the one the year before, namely its said that the joint air striker program continues for the second straight year to take longer than we thought it and cost more than thought. it was on the basis of those two years' news in a row that we determined we should have a department-wide, in-depth review. try to get to the bottom of it. why was their this vast difference between the second estimate and what we were

hearing from the program office and contractor? it was abundantly clear that if the jet estimate were cleatrue,n there would be a credible breach. the review began in november. i met with you and give you some results in december. robert gates gave you some of his decisions based on their review. i like to briefly recap them in three phases. first, the joint air striker developed a phase, then transition to full rate production, then full-rate production itself. the jet two forecasted a longer by 30-month, and more expensive by $3 billion over future years

development phase of banda jpo. -- phase of the jpo that they were predicting last summer. that is just two estimate was determined to be credible. secretary gates made several steps to try to partially restore the schedule to what it was supposed to be. it did not get all the way there. first, he directed the procurement of additional carrier aircraft to be used for flight testing. if you have more aircraft you can get through all the tests faster. that is just a matter of adding resources to the test program. secondly, he directed that we take three early production just never planned for operational tests and loan into

development of tests again with the objective of hastening development of test. third, he directed that we establish, the program office and contractor add another software line to the program. it was to prevent the situation in which we compress the flight test program, but then found that those long pole in the tent was delivered. we did not want to get into that situation. we wanted to proactively add to the software capability. the secretary of defense to that. on that basis, the jet team decided to look of the program as restructured by secretary gates. let's go through the mouth again.

when they did, they found that the slick was 13 months rather than 30 months. -- they found that the dlislip s 13 rather than 30 months. it did not seem reasonable that the taxpayers should bear the entire cost of this failure of a program to meet expectations. these additions of additional aircraft and software capability, it seemed the cost should be shared between us and that the contractor. that's what the secretary decided to withhold six of $14 million in fees from the lockheed martin contract. the second thing, on this development phase witbefore getg too early production, while it

is a constructive result of this jet process that we got 30 down to 13 months, i want to emphasize that these are still estimates. however good we are at estimating, reality gets a vote. the next two years will be critical. lots of activity, delivery of test aircraft, completion and analysis of hundreds of test flights, and commencement of training just this year. if we go on to 2011, that's one we will have the first stovall training and c trials above an amphibious ship. completion of land-based catapult.

catapult and arrested planning, testing at a couple of places. release of the software, a critical milestone. completed static a structural testing, and so forth. both the 2010 and 2011 are event-filled years. reality gets a vote. the current program plan as revised stands up the first train squadron in a eggland in 2011 and delivers and 2011 and so on to the different military branches. that is delivery of aircraft. that is not ioc. let me address ioc since there has been confusion surrounding it. they are determined by the services based on both the

programs' performance and how each define ioc. each service has a somewhat different definition depending on the capabilities they intend to have, operational and test train requirements, and number of aircraft they require. at this time, the services are estimating ioc's of 2012 for the marine corps, and 2016 for the both the air force and navy. let me speak to the initial production process. the report which my office commissioned was already mentioned. that report examined this critical transition from development to full-rate production as one goes up those ramp.

jsf has an unprecedented amount of concerconcurrency. the report back said in a sense that there are large number of conditions that would have to be met for this program to reach maturity of the ramp that had been planned. they recommended a somewhat faster and smoother ramp. that together with the slip means -- and this is the essence of the projection for this phase of the program -- a bitter, and somewhat lower production ramp. -- a later and lower ramp.

secretary gates decided to revise this ramp and that's where the 2011 budget forecasts both a later and slower ramp. we're budgeting to an independent cost estimates, consonant with your legislation reform act. in doing so it has three important consequences. first, it reduces risk because it reduces concurrency. second, the earlier aircraft would be more expensive since they are produced in smaller annual lots. third, this is an estimate. obviously, we would like the program to perform better. that is why we're looking at

producing 48 and not 43 in 2011, to be determined with negotiations with the contractor. it includes the transitioning of the contract for joint air striker to a fixed price at an earlier date. this is again something this committee and reform legislation emphasized. we think the taxpayer would want us to get more and cheaper aircraft than the jet two estimates. we will try to do better in the negotiations with the contractor. last, and finally, and i will conclude with this -- once we are in full-rate production -- after several years of l-rip, the program will enter full- rate production. the program has been approaching the threshold for several years,

and as i mentioned earlier, it was obvious in november that it the jet two estimate was except in, then it would indeed breach the mccurdy threshold. since the secretary accept the revised jet two estimate as credible, and the secretary will inform congress within days of such a breach, we would then begin the process of considering the certification of the joint air striker program. the only good thing that i can say about it at this juncture is with the process called for in the of mccurdy legislation, it

is the process we began back in november. we have been acting as if we were in the breach since last november. some of the work is behind us. some of it represents what i am telling you today. ms. fox to describe the factors going into the cost growth. several are in the air frame, engines, materials. let me conclude by looking ahead. several management measures will be critical of the the next few years, and secretary gates has elevated it to a three-star rank to reflect this need for experienced in vigorous management. the jpo with oversight will need

to take a number of critical steps in the next few years. i divide them into development, ramp up and addressing those breach. in developing a program leading up to ioc it is important to provide the new testaments as directed by secretary gates so there will be no further delays. second, the contractor must be held to account to meet define milestones. all those events in 2010 and 2011 i named are now on the schedule and constitute a set of targets for the program. the remaining feet on the std contract will be tied to the achievement of all of those milestones. those negotiations are underway. finally, the program will need to deal promptly with issues that arise during flight testing. experience shows issues will

surface in flight testing. with respect to the ramp up to full-rate production, the contract covers 2011 should provide for pricing that meets or exceeds the jet two based plan of 43 aircraft. these negotiations are also underway. l-rip contras should transition to a fixed-price structure reflecting the need for the contractor to control costs, and it not simply pass them on to the government. the director for the more, was with me here today, will be connecting a should-cost analysis for l-rip five. that will be the fiscal year 2012 buy. affordability, it must be aggressively and relentlessly pursued by all three contractors.

we will be looking at the cost structure of jsf in all of its aspects. more fundamentally, the program management contractors and apartment need to surface candidly and openly issues as they arise so that we can deal with the managerial issues so that congress is aware and they can be addressed. i pledge to keep this committee fully and promptly informed of this program's progress. we will keep international partners fully and promptly informed. the program will benefit from the fresh eyes and experience to hand of a three-star program executive officer. military capability will ensure

this aircraft will be the backbone of u.s. combat air superiority for the next generation. as i stated earlier, the technological capabilities of the aircraft are sound, but its affordability must be restored. thank you. >> thank you, secretary carter. are there any other opening statements from other panelists? >> thank you. thank you for the opportunity to appear before you to discuss the analytic basis for the restructuring of the program that has just been described. the analysis has been led by the cost analysis program, cape, -- >> let me interrupt you. give us an idea as to how long your opening statement will be? >> less than five minutes.

>> and the other opening statements? >> i can do it in just one minute, if you want. >> we will call on senators and the same order they arrive. ms. fox, please. >> let me try to shorten it. a couple of things about independent cost estimates. we build on the methodologies that cape and the former organization have used for many years. it is imported for you to know that we went one step further here and built a team of experts. this review is not done just in cape alone, but we involved government experts drawn from

different military branch staff. this was quite an expert team. dr. carter has gone through the jet one, two history. i like to talk about what the estimate means. it is difficult to estimate the precise mathematical estimates. based on the rigor of the methods used in building the estimates, the strong adherence to the collection and use of historical cost information, and review of applied assumptions, we projected is equally likely that the jacked two estimate will prove too low or too high. -- we project that. i would like to comment on the documentation. normally we would document the results of an independent cost estimate in a written report.

in the case of just two, however, we pulled them into a summary level briefing as quickly as possible to present to dod edition. this is the same briefing provided to you. it prompted dr. carter to create a task force. these same analysts were deeply engaged in guiding the restructuring. i believe this combination of the cost estimation is an independent activity and using it to guide as a result of legislation is something you for cape to grapple with. we prefer to document our work in a written reports and have to return to that in the future as we have staff and time permitting. i was going to briefly summarize the restructuring that dr. carter has already gone through. in the interest of time let me

focus on the cost that might answer before was clear. the program restructuring based on the jet two cost estimate and production rates estimated by the imrt will result in a critical breach of > 50% when measured from the original acquisition, program baseline established for the program in 2001. we have been preparing for this ever since the jet two results became available october 2009, even though the formal declaration has not been made to you, we anticipate it will be within days, and the department plans to complete the certification review of the program by june 2010. in 2001 at the time of the milestone approval of the program, the jsf average per unit cost was projected to be $60.2 million in constant --

this figure was based on a total anticipated u.s. procurement of over 2000 aircraft including for all three branches. the number to be procured was revised in late august 2002 to a smaller number which holds today. the revision was in response to navy/marine corps integration via the latest per gram baseline dated march 2007 projected an average production procurement cost of $69.2 million. the currently anticipate that average procurement per unit cost for the restructured program based on the total number of the 2043 jets will fall in the rage of between $80 up to $90 billion.

i will close by focusing for a minute on the perceptions of the program that result from restriction. the projected delay in completion of the developmental flight test program in our view should not be interpreted as a signal that the program has insurmountable technical problems. instead, it reflects the programs complexity cannot risks remaining in the development activities. i know this is not the goal, however, development delays have been experienced by other aircraft programs. these ultimately produce viable aircraft. c-17 also expressed significant development problems three two decades. it raises questions about cost-

effectiveness. they restructure the program until problems were resolved. similarly, the f-22 are repeatedly failed to meet goals. ultimately, the contractor was able to overcome the challenges and produce capable aircraft. we are researcher in at an early stage. the independent cost estimates were taken very seriously. there were acted upon by secretary gates immediately. there is a plan for this program now. >> thank you, ms. fox. >> i will make it brief. my primary concern has been assuring that we can begin operational testing on whatever

schedule is contemplated. currently that would be january 2015. we estimate completing its in april 2016. the testing is robust. the air force and marine corps will be getting aircraft they need. we need to make sure we have a robust developmental test program. if not, the problems that should have been discovered in testing and fixed then will instead be discovered during operational testing. unfortunately, that has often been the case and they are much more time-consuming and expensive to fix then. to provide additional aircraft, resources, and time, and sulfur, and account realistically for

the inevitable discovery of problems, and provide additional engineering and other resources needed -- are care -- the resources, time, and software -- all of this is key to having a robust development program to enable us to not discover a lot of problems -- they are key. >> thank you. >> i will also be brief. gio has looked at the restructuring efforts. we think that they do go along way to getting at with the problems are. however, we still believe there is substantial overlap across activities. there is still significant risk in the program slowed by late aircraft deliveries, low productivity, and technical problems.

the flight test program only completed 10% of activities they had planned for last year. the problem we see now is not necessarily technological in nature. it is not necessarily unknown unknowns, if you will. their estimates for time and manpower needed were very optimistic. the jet analysis -- the actuals are from beginning to appear more realistic, reasonable. i would just throw out one metric. when they began emd in 2001, i think there were estimating

somewhere around 1 million labor hours to complete the development program and manufacture aircraft. that is well over two million today. the flight test program is still nascent. once that begins there will be more design changes. there will probably be more delays as a result. to summarize, i think that the jet team got as realistic as they can at this time, however, there are still a lot of risks in the manufacturing and development of aircraft. one of the thing i think is important is that the development did take more aircraft out of the near term years which we think is a way to mitigate risk, however, they will still be purchasing the bell 300 procurement aircraft before they're done with development tests.

>> thank you. >> i appreciate it. briefly, ms. fox, you give us some examples of success the c- 17 and f-22, both of which had significant cost overruns. you also mentioned the resulted in decreased production numbers. so, the you anticipate the same thing to happen with the joint air striker -- the joint strike fighter? you suggest the were successful programs, and both resulted in fewer numbers produced and higher unit costs. >> yes, sir, absolutely. the in the comparison was the program is not on a technical problem. those programs looked troubled at the same stages but developed

capable aircraft in the end. yes, but at incredible high costs and much higher than initial estimates. it is one of the reasons we have been engaged as we have. i am astonished that you use that as some kind of success story because they overcame technical problems. the unit cost nearly doubled to more, right, mr. sullivan? the delays were enormous. i do not get it. >> sorry, sir, i was not trying to suggest this was the goal. the cost is clearly a tremendous problem. i believe the costs we have estimated are as realistic as we can be. it is merely that the jsf program is producing technically capable aircraft. . .

>> without having completed the planned testing evaluations. >> i think the ramp up, as i said, the will of procured about 300 aircraft, given the

restructuring before they completed flight tests. that is still a significant risk in the program. they added test assets. there will be able to burn down the test. points. >> could i go to the cost of thing? you're asking 120$205 million but the cost will be $90 million per copy. is in bed elusive -- isn't it elusive to say that the cost will be very high and the examples miss fox stated we will purchase less than originally planned, the unit cost could not

be at $90 million. they could be higher if president holds true. >> i would argue they do not know. one good indicator at this point is that they are still operating under the contracts to procure these aircraft. they are not willing to commit to a unit priced at this time. >> i wonder when the contractor is willing to submit a cost -- unit cost. >> a good question. a good indicator of how the contractors' own estimate of the stability of the line. we are in discussion of that not later than will require a fixed price. >> how long will that be? >> next year. up until now, the contracts have been cost-plus.

it could suggest we transitioned the contracts to fixed price. that puts a burden on the manufacturer to control costs and to be able to know how much -- what these unit costs are. then if they overrun it is on their budget. that is the whole. a fixed price contract at this stage. the healthy thing to do. >> general moore, you're confident the plans that has been described to this committee, they will buy 2400 and that if the unit costs will not increase further? and you will have the operational test and evaluation successfully completed while the aircraft are in an operational mode without having to go back

and retrofit significantly and expansively? >> if i could take on those questions. for the unit costs, i am confident that we will be able to do better based on the cost estimates. i have been challenged by the department. >> you are confident we will by this number of aircraft? >> we will continue to reduce the costs as we have negotiated in the contract. >> you are confident there will be no further delays? >> given the schedule that we now have reasonable margin to deliver the full capability within the schedule and within the budget of has been allocated. >> i think the witnesses and the think you, mr. chairman, for holding this hearing. we have monitoring to do. i think it has been helpful.

public like to submit follow-up questions to the witnesses. -- i would like to submit follow-up questions. >> let me begin my questioning. looking backward in time, what caused these huge errors in these estimates? these are 90% increases. these bridges are 50%-plus. they're more than 50%. there somewhere between 60% and at 90% increases. who is accountable for the suspects whose mistake and who is paying a price? >> let me do some of the diagnosis of first and then the treatment. for the development phase, it has been going on -- what has

been going on is that when it comes time to put the pieces together down in fort worth, they sometimes do not fit together. that is because when they were designed, the match up wasn't done. that leads to class two change traffic meaning the pieces -- the design of the pieces has to be changed. you're trying to make the thing fit together. there has been a lot of change the traffic on the line. >> change traffic? >> changing the design of the pieces so they fit together. it takes engineers and time to do those changes. everybody else waits around. it introduces inefficiency on

the line. this is the kind of thing test driven the slow delivery of aircraft to test. >> i am talking about these huge cost overruns. >> i was going to get to the symptoms part. >> it has gone up from 50% to 35%. it was about $70 million a copy. nowt is $95 million. it has gone upper $25 million in constant dollars over the last three years. >> that is right. you're asking the contributory causes to the unit cost growth in the aircraft. there are several of those.

first was the larger than planned development costs for the stoval version. that is the short takeoff and vertical landing version. that very because of the way to growth. it occurred several years ago. the development schedule which i have described increase in labor and overhead rates. degradation of airframe, now. >> was that for cybill? >> the route 4 scene. -- was that foreseeable ta? >> it was not foreseen. it has occurred in the past. it is a pattern that would match that.

i cannot speak to them. >> who will determine whether that is true? >> of her this program, -- for this program, will manage at this point forward. we will do independent cost estimate from the beginning. so there isn't an opportunity for a buyout. the cost estimate has already been done. we are we are with the joint strike fighter and we need to try to wrestle these costs down. >> there was great concurrency you made reference to. that means there is great risk. that concurrence in has been somewhat reduced by the sloping reduced and by the number of -- the other way was what we will

have more planes that are going to be tested. in any event, is the concern, until level of concurrence in now except to have acceptable risk? >> the level of concurrence it is still unprecedented even with the reduction of the aircraft at a given point in time since the beginning of flight testing were bought a couple thousand aircraft. i would demur and judging -- >> who will give us the judgment? >> i think dennis up to the secretary. i am the evaluator. i know i'm passing the buck. >> is the level of concurrency acceptable? >> the level of concurrency is

unprecedented. it is produced as a result of these actions. we are judging the schedule that we're giving you is realistic. it is not optimistic. i think mr. fox has emphasized this is not the worst-case estimates -- i think miss fox has emphasized this is not the worst case estimate. it has to be managed. the theory of the case and it is perfectly reasonable was that we had gotten to the point in simulation that we should be able to confidently enter production before we have completed testing fully. that is the theory from the

beginning. unprecedented and we have found that in some respects, that aspiration has not always been achieved. that is what we're trying to take some of the aggressiveness out of the program at this point. it is still aggressive. reality will have a vote here. >> if you shorten the development time, it seems to me the increases -- that seems to me that increases the concurrence it. you knew this from the beginning. why isn't the shortening of the development time, why isn't there an increase in the concurrence it level? >> the reduction from 30 to 13

months means doing the same testing we were going to do. that is good. the number of tests. is the same -- the number of test opints is tpoints is the s. >> i guess senator thune is next. >> i support 3 f-35 program -- i support f-35 program. i am concerned about these development delays and the potential reductions that have been planned for the program. i have been told from my constituents that there f-316's

are not going to last forever. i want to get things f-35's as soon as possible. when do you see training jets and windier route 4 see this program reaching for reproduction? >> i do not want to speak for the services who will determine where, how, when they feel their aircraft from the programs. a fe point of view. the air force current intention based upon the revised schedule is to go to ioc in 16.

and that is with the full capabilities pay always intended, which is now the capability embodied in the software. that capability and after completion of operational test and evaluation, that is out there defining ioc in the air force. >> there has been a lot said it will be it said and sometimes it is easier to forget in what it means to the navy and marine corps. the joint strike fighter represents the future and we know about the significant delays and cost overruns. recent news reports indicate an increase in aircraft operating costs once they are finally delivered. a recent article stated each flight our flown will cost

about $31,000. $19,000 for the services of the hornets and carrieharrierrs s. we must have a fleet unless they burn us in effigy. lockheed martin is clement support costs for the f-35 will be lower than those than the f- 16. can you set the record straight and what you expected operating costs to be in comparison to current fighters? >> i cannot as i sit here right now. you are pointing to the sustainment costs. it is the same kind of discrepancy of was mentioning

earlier. there has been an assessment of the total ownership cost of the f-35. tourists and office estimate and these are for the out years. it seems in the distant future. we do not will determine how much we pay them and we owe it to the taxpayer to control those costs. we're having the same independent cost estimate now of the sustainment face as we have done and are doing for the production phase. so i cannot give you an answer now. i hope to give it a credible answer in the future. that is a lot of money out there to maintain a fleet. we owe it to you to control those costs.

question do you want to add to that? >> we will be part of the review. we will have an estimate as soon as we finish of that. >> thank you. over the past several years, the trend i have noticed is that the costs along with an increased timeline in obtaining a lot of these symptoms, it causes an increase in costs and reducing the number of items we can buy. this year will have substantial procurement initiatives. my question is an a pertains to jsf, what steps is the department of defense taking to control costs on this s

ymptons? >> a good question. two and service to it. -- two answers to it. we're redoing on the back end? we have a lot of good practice. that was the principal intent of the wasara act. you are saying we have we had. what are we doing to make sure they deliver? this is a good example. we're past the beginning point right now on jsf. we are looking at very carefully now, very aggressively at the cost structure of our programs, the contract structure as

between cost and fixed price. i mentioned our overhead and in directs, all the ways we can squeeze 2% here and 4% there and pretty soon you're talking about a serious amount of money. management and relentlessness in the middle part of the programs is important. there is a form of acquisition reform that secretary gates has emphasized also which is the discipline to stop doing things that we have enough of, or that are working or that are single- purpose capabilities. this year we will be proposing some programs to end at some programs. that is always a difficult thing to do. every time we can stop buying something we do not need,

if it frees up more money for other items. acquisition reform has to go across the full spectrum and into having the discipline to stop doing something when it is time to stop doing something. >> is scenes like this will become a recurring theme and a recurring story. you have programs better way over budget. you do not need. we shouldn't be funding of them. you hate to not fund programs because of their programs are so far over budget. the increasing cost and overruns and delays, it seems like the acquisition process is in desperate need of a new model. i guess i wanted to make debt observation for the record and raised the question with you.

thank you. >> thank you. senator lieberman. >> i apologize i had a couple of other meetings. i think i have the drift of the testimony. i have a question that is simple but is central. what will the $2.8 billion increase in the jsf budget and to what degree of confidence we you have in that estimate for a total cost by the april 26 completion date you have said et? >> senator, i'll ask either general -- >> the holocaust will be $50

billion -- the total cost will be $50 billion. >> that is by the april date we're talking about. >> think you. >> he is talking about the total cost from the beginning of the program. the to $20 billion is in addition -- the $2.8 billion is in addition. >> i understand. thank you for the clarification. as you know, the consensus of support there has been for the joint strike fighter here in congress, there is a sub-part of this much in conflict and that is the question of whether there is an alternative engine built. it looks like we will have that again. the conflict again.

some questions. this conflict and the idea of building an alternate engine and a cost associated with it, it seems to me gets more exacerbated because of the increases in the overall program. i will quote from the memorandum. the department has not funded an alternative engine since 2007 because in the department's view, a second engine is not necessary. this position is reflected in the president's budget submission which is not include funding for the jsf alternative engine. this is based in part an updated analyses which continue to show the business case is not compelling and that it alternate

engine program will require significant dod investment of additional resources. later in the report, you say analysis would require an investment of $2.9 billion to get the alternate engine. as you know, that set alongside the estimate of your predecessor in 2007 and said it alternate engine would require another $1.2 billion in developmental funding before it was right to compete. in the three years since then, we'll spend $1.3 billion on the alternate engine. you estimate another $2.9 billion.

have i got a all right? >> yes, sir, youtube. there are a few changes. in apples to apples, -- yes, sir, you do. it is a break-even. in terms of the long-term procurement of a second engine. the initial investment that would be required and now with the restructuring program, competition would move to 17. to account for that, that additional investment is necessary to complete the development costs for the alternate engine but also to fund the component improvement program you would need to maintain the engine and perform directed buys of the engine, primerica and second sources and you have to procure tooling and that is all in the $2.9

billion. >> there are concerns that will be necessary to employ the backup and support fully alternate engine for the navy and marine corps. i want to end with a broader question and maybe it has been touched on. you served in the defense department. we have continued to be troubled, frustrated by the fact that these systems we need so much are costing some much more of the we expect. forgive this question. to the best of your ability, what the heck is going on? is this happening because some

of us think we should be moving much more towards fixed price contracts? is it happening because the department and we are accepting initial estimates of the cost of programs that simply not realistic? in this round of your service, what is your explanation of what is happening? i know you want very much for it to stop happening. >> it is pervasive. there is no silver bullet. it is pervasive. i do believe that we have problems with the acquisition reform system. i think there are two things

that are critically important. one is that it seems to me vapithat the last decade of groh in the defense budget which has been terrific in lots of ways in terms of being able to buy more capability, enhance our military capabilities, has also engendered an erosion of discipline. it has been easy to solve problems with money. you see that. they throw more money. we need to be more vigilant about how using money to solve our problems. einstein said his work was 90% perspiration and 10% inspiration. you just have to keep hammering

away at these things and be disciplined and willing to say that this doesn't look right. the other thing is people. i did not mean to sound a abstract. we have to have good people. in the last 10 or 15 years, the acquisition cadre on the civilian side and uniformed side has been allowed to dwindle away. our workforce is older than it should be. older people leave the department and then what do we have? i am trying to pay attention to drawing in to service the people we need, and program managers, the engineers, the systems engineers and so forth that will make the system better. then there are the changes to

the system itself, including those that were included in the legislation. you can have the best system in the world. if it is not populated by the right people and you do not have the discipline to recognize surface problems and tried to address them, you could have milestones, when stoneand you'rg to get anything. we're trying to do the blocking and tackling. >> i appreciate the answer. i think it was important and candid. you cannot solve every problem with more money. the country is running to a point where the consensus and support of defense spending has

to begin to break. orderlies be under real pressure that will deny the kind of funding that has been available. i am fearful up until now. the work you're doing is important. every dollar you save is a doubt that might be spent on additional personnel, which i think we still need. my time is up. think you. >> thank you, senator lieberman. we claim edison as a son of michigan. claim and believe it was edison, not feinstein. senator chambliss. >> thank you. as i hear you talk about the average age of the workforce, i think above the average age of the united states senate. we're both heading in that

direction, i guess. >> that is off the record. >> we are all dealing with experience, mr. chairman. mr. sullivan, your statement relative to the cost of this airplane being on known, you testified to that affect over and over, particularly last year as we were going through the defense authorization process and with the ongoing debate over the f-22. you noted in a statement that dod does not have piffle cost estimate for completing the program. you validated that statement again today. you made a statement on npr that when all is said and done, the price of the nearly 2500 f-35's

, du still stand by that statement? >> i don't remember saying that. i am not sure what you are referring to. but i do not think -- that does not sound right. >> ok. would you concur with the estimate that was alluded to relative to $2,001. you said -- >> 2002, sir. >> you said would be in the range be in $80 million. >> it would the apples to oranges. the average per current unit we have it is about $112 million.

>> you have answered my question. we're looking at somewhere around $112 million and that is an average cost and assuming the perfect storm occurs and that every timeline is meant and the test phase is conducted. finally, let me ask you about this timeline of reducing 30 months testing down to a 13 months. this is a sophisticated airplanes. we know that. you have had experience with other weapons at the department of defense. do you know of any other weapons system that has been able to reduce its testing time from 30 months down to 13 months? >> just to qualify that a little bit, it is an increase to an

existing plan. the way they came about that was by adding new assets. it is an increase. it seems relatively optimistic to me. i think it will be a challenge for them, especially given that this aircraft is laden with software. could i just -- >> the question was whether we would extend from 53 months to 80-some months. 60 months is in line with past experience in these kind of complex programs. i hope that clarifies the testing program.

>> i understand that. dr. carter, in your written statement you states the current ioc dates is 2012. the navy, 2016. the air force, 2016. is that correct? that is a two-year delay from the navy and a three-year to light from the air force over what was advertised only a month ago. isn't that right? >> if you're referring to testimony given, i am not quite sure what the base line is. it is an increase -- what i'm saying is an increase over the past because services have taken the estimate as or realistic, the most realistic plan we can give them for when we will deliver the jets and they will have done their separate things

so they have adjusted their ioc dates in accordance with the program. i am sure it is different from what we said before. >> why did it take osd over a year to validate the jet report? >> there were two separate jet reports, both of them valid. >> both were basically the same. >> exactly. they had similar contact. it was a year later. the problems noted in 2008 had continued into the fall of 2009. it was reporting the same dynamic going on on the assembly line. since it came a year later, this

had been going on not just for one year, but two years. that is much more serious than one year. you're still with the same news any to be more worried. >> when did you become aware of the 2008 chip report? >> surely after i got into office. -- when did you become aware of the 2008 jack reporet report? >> they're recognize the 2008 estimate was serious. the secretadeputy secretary of e said we should do it again. it showed what it shows, which is it wasn't just something -- it was true in october of 2008.

it was still true. >> and was the report pretty widely known throughout the department of defense? >> it was known to my office. my understanding is it was also briefed to the congress last year, as well as it was pretty widely circulated. >> my concern is the debate over the f-22 last year, two issues were front and summcenter. the last lot, $140 million, $20 million difference in what mr. sullivan estimates it will be for the purchase. " it is not different when you consider. f-22 has more capabilities.

i am curious as to why that wasn't talk about last year. do you have any recollection of that? >> i cannot be. i cannot speak to them. i was not in office at the time. i do know from the records what transpired after the first jet estimate, which was that secretary gates added, recognizing that there had been this poor performance in the program. petted $476 million and said we better adjust our budget to take account of the past month. he did not adjust the entire out your budget as we're doing this year because he only had the first jet estimate which showed there was trouble going on for a year.

this year, he directed we adjust the budget to reflect the estimate not only in this year but throughout the out years. the more serious action taken in response to more serious news, which is a second jet estimate that says the same thing. he took actions in both years. they were different actions. >> i have some additional questions i want to submit for the record. i think it is obvious to the panel members how serious this issue is to us. it is a great airplane. we have to have a. we do not want to go down that trail that senator mccain talked about. we cannot afford to reduce it.

we had testimony that the reduction has caused us to call on the canadiens. if we do not get these costs under control, who knows where we will go? we cannot do without this airplane. the assets are so superior to any other asset that we have outside the f-22. the russians are coming out with an airplane but they say is comparable to the f-22 and they did not mention the f-35. it is imperative that we continue down the track of trying to get these costs under control. i appreciate all of your work. being as frank as you have with respect to this program. thank you, mr. chairman. >> thank you, senator chambliss. senator mccaskill.

>> i know there has been talk about unit costs. i have not heard an estimate for the entire program. can somebody give me that number? perhaps i am sorry, i do not have that number. we do not have that number with us. >> i think we need to know that number. i am a little worried you would come to this. without that number, to be honest with you. i think everybody having a handle on what the overall costs are compared to what the were predicted to big, we are stuck and i'm sure this will be a great jet, but we want to learn from this. we do not want to do this again. if we do not have competition

and i am a big fan of the product boeing puts in the air. for accountability purposes, i think whenever this group of people assembles, you should have a number of the overall program will be a. there is the shortfall. the home in st. louis, i know what the tactical aircraft means to our services now. i know that as you talked about more and cheaper, secretary carter, there is a shortfall. it has been difficult to get a handle on the shortfall. initial operational is not going to be until 2016 for the navy. we have 11 carriers to fill. it is hard for me to believe that you all are maintaining

that there is only 100 shortfall. do you have a number you all are comfortable with on the shortfall? >> let me ask miss fox to address the shortfall issue because she has done analysis on that. you are right. i accept the point about total ownership cost. we have to take into account and manage the fielding and the other associated total ownership cost of the fighter, not just the cost to build it. we have been addressing the cost to build the mostly in this hearing and to be honest, your question reveals this internally. we're going to turn to the total ownership costs.

we have some estimates that differ and need to reconcile them so we have a number and a plan for reducing that number. someone will end up owning these things and they should have a reasonable cost of ownership. with respect to the f-18 and jsf issue, have done a lot of analysis and bs miss fox to address that. >> multi-year will save money. we have a big enough shortfall. i know you asked for an extension. you know you're in a bind. you know you are. i'm just hopeful -- it would be great if i could go to lunch saying it is the right way to go. >> why don't you speak to the multi-year issue? >> we are concerned about the

strike fighter shortfall as a result of the restructuring. the number you quoted it is an old number and the reflect the restructuring. i apologize i do not have a final analysis for you. back to the overall cost, we will have an assessment with the strike fighter program in the certification. it is a good thing to add. these are challenging things to estimate in the program. we owe an estimate for sure and we both an estimate in working with these services on the implications on the strike fighter inventory. >> since we do not know, we note is not 100. but we do not have a number. secretaire carter? multi-year it? >> it rises a new and a properly

because we have made the decisions to procure more f-18's and also the electronic attack version in order to recapitalize the expeditionary electronic attacked fleet. it is now represented by the prowlers. since we are buying more, we had asked a question of the manufacturer, give us a price. we have indicated the threshold interest is 10%. that is the threshold of interest. and so we would look for a savings in the teens in order to -- for that to be an interesting proposition for the department and the taxpayer given it is a multi-year

commitment. there has to be savings there. the department of the navy is in discussions with boeing over that very point. >> with all due respect, i hate to say i told you so. i kind of knew that 100 wasn't real. if you look at the jsf program, and looking at my friend from gao, it wasn't going to be on time and was going to keep getting pushed back. we have those 11 carries. we should save the money if we're going to buy the jets. i don't know what we accomplished if we will end up buying them anyway. if it will save money to do multi-year, by all means, let's do it. this is hard.

i need somebody to do an estimate on the problems associated with this program. we will have a breach. i need to know whose fault is. this is too big to fail, this program. we're going to push money across the table. we will push back the time line. i need to figure out and all need to figure out, whose fault is it? is the contractors fault? where they're changing things during the process? weather delays that the military is responsible for? is anyone in charge of finding out who's promises? we have withheld one payment. are there other penalties you envision the contractor pays for these mistakes? this isn't no harm, no foul.

somebody needs to be held accountable. we all sit around and shrug and no one ever is held accountable. i want to know who will be held accountable and whose fault it was. >> i will address that. first of all, who is accountable for it, i think that there is responsibility on both the government side and the contractor side. it is our job to get the biest is this deal. it is our job to tell the truth and that has not always been done. it is the contractor's job to perform. fares on both sides. i will cite as soon as i got --

failures on both sides. i went to the contractor. the leadership of the contractor recognized immediately as i did that this was serious. here rolled up his sleeve. i have to commend him for that. -- he rolled up his sleeves. it would be better if we did not have to find out in october of 2009. there was a willingness to a knowledge and get on with solving this. i wanted to say that because i am grateful it was the response of the contractor. >> if you would indulge in one more question. is it reasonable for us to ask for someone to give us names? is someone being demoted?

has someone lost their jobs? is this something happening on the contractor side in terms of accountability? these are multi, multi, multi million dollar mistakes and we need every penny of that money right now in terms of economic strength of this nation. it really -- our strength is not just military. i am proud of our military and all of the work you do. can we get some names? >> on the government side, secretary gates has taken some steps to strengthen the program and to upgrade the program manager on the joint strike fighter to a three-store position. will continue to strengthen -- >> i do not want to know who is getting promoted.

i want to know who is getting demoted. has anyone been held accountable? thank you, secretary carter. >> is a true general kinds ♪ ♪ heinz has been relieved of duty? a three-store manager has been put in his place. >> i was pressing them for the same question before. i interrupted secretary carter won a game in the first reasons for these huge cost overruns. he listed two. i would ask secretary carter for the record to give us because as you began to identify. you said there were labor costs and engineering changes. give us all of the reasons for the record as to the 60% to 90%

increase in the unit costs. >> i want to commend senator mccaskill on being vigilant on this cost issues. we need more of that. i am new to the united states senate. forgive me for not being expert on this topic spirit my understanding -- for being expert on these topics. this project started in 1995. we are a 30% over budget, $18 billion. >> we are more than that in the program, if you're talking about -- more of that on the program. >> do you know what is? >> i will ask miss fox. >> i am sorry, sir, i do not have the numbers back to 1995.

we added $2.8 billion but i believe it had gone up before. >> if you could submit that for the record. we're excited in florida about getting this joint strike fighter. we are proud of our military bases in florida. with forward to getting them. i think the american people if they knew about this would be shocked about how long it has taken to do this plane and getting it in the air. we just have test planes. >> there are aircraft flying in their test aircraft. >> we're hoping to get a plane to the marines by 2012. >> for the marines, yes. >> we started this program in 1995 and we will get a plane delivered in 2012. we went to the moon faster than

developing this plane. to be this far over budget, i appreciate the comments of my colleagues about accountability. i think this bespeaks a larger problem with procurement. i appreciate your comments about using business models. this cannot happen in the business world. if it did, the company would fail if they did this. so i would commend mr. chairman and you may have done this before. for us to have a hearing on procurement, to bring in large companies who buy billions of dollars of services and to have them here in the private-sector, i can just tell you that i have the opportunity and the honor to run a large law firm, nothing