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United States Government Accountability Office, 03-May-2004. Joint Strike Fighter - Observations on the Supplier Base, GAO-04-554

United States Government Accountability Office, 03-May-2004. Joint Strike Fighter - Observations on the Supplier Base, GAO-04-554

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Published by: Foro Militar General on Mar 22, 2013
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Report to the Chairman,Committee on Small Business,House of Representatives
United States General Accounting Office
May 2004
 JOINT STRIKEFIGHTER ACQUISITIONObservations on theSupplier Base
www.gao.gov/cgi-bin/getrpt?GAO-04-554.  To view the full product, including the scopeand methodology, click on the link above.For more information, contact Katherine V.Schinasi at (202) 512-4841 orschinasik@gao.gov.Highlights ofGAO-04-554,a report to the Chairman, Committee on Small Business,House of Representatives
May 2004
Observations on the Supplier Base
The Buy American Act and Preference for Domestic Specialty Metals clauseimplementing Berry Amendment provisions apply to the government’s purchase of manufactured end products for the JSF program. Currently,only one of the three JSF prime contractors is under contract to deliver manufactured end products to the government in this phase of the program.The Buy American Act will apply to manufactured end products delivered toDOD during subsequent phases, but it will have little impact on the selectionof suppliers because of DOD’s use of the law’s public interest exception.DOD, using this exception, has determined that it would be inconsistent withthe public interest to apply domestic preference restrictions to countriesthat have signed reciprocal procurement agreements with the department. All of the JSF partners have signed such agreements. DOD must also applythe Preference for Domestic Specialty Metals clause to articles deliveredunder JSF contracts. All three prime contractors have indicated that theywill meet these Specialty Metals requirements.While the JSF Program Office maintains more information on subcontractorsthan required by acquisition regulations, this information does not providethe program with a complete picture of the supplier base. The programoffice collects data on subcontract awards for international suppliers andU.S. small businesses. In addition, it maintains lists of the companiesresponsible for developing key or critical technologies. However, the lists donot provide visibility into the lower-tier subcontracts that have been issuedfor developing or supplying these technologies.
JSF Development Phase Subcontract Awards to the United States and Other Partner andNonpartner CountriesCountries Subcontract awards Percentage
United States $10,361,670,423 73.9Partner countries: $3,620,103,309 25.8United Kingdom, Italy, Netherlands,Turkey, Australia, Norway,Denmark, CanadaNonpartner countries: $44,586,392 0.3France, Germany, India, Israel,Poland, Russia, Spain, Switzerland
Total subcontract awards $14,026,360,123
Sources: JSF prime contractors—Lockheed Martin, Pratt & Whitney, and General Electric—and their self-identified teammates—BAESystems, Northrop Grumman, Rolls Royce plc, Hamilton Sundstrand, and Rolls Royce Corporation (data); GAO (analysis).
Note: Information is based on subcontracts awarded for the System Development andDemonstration phase between October 26, 2001 and December 31, 2003. These awards includethe first-tier of the JSF supplier base and portions of the second-tier.
Total does not add because of rounding.
 As the Department of Defense’s(DOD) most expensive aircraft program, and its largestinternational program, the JointStrike Fighter (JSF) has the potential to significantly affect theworldwide defense industrial base. As currently planned, it will cost anestimated $245 billion for DOD todevelop and procure about 2,400 JSF aircraft and related supportequipment by 2027. In addition, the program expects internationalsales of 2,000 to 3,500 aircraft. If the JSF comes to dominate themarket for tactical aircraft as DODexpects, companies that are not part of the program could see their tactical aircraft business decline. Although full rate production of the JSF is not projected to start until2013, contracts awarded at this point in the program will providethe basis for future awards.GAO was asked to determine thelimits on and extent of foreigninvolvement in the JSF supplier base. To do this, GAO(1) determined how the Buy American Act and the Preferencefor Domestic Specialty Metalsclause apply to the JSFdevelopment phase and the extentof foreign subcontracting on the program and (2) identified the data available to the JSF Program Officeto manage its supplier base,including information on suppliersof critical technologies.DOD provided technical commentson a draft of this report, whichGAO incorporated as appropriate.
 Page i GAO-04-554 Joint Strike Fighter Supplier Base
Results in Brief 2
Background 3
Buy American Act and Specialty Metals Requirements Apply butWill Have Little Effect on JSF Subcontracting Decisions 5
 JSF Program Office Maintains Subcontract Information on Specific Areas of Interest 9
Conclusions 10
 Agency Comments and Our Evaluation 11
Scope and Methodology 11
 Appendix I Joint Strike Fighter Partner FinancialContributions and Estimated Aircraft Purchases
 Appendix II Joint Strike Fighter System Development andDemonstration Subcontract Awards
Table 1: Joint Strike Fighter Partner Financial Contributions andEstimated Aircraft Purchases 13
Table 2: JSF Development Phase Subcontract Awards to the UnitedStates, Qualifying Countries, and Nonqualifying Countries 14
Table 3: JSF Development Phase Subcontract Awards to the UnitedStates and Other Partner and Nonpartner Countries 14
Figure 1: Example of Specialty Metals Clause Application 8

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