Summary: Mounting cost, schedule, and performance problems continue to plague the C-17 aircraft program. Total C-17 program costs are soaring; the current $43 billion estimate for 120 aircraft now exceeds the last Pentagon estimate for 210 aircraft by $1.3 billion. Delivery schedules have again slipped and aircraft are being delivered with increasing amounts of unfinished work or known defects that must be fixed after government acceptance. Estimates of flight test completion appear to be optimistic. Also, C-17 reliability is significantly less than expected and the plane is having difficulty meeting current payload and range specifications. Although the contractor is fixing problems with the wings, flaps, and slats, other problems continue to surface, including immature mission computer software and inadequate built-in-test capability. In December 1993, the Pentagon announced that it would stop the C-17 program at 40 aircraft unless contractor management and productivity improved significantly. In January 1994, the Defense Department (DOD) and McDonnell Douglas agreed to a settlement designed to ensure a viable 120 aircraft program. DOD has not, however, established criteria against which to evaluate improvements in the contractor's performance, and the ultimate costs to the government arising from potential contractor claims are unclear under the settlement. In GAO's view, DOD should investigate alternative wide-body planes that can meet its airlift needs in the event the C-17 program is cancelled.
