Congress’ government watchdog office and the Pentagon’s F-35 Joint Program Office (JPO) are at odds over how to structure the jet’s Block 4 modernization effort.

In a March 23 hearing, Government Accountability Office (GAO) Director of Acquisition and Sourcing Management Michael Sullivan argued that the Block 4 estimated cost justifies its management as a separate program, But F-35 Program Executive Officer (PEO) Air Force Lt. Gen. Christopher Bogdan countered that breaking it off would create an administrative burden and add to the program’s price tag and schedule.  

The Defense Department has not formalized the requirements for the new Block 4 capabilities, but GAO estimates the modernization program will cost $3 billion over the next six years, said Sullivan. The office put forward an update of its F-35 report Wednesday morning. 

“That price tag alone would qualify it as a major defense acquisition program in its own right and it should be managed as such so that it is subject to the same statutory and regulatory reporting as any other program its size,” he told lawmakers during a House Armed Services tactical air and land forces subcommittee hearing.

The F-22 program provides a precedent for this, he added. While the Air Force began its modernization effort under the same baseline, it eventually transitioned it to a separate program.

DoD will not be going the same direction with the F-35 Joint Strike Fighter, which is manufactured by Lockheed Martin [LMT]. The Pentagon’s top weapons buyer, Frank Kendall, issued an acquisition decision memorandum in August formalizing the Pentagon’s decision to keep the Block 4 modernization effort within the F-35 program.

One reason DoD elected against making it a separate program is that it would have to redo all documentation—such as formulating a new acquisition strategy, contracting strategy and threat report­—and go through the approval process again, Bogdan said.

“It will be greater cost, I will need more people in my program office and I will tell you it will probably add six months to a year easily to the start of follow on modernization if I have to start over,” he said.

However, DoD hopes to increase transparency and ameliorate congressional concerns by issuing a separate contract for Block 4 mods and tracking cost, schedule and performance independently from the rest of the program, Bogdan said.

Even though DoD is not technically making Block 4 a separate program, Kendall is requiring the JPO to go through a similar process as a Milestone B decision, including undergoing a preliminary design review (PDR) and obtaining his approval to issue a request for proposals (RFP) and sign the contract, Bogdan added.

“That’s an equivalent to a Milestone B type of requirement, but it’s not called a Milestone B because if you call it a Milestone B it comes with all sorts of baggage,” Bogdan said.

“What everyone is concerned about is burying a $3 billion modernization program underneath a $50 billion SDD (system development and demonstration) program, so when any changes in cost, schedule and performance occur, you can’t see it or measure it,” he added. “That is not going to happen.”

The RFP for Block 4 modernizations would likely be released in early 2018 for an anticipated contract award in late 2018, Bogdan said. That competition will likely be limited to current prime contractors, but part of that contract will entail creating an open architecture environment for the Joint Strike Fighter that would allow sensors and other equipment to be more easily integrated onto the aircraft.

“That should happen around [Block] 4.2 or 4.3 in the 2023 timeframe,” he said. “If we are successful in that, then the ability of the department to upgrade the airplane through competition becomes much better.”