Note: this item is edited and updated as of 5 pm Eastern time on Friday, January 23.

It caused a definite but understandable flap this morning when an official statement emerged from the Government Accountability Office, declaring the Joint Strike Fighter program "recently declared a Nunn-McCurdy unit cost breach." This apparent bombshell - the program has been struggling to avoid such a declaration for a couple of years - was buried in a corner of the GAO's transition website.

Don't panic, says the GAO (in a direct comment below from Katherine Schinasi, the agency's managing director for acquisition and sourcing management). The "recent" breach actually dates to 2005, following the redesign undertaken to fix weight-gain problems.

That was why the subject of a breach did not come up during in a 90-minute briefing and discussion with program office director Maj Gen Charles Davis at the Brookings Institute last week. Although several questions were asked about costs, nobody specifically used the N-word.

Davis did say (noted here) that costs were likely to overrun, and stated that the average unit procurement cost was likely to be $80 million in 2014 dollars for the F-35A, $85-87 million for the F-35C and "a couple million more" for the STOVL F-35B.

Note: that doesn't mean that an F-35A ordered in FY14 will cost $80m - the projection is the average across 2400+ aircraft. Backtracked to today's dollars, it translates into a unit cost of $71 million - which is still a lot more than the $52 million which Norway used in its estimates.

In fact, that $71 million could put the program on track for a Nunn-McCurdy breach. Passed in 1982, Nunn-McCurdy requires a report to Congress when a major acquisition program overruns its projected unit cost (which may or may not include development - two sets of criteria are used) by a set percentage. A 15 per cent breach requires notification.

A 25 per cent breach technically means termination - although this can be (and almost always is) avoided if the Secretary of Defense certifies to Congress that the program is critical to national security. But at that point the program is likely to be restructured, too, and it will certainly face a lot of scrutiny.

The law was also changed in 2006 to deal with "re-baselining" - that is, cases where the program was restructured and a new Nunn-McCurdy baseline set. Congress added requirements to report (30 per cent) and terminate or recertify (50 per cent) based on the original baseline cost. For JSF, this would mean the estimate at contract award in late 2001, before the weight explosion, major redesign and schedule slip in 2004-05.

(For everything you want to know about Nunn-McCurdy, see this presentation.)

The JSF office has been working to avoid a breach sor some years, trying to control actual and projected costs, and cutting in some places to offset increases in others - in particular, increases in the cost of manufacturing the aircraft.

The GAO notes that JSF "faces considerable risks stemming from its decision to reduce test assets and the flight-test program to pay for development and manufacturing cost increases." The program office has also attempted several times to cancel the F136 engine, and to revise assumptions for support costs.

Remember all the confusion around the 2007 SAR - which was closely followed by the revelation of another one-year slip? As noted at the time, "the big good news was that there was no big bad news... The fighter dodged the incoming Nunn-McCurdy missile that everyone had predicted."

Whether it will do it again will be seen in March, as a result of the  end-2008 Selected Acquisition Reports (SAR), normally published at the end of March.

Today, Pratt & Whitney is lobbying more intensively to have the F136 cancelled and the JSF program is fighting against efforts to slow the program down, which would increase unit costs. It's not hard to see why.