oversight

Defense Acquisition Programs: Status of Selected Programs

Published by the Government Accountability Office on 1990-06-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

DEFENSE ACQUISITION
PROGRAMS

Status of Selected
Programs



                     141695
Uuited States
General Accouuthg   Office
Washiugton, D.C. 20548

National Security aud
International Affairs Division

B-226470
June 27,1QQ0
The Honorable Sam Nunn
Chairman, Committee on Armed Services
United States Senate
Dear Mr. Chairman:

This report responds to your request that we review the requirements,
schedule,performance, cost, and funding support for selectedDepart-
ment of Defense(DOD) weapon system acquisition programs. As agreed
with your office, we selectedprograms for which DOD was scheduledto
make an acquisition milestone decision1during fiscal year 1991 and
therefore were possible candidates for milestone authorization. Mile-
stone authorization is a concept that would authorize up to 6 years of
funding to cover the entire acquisition phase for either full-scale devel-
opment or full-rate production. During our review, the services revised
or eliminated the scheduledmilestone decision dates for someprograms;
however, we retained these programs in our review.
The programs we reviewed and their next milestone decision as of
March 1990 are shown by service in table 1.




‘Major defense system acquisitions typically proceed through several phases, with each phase pre
ceded by a senior management review, or “milestone decision,” by the military services and/or DOD.
The milestone 0 decision precedes the concept exploration phase, the milestone I decision precedes
the demonstration and validation phase, the milestone II decision precedes the full-scale development
phase, the n&stone IIIA decision precedes low-rate initial production, and the milestone IIIB decision
precedes full-rate production.



Page 1                                          GAO/NSIAD-90-159     Defense Acquisition   Progranw
                                   B-220470




Table 1: Mileatone Decirions for
Programs GAO Reviewed                                                                          Next milestone
                                   Program                                                     decision                       Date
                                   Army
                                   Non-Line-of-Sight (NLOS) Missile                            a                              a
                                   Liaht Helicooter ILH)                                       II                             Jan. 1991



                                   Air Force
                                   Sensor Fuzed Weaoon (SFWI                                   IllA                           Scot. 1991b
                                   Advanced Tactical’Fighier (IITF)                            II                             June 1991
                                   Joint Tactical Information Distribution                     Class 2M-IIIAC                 Oct. 1991
                                      System (JTIDS) Class 2 Terminals                         Class 2 and 2H-IIIB            Oct. 1993
                                   Yn the fiscal year 1991 budget request, DOD decided to continue to fund development   but not
                                   procurement.

                                   bThe production contract is not expected to be awarded until December 1991
                                   CThe milestones for the Army Class 2M terminals were rescheduled to coincide with the program
                                   schedule for the forward area air defense/command, control, and intelligence system, since the
                                   Class 2M terminal is a primary subsystem of that system.




Results in Brief                   The current and anticipated instability in the overall defensebudget and
                                   the recent changesin Eastern Europe are forcing DOD and the military
                                   servicesto reexamine the need, priority, and annual funding levels for
                                   many weapon system acquisition programs. DOD and the serviceshave
                                   reexamined or are reexamining someof the systems we reviewed. For
                                   example, the Army had characterized the NIDS missile as a high priority,
                                   but its procurement was terminated by DOD in its fiscal year 1991 budget
                                   request. The Secretary of Defenseinitiated a review in December1989
                                   to reexamine, among other things, the need for the ATF. In April 1990 the
                                   Secretary announcedthat he had decided to maintain the ATF force level
                                   objective at 760 aircraft but proposed delaying its initial procurement
                                   by 2 years. The Secretary also recently initiated a similar review of the
                                   LH. Other programs can expect to be reexamined. For example, the
                                   changesoccurring in Europe will likely result in a reexamination of the
                                   need for the SFW,a weapon designedto attack formations of enemy
                                   armored vehicles.
                                   Although the six programs we reviewed are being developed to satisfy a
                                   stated military requirement, DOD and the serviceshave not fully agreed
                                   that certain programs are the best or most cost-effective solution for
                                   satisfying the requirements. For example, the specific requirements for
                                   the LH have not yet been determined, and the Army doesnot know


                                   Page 2                                           GAO/NSIAD-99-lS9    Defense Acquisition       Programs




                                                                                J
                                                      B-220470




                                                      whether this aircraft is the most cost-effective way to accomplish the
                                                      LH'S projected missions. A revised cost and operational effectiveness
                                                      analysis is expected to be finalized before the LH'S next major acquisi-
                                                      tion milestone decision, scheduled for January 1991. In addition, the
                                                      future of the JTIDS Class 2 terminal is unclear. The Air Force, as lead
                                                      service, has reduced its planned procurement of JTIDS terminals for the
                                                      F-16 aircraft from 160 to only 20 units. However, DOD has given the Air
                                                      Force until June 1991 to decide whether to retain the terminals for the
                                                      F-16 and expand the program or terminate it and transfer the 20 termi-
                                                      nals to the Navy. In addition, a variant of the Class 2 terminal is being
                                                      designedand built for the Army.
                                                      Each of the six systems we reviewed has experienced someschedule
                                                      slippage, and cost estimates for four systems have increased.Five of the
                                                      six programs have not yet demonstrated that the system being designed
                                                      and/or produced can meet its requirements. Tables 2 through 6 summa-
                                                      rize the results of our review, and detailed information on each of the
                                                      programs is in appendixes II through IV.
                                                -
Table 2: GAO’s Assessment of the Status of the Programs Reviewed
                                         Recent          Future                   Demonstrated
                     Stage of            schedule        slippage                 It will meet        Recent cost     Future cost
Program              development         slippage        indicated                requirements        growth          growth indicated
LH               --             Earlv develoDment    Yes           Yes            No                  No              Yes
ATF
.-.--____-_-                    Early development    Yes           No             No                  Yes             No
NLOS                            Full-scale           Yes           Yes            No                  Yes             Yes
..-----    __.....___
                    I___----.   development
SFW                             Full-scale           Yes           Yes            No                  Yes             No
_-.--_._---____---.-            development
MK-50
.--__--.                        Initial production   Yes           No             Yes                 Yes             No
JTIDS                           Initial woduction    Yes           No             No                  No              No




                                                      Page3                             GAO/NSIAD-99.169DefenaeAcquMtionPrograma
                                          B220470




Table 3: Cobt Estimates for Programs in
Early Development
                                          -Escalated dollars in millions
                                                                                                   Full-scale
                                                                         developZ2              development           Production                 Total
                                          Program                                 cost                    cost              cost                 cost
                                          iii----                               $921.6                $3,107.6          $41,700.0           $45,729.2
                                          ATF                                  $35817.6              $10.534.0          $65.082.2           $79.433.8


Table 4: Cost Estimates for Programs in
Full-Scale Development                    Escalated dollars in millions
                                                                                                         Initial           Full-rate
                                                                             Development            production          production               Total
                                          Program                                    cost                 cost                  cost              cost
                                          NLOS                                        $630.8                $O.Oa               $0.0”          $630.9
                                          SFW                                         $200.9              $762.6            $2,914.9         $3,879.0
                                          7300 decided to delete procurement funding for the NLOS missile from the fiscal year 1991 budget and
                                          the Five Year Defense Plan.


Table 5: Cost Estimates for Programs in
Production                                Escalated dollars in millions
                                                                                    Initial             Cost for 5
                                                         Development           production            years of full-         cost to              Total
                                          Program                cost                cost         rate production         complete               cost
                                          MK-;O                 $1,472.3             $659.1                $2,544.9         fs2i79.0         $7,255.3
                                          JTIDS                 $2.032.0             $773.1                $1.0885”                     a    83.893.7
                                          aFulI-rate production of JTIDS is not expected to begin until fiscal year 1994 and will be completed
                                          within 5 years.



                                          To obtain the information for this report, we reviewed relevant program
Scopeand                                  documents, such as operational requirements, selected acquisition
Methodology                               reports, acquisition strategies, operational effectiveness analyses,pro-
                                          gram master schedules,cost estimates, cost performance reports, test
                                          reports, contract documents, and budget exhibits. We also discussed
                                          each program with responsible DOD and military service officials.

                                          We conducted our work at Headquarters, Departments of the Army,
                                          Navy, and Air Force, Washington, D.C.; DefenseIntelligence Agency,
                                          Washington, D.C.; Army Aviation SystemsCommand,St. Louis, Mis-
                                          souri; Army Missile Command, RedstoneArsenal, Alabama; Army Oper-
                                          ational Test and Evaluation Agency, Washington, D.C.;Air Force
                                          Systems Command, Aeronautical Systems Division, Wright-Patterson
                                          Air Force Base,Ohio; Electronic Systems Division, HanscomAir Force



                                          Page 4                                              GAO/NSIAlXKb169      Defense Acquisition       Programs
Base,Massachusetts;Munitions SystemsDivision, Eglin Air Force Base,
Florida; and Naval SeaSystemsCommand,Arlington, Virginia.
We performed our work from October 1989 to April 1990 in accordance
with generally acceptedgovernment auditing standards. As requested,
we did not obtain official agency comments.However, we discusseda
draft of this report with DOD and service officials and incorporated their
comments where appropriate.

We are sending copiesof this report to the Chairmen, House Committees
on Appropriations, Armed Services,and Government Operations and
SenateCommittees on Appropriations and Governmental Affairs; the
Secretariesof Defense,the Army, the Navy, and the Air Force; and the
Director, Office of Managementand Budget. We will make copies avail-
able to other interested parties.

This report was prepared under the direction of Nancy R. Kingsbury,
Director, Air Force Issues,who may be reached on (202) 276-4268 if you
or your staff have any questions concerning this report. Other major
contributors to this report are listed in appendix V.
Sincerely yours,




Frank C. Conahan
Assistant Comptroller General




Page 6                            GAO/NSIAD-90-159   Defense Acquisition   Programs
Contents


Letter                                                                                                       1

Appendix I                                                                                                   8
Milestone
Authorization
Appendix II                                                                                             10
Army Programs           Non-Line-of-Sight Missile
                        Light Helicopter
                                                                                                        10
                                                                                                        16

Appendix III                                                                                            23
Navy Program            MK-60 Torpedo                                                                   23

Appendix IV                                                                                             29
Air Force Programs      SensorFuzed Weapon
                        Advanced Tactical Fighter
                                                                                                        29
                                                                                                        36
                        Joint Tactical Information Distribution System Class 2                          44
                            Terminal

Appendix V                                                                                              64
Major Contributors to
This Report
Tables                  Table 1: Milestone Decisionsfor Programs GAO Reviewed                                2
                        Table 2: GAO’s Assessmentof the Status of the Programs                               3
                            Reviewed
                        Table 3: Cost Estimates for Programs in Early                                        4
                            Development
                        Table 4: Cost Estimates for Programs in Full-Scale                                   4
                            Development
                        Table 6: Cost Estimates for Programs in Production                               4
                        Table II. 1: NICS Missile Program Schedules                                     13
                        Table 11.2:NI.CSMissile Cost Estimates                                          16
                        Table 11.3:LH Program Scheduleas of December1989                                18
                        Table 11.4:LH Cost Estimates                                                    20
                        Table III. 1: MK-60 Program Schedules                                           26
                        Table 111.2:MKBO Cost Estimates                                                 28
                        Table IV. 1: SFW Program Schedules                                              32


                        Page 6                           GAO/NSIAD-90-169   Defense Acquisition   Programs
  I

          Cmtents




          Table IV.2: SFW Program ScheduleChangesDue to 1989                            32
              Restructuring
          Table IV.3: SFWCost Estimates                                                 36
          Table IV.4: ATF Program Schedules                                             41
          Table IV.6 ATF Cost Estimates as of February 1990                             44
          Table IV.6: JTIDS Program Scheduleas of December1989                          60
          Table IV.7: JTIDS Cost Estimates as of February 1990                          63

Figures   Figure II. 1: NIB!! Missile System                                            11
          Figure 11.2:ProposedLH Designs                                                17
          Figure III. 1: MK-60 Torpedo                                                  24
          Figure IV.l: SFW Deployment Events                                            30
          Figure IV.2: ATF’s Projected Role in Offensive Counterair                     38
              Missions
          Figure IV.3: JTIDS Users                                                      47




          Abbreviations

          ATF       Advanced Tactical Fighter
          DOD       Department of Defense
          FAADS     Forward Area Air DefenseSystem
          GAO       General Accounting Office
          JTIDS     Joint Tactical Information Distribution System
          LH        Light Helicopter
          NIDS      Non-Line-of-Sight
          SFW       SensorFuzed Weapon


          Page 7                           GAO/NSIADW-169   Defense Acquisition   Programa
                                                                                          ,
Appendix I

MilestoneAuthorization


               Milestone authorization is a concept that would authorize up to 6 years
               of funding to cover the entire acquisition phase for either full-scale
               development (milestone II) or full-rate production (milestone IIIB).
                10 USC. 2437, enacted in October 1986, established the milestone
               authorization concept to enhanceprogram stability by alleviating some
               of the year-to-year funding uncertainties and minimizing the amount of
               managementreview within the Department of Defense(DOD) and the
               services.The concept was basedon the principle that if DOD would
               commit to managing a program within set cost, schedule,performance,
               and other requirements, the Congresswould commit to stable multiyear
               funding authorization. The legislation required the Secretary of Defense
               to (1) designate someDOD programs as “Defense Enterprise Programs”
               to receive streamlined managementand (2) nominate someof these pro-
               grams as candidates for milestone authorization. A 1987 amendment to
               the legislation enabled the House and SenateCommittees on Armed Ser-
               vices to consider defenseacquisition programs that have not been desig-
               nated as DefenseEnterprise Programs for milestone authorization and
               approve the programs for milestone authorization as appropriate.
               In March 1987 the Secretary of Defensedesignated 10 acquisition pro-
               grams as DefenseEnterprise Programs and nominated 3 for milestone
               authorization: the Army’s Mobile Subscriber Equipment, the Navy’s Tri-
               dent II D-6 Missile, and the Air Force’s Medium Launch Vehicle. The
               Congressapproved milestone authorization for the Army and Navy sys-
               tems and two others: the Navy’s T-46 Training System and the Army’s
               Tactical Missile System. Sincethen, neither DOD nor the Congresshas
               designated or nominated systems for the DefenseEnterprise Program or
               milestone authorization.
               In his July 1989 DefenseManagementreport, the Secretary of Defense
               stated that DOD should take better advantage of the DefenseEnterprise
               Program and milestone authorization. The report stated that the Under
               Secretary of Defensefor Acquisition, with the Service Acquisition Exec-
               utives, would carefully select several new DefenseEnterprise Programs
               from programs in the DefenseAcquisition Board’s concept approval
               (post-milestone I) phase, provide strong policy direction and oversight in
               implementing the DefenseEnterprise Program, and seek milestone
               authorization for such programs to enhancemanagementstability.
               Sincethen, a DOD task force has been preparing an implementation plan
               and a proposed list of candidate programs. However, DOD’S fiscal year
               1991 budget request to the Congressdid not contain any candidate pro-
               grams. In March 1990 DOD officials informed us that candidate programs


              Page 8                             GAO/NSJAD-90-159   Defense Acquisition       Programs
Amendix     I
Milestone   Authorlmtion




are still being considered,but the final decision on nominations to the
program had not yet been made, primarily becauseof the current and
anticipated instability of the overall defensebudget. As a result, DOD and
service decisionmakershave had to cut the budgets and delay the sched-
ules of many programs, including someof those that were being consid-
ered for the DefenseEnterprise Program.




Page 9                            GAO/NSIAD-90-159   Defense Acquisition   Programs
Appendix II

Army          Programs




                         The Non-Line-of-Sight (NIBS) Missile’ is an important part of the Army’s
Non-Line-of-Sight        Forward Area Air DefenseSystem (FAADS) becauseof its ability to
Missile                  attack enemy helicopters hidden from view by the terrain. DODhas
                         decided not to fund the NILIS missile’s procurement2becauseother pro-
                         grams have higher priority and its position that the forward area air
                         defensemission can be accomplishedby the Air DefenseAnti-Tank and
                         Pedestal Mounted Stinger Systems.According to Army officials, the
                         Army plans to appeal DOD’S decision during the fiscal year 1992 budget
                         formulation processbecauseit believes that a requirement for the mis-
                         sile’s capabilities still exists. Therefore, we have included this program
                         in our report to provide information on its status and identify issues
                         that would be relevant if the program continues.

                         The NILISmissile program is in full-scale development, and an initial pro-
                         duction decision was scheduled for July 1991. If DOD’s decision not to
                         fund the missile’s procurement is sustained, current plans call for the
                         program to be terminated after development is completed in December
                         1993, and the technology to be “shelved” for possible future use.

                         According to Army testing officials, the initial operational evaluation of
                         a prototype3 missile was successfulin demonstrating the feasibility of
                         the NIDS concept. However, componentsto be included in the full-scale
                         development missile-such as an infrared seeker and a more powerful
                         propulsion system- are not scheduledto be tested until fiscal year
                         1991.


Background               The NIDS missile system is designedto protect ground troops and vehi-
                         cles by attacking enemy helicopters hidden from view by the terrain.
                         The NIDS missile system consistsof a fiber optic guided missile, launcher,
                         gunner station, and communication and navigation equipment.
                         Figure II. 1 illustrates how the NILE missile would be used in combat.




                         ‘The missile is also referred to as the Fiber Optic Guided Missile.

                         %OD decided to delete procurement funding for the NIL?3 missile from the fiscal year 1991 budget
                         and the Five Year Defense Plan.

                         3A prototype is the first working article of a new technology or design intended to serve as the pat-
                         tern or guide for subsequent designs that will be incorporated in a weapon system.



                         Page 10                                          GAO/NSIAD-90-169     Defense Acquisition    Programs
     .
                                    Appendix II
                                    Army prorprme




Figure 11.1:NlOg Mlrrils   gy8tem




                                         Chstant Altitude ’
                                         Midcourse




                                     Page 11                  GAO/NSLADgO-169   Defense   Acquisition   F’rogram~
               The NIB missile is to be mounted on vehicles, such as the High Mobility
               Multi-Purpose WheeledVehicle or the Bradley Fighting Vehicle, and
               operate in the forward area of the battlefield in concealedpositions out
               of direct enemy view. The missile will receive target location informa-
               tion from its own sensor and from the FAADS command, control, and
               intelligence network, which will contain ground and aerial sensors.Once
               the missile is launched, it will use an on-board television camera or
               imaging infrared sensorto detect targets. The targets’ imageswill pass
               though a fiber optic line to the gunner’s monitor so the gunner can guide
               the missile to the target.
               The NILISmissile program is currently in full-scale development. The
               Boeing Company was awarded a cost-plus-incentive-feecontract in
               December1988 to develop a missile capable of operating in all types of
               weather and in the day or night. The missile includes a television
               camera, infrared seeker, and a more powerful propulsion system than
               the prototype missile. To reduce the risk in developing the missile, the
               Army built and tested a prototype missile containing only a television
               camera. In February 1988 the Army restructured the program, in accor-
               dance with congressionalguidance, to delete plans for equipping the
               first operational units with missiles using the television camera only.
               However, the information learned from developing and testing the pro-
               totype missile has been transferred to Boeing.


Requirements   In 1986 the Joint Requirements and ManagementBoard approved the
               concept for the overall FAADS program. The Army approved the require-
               ments for the NILE3 missile in October 1987, and the DefenseAcquisition
               Board approved full-scale development of the missile in September
               1988.
               If DOD doesnot fund the NILS missile’s procurement, the Army will have
               to rely on the Air DefenseAnti-Tank and Pedestal Mounted Stinger sys-
               tems for forward area air defense.According to a FAADS program offi-
               cial, these systems are not capable of attacking targets concealedby
               terrain. Therefore, the Army’s stated requirement for a non-line-of-sight
               forward area air defensecapability will not be met.


Schedule   *   DOD’S decision not to fund the NIQS missile’s procurement will result in
               the termination of the program at the end of initial operational test and
               evaluation in December1993. Table II. 1 comparesthe missile’s sched-
               ules from February 1988 through February 1990.


               Page 12                           GAO/NSLAD-90-169   Defense Acquisition   Programs
          ,




Table 11.1:NLOS Missile Program
Schedules                         Event                                                   Feb. 1988        Dec. 1989         Feb. 1990
                                  Full-scale development decision                         June 1988        Aug. i988         Aug. 1988
                                  Complete initial operational evaluation                 Mar. 1989        Sept. 1989        Sept. 1989
                                  Initial production decision                             Jan. 1991        July 1991         a
                                  Initial oroduction contract award                       Jan. 1991        Julv 1991         a
                                  First unit eauiDped                                     Feb. 1992        Au;. 1993         a
                                  Complete initial operational testing and                July 1992        Dec. 1993         Dec. 1993
                                  evaluation
                                  Full-scale production decision                          Sept. 1992       Jan. 1994         a
                                  Full-scale production contract award                    Jan. 1993        Mar. 1994         a
                                                                                          b                b                 a
                                  Initial operational capability
                                  aThese events have been deleted from the schedule due to DOD’s decision not to fund the missile’s
                                  procurement.

                                  bThis information is classified


                                  Between February 1988 and December1989, the program experienced
                                  delays due to DOD and congressionalbudget reductions and technical
                                  problems. As a result, the schedulesfor first unit equipped, completion
                                  of initial operational test and evaluation, and the full-rate production
                                  decision and contract award dates slipped over 14 months.

                                  DOD eliminated all procurement funds for the ~10s missile in its fiscal
                                  year 1991 budget request. Therefore, planned procurement decisions
                                  and related tests have been deleted from the schedule.Unless DOD
                                  decidesto provide funding for the missile’s procurement, current plans
                                  provide for the termination of the program after initial operational test
                                  and evaluation are completed in December1993, and the technology will
                                  be “shelved” for future use.


Performance                       Numerous tests of the prototype NU)Smissile have been completed since
                                  1988. According to Army operational testing officials, the tests have
                                  been successfulin demonstrating the feasibility of attacking enemy heli-
                                  copters hidden from view by the terrain. However, full-scale develop-
                                  ment NWS missiles, which include infrared and television seekersand a
                                  more powerful propulsion system, are not scheduledto be tested until
                                  fiscal year 1991.
                                  The NWS missile acquisition strategy included early operational testing
                                  of a prototype missile and a technical risk reduction program. The pro-
                                  gram office devised a test scheduleto include initial operational evalua-
                                  tion and extended user employment tests. The initial operational


                                  Page 13                                        GAO/NSIAD-90-169      Defense Acquisition       Programs
       evaluation tests have been completed, but as of February 1990, the
       extended user employment tests were still being conducted.
       The initial operational evaluation tests were conducted from November
       1988 to September 1989. The tests included (1) captive flight tests to
       demonstrate that soldiers could detect and identify rotary wing and
       armor targets, (2) a force development test and experiments to investi-
       gate tactics, training, and crew performance, and (3) actual missile fir-
       ings to demonstrate capability against helicopters and armored vehicles.
       Although the Army considersthe tests successful,it had not finalized its
       evaluation reports on the results of the missile firing and the extended
       user employment tests as of February 1990.
       During the missile firing tests, 6 of the 10 missiles fired hit their
       intended target. Initial results from the extended user employment test
       showed that 3 of the 6 missiles fired hit the targets. However, according
       to the Army’s “OperationalTest and Evaluation Agency, the test
       revealed a serious navigation problem with the missile causedby
       software problems. Nevertheless,according to an Army official, a solu-
       tion to this problem has been recently identified and successfully
       demonstrated in the extended user employment testing phase. The NIB
       system engineer stated that Boeing is also addressingthe problem as a
       part of the full-scale development.
       The Army initiated a risk reduction program in 1988 to reduce technical
       risks in someNIDSmissile componentsand serve as a backup develop-
       ment effort. Technical componentsconsideredhigh risk were the
       infrared seeker, a variable speedmotor, and midcourse navigation. The
       technical risk reduction program is scheduledto end on September30,
       1990, and Boeing will be responsible for eliminating additional risks.
       According to Boeing’s November 1989 cost performance report, tech-
       nical risks could affect the schedulefor completing full-scale
       development,


cost   NILE missile system cost estimates remained relatively stable until the
       DOD’S recent decision not to fund production. From December1988 to
       December1989, research and development cost estimates increased by
       about $74 million (in escalated dollars) due to changesin testing plans
       and resulting delays in the testing schedule.Between December1989
       and February 1990, the research and development cost estimate
       changed becausea new inflation factor was used and certain tests were



       Page 14                           GAO/NSIAD-90-169   Defense Acquisition   Programs
                                          Appendix II
                                          AnnY PwP-




                                          eliminated. Table II.2 shows the changesin the cost estimates from
                                          December1988 to February 1990.
Table 11.2:NLOS Mlacrile Coat Estimates
                                          Escalated dollars in millions
                                          Funding category                             Dec. 1988       Dec.-1989          Feb. 1990
                                          Research and development                         $555.9           $629.7          $630.6
                                          Procurement                                      2364.5           2334.1              0.0
                                          Total                                          $2920.4          $2963.8           $630.8




Recent GAO Report                         DODAcquisition        Programs: Status of SelectedSystems(GAO/NSIAD-88-160,
                                          June 30,1988).

                                          The Light Helicopter (LH) program is intended to provide the Army with
Light Helicopter                          a new generation of lightweight helicopters to perform attack and scout
                                          missions. Demonstration and validation of the LH concept began in
                                          November 1988 and is scheduledto end in September 1990. At that
                                          time, the contractor teams will submit their final aircraft designsand
                                          full-scale development proposals to the Army, who will evaluate the
                                          proposals and select a single contractor team for full-scale development.
                                          The full-scale development decision is scheduled for January 1991. The
                                          Army estimates that research, development, and procurement costs for
                                          2,102 LHS-6 development prototypes and 2,096 production aircraft-
                                          will cost $46.7 billion in escalateddollars.

                                          The LH is expected to provide increasedtarget acquisition, night vision
                                          sensor, and other capabilities over the helicopters it will replace: the
                                          OH-6,OH-68 and AH-1s. However, the Army has not yet determined
                                          that the LH is the best and most economical way to perform its attack
                                          and scout missions in the future; a Cost and Operational Effectiveness
                                          Analysis will be finalized before the upcoming full-scale development
                                          decision.
                                          The successfuldevelopment and application of advanced technologies
                                          will be required to meet the LH’Ssurvivability, weight, and multiple mis-
                                          sion requirements. These technologiesinclude sophisticated target
                                          acquisition and night vision sensors,a composite (nonmetal) airframe,
                                          and very high speedintegrated circuitry. Integration of the mission
                                          equipment and sensorpackage and software are consideredto contain



                                          Page 16                               GAO/NSIAD-90-169    Defense Acquisition   Programa
             the highest degreeof risk, according to a program official. These tech-
             nologies will be further developed in demonstration and validation but
             will not be demonstrated in prototype flight testing until full-scale
             development.
             The Army plans to control cost growth by securing production and oper-
             ating and support cost commitments from each contractor team during
             the full-scale development source selection. For example, system hard-
             ware must be designedto a specific cost, and any changesin specifica-
             tions must be evaluated in terms of the impact on life cycle cost. In
             addition, if projected procurement funds do not becomeavailable, the
             estimated production rate of 216 aircraft per year may have to be
             reduced, which would increase LHunit costs.A program office official
             said that the $7.6 million (fiscal year 1988 dollars) average unit flyaway
             cost4goal is achievable becausecontractors can reduce or tradeoff
             system capabilities to meet this goal.


Background   The LH is intended to perform multiple missions into the 1990sand
             beyond, including light attack and armed reconnaissanceroles. In the
             light attack role, the LH will be equipped with Hellfire antitank missiles
             and engageenemy armored units in maneuvers against ground forces. In
             the armed reconnaissancerole, the LHwill fly over enemy territory and
             report back to ground commanderson enemy positions. The Army also
             intends to use the LHto conduct air-to-air combat missions against
             enemy helicopters and long-range attack missions into enemy territory.
             In November 1988 the Army awarded cost-plus-fixed-fee contracts to
             two contractor teams for competitive demonstration and validation of
             the LH airframe design and avionics. Boeing Helicopters and Sikorsky
             Aircraft Division of United TechnologiesCorporation comprise one
             team, and McDonnell Douglas Helicopter Company and Bell Helicopter
             Textron comprise the other. The 23-month demonstration and validation
             contract period is scheduledto end in September 1990. The full-scale
             development contract award is scheduled for January 1991. Figure II.2
             shows the two contractor teams’ proposed LH designs.



             4Flyaway cost includes all recurring and nonrecurring production costs that are incurred in the manu-
             facture of a usable end item. It includes mission equipment (basic structure, propulsion, electronics),
             project management, systems engineering, system test, and the allowances for engineering changes
             and warranties, Research and development costs, training equipment, support equipment, initial
             spares, technical data, and publications or contractor services are not included.



             Page 16                                         GAO/NSIAD-90-169      Defense Acquisition   Program8
Figure 11.2:Proposed LH Designs




          Bell/McDonnell   Douglas                      Boeing/Sikorsky



                                     The Army awarded a firm-fixed-price contract in October 1988 for
                                     development of the LH'S T800 engine to the Light Helicopter Turbine
                                     Engine Company, a company formed by Garrett Engine Division of the
                                     Allied Signal Corporation and the Allison Gas Turbine Division of Gen-
                                     eral Motors. Full-scale development of the engine is scheduled for com-
                                     pletion in April 1991.


Requirements                         The Army’s objectives for developing the LH are to replace the current
                                     light fleet of AH-l, OH-6, and OH-58 A/C helicopters with fewer LHS and
                                     to provide a multiple mission helicopter capable of meeting future
                                     threats.

                                     Requirements for a new observation/light attack helicopter are defined
                                     in a draft Required Operational Capabilities document. According to a
                                     program official, however, even though the LH has been established to
                                     meet these projected needs,full validation is pending the completion of
                                     the LH Cost and Operational Effectiveness Analysis. The analysis will
                                     assesshow mixes of other aircraft will perform in various scenarios.
                                     Other helicopter systems, such as the Army Helicopter Improvement
                                     Program and improved Apache are still being considered.An interim
                                     report on the analysis will be completed in April 1990, and the final
                                     report will be completed in October or November 1990, before the full-
                                     scale development decision scheduled for January 1991.
                                     The Army was forced to change its original single-seatdesign to a two-
                                     seat design becausethe LH'S mission requirements were too demanding.
                                     As a result, the projected weight and cost of the LH has increased. In



                                     Page 17                              GAO/NSLAD-99-169   Defense   Acquisition   Programs
                                       addition, when DOD determined in 1988 that the program was not afford-
                                       able, the Army reduced someof its functional requirements to lower air-
                                       craft cost and weight. In the demonstration and validation phase,
                                       scheduled for completion in September 1990, contractor teams have
                                       been proposing tradeoffs to reduce weight and cost. According to LHpro-
                                       gram officials, both contractor teams have indicated that the 7,500-
                                       pound weight goal will be achieved by the end of the demonstration and
                                       validation phase.


  nedule
SC1                                    Although the LH'S schedule changedmany times in previous years, it has
                                       remained relatively stable since the June 1988 decision to begin the
                                       demonstration and validation phase. The only significant schedule delay
                                       occurred in March 1989, when the demonstration and validation con-
                                       tract was definitized at a 23-month performance period, instead of the
                                       originally planned 18-month period. This changeresulted from an imbal-
                                       ance between the funds available and work required during the first
                                       year of the demonstration and validation contract. As a result, the con-
                                       tractor source selection evaluation processwas shortened by 4 months.
                                       The LH'S current scheduleis shown in table 11.3.
Table 11.3:LH Program Schedule as of
December 1999                          Event                                                                               Date
                                       Complete demonstration and validation contracts                                     Sept.   1990
                                       Full-scale development decision                                                     Jan.    1991
                                       First flight of full-scale development aircraft                                     Aug.    1993
                                       Low-rate initial oroduction decision                                                Nov.    1994
                                       Complete full-scale development                                                     Sept.   1996
                                       Complete initial operational test and evaluation                                    Sept.   1996
                                       Full-rate production decision                                                       Nov.    1996
                                       Initial ooerational cababilitv                                                      Dec.    1996


                                       Program officials characterized LH'S schedule as low risk. However,
                                       when the program was restructured in 1988, the Army compressedthe
                                       schedule and deleted the test and evaluation of competitive prototype
                                       aircraft from the demonstration and validation phase. As a result, com-
                                       petition between the two contractor teams consists of paper studies,
                                       mock-up designs,wind tunnel tests, surrogate flight tests, and field tests
                                       of the target acquisition systems. By not building competitive proto-
                                       types, decisionmakersmay not have critical information that would
                                       have been provided during the early fabrication and testing processes.
                                       Technical performance demonstration will be reduced, and the Army


                                       Page 18                                    GAO/NSIAD-99-169   Defense Acquisition    Programs
              will have to use cost estimates instead of actual costs for a longer period
              of time. Thus, the Army will have to select a contractor and decide
              whether to move to full-scale development with less information than
              was originally planned.
              In addition, the low-rate initial production decision is scheduledfor
              November 1994, almost 2 years before full-scale development is com-
              pleted in September 1996. Thus, important information from the latter
              part of the full-scale development phase, such as results of prototype
              operational testing, will not be available until after low-rate initial pro-
              duction has begun. Program officials believe this concurrency is man-
              ageableand can benefit the program by providing the impetus to
              complete full-scale development by a specific date and to preclude a
              break between the end of full-scale development and the beginning of
              production. Program officials emphasizedthat only 12 of 2,096 aircraft
              will be procured before the end of full-scale development.
              Moreover, achieving the schedulewill depend on successfully devel-
              oping and integrating the LHS advancedtechnologies while controlling
              aircraft cost and weight. Nevertheless,program officials believe that the
              schedule is achievable through the full-scale development phase and
              that adequate information will be available when decisionsneed to be
              made.


Performance   Even though somerequirements have been reduced to control weight
              and cost, the LH is still expected to be a sophisticated aircraft. The devel-
              opment of the LH’S avionics and mission equipment/sensors, which are
              similar to those to be developed for the Air Force’s Advanced Tactical
              Fighter, involve considerabletechnical risks. Mission equipment con-
              sisting of sensorsand avionics remains the most critical program ele-
              ment. High-speed,high-capacity integrated circuits for processing
              threat, flight, and other critical data and advancedthreat sensorsare
              examples of the LH’S required technological advancementsand applica-
              tions. In addition, the LH will utilize advancedtechnologies in developing
              an all-composite (nonmetal) airframe to reduce weight.
              The integration of various technologies also posesrisks. The Army has
              been involved in a risk reduction program on the LH for several years
              and the contractor teams are conducting additional efforts during the
              demonstration and validation phase to reduce cost and technical risks.
              However, even though preliminary mission equipment testing will occur



              Page 19                             GAO/NSIAD-90-169   Defense Acquisition   F’rograma
                               Appendix II
                               Army PmP.~




                               during the demonstration and validation phase, a fully integrated
                               system will not be tested until full-scale development.
                               The LH program also faces the challenge of keeping aircraft weight down
                               while meeting performance requirements. Enhanced maneuverability
                               and agility as well as reduced procurement and operation and support
                               costs are someof the expected benefits from reduced aircraft weight.
                               The LH’S empty weight goal remains at 7,500 pounds, although in 1987
                               the estimates exceededthe goal by as much as 2,300 pounds. The
                               increased weight can be attributed to attempts to achieve performance
                               requirements. An Army official said that the contractors are required to
                               achieve the 7,500-pound requirement with delivery of the first aircraft
                               from the secondproduction lot. In addition, the 5- to lo-percent weight
                               growth that has historically occurred during aircraft development is not
                               considered a significant problem, according to an LH program official.
                               However, future weight growth-totaling several hundred pounds-
                               due to the anticipated addition of the Longbow millimeter wave radar is
                               excluded from the weight requirement.


Cost                           According to the Army’s February 1990 estimate, the acquisition of
                               2,102 LHS will cost $45.7 billion6 in escalated dollars: $4.0 billion for
                               research and development and $41.7 billion for procurement. The total
                               program cost estimate in constant fiscal year 1990 dollars is $31,2 bil-
                               lion Program costs reached their highest point in November 1987, after
                               which the Army initiated program reductions, including reducing the
                               number of LHS by 2,199 and conducting design trade-offs, which nearly
                               halved the total cost by June 1988. Since then, the total projected cost
                               has remained relatively stable. Table II.4 shows these changes.
Table 11.4:LH Cost Estimates
                               Fiscal year 1990 dollars in millions
                                                                        Feb.           Nov.                        Mar.         Feb.
                               Cateaorv                                 1987           1987                        1989         1990
                               Research and development                $4,354        $5,311         $3,590        $3,649       $3,644
                               Procurement                             47,163        55,814         28,588        28,494       27,550
                               Total                                  $51,517      $61,125         $32,178     $32,143       $31,194
                               Quantity                                 4,509         4,301          2,102         2,102        2,102
                               Unit cost                                $11.4         $14.2          $15.3         $15.3        $14.8




                               ‘Approximately   $3 billion for the Longbow millimeter wave radar program has been included in this
                               estimate.



                               Page 20                                          GAO/NSIAD-90-169      Defense Acquisition   Programs
Appendix II
krmY ProIpame




The cost increasesleading up to the November 1987 peak were a result
of the demanding mission requirements established by the Army. During
1988 the Army and DODattempted to control costsby (1) eliminating
competitive prototypes from the demonstration and validation phase,
(2) lowering production quantities from 4,301 to 2,096 by deleting a pro-
posedutility version of the LH, and (3) establishing strict aircraft cost
and weight goals, including the $7.5 million unit flyaway cost goal.
These changesand the resulting cost reductions are reflected in the June
1988 estimate.

Costs decreasedfurther for the March 1989 estimate as a result of
(1) lower mission equipment weight related to decreasedcapabilities,
(2) other cost reductions, which are estimated as a percent of total costs,
and (3) reduced engine production cost estimates agreed to by the engine
manufacturer. The February 1990 estimate showed that the costs have
been reduced again by almost $1 billion. Program officials attribute this
decreaseto the continuing requirement tradeoffs and reductions to meet
the cost and weight goals.

Despite the significant LH program reductions undertaken by DODand
the relative stability of the cost estimates since June 1988, program
uncertainties remain, which may lead to increased costs.The Office of
the Secretary of Defense’sCost Analysis Improvement Group reported
in May 1988 that difficulties in systems integration, potential software
development problems, weight growth, and avionics uncertainties are
likely to increasethe LH’Scosts. Program officials agree that the cost of
avionics, software, and integration are areas in which costs are uncer-
tain However, the officials believe the risk reduction efforts, including
the current demonstration and validation phase, have been adequate to
identify the areas of uncertainty and validate the Army’s estimates.
Program officials believe the $7.5 million (fiscal year 1988 dollars) unit
flyaway cost goal is achievable becauseboth contractor teams have the
flexibility to reduce or tradeoff system capabilities to meet the goal. For
example, the triple redundant navigation system and someballistic pro-
tection have been eliminated to reduce cost.
Program officials also said that the reliability of cost estimates for LHis
improving becausesomeestimates are being derived from engineering
information rather than modeling or parametric data, which was done
previously. The program office is currently revising the baseline cost
estimate to prepare for the full-scale development decision,




Page 21                            GAO/NSIALHO-169   Defense Acquisition   Programs
                     Scheduledelays could also increase costs.For example, if either DODor
                     the Congressdetermine that it is not possible to fund the procurement of
                     216 LHSper year, as the Army is planning, scheduledelays will occur.
                     A reduction of the annual production rate would increasetotal program
                     costs if the total procurement quantity remains at 2,096.

                     According to program officials, the LH was the primary research and
                     development program in the Army. Nevertheless,the program remains a
                     target for future funding cuts due to the affordability issue raised by
                     DODand the large investment required. Funding is considered adequate
                     to carry out LH research and development under the revised acquisition
                     strategy. The fiscal year 1991 budget request for continued research
                     and development is $466.1 million. However, even with no cost growth,
                     officials concedethat currently projected annual procurement funding
                     levels are inadequate for the planned production rate. In addition,
                     future funding reductions are possible as a result of possible overall
                     defensebudget reductions.


Recent GAO Reports   DefenseAcquisition Programs: Status of SelectedSystems(GAO/
                     NSIAD-90-30,Dec. 14, 1989).

                     Light Helicopter Program: Risks Facing the Program RaiseDoubts About
                     the Army’s Acquisition Strategy (GAO/NSIAD-89-27,Dec. 23, 1988).




                     Page 22                          GAO/NSI.AD-90-159   Defense Acquisition   Programs
Appendix III

Niwy Program


               The MK-60 is an advancedlightweight torpedo intended to counter
MK-50Torpedo   Soviet submarine threats. It will be launched from ships and aircraft
               and will provide the Navy’s fleet with enhancedperformance and
               lethality over the MK-46 torpedo, which has been in the Navy’s inven-
               tory since 1961. According to the Navy, the MK-46 torpedo needsto be
               replaced due to improvements in Soviet submarine capabilities. No
               North Atlantic Treaty Organization countries are developing alterna-
               tives to meet this requirement.
               The MK-60 program is closeto the end of its full-scale development
               phase and has been in limited production since March 1989. As of
               December31, 1989, the MK-50’s total development, procurement, and
               military construction cost was estimated to be almost $7.3 billion (esca-
               lated dollars).
               After an initial operational test and evaluation period identified per-
               formance problems, the Navy restructured the MK-50 full-scale develop-
               ment program in 1987 and revised its cost, schedule,and performance
               estimates. According to program officials, the development of the MK-50
               is currently proceeding well, and only minor changesare anticipated.
               The Navy completed initial operational test and evaluation in November
               1988. The Navy awarded limited-rate production contracts to Honey-
               well, Incorporated, in October 1988 and to WestinghouseCorporation in
               December1988. Initial torpedo deliveries are expected in the summer of
               1990. The Navy plans to decide whether to enter full-rate production in
               April 1991.


Background     The MK-60 system consists of a torpedo and automatic test equipment,
               Figure III. 1 shows the torpedo and its major subsystems.




               Page 23                           GAO/NSIAD-90-159   Defense Acquisition   Programs
                              Appendix III
                              Navy Program




Figure 111.1:MK-50 Torpedo

                                                          Propulsion System
                                                          (Stored Chemical Energy Propulsion System)




                                             Exercise Subsystem/




                             The MK-60 torpedo includes a command and control system for gui-
                             dance and speedcontrol, a stored chemical energy propulsion system for
                             power (electrical and thrust), a sonar for target search and acquisition,
                             and either a warhead or an exercise section for testing. The exercise sec-
                             tion includes recording instrumentation and a buoyancy system to facili-
                             tate recovery after in-water exercises.The torpedo also includes air-
                             launch accessories,such as a parachute.




                             Page 24                               GAO/NSIAD-99-169   Defense Acquisition   Programs
               Appendix ill
               Navy Program




               The MK-50 is designedto be launched from ships and fixed- and rotary-
               wing antisubmarine warfare aircraft. The MK-50 is a fire-and-forget
               weapon; that is, once launched, it independently searches,locates and
               attacks its target.
               The MK-50’s concept development began in 1975. DOD approved
               advanced development of the torpedo in 1979, full-scale development in
               1984, and limited production in March 1989. The MK-50 full-scale devel-
               opment contract with Honeywell is a cost-plus-incentive-feecontract
               with a fixed ceiling price and is structured to reduce cost risk to the
               government. Full-rate production will be competitive, using a leader-fol-
               lower acquisition strategy with WestinghouseCorporation as the
               follower.


Requirements   Improvements in Soviet submarine design and performance (speed,hull
               strength, maneuverability, depth, smaller acoustic target size, and lower
               radiated noise) and in countermeasurecapability necessitatean
               advanced antisubmarine warfare torpedo. According to the Navy, the
               MK-50 is the only conventional air- and surface-launched antisubmarine
               warfare weapon capable of countering the newer Soviet submarines. DOD
               anticipates that the MK-50 will meet or surpass North Atlantic Treaty
               Organization requirements for a lightweight torpedo for the 1990 and
               beyond time frame.

               In April 1974 the Navy established an operational requirement for an
               advanced lightweight acoustic homing torpedo capable of defeating the
               post-1985 Soviet submarine threat. In 1984 DOD revalidated the MK-50
               requirement when it authorized full-scale development. The Defense
               Intelligence Agency validated the August 1987 System Threat Assess-
               ment Report on Antisubmarine Warfare WeaponsSystems,which
               included an assessmentof the MK-50, for use in threat analysis sup
               porting DefenseAcquisition Board milestone decisions.


Schedule       The Navy originally planned to complete operational test and evaluation
               in July 1988. However, in 1987 the schedulewas extended, and a new
               target date for completing operational test and evaluation was set for
               July 1990. In addition, the target date for ending full-scale development
               and beginning full-rate production was set for January 1991. The Navy
               cited initial test failures, hardware and software development problems,
               contractor managementproblems, and funding reductions as causesfor
               the schedule slippage. Sincethe program was restructured, the target


               Page 25                           GAO/NSIAD-99-159   Defense Acquisition   Programs
                                      Appendix Ill
                                      Navy Program




                                      date for completion of operational testing and full-scale development
                                      has again slipped and been reset for December1990. The Navy deputy
                                      project manager said that congressionalbudget reductions have caused
                                      the full-rate production decision to be delayed until April 1991.
                                      Table III.1 shows the changesin the MK-50’s schedulesince late 1985.
Table 111.1:MK-50 Program Schedules
                                      Event                                                Dec. 1985      Dec. 1987         Dec. 1989
                                      Demonstration and validation decision                 July   1979    July   1979      July   1979
                                      Full-scale development decision                       Jan.   1984    Jan.   1984      Jan.   1984
                                      Critical design review                               June    1986    May    1988      May    1988
                                      Complete initial operational test and evaluation     Sept.   1986   Sept.   1988      Nov.   1988
                                      Initial production decision                           Dec.   1986    Feb.   1989      Mar.   1969
                                      Complete operational evaluation                       July   1988    July   1990      Dec.   1990
                                      Full-rate oroduction decision                         Oct.   1988    Jan.   1991      Aor.   1991


                                      The MK-50 deputy program manager assessedthe restructured pro-
                                      gram’s schedule risk as low. According to the MK-50 acquisition plan,
                                      cost-sharing provisions of the renegotiated contract provide an incentive
                                      for Honeywell to meet the current schedule.The deputy program man-
                                      ager said that only minor development tests remain. According to pro-
                                      gram officials, the major factor that could further delay completion of
                                      operational testing is the availability of Navy ships for testing.

                                      According to Navy officials, the restructured program, unlike earlier
                                      program schedules,has low to moderate risk. They stated that moderate
                                      concurrency between full-scale development and initial production
                                      exists primarily to achieve the earliest possible fleet deliveries. How-
                                      ever, only 4 months has been allotted between the end of operational
                                      testing and evaluation and the start of full-rate production to solve
                                      unexpected problems without extending the schedule.
                                      According to the Navy, the acquisition strategy controls the risks of con-
                                      currency through selectedmanagementreviews and decision points
                                      before both initial and full-rate production begin. The strategy includes
                                      a critical in-design review, the use of prototype torpedoes and fleet test
                                      equipment in development, and an operational evaluation conducted
                                      against operational submarines and in realistic scenarios.The program
                                      office informed us that all necessarychangesto the torpedo design iden-
                                      tified during the full-scale development phase will also be implemented




                                      Page 26                                      GAO/NSl.ADW-169    Defense Acquisition    Programs
              Appendix III
              Navy Program




              into the production units. If production units have already been deliv-
              ered, then a retrofit will be ordered. The program office also stated that
              all test torpedoes are representative of production units.


Performance   The program office currently estimates that the MK-60 torpedo will
              achieve all technical and operational performance characteristic thresh-
              olds. The torpedo warhead, propulsion system, and tactical logic are
              consideredsignificant technical advances.For example, the torpedo
              employs a unique advanced stored chemical energy propulsion system
              with an extremely high-energy density. A pump jet propulsor drives the
              torpedo through the water. This design enablesthe torpedo to achieve
              high speedsregardlessof depth, is quieter than an open-cycleengine,
              and produces little wake. Technical risk is consideredlow becausemost
              critical technical challengeshave been proven on advanced development
              and prototype torpedoes.
              The first successfulin-water test of a full-scale development prototype
              torpedo occurred on July 30, 1986. The Navy originally attempted a con-
              current development and initial operational test phase beginning in
              October 1986. However, in April 1987 the initial operational test phase
              was suspendedbecausethe MK-50 was decertified by Navy’s program
              office. Development tests continued, and on August 29,1988, initial
              operational testing resumed and continued through November 1988. The
              Navy’s Operational Test and Evaluation Force concluded in December
              1988 that the MK-60 torpedo was potentially operationally effective and
              suitable. These findings supported the Navy’s initial production decision
              (milestone IIIA) in March 1989.
              Between July 1986 and March 1990, 262 in-water full-scale development
              tests were made. The Navy plans to commenceoperational test and eval-
              uation in mid-1990; the results will be used to support the anticipated
              full-rate production decision scheduledfor April 1991.




              Page 27                           GAO/NSIAD-90-159   Defense Acquisition   Programs
                                   Appendix JII
                                   Navy Prosram




cost                               Table III.2 shows the MK-SO’scost growth over the past 2 years.

Table 111.2:MK-50 Coat Estimates
                                   Escalated dollars in millions
                                   Fundina cateaory                                         Dec. 1987         Dec. 1989
                                   Development                                                $1,432-l         $1,472.3
                                   Procurement                                                 5202.1           5,783.0
                                   Militarv construction                                          12.3             35.9
                                   Total                                                     96,046.5          $7,291.2


                                   The development cost increase resulted from Honeywell’s revised esti-
                                   mated target price of $698 million, which was about $60 million more
                                   than the 1987 target price. The revised ceiling price is now $730 million.
                                   The development cost increase was causedprimarily by problems with
                                   building the MK-60 automated testing equipment, late hardware deliv-
                                   eries, and in finalizing technical issues.The procurement cost increase
                                   was causedby scheduleslippages in the early portion of the procure-
                                   ment program, resulting in increased quantities to be procured in the
                                   later years of the program, at escalatedprices. The military construction
                                   cost increasewas largely due to the addition of an intermediate mainte-
                                   nance activity for the MK-60 at Charleston, South Carolina.


Recent GAO Reports                 WD  Acquisition Programs: Status of SelectedSystems(GAO/NSIAD-
                                   88-160, June 30, 1988).

                                   Observationson the Advanced Lightweight Torpedo MK-60 Program
                                                  Aug.30, 1984).
                                   (GAO/NSIAD-84-28,




                                   Page 28                           GAO/NSIAD-90-169   Defense Acquisition   Programs
Appendix IV

Air Force Programs


Sensor Fuzed Weapon   The SensorFuzed Weapon(SFW) is a cluster-type weapon designedto
                      provide a multiple kill per aircraft pass capability and operate in the
                      day or night and in all weather conditions. The Air Force is developing
                      the SFWto attack enemy armored vehicle formations.
                      The SFW program has experienced significant technical problems since
                      full-scale development began in late 1986, including numerous test fail-
                      ures, which resulted in scheduleslippages and cost increases.Conse-
                      quently, the program was restructured in 1986 and in 1989. The latest
                      restructuring causedcoststo increaseover $600 million-about one-half
                      of which was due to the use of higher inflation indexes-and major
                      milestones to slip by 16 to 18 months. The Air Force estimated that as of
                      February 1990 the cost to procure 19,968 srws will be about $3.7 billion
                      in escalateddollars. A decision on low-rate initial production is antici-
                      pated in September 1991.

                      Becausethe program was recently restructured, it is too early to assess
                      whether schedulemilestones will be met. Test hardware deliveries were
                      somewhat behind schedule, and several tests had been delayed for short
                      periods. However, SFW development testing is expected to continue until
                      December1990, and operational testing is scheduledto start in July
                      1990 and end in October 1991. Although there are no indications at this
                      time that the srw will not meet its established performance require-
                      ments, the Air Force cannot be certain that it will meet its requirements
                      until more testing is performed.


Background            The SFW will consist of a tactical munitions dispenser containing 10 sub-
                      munitions. Each submunition contains four individual projectiles, or
                      warheads.
                      The delivery aircraft will launch the dispenser once it reachesthe target
                      area. At a preset time or altitude, the dispenser will releasethe sub-
                      munitions. Parachutes will deploy from the submunitions to stabilize
                      their descent.At a predetermined distance from the ground, a rocket
                      motor fires to elevate and spin the submunition to dispensethe projec-
                      tiles. An infrared sensorin each of the projectiles scansthe target area,
                      and once the sensor detects the heat of a vehicle, the projectile will fire
                      an armor-piercing penetrator into the target. Figure IV. 1 illustrates the
                      SFW and its operational sequence.




                      Page 29                            GAO/NSLAD-90-159   Defense Acquisition   Programs
                                                                                                                              ,
                                     Appendix Iv
                                     Ah Force Programs




Figure IV-l: SFW Deployment Events




                      Skin
                     Opens

                                                Bays
                                               Deploy




                                                 B       Main Chute
                                                                                          ,e    D




                                                                                                          Target Detection and
                                                                                                             Warhead Firing



                                                         Rocket Motor   o$’
                                                            Ignition          \’




                                     The SFWcan be launched from several aircraft, including the F-16E,
                                     F-16, A-10, F-l 11, and several allied nations’ aircraft. It will not replace
                                     any existing weapon system.


Requirements                         The Air Force established a requirement for a wide-area anti-armor
                                     weapon in the late 1970s.A 1978 Air Force General Operational
                                     Requirement document and a 1979 Air Force Mission Element Need
                                     Statement established requirements for the SFW.

                                     In May 1987 the Air Force Center for Studies and Analyses prepared an
                                     analysis to determine whether the SFWis a cost-effective weapon for
                                     attacking second-echelon,enemy armored formations. The analysis com-
                                     pared the SFWwith the Maverick missile, Combined Effects Munition,


                                     Page 30                                       GAO/NSIAMKb159   Defense Acquisition   Programs
           Appendix IV
           Air Force Program




           and 30-millimeter gun and concluded that the SFWwould be considerably
           more effective against enemy armor formations.
           In May 1989 the Air Force approved a System Operational Require-
           ments document for the SFW.The document amplified and refined the
           basic requirements documents and explained how the proposed system
           will be operated.


Schedule   In November 1986 the Air Force awarded a fixed-price incentive fee
           contract for SFWfull-scale development to Textron DefenseSystems.
           Becauseof cost and scheduleproblems, the Air Force restructured the
           SFWprogram in June 1986 and established a program cost and schedule
           baseline. Between June 1986 and April 1989, scheduleslippages and test
           failures forced the Air Force to temporarily suspendcontractor testing
           and to begin a restructuring of the program a secondtime.
           In March 1989 the Air Force conveneda group of government and
           industrial leaders in infrared technology to assessthe SFW’S
                                                                      design. The
           group concluded that the design was sound.

           In April 1989 the Air Force contracting officer notified Textron that
           development performance was not satisfactory and that the Air Force
           would consider terminating the contract for default if the situation were
           not remedied within 60 days. Among other things, the contracting
           officer’s letter cited consistent test failures and consistently under-
           achieved schedulesas reasonsfor the Air Force’s concerns.Textron’s
           initial responsewas rejected by the Air Force becauseit did not provide
           a comprehensiveplan of actions, initiatives, and commitments neededto
           put the program back on track. Textron revised its plan of action to
           addressthe problems and, on June 19,1989, the Air Force acceptedTex-
           tron’s plan.

           The restructured SFWprogram included additional testing to define per-
           formance margins better and a multistage improvement program to
           address future changesin the threat. In addition, the testing, production
           start, and secondsource qualification scheduleswere changedto reflect
           more realistic program goals. For example, the program manager
           decided it was inappropriate to accept proposals for the secondsource
           qualification contract until after the September 1991 low-rate initial
           production (milestone IIIA) decision, Therefore, the secondsource quali-
           fication contract will not be awarded until February 1992, or 2 months
           after the expected award of the initial production contract.


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                                    Appendix IV
                                    Air Force Programs




                                    The program manager stated that most operational testing will be com-
                                    pleted before the low-rate initial production decision in September 1991.
                                    He also stated that the tests added to the restructured program will be
                                    completed before the initial production decision.

                                    The restructured program was approved by the Air Force in November
                                    1989 and approved by the Under Secretary of Defensefor Acquisition in
                                    April 1990. Table IV.1 comparesthe June 1986 scheduleto the February
                                    1990 restructured schedule.
Table IV.1: SFW Program Schedules
                                                                                       June 1986          Feb. 1990         Delay
                                    Event                                               schedule          schedule       (months)
                                    Full-scale development contract award               Nov.    1985       Nov.   1985           0
                                    Critical design review                              July    1987      Aug.    1989          25
                                    Start government development tests                  Mar.    1988       Dec.   1988           9
                                    Initial production decision                         Nov.    1988      Sept.   1991          34
                                    Production contract award                           Dec.    1988       Dec.   1991          36
                                    First delivery to inventory                         July    1990       Dec.   1993          41


                                    The restructuring resulted in slipping the dates for testing and qualifica-
                                    tion of a secondsource for the production program. Table IV.2 compares
                                    someevents before and after the program restructured in 1989.
Table IV.2: SFW Program Schedule
Changes Due to 1989 Restructuring                                                     Schedule
                                                                                         before            Schesi:          Delay
                                    Event                                         restructuring        restructuring     (months)
                                    Complete Air Force development test and
                                    evaluation                                       Aug. 1989             Dec. 1990            16
                                    Complete initial operational test and
                                    evaluation                                        Apr. 1990            Oct. 1991            18
                                    ComDlete second source aualification              Oct. 1992            Mar. 1994            17


                                    We reviewed the status of the program schedule after it was restruc-
                                    tured and noted that one development test was delayed in December
                                    1989 and two development tests were delayed in January 1990 because
                                    hardware was not available for testing. A test official from the SFWpro-
                                    gram stated, however, that he believes there is enough time to recover
                                    from these delays and the development test program can be back on
                                    schedule within 2 months.




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              Air Force Programa




              As of February 1990, the SFWprogram manager’s assessedthe pro-
              gram’s schedule as “yellow”6 becausefunding constraints in the Presi-
              dent’s fiscal year 1991 budget will causethe initial operational
              capability date to slip 4 months. The slippage was incorporated in the
              baseline scheduleapproved by the Under Secretary of Defensefor
              Acquisition in April 1990.


Performance   Since the program was restructured in 1989, much of the testing has
              been done in a somewhat controlled environment to determine whether
              problems revealed in earlier testing had been corrected. The SFW pro-
              gram manager believes that recent development testing has been suc-
              cessful and that solutions to earlier technical problems have been
              identified, fixed, and successfully retested. Nevertheless,sufficient
              testing has not yet been completed to demonstrate that the SFW will meet
              its established performance requirements. At this time, however, there
              are no indications that the SFWwill not meet any of its performance
              parameters.

              Subsystemtests conducted by Textron in 1988 and early 1989 revealed
              a number of technical problems. For example, multiple submunition
              drop tests conducted during 1988 showed that the detonation of one of
              the SFW projectiles or warheads could causethe premature detonation of
              nearby warheads, a phenomenonknown as “sympathetic firing.” Tex-
              tron made design changesto correct the problem and successfully con-
              ducted additional tests using single warheads. However, a multiple
              submunition test in February 1989 showed that the problem was not
              resolved. The Air Force formed a team consisting of officials from both
              government and industry to conduct an independent technical review
              and determine the causeof the February 1989 test failure, The team
              concluded that the likely causeof the failure was that the projectiles’
              infrared sensorsand the processorcircuit were oversensitive. Textron
              changedthe sensor’ssensitivity, and a repeat test was successfully con-
              ducted in July 1989.
              In addition, the first two development tests conducted by the Air Force
              were unsuccessful.These tests were intended to demonstrate proper
              separation of the tactical munitions dispenser from the aircraft and the
              releaseof inert submunitions from the dispenser.In two development


              “A “yellow” rating means that significant potential exists for a program not meeting its performance
              parameters, cost thresholds, or schedule milestones.



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       Air Force Programs




       tests conducted in July 1989, all 10 submunitions were successfully
       ejected and all parachutes deployed properly.
       To reduce technical risk and validate potential solutions to identified
       problems, the program office added four seriesof tests. For example,
       instrumentation was added to SFWwarheads so that more complete test
       data could be collected. In addition, a series of captive carry tests of the
       SW sensorwas added to collect more data on the sensor’sreaction to
       countermeasuresand various operational environments. The additional
       testing is to be completed in August 1990 and is expected to provide the
       confidence neededto proceed with the development test and evaluation
       effort and the initial operational test and evaluation.
       Since testing was resumed in July 1989, 13 development tests have been
       conducted, all of which were consideredsuccessful.Someproblems
       occurred in the testing, but according to the program manager, the tests
       have demonstrated that the problems that led to restructuring the pro-
       gram have been resolved.
       The Air Force plans to complete development test and evaluation of the
       SFWin December1990. Also, initial operational test and evaluation is not
       scheduledto start until July 1990. Until additional development and
       operational testing is performed, the Air Force cannot make an accurate
       assessmentof whether the SFWwill meet established performance
       requirements.


cost   The SFW’S  estimated total acquisition cost increasedby about $1.6 billion
       (escalated dollars) since the June 1986 baseline cost estimate, primarily
       due to an increase of 6,874 units to be procured, from 14,084to 19,968.
       Between the February 1989 and February 1990 estimates, the program
       was restructured, and the estimated total acquisition cost increased by
       $668 million from about $3.2 billion to $3.9 billion. The increasewas
       attributed to added research and development costs due to added
       testing, a delayed production start, delaying procurement of weapons to
       later in the production cycle, and higher inflation indexes. About one-
       half the increase or $333 million was attributed to the higher inflation
       indexes. Table IV.3 shows the changesin the cost estimate.




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                                 Appendix IV
                                 Air Force Programs




Table IV.3: SFW Coat Eetimatss
                                 Escalated dollars in millions
                                 Cateaorv                                June 1988        Feb. 1989         Feb. 1990
                                 DeveloDment                                  $128              $180            $201
                                 Procurement                                  2,278             3,031           3,678
                                 Total                                       $2,408           $3,211          $3,873
                                 Quantity                                    14,084           19,900           19,958
                                 Unit cost                                   $0.171           $0.161           $0.194


                                 As of February 1990, the program manager’s assessmentof cost per-
                                 formance was “yellow” becausethe prime contractor had exceededthe
                                 ceiling price of the development contract. The President’s fiscal year
                                 1991 budget request doesnot include procurement funds for the SFW
                                 program in fiscal year 1991. The Air Force plans to make the low-rate
                                 initial production decision in September 1991 and award a production
                                 contract in December1991 if fiscal year 1992 procurement funding is
                                 approved.


Recent GAO Reports               DefenseAcquisition Programs: Status of SelectedSystems (GAO/
                                 NSIAD-90-30,Dec. 14, 1989).

                                 DODAcquisition Programs: Status of SelectedSystems(GAO/NSIAD
                                 88-160, June 30, 1988).


                                 The Advanced Tactical Fighter (ATF) is being developed to meet the Air
Advanced Tactical                Force’s air superiority requirements in the mid-1990s and beyond. The
Fighter                          ATF program is in the demonstration and validation phase, and flight
                                 tests of two competing prototype aircraft are scheduledto begin in May
                                 and June 1990. Oneof the prototypes will be selectedin April 1991, and
                                 a decision whether to begin full-scale development is scheduled for June
                                 1991, Program acquisition costs for 760 aircraft are estimated by the
                                 Air Force at $79.4 billion in escalateddollars.
                                 The ATF development plan incorporates technological advancesin
                                 design, materials, propulsion, and electronics to provide an advanced
                                 aircraft system superior to any Soviet system currently projected. The
                                 Air Force has defined broad performance goals, a cost and weight goal,
                                 and a program schedule.During the demonstration and validation
                                 phase, the program manager intends to assessthe likely benefits and



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             Air Force Programs




             costs of incorporating these new technologies and plans to make the nec-
             essary trade-offs to maintain the cost, weight, and performance goals of
             the program.

             As of February 1990, about 70 percent of the demonstration and valida-
             tion phase had been completed; somecritical cost and performance
             trade-off decisionsand system demonstrations still need to be com-
             pleted. The ATF'S design and system specifications are subject to change,
             and the Air Force will not assessthe ATF'Sperformance capabilities for
             full-scale development until the required cost and trade-off studies,
             engineering analyses,component tests, and prototype demonstrations
             have been completed. Nevertheless,the Air Force has been directed by
             the DefenseAcquisition Board to submit the specific radar cross section,
             supersonic cruise, maneuver, mission radius, and integrated avionics
             capabilities to be achieved during full-scale development before the
             evaluations are completed.


Background   The ATF is being developed as a follow-on to the F-15 in the air superi-
             ority role. It is expected to have new and expanded capabilities,
             including the ability to cruise at supersonic speedsover long distances
             with greater maneuverability, longer range, lower detectability, and
             better reliability and maintainability than any existing fighter aircraft.

             The ATF is to be a single-seat,twin-engine fighter armed with AIM-120A
             Advanced Medium RangeAir-to-Air Missiles, AIM-9 Sidewinder missiles,
             and a %O-millimetergun. It is expected to be able to fight in all types of
             weather, in the day or night, over land or sea, and at ranges greater than
             current fighter aircraft. The ATF design concept includes use of stealth
             technology, advancedmaterials, new enginescapable of propelling the
             aircraft at supersonic speedswithout afterburner, and an advanced,
             highly integrated avionics system capable of detecting, identifying, and
             engagingthe enemy at ranges beyond the pilot’s vision.
             At the direction of the Congress,the Navy is evaluating the ATF as a
             possible replacement for the F-14 fighter aircraft. In June 1987 the
             Navy established a tentative operational requirement for a variant of
             the ATF that must have a stronger structure and excellent low-speed
             flying qualities compatible with Navy carrier operations. The Navy will
             participate in the Air Force’s source selection decision for full-scale
             development by evaluating proposed designsof a Navy variant of the
             ATF to be submitted by both contractor teams participating in the pro-
             gram. The Navy estimated that acquiring a variant of the ATF could save


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               Appendix N
               Air Force Programs




               $9.9 billion-$4.9 billion in development costs and $6 billion in procure-
               ment costs-over a separate aircraft development and procurement
               program.


Requirements   The ATF program is the Air Force’s highest priority tactical research and
               development program. The Air Force’s Tactical Air Command,the pri-
               mary user of the ATF, believes that the ATF is neededto replace the F-15,
               which will be near the end of its useful life by the year 2000. The F-16 is
               the only dedicated Air Force air superiority fighter, but more than half
               will be over 22 years old by the year 2000. In addition, some DODoffi-
               cials believe that the ATF'Spromised technological capabilities are cur-
               rently neededto counter the growing effectiveness of fighter and
               ground threat systems located in the Soviet Union and other Warsaw
               Pact countries and third world nations.
               DODinitially recognizedthe need for an ATF in November 1981 and reaf-
               firmed the need in an October 1986 milestone I decision, which author-
               ized the program to begin the demonstration and validation phase. The
               next major DODreview of the program is the milestone II decision, which
               authorizes the start of full-scale development, scheduledfor June 1991.
               Before the recent changesin Eastern Europe, an Air Force analysis of
               the threat indicated a need for an air superiority fighter with advanced
               technologies and superior capabilities to counter the numerical advan-
               tage of Soviet and other Warsaw Pact forces and the emergenceof
               Soviet aircraft with capabilities equivalent to current U.S. fighters.
               Figure IV.2 shows how the ATF is expected to be used in offensive
               counterair missions.




               Page 37                            GAO/NSIAD-99-169   Defense Acquisition   Programs
                                            Appendix N
                                            Air Force Pmlprune




Figure IV.2: ATF’s Projected Role in Offensive Counterair Missions




                                                                     l   Defeat Projected
                                                                         Air Threats




                                                                                                    ssfully Penetrate
                                                                                            Threat Defenses
                                                                                            Projected for the
                                                                                            Year 2000




                                                                                                                   mproved Soviet Surface-
                                                                 l       Increase                                  o-Air Missiles
                                                                         Leverage of
        Main Operating Base                                              Ground Attack                                  SA-10       SA-13
        and Dispewed Base                                                Aircraft                                       SA-11       SA-14
        Operations                                                                                                      SA-12
                                                                                                                        SA-15




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AlrForceRograms




Air Force-sponsoredanalyses have also examined the need for air supe-
riority and alternatives to achieve it, such as using ground-basedair
defensesystems and/or upgrading existing fighter aircraft with many of
the technologiesplanned for the ATF. The analyses not only affirmed the
need for an advanced air superiority fighter but also concluded that
both ground-basedand airborne systems were essential and complemen-
tary in the air defensemission. The analyses showed that airborne
fighters have greater mobility and flexibility to cover defensive gaps
than other air defensesystems and that they augment ground-basedair
defenseforces such as the Patriot and Hawk missile systems. Unlike rel-
atively fixed ground-baseddefenses,airborne fighters can be deployed
over large distances in short periods of time. The analyses also indicated
that fighters would destroy more enemy aircraft than ground-basedair
defensesystems.
The Air Force also examined the effectiveness of modifying or
enhancing versions of current fighter aircraft for airborne air defense as
well as producing a lower cost variant of the ATF. Modifying current
fighters would make them more effective, but the improvements would
be marginal compared to the ATF'Sexpected capabilities. Also, their
survivability would be lower than the ATF'S,thus requiring a greater
number of modified fighters to ensure air superiority in the mid-1990s
and beyond. Regarding a lower cost ATF variant, many of the current
ATF'Sexpected capabilities were retained while other key capabilities
were degraded in an effort to contain cost.

According to DefenseIntelligence Agency officials, recent intelligence
assessmentsof the political changesoccurring in the Warsaw Pact coun-
tries indicated that even though the number of Soviet forces are
decreasing,the capabilities of the remaining Soviet forces will continue
to be a formidable threat. New fighter aircraft continue to enter the
inventory, and other military equipment continue to be modernized. In
addition, the spread of high-technology weapons to many other coun-
tries presents a new and more sophisticated global threat to U.S. forces.
In December 1989 the Secretary of Defenseinitiated a review of the ATF
and three other major aircraft programs to reexamine the need for these
aircraft. This review included an assessmentof (1) neededATF capabili-
ties that current aircraft do not provide, (2) the extent to which the ATF
will provide the neededcapabilities, and (3) ATF fiscal and acquisition
strategy considerations, including cost, schedule,and performance.




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           On April 26,1990, the Secretary announcedthat the review found that
           the ATF is the most effective aircraft for the air superiority mission.
           Therefore, the Secretary decided to maintain the ATF force level objec-
           tive at 760 aircraft at least until another review of the total force struc-
           ture is completed. However, the Secretary proposed delaying the initial
           procurement of ATF for 2 years to fiscal year 1996 and a lower peak
           annual production rate. The delay is expected to reduce the concurrency
           between development and production and facilitate orderly testing of
           the aircraft. However, the delay would also postpone the procurement
           of the Navy variant of the ATF by 2 years and reduce the number of
           aircraft from 618 to 546.


Schedule   The Air Force revised the ATF'S acquisition program in 1986 in response
           to a recommendation by President Reagan’s1986 Blue Ribbon Commis-
           sion on DefenseManagementthat a high priority be placed on building
           and testing prototype systems to demonstrate that new technology can
           substantially improve military capability. The revised program added
           the demonstration of prototypes before the selection of the ATF'S design
           for full-scale development.
           The schedule for completing demonstration and validation and the
           beginning of full-scale development remained basically unchanged from
           1986 until January 1990. However, in January 1990 the schedule was
           extended by 6 months to June 1991 to reduce the risks associatedwith
           entering full-scale development. In addition, the first flight of prototype
           aircraft slipped from October 1989 through March 1990 to May through
           June 1990. Table IV.4 compares the ATF'S 1986 schedule with the Jan-
           uary 1990 schedule.




           Page 40                            GAO/NSIAD-90-159   Defense   Acquisition   Programs
-.
     Appendix    IV
     AirForcePrqrme




                                                                                                     Change
     Event                                           1986 Schedule            1990 Schedule         (months)
     First flight of prototypes                      Between Oct. 1989        Between Ma
                                                     and Mar. 1990            andJune      ii 0             7
     Full-scale development       decision           Nov. 1990                June 1991
                                                     19 aircraft)             (9 aircraft)                  7
     Start development test and
     evaluation with full-scale
     development aircraft                            Nov. 1992                June 1994                    19
     First production lot contract                   Nov. 1992                Jan. 1994a
     award                                           (18 aircraft)            (4 aircraft)                 14
     Low-rate initial production
     decision                                        Nov. 1992                Dec. 1994                    25
     Second production lot contract                  Nov. 1993                Jan. 1995
     award                                           (36 aircraft)            (8 aircraft)                 14
     First flight of full-scale
     development aircraft with full
     avionics                                        June 1994                Mid-1995              About 12
     Third production lot contract                   Nov. 1994                Jan. 1996
     award                                           (48 aircraft)            (16 aircraft)                14
     Start initial operational test and
     evaluation                                      June 1995                After Jan. 1996       At least 7
     Delivery of first production aircraft           Dec. 1994                Jan. 1996                     13
     High-rate production decision                   Nov. 1995                Dec. 1997                     25
     aThe aircraft will be used in initial operational test and evaluation.


     Although the January 1990 scheduleprovides for someconcurrent
     development and production, it reducesthe risk associatedwith concur-
     rency by committing only one lot of four aircraft to production before
     the first flight test of a full-scale development aircraft in June 1994. In
     contrast, the 1986 schedule committed 18 aircraft to production at the
     sametime as the first full-scale development flight test. The four pro-
     duction aircraft are scheduledto be on contract 6 months before the
     first flight test. Further, even though they are funded with production
     funds, the aircraft will be used for initial operational test and evaluation
     and are not intended for the ATF operational inventory.

     The January 1990 schedule also lowers the risk associatedwith concur-
     rency by committing only 12 aircraft to production before the first flight
     test of a full-scale development aircraft with a complete avionics suite,
     whereas the 1986 schedule committed a total of 64 aircraft to produc-
     tion before that event.




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                                                                                           .
              Appendix IV
              Air Force Programa




Performance   As of March 1990, the approved baseline for the ATF contained only
              technical characteristic “goals” for the system. Specific characteristics
              and performance thresholds will not be established until the system
              specification for full-scale development is written at the end of the dem-
              onstration and validation phase. Only limited testing of the aircraft sys-
              tems has been done to date, and initial operational test and evaluation of
              the ATF will not begin until full-scale development.
              Two competing contractor teams are each fabricating two prototype air-
              craft, and two competing engine contractors are each fabricating and
              testing prototype engines.Both engineswill be flight tested by each air-
              frame contractor team.

              As of February 1990, the aircraft contractor teams were approaching
              final assembly and completion of structural testing of their prototype
              aircraft. The flying prototypes will be the initial test resource for dem-
              onstrating the aerodynamic performance, flying and handling qualities,
              supersonic cruise speed,and engine compatibility with the airframe.
              Through February 1990 the engine contractors have tested engine com-
              ponents and full-scale enginesat sea level and simulated altitude condi-
              tions. They have accumulated a combined total of about 2,600 hours of
              ground testing to prepare for flight testing in the prototype aircraft.
              Both contractors’ enginesare to be cleared for flight by July 1990.
              The primary resourcesfor testing avionics during the demonstration
              and validation phase are avionics ground prototypes being built by both
              aircraft contractor teams and avionics prototypes to be flown in com-
              mercial-type aircraft. The avionics system architecture, system
              software, integration of functions, modular packaging, cooling, built-in
              test, and diagnostic functions of each contractor’s design are currently
              being tested through a seriesof avionics ground prototype demonstra-
              tions scheduledto end about late August 1990. The avionics prototypes
              to be flown in commercial-type aircraft are to confirm the ground dem-
              onstrations and further test the avionics sensorsand apertures, such as
              the radar, infrared search and track set, and electronic countermea-
              sures. Only limited avionics will be available for testing in the prototype
              aircraft.
              As of February 1990, both contractors successfully accomplishedlim-
              ited ground prototype demonstrations of modular integration architec-
              ture, large portions of Ada language software, radar, infrared search



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       Appendix IV
       Air Force Programs




       and track, communications, navigation, and electronic warfare
       functions.


cost   As of February 1990, the ATF'Stotal acquisition cost was estimated at
       $79.4 billion in escalateddollars. This estimate included $14.3 billion for
       the research and development: $3.8 billion for early development and
       $10.6 billion for full-scale development. The $79.4 billion estimate also
       included the cost to procure 750 aircraft estimated at $66.1 billion.
       The $79.4 billion estimate is $12.3 billion more than the May 1989 esti-
       mate of $67.1 billion. An ATF program cost official attributed the
       increase to inflation. The official explained that the increase was caused
       by a combination of using higher inflation rates in the current estimate,
       the 6-month extension of demonstration and validation, and the reduc-
       tion of the number of aircraft to be produced in the earlier years of pro-
       duction, when inflation is lower.

       The estimate for the early development included the cost of the g-month
       extension. This estimate should not change significantly, since it is cov-
       ered by fixed-price contracts. No contracts have been awarded for full-
       scale development and production; the cost estimates for these phases
       were constructed using both analogousand parametric estimating meth-
       odologies.Both methods are appropriate to use for a program in early
       development, such as the ATF. However, as actual cost and engineering
       data becomeavailable from producing the prototype articles and the
       configuration becomesdefined, the Air Force anticipates that an esti-
       mate with a greater level of confidence will becomeavailable.
       The Air Force is using a $36 million (1986 base-yeardollars) unit fly-
       away goal to maintain cost discipline in the program. Table IV.6 shows
       that the most recent estimate of unit flyaway is $37.2 million (1986
       base-yeardollars), $2.2 million per unit over the goal. (In then-year dol-
       lars, the unit flyaway cost is estimated at $67.6 million.) Reducing the
       estimated unit flyaway cost to attain the $36 million goal and achieving
       the desired ATF performance characteristics will be a challenge for the
       Air Force and the contractors.




       Page 43                            GAO/NSIAD-90-159   Defense Acquisition   Programs
                                       Appendix N
                                       Air Force Programs




Table IV.5: ATF Cost Estimates as of
February 1990                          Dollars in millions
                                                                                                                 Ba-@-i$;          Thy;y;;
                                       Category
                                       Research and development                                                    $10,846.2        $14,351.6
                                       Production                                                                   35809.5          65082.2
                                       Total                                                                      $46.655.7        $79.433.8
                                       Unit flyaway cost                                                               $37.2             $67.6
                                       Program unit Costa                                                              $61.5            $104.7
                                       aProgram unit cost is the sum of development   and production cost divided by the number of develop-
                                       ment and production aircraft.




Recent GAO Reports                     Aircraft Development: Navy’s Participation in Air Force’s Advanced
                                       Tactical Fighter Program (GAO/NSIAD-90-64,Mar. 7, 1990).

                                       DefenseAcquisition Programs: Status of SelectedSystems(GAO/
                                       NSIAD-90-30,Dec. 14, 1989).

                                       Aircraft Development: The Advanced Tactical Fighter’s Costs,Schedule,
                                       and Performance Goals (GAO/NSIAD-88-76,Jan. 13, 1988).

                                       DODAcquisition: CaseStudy of the Air Force Advanced Tactical                                Fighter
                                       Program (GAO/NSIAD-86-46S-12,
                                                                  Aug. 26, 1986).


                                       The Joint Tactical Information Distribution System (JTIDS) is a secure,
Joint Tactical                         jam-resistant, digital information link for conventional forces. In 1976
Information                            the Office of the Secretary of Defenseassignedthe Air Force as the lead
Distribution System                    service in developing JTIDSterminals. The Air Force, along with the
                                       Army, Navy, and Marine Corps, intended to incorporate JTIDSinto air-
Class 2 Terminal                       borne, shipboard, and ground command and control centers, as well as
                                       fighter aircraft. However, the Air Force has changedits original plan
                                       and now expects to use JTIDSon only 20 of its F-16 fighter aircraft.
                                       DODdesignated the first generation of JTIDSas the Class 1 terminal, but
                                       the volume and weight of the terminals made them unsuitable for use in
                                       fighter aircraft and Army situations requiring mobility. Therefore, in
                                       the late 197Os,the JTIDSJoint Program Office began to develop a smaller
                                       terminal, designated Class 2, that was to satisfy the needsof all the ser-
                                       vices. As development progressed,however, two terminals emerged,the
                                       Class 2 and 2H. These terminals were essentially similar but the Class
                                       2H has a high-power amplifier for greater range. In the mid-1980s the


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      .



             Appendix IV
             Air Force Programs




             Army changedits requirements, resulting in the need for an even
             smaller, lighter terminal; this new terminal was designatedthe Class 2M.
             The redesign neededfor the Class 2M terminal was extensive enough to
             warrant a separate development track and separate production
             approval from the DefenseAcquisition Board.
             Although the Class 2 terminal is currently below its required laboratory
             and field reliability requirements, as measured by mean time between
             failures, it has achieved at least the threshold values for other perform-
             ance requirements established by the 1981 Secretary of DefenseDeci-
             sion Memorandum. Nevertheless,in October 1989 the Under Secretary
             of Defensefor Acquisition approved low-rate initial production for the
             JTIDSClass 2 and 2H terminals. However, approval of low-rate initial
             production for the Army Class 2M terminal is currently scheduled for
             October 1991. The Under Secretary has segmentedClass 2 and 2H low-
             rate production into three consecutive annual production lots, and the
             program office awarded the first Class 2 and 2H production contract in
             March 1990. However, the Under Secretary has identified specific cri-
             teria, such as reliability improvements, that must be satisfied before the
             secondand third production contracts can be awarded.

             The services and DODare sharing the $2 billion cost of developing the
             JTIDSClass 2 terminal. The program office estimates that development
             will continue through 1995. The services will purchase production ter-
             minals with their own funds. As of February 1990, total program costs
             through production are estimated at about $3.9 billion.


Background   Commandersat all levels require timely information to employ their
             forces and make real-time assessmentsduring fast-moving, complex
             combat operations. Combat experience gained in Southeast Asia, the
             Middle East, and Grenada exposeddeficiencies in the tactical communi-
             cation, navigation, and identification capabilities to support com-
             manders in their tactical decision-making. An information link that
             provides digital and voice transmissions for tactical use in combat, the
             JTIDShas the potential to connect scattered sourcesof surveillance and
             intelligence data, weapon controllers, weapon systems, and command
             elements. It is designedto be used for command and control among all
             equipped airborne, ground, and naval elements in the tactical theater.
             The Office of the Secretary of Defenseinitiated this multiservice pro-
             gram in 1975 and assignedthe Air Force to be the lead service. The first
             generation of JTIDSterminals was designated Class 1, but the volume and


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                                                                      c




Appendix IV
Air Force Programs




weight of the terminals made them unsuitable for use in fighter aircraft
and Army situations requiring mobility. In the late 1970s the program
office began to develop the smaller, Class 2 terminal, which was to sat-
isfy the needsof all the services.As development progressed,however,
two terminals emerged,the Class 2 and 2H. The Class 2H terminal is
essentially the sameas the Class 2, except the Class 2H has a high-
power amplifier for greater range.
In the mid-1980s, the Army changedits requirements, resulting in the
need for an even smaller, lighter terminal and this new iteration was
designated the Class 2M. The program office initially hoped that this
new terminal could be developed using the samedesign except the voice
and tactical air navigation capabilities, which the Army considers
unnecessary.The amount of redesign work neededfor the Class 2M was
so extensive, however, that a separate development track was set up
which will require its own DefenseAcquisition Board decision before
production.
JTIDSwill provide the serviceswith a common link for sharing data.
Figure IV.3 shows which friendly air, sea,and ground forces are
expected to use JTIDS.Both Air Force and Navy fighter aircraft will use
Class 2 terminals, whereas Air Force, Navy, and Marine Corps command
and control units will use Class 2H terminals. The Army will use its
lighter, smaller Class 2M terminal for forward area air defensecom-
mand and control units.




Page 46                           GAO/NSIAD-99-159   Defense Acquisition   Programs
             .


                                                Appendix IV
                                                Air Force Programs




Figure IV.3: JTIDS Urers
                               United Kingdom Tornado


     United States E-3A




   U.S. Air Forct ~
                                                                                                          I               NATO E-3A
   Control and      7@&@&$&
   Reporting Center




    Adaptable                       1           /
    c, ,.lann Intadann
    Terminal



                                                                             \     kitye
                                                                                   Interface
                                                                                                    3             \
                                                                                                n
                                                                                   Terminal
                                                                              \

                                                                                                b
                                                                                               U.S. Army
                                                                                               Ground-Based Radar
                                                                                                                         U.S. Marine Corps
                                                                                  Area Air                               and Air Force
                                                                                  Defense                                Ground Command
                                                                           Hate                                          and Control Centers
                                         U.S. Air Force       InterfaceTerminal
                           Y
                                         Message
                                         Processing
                                         Center




                                                    Page 47                                    GAO/NSIAD-99-169       Defense Acquisition   Prorpams
               Appendix IV
               Air Force Programa




               It is unknown whether the Air Force will incorporate JTIDSon all F-16
               fighters. Of the JTIDSterminals to be produced in fiscal year 1990, the
               Air Force will designateonly 20 for its F-16 aircraft, and the production
               units scheduledoesnot include the acquisition of additional terminals
               for the F-15. The Under Secretary of Defensefor Acquisition has given
               the Air Force until June 1991 to decide whether to include other F-16s
               in the JTIDSprogram or terminate its participation and transfer all JTIDS
               F-16 terminals to the Navy.
               The program office is employing the leader-follower acquisition
               strategy: the leader and follower will compete for each of the production
               contracts. PlesseyElectronic SystemsCorporation, the leader, is respon-
               sible for the design and development of the digital data processor and
               interface unit. Collins Government Avionics Division of Rockwell Inter-
               national, the follower, is responsible for the design and development of
               the receiver/transmitter and the high-power amplifier.

               However, Plesseyand Collins did not compete for the first production
               lot of the low-rate initial production contract. The Navy’s portion of the
               first production lot-37 Class 2 and 2H production terminals-will be
               produced by Plessey.The Air Force is also procuring 37 terminals in the
               first production lot-Plessey will produce 2 1 and Collins will produce
               the other 16 terminals. Competition will begin with the secondproduc-
               tion lot of the low-rate initial production contract and is expected to con-
               tinue through full-rate production.


Requirements   The 1981 Joint Chiefs of Staff operational requirement for JTIDSstated
               that existing communication systems lacked the capability to provide, in
               real time, the quantity and quality of accurate information necessaryto
               ensure adequate mission performance. As recently as 1989, the program
               office reported that current voice radios and data links could not pro-
               vide sufficient communication quality or volume. The program office
               also noted that existing Navy, Marine Corps, and Army tactical data
               links have limited capacity, are susceptible to jamming, and are not
               secure.In addition, the Air Force has no ground-to-air or air-to-air data
               links for its tactical fighter aircraft.
               For all services,information regarding the location of and actions among
               supporting and opposing forces, as well as the status of targets, must be
               made available to tactical operators through a single, more useful, and
               timely system. Individual capabilities will continue to be needed.How-
               ever, no single system or collection of systems available, other than


               Page 48                            GAO/NE&ID-90-169   Defense Acquisition   Programe
           Appendix IV
           Air Force Programa
                                                                .




           JTIDS,can satisfy
                           service requirements for tactical data and voice links,
           which provide coherent situation awareness,jam resistance,and secure
           communications.


Schedule   In October 1989 the Under Secretary of Defensefor Acquisition
           approved low-rate initial production for the JTIDSClass 2 and 2H termi-
           nals. The Army Class 2M terminal was not included in this milestone
           decision and its milestone IIIA decision is currently scheduled for
           October 1991. The Class 2 and 2H low-rate initial production is seg-
           mented into three consecutiveannual production lots, starting in fiscal
           year 1990. The program office awarded the contracts for the first pro-
           duction lot in March 1990. The Under Secretary has identified specific
           criteria that must be satisfied before contracts for secondand third lots
           can be awarded.
           Only the Air Force has completed Class 2 preproduction testing (on its
           F-16 aircraft). On the basis of the results of these tests, we found that
           the Class 2 terminal doesnot meet the reliability requirements estab-
           lished by the Secretary of Defensein 1981. Becausetesting aircraft are
           unavailable, the Class 2H terminal has not been extensively tested. The
           Army plans to conduct its Class 2M operational assessmentbetween
           March and June 1991. The Navy plans to begin technical and opera-
           tional evaluation testing in November 1992 and May 1993, respectively.
           The program office has scheduled a full-rate production decision for the
           Class 2M terminal in August 1993 and for the Class 2 and 2H terminals
           in October 1993. Table IV.6 highlights someimportant events in the pro-
           gram’s schedule.




           Page 49                           GAO/NSIAD-99-169       Defense Acquisition   Programe
                                       Appendix Iv
                                       Air Force Ptograma




Table IV&: JTIDS Program Schedule aa
of December 1989                       Event                                                                                         Date
                                       Complete Class 2 (F-15) initial operational test and evaluation                               Apr. 1987
                                       Complete Class 2M initial operational assessment                                              June 1991a
                                       Low-rate initial oroduction decision
                                           Class 2 and 2H                                                                            Oct. 1989
                                           Class 2M                                                                                  Oct. 1991
                                       Complete testing to support full-rate production decision
                                           Air Force Class 2 and 2H chase 2 multiblatform ocerational tests                          Acr. 1993
                                           Navy Class 2 and 2H operational evaluation                                                May 1993
                                          Army Class 2M initial operational test and evaluation                                      Apr. 1993
                                       Full-rate oroduction decision
                                          Class 2 and 2H                                                                             Oct. 1993
                                          Class 2M                                                                                   Aug. 1993
                                       Initial operational capability
                                                                                                                                     b
                                          Air Force Class 2 (F-l 5)
                                          Navy Class 2H                                                                              Sept. 1993
                                          Class 2M                                                                                   Oct. 1993
                                       BThe milestones for the Army’s Class 2M terminal were rescheduled to coincide with the program
                                       schedule for the forward area air defense/command, control and intelligence system. The Class 2M
                                       terminal is a primary subsystem of that system.

                                       bBecause only 20 F-l!% will be equipped with JTIDS, initial operational capability is not considered to be
                                       relevant.




Performance                            Although the Class 2 terminal is currently performing below required
                                       laboratory and field reliability specifications, as measured by mean time
                                       between failures, it has achieved thresholds set for the other perform-
                                       anceparameters established by the 1981 Secretary of DefenseDecision
                                       Memorandum, The performance parameters for the Class 2H and 2M are
                                       basically the same as for the Class 2, although the Army’s field relia-
                                       bility requirements are more stringent than requirements for the other
                                       services.
                                       Development test and evaluation and initial operational test and evalua-
                                       tion took place at Eglin Air Force Basein 1986 and 1987. The testing
                                       included an assessmentof the reliability and maintainability of the
                                       Class 2 terminal on an F-16. The terminal demonstrated only 17 hours
                                       between failures in the field, far less than the 102 hours set out in the
                                       1981 memorandum. This low reliability led to a terminal redesign and
                                       the establishment of a Reliability Growth Plan to ensure that the first
                                       production terminals will meet or exceedthe user’s reliability require-
                                       ments and that no inherent design weaknesseswill go unaddressed.The


                                       Page 50                                          GAO/N&ID-90-159        Defense Acquisition       Programs
Appendix IV
Ah Force Program




plan describesthe reliability testing that must be successfully per-
formed from December1989 through December1993. Testing actually
started in December1989. The assumption behind this testing is that
achieving laboratory reliability thresholds will ensure that field relia-
bility thresholds will be met.
The low-rate initial production contract for the first production lot
includes an incentive for the Air Force F-16 terminals to achieve relia-
bility beyond the required threshold. As a result of the reliability
growth efforts to date, the demonstrated laboratory reliability, although
still below the threshold of 400 hours, has increasedto 316 hours
between failures. This was achieved in verification tests completed in
August 1988. The increased operating hours and data collection that
becomepossible as additional terminals are acquired are expected to
move laboratory reliability toward its goal of 600 hours between
failures.
Before the October 1989 DefenseAcquisition Board’s low-rate initial
production decision, an operational assessmentwas conducted, but
quantitative improvements in field reliability could not be demonstrated
due to a limited number of terminal operating hours (129 hours with 2
critical terminal failures). Therefore, the Air Force Operational Test and
Evaluation Center could not make a statistically confident assessment
beyond the 17 hours between failures previously reported. However, the
Joint Test and Evaluation Master Plan summarizes the test results and
states that terminal reliability has improved since initial operational test
and evaluation, but it doesnot yet meet user requirements.

Development test and evaluation and initial operational test and evalua-
tion for terminals other than the Class 2 have not been completed as of
March 30, 1990, since the F-15 was the only platform available for
testing. However, additional development testing has recently been initi-
ated. The Navy began flight testing the Class 2H on its E-2C Hawkeye in
January 1990 and the Army began an informal engineering test at the
contractor’s plant in March 1990.
In addition, other test events are expected to support full-rate produc-
tion decisions,including (1) the Navy’s operational evaluation, sched-
uled for February through May 1993, (2) the Air Force’s phase 2
multiplatform operational test and evaluation, scheduled for March or
April 1993, and (3) the Army’s initial operational test and evaluation of
the forward area air defensecommand, control and intelligence system,



Page 51                            GAO/NSIAIMO-159   Defense Acquisition   Programs
           Appendix IV
           Air Force Programs




           scheduled for November 1992 through April 1993. According to a pro-
           gram office official, the terminals should accrue enough operating hours
           during these tests to allow an accurate assessmentof terminal reliability
           before the full-rate production decisionsin 1993.
           The Army Class 2M terminal, currently under development, is scheduled
           to complete technical test and initial operational assessmentby July
           1991. Before the low-rate initial production decision scheduled for
           October 1991, the terminal must demonstrate reliability thresholds of
           400 hours between failures in the laboratory and 207 hours between
           failures in the field. The Class 2M terminal is scheduledto complete ini-
           tial operational test and evaluation, including the forward area air
           defense/command,control and intelligence system and multiservice
           operational testing, before the full-rate production decision scheduled
           for August 1993.
           Although the October 1989 Acquisition Decision Memorandum approved
           low-rate initial production, stating that “reliability growth dependson
           conducting low-rate initial production with automated production facili-
           ties,” the Under Secretary of Defensefor Acquisition approved low-rate
           production in three phasesand established criteria to be met and veri-
           fied by the Air Force and the Navy before the secondand third phases
           can begin. Before allowing the Lot 2 buy in fiscal year 1991, the Under
           Secretary is requiring the Air Force and the Navy Service Acquisition
           Executives to certify that the Class 2 fighter terminal has met its labora-
           tory reliability threshold of 400 hours between failures and that the
           Class 2H high-power amplifier has undergone a specified amount of lab-
           oratory reliability testing. The memorandum also requires the services
           to submit an updated program baseline for approval and requires the
           Navy to approve Navy production funding for the Class 2 and 2H termi-
           nals to be installed on F-14 and E-2C aircraft.
           Further, the memorandum stipulated that before the third production
           lot buy can be executed in fiscal year 1992, the Air Force and the Navy
           must certify that the Class 2H terminal has reached a laboratory relia-
           bility threshold of 300 hours between failures, and development, opera-
           tional, and multiservice testing has been completed for the F-16 and E-3
           Class 2 and 2H terminals.


Cost   ”   The program office estimates that development of JTIDSterminals will
           cost over $2 billion and continue through 1995. On the basis of data
           available at the program office, we estimated that total program costs


           Page 52                            GAO/NSLAD-90-169   Defense Acquisition   Programs
           .


                                         Appendix IV
                                         Air Force Programs




                                         through production are about $3.9 billion, Table IV.7 shows the JTIDS
                                         total estimated costs as of February 1990.
Table IV.7: JTIDS Cost Estimates as of
February 1990                            Escalated dollars in millions
                                         Funding category                                                                              cost
                                         Development                                                                               $2,032.1
                                         Procurement                                                                               $1,861.6
                                         Total                                                                                     $3,993.7
                                         Note: These estimates were based on information from the February 1990 “Defense Acquisition Execu-
                                         tive Summary” prepared by the JTIDS Joint Program Office.


                                         As of February 1990, the estimated number of production terminals and
                                         trainers to be procured was 1,441. The total procurement cost estimate
                                         of $1.861.6 billion includes the cost of spare parts to support the 1,441
                                         terminals. The most significant changein the JTIDSquantities to be pro-
                                         cured was the reduction of 140 terminals from the F-16 program. The
                                         Air Force now proposesto equip only 20 F-l& with JTIDSterminals,
                                         using aircraft procurement funds appropriated for fiscal years 1988
                                         through 1990.




                                         Page 53                                       GAO/NSLAD-90-169     Defense Acquisition   Programs
Appendix V

Major Contributors to This Report


                         Norman J. Rabkin, Associate Director
National Security and    Robert L. Pelletier, Project Director
International Affairs    William R. Graveline, Project Manager
Division, Washington,    John J. D’Esopo,Assistant Director
                         Raymond Dunham, Assistant Director
D.C.                     Howard Manning, Assistant Director
                         F. James Shafer, Assistant Director
                         Emil C. Cracker, Senior Evaluator
                         Paul J. O’Brien, Senior Evaluator
                         James K. Seidlinger, Senior Evaluator

                         Jimmy R. Rose,Regional ManagementRepresentative
Atlanta Regional         James H. Beard, Senior Evaluator
Office                   Thomas L. Gordon, Staff Evaluator
                         John W. Randall, Staff Evaluator

                         Paul G. Williams, Regional ManagementRepresentative
Boston Regional Office   Thornton L. Harvey, Senior Evaluator
                         Diana Gilman, Staff Evaluator

                         Robert D. Murphy, Regional ManagementRepresentative
Cincinnati Regional      James R. Kahmann, Senior Evaluator
Office                   Catherine L. Basl, Staff Evaluator
                         Katrina D. Stewart, Staff Evaluator
                         Neilson S. Wickliffe, Staff Evaluator


                         Charles 0. Burgess,Regional ManagementRepresentative
Kansas City Regional     Carol E. Kutryb, Staff Evaluator
Office




(332540)                 Page 64                         GAO/NSIAD-99-159   Defense Acquisition   Programs
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