oversight

Defense Budget: Potential Reductions to Air Force and Navy Missile and Other Budgets

Published by the Government Accountability Office on 1990-09-07.

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

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                                                       DEFENSE BUDGET
                                                      Potential Reductions to
                                                      Air Force and Navy
                                                      Missile and Other
                                                      Budgets


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      United States
GAO   General Accounting Office
      Washington, D.C. 20648

      National Security and
      International Affairs Division

      B-240708

      September    ‘7,199O

      The Honorable Daniel K. Inouye
      Chairman, Subcommittee on Defense
      Committee on Appropriations
      United States Senate

      The Honorable John P. Murtha
      Chairman, Subcommittee on Defense
      Committee on Appropriations
      House of Representatives

      As you requested, we reviewed the Air Force’s fiscal year 1991 procure-
      ment budget request and past appropriations for the Advanced Medium
      Range Air-to-Air Missile (AMRAAM), QF-106 target aircraft, AGM-130
      guided bomb, and GBU-15 improved data link programs to identify
      potential budget reductions. We also reviewed the Navy’s fiscal year
      1991 missile procurement budget request for AMRAAM. In July 1990 we
      briefed your staff on the results of our review.

      We identified potential reductions of $1,338.4 million from the Air
      Force’s and the Navy’s fiscal year 1991 AMRAAM procurement requests.
      We also identified potential reductions of $43.6 million from the Air
      Force’s procurement budgets for the other programs we reviewed:
      $37 million in the fiscal year 1991 budget request and $4.3 million and
      $2.3 million in appropriated funds for fiscal years 1990 and 1989,
      respectively. The reductions result primarily from development and pro-
      duction delays and lower-than-anticipated costs of negotiated contracts.
      Additional information on our review is discussed in appendix I.

      As you requested, we did not obtain agency comments on this report.
      However, we discussed its contents with officials from the Departments
      of Defense, the Air Force, and the Navy and incorporated their com-
      ments where appropriate. Our objectives, scope, and methodology are
      described in appendix II.

      As arranged with your offices, we are sending copies of this report to
      appropriate congressional committees; the Secretaries of Defense, the
      Air Force, and the Navy; the Director, Office of Management and
      Budget; and other interested parties.




      Page 1                                     GAO/NSIAD-90-272BR   Defense   Budget
E240708




This report was prepared under the direction of Nancy R. Kingsbury,
Director, Air Force Issues, who may be reached at (202) 275-4268 if you
or your staff have any questions concerning this report. Other major
contributors to this report are listed in appendix III.




Frank C. Conahan
Assistant Comptroller General




Page 2                                    GAO/NSIAD-WI-272BR   Defense   Budget
Page 3   GAO/NSIAD-!W272BR   Defense   Budget
Contents


Letter                                                                                                    1

Appendix I                                                                                                6
Potential Reductions     Advanced Medium Range Air-to-Air Missile
                         QF-106 Target Aircraft
                                                                                                          6
                                                                                                          8
to the Air Force’s and   AGM-130 Guided Bomb                                                              9
the Navy’s Missile and   GBU-16 Improved Data Link                                                       10
Other Procurement
Budgets
Appendix II                                                                                              11
Objectives, Scope,and
Methodology
Appendix III                                                                                             12
Major Contributors to
This Report
Table                    Table I. 1: Potential Reductions to the Air Force’s and the                      6
                             Navy’s Procurement Budgets




                         Abbreviation

                         AMRAAM    Advanced Medium Range Air-to-Air       Missile


                         Page 4                                       GAO/NSIAD-!-&272BR   Defense   Budget
Page 5   GAO/NSIAlMO-272BR   Defense Budget
Pot&&l Reductions to the Air Force’s and the
Navy’s Missile and Other Procurement Budgets

                                         We identified potential budget reductions of $1,338.4 million from the
                                         Air Force’s and the Navy’s fiscal year 1991 procurement budget request
                                         for the Advanced Medium Range Air-to-Air Missile (AMRAAM). We also
                                         identified potential reductions of $43.6 million from the Air Force’s pro-
                                         curement budgets: $37 million in the fiscal year 1991 budget request and
                                         $4.3 million and $23 million in funds appropriated for fiscal years 1990
                                         and 1989, respectively. Table I.1 shows these potential reductions by
                                         program.

Table 1.1: Potential Reductions to the
Air Force’s end the Navy’s Procurement   Dollars in millions
Budget8                                                                                      Fiscal year
                                         Proaram                                    1991         1990    1989              Total
                                         AMRAAM                                  $1 r338.4        $0       $0         $1,338.4
                                         OF-106 target aircraft                      6.0         4.3      2.3             12.6
                                         AGM-130 auided bomb                         8.2           0        0              8.2
                                         GBU-15 improved data link                  22.8           0        0             22.8
                                                                                                                           -
                                         Total                                  91.3754         $4.3     $2.3         $1.382.0




Advanced Medium
Range Air-to-Air
Missile

Brief Description of                     The Air Force and the Navy are jointly developing AMRAAM to replace
                                         the Sparrow missile. AMRAAM will be compatible with both services’
Program                                  latest fighter aircraft-the    F-14, F-15, F-16, F/A-18, and Advanced Tac-
                                         tical Fighter-and     is expected to have some key improvements over the
                                         Sparrow, such as the capability for a pilot to engage several targets
                                         simultaneously and then maneuver the aircraft to avoid counterattack.

                                         The total number of AMRAAMS to be procured has decreased from 24,320
                                         to about 16,500. The amount to be procured by the Air Force decreased
                                         from 17,108 to 12,000. The Navy originally planned to procure 7,212
                                         missiles; the amount the Navy plans to buy was undetermined at the
                                         time of our review, but, for planning purposes, the Air Force estimates
                                         that the Navy will procure 3,600 missiles. A Navy program official told
                                         us that the number of AMRAAMS to be procured by the Navy will be dis-
                                         cussed at a major program review scheduled for August 1990 with the
                                         Defense Acquisition Executive.


                                         Page 6                                       GAO/NSIAD-90-272BR        Defense   Budget
                      Amendbc I
                      Potendal Beductione to the Ah For&e   and
                      the Navy’s Missile and Other
                      Procurement   Budgets




                      Because of continuing concerns about AMRAAM'S reliability, the Defense
                      Acquisition Executive has released only $845 million of the $687.8 mil-
                      lion that the Congress appropriated in fiscal year 1990 for the Air Force
                      to buy 815 missiles. Air Force program officials are reviewing various
                      alternatives on how to proceed for fiscal year 1990 funding and their
                      potential impact on the fiscal year 1991 budget request. A decision on
                      how to proceed is expected in August 1990.


Results of Analysis   In May 1990 we reported’ that the Congress should deny the $1,338.4
                      million requested for the fifth year of AMRAAM procurement in fiscal
                      year 1991 because the missile’s performance, reliability, producibility,
                      and affordability remain questionable. Funds totaling about $3.2 billion
                      had already been appropriated for the first four production years, three
                      of which were fully under contract and the other had long lead items
                      under contract. Missile deliveries, however, from the first production
                      year were at least 6 months behind schedule, and the Air Force had
                      stopped accepting missiles because of reliability problems.

                      The Air Force had drafted a plan to identify and correct reliability
                      problems but, as of July 25, 1990, was still not accepting missiles from
                      either contractor-Hughes     Aircraft Company or Raytheon Company. If
                      the contractors resolve their manufacturing problems and begin to pro-
                      duce quality missiles consistently, delivery schedules can be rephased so
                      that a costly production gap does not occur. We believe that the procure-
                      ment quantities and appropriations already provided are sufficient and
                      that additional procurement funds will not likely be needed before fiscal
                      year 1992.

                      Fiscal year 1989 appropriations provided $795.4 million for the Air
                      Force to buy 874 missiles. Production contracts were negotiated for
                      $19.4 million less than the appropriated amount. However, Air Force
                      program officials told us that the $19.4 million is needed for known and
                      unknown contingencies. The $19.4 million was transferred to a reserve
                      for engineering change orders, thereby increasing the reserve from
                      $42.4 million to about $62 million. Program officials told us that all but
                      about $7 million of the $62 million reserve had been allocated to specific
                      engineering and task change proposals to improve AMRAAM’S reliability



                      ‘Missile Prqkurement:Further Productionof AMRAAM ShouldNot BeApproved Until QuestionsAre
                      Resolved(GAOm90-146,           May 4,199O).



                      Page 7                                              GAO/NSIAD-90-272BB   Defense   Budget
                       A~pendh I
                       Potential Reductiona to the Ah Force’s and
                       the Navy’s MiseUe and Other
                       Procurement   Budgets




                       when carried on the F-15 aircraft. As of July 26, 1990, contract negotia-
                       tions to incorporate the reliability improvements had not been com-
                       pleted. In view of the small amount of the unallocated reserve and
                       continuing contract negotiations, we do not recommend any reduction in
                       this area at this time.



QF-106 Target
Aircraft

Brief Description of   The QF-106 program converts retired F-106 aircraft into targets that
Program                can be safely controlled from a ground station many miles away. The
                       converted aircraft are used in various tests, such as targets for testing
                       air-to-air missiles. After the aircraft are converted, they can still be
                       flown by pilots for less hazardous tests and for relocating the aircraft to
                       various test ranges. The 4-year procurement program, which began in
                       1989, will convert 48 aircraft each year and include related equipment,
                       such as a new Missile End Game Scoring System now in development.


Results of Analysis    Our review showed a potential reduction of $12.6 million: $6 million
                       from the fiscal year 1991 budget request and $4.3 million and $2.3 mil-
                       lion in appropriated funds from fiscal years 1990 and 1989, respec-
                       tively. The funds are excess because of delays in the development and
                       planned production of the new scoring system and a reserve that is not
                       needed.

                       The fiscal year 1991 budget includes $5 million and the fiscal year 1990
                       appropriation includes $4.9 million for production of the new test
                       scoring system. However, the scoring system’s development has been
                       delayed, and current plans are to award the production contract in Jan-
                       uary 1992. Because of the delays, fixed-price contracts to continue
                       buying the existing scoring system were awarded for $1.6 million for
                       fiscal year 1990. Therefore, the $6 million requested for fiscal year 1991
                       and the remaining $3.3 million appropriated for fiscal year 1990 will not
                       be needed.

                       The Air Force’s fiscal year 1991 budget request and fiscal year 1990
                       appropriation include $1 million each year for a reserve to cover the




                       Page 8                                       GAO/NSIAD-90-272BR   Defense Budget
                       Appendix I
                       Potential Reduction8 to the Air Force’s and
                       the Navy’s Missile and Other
                       Procurement   Budgets




                       risk that the procurement cost estimate might be too low for the con-
                       tract award. However, these funds also appear to be excess because the
                       costs to modify the QF-106 aircraft are covered by firm fixed-price con-
                       tract options. Moreover, the budget includes almost $1 million for con-
                       tingencies, such as engineering change orders that might be needed after
                       contract award.

                       A potential reduction of $2.3 million to the fiscal year 1989 appropria-
                       tion exists because $1.1 million was included for the reserve and fixed-
                       price contracts for the existing scoring system were awarded for
                       $1.2 million less than the budgeted amount. Air Force program officials
                       could not provide documentation to support the need for these funds.



AGM-130 Guided
Bomb

Brief Description of   The AGM-130 guided bomb program provides improvements to the
Program                GBU-15 guided bomb, which is already fielded. The AGM-130 provides
                       (1) an improved data link less susceptible to enemy disruption, (2) a
                       rocket motor to extend the range of the current glide bomb, and (3) an
                       autopilot and radar altimeter to maintain proper flight control and coor-
                       dinate rocket motor ignition and ejection. In January 1990 the program
                       office submitted a reprogramming request for $32 million of fiscal year
                       1990 procurement funds to award the initial production contract in
                       March 1990. However, as of July 24,1990, the reprogramming request
                       had not been approved, and contract negotiations between the Air Force
                       and Rockwell International had not been completed.


Results of Analysis    Our review showed a potential reduction of $8.2 million from the
                       $38.4 million fiscal year 1991 budget request to produce 63 AGM-130s
                       in the second production year, if the reprogramming action is approved.
                       As of June 30, 1990, the planned start of the first production year had
                       been delayed from March to September 1990. If the reprogramming
                       request is approved and the contract is awarded in fiscal year 1990, the
                       Air Force expects the delay to cause the last 4 months of the fiscal year
                        1991 deliveries, totaling 28 missiles, to occur during the fiscal year 1992
                       delivery period. Therefore, on the basis of the Air Force’s latest pro-
                       jected unit cost, which considers the increase resulting from buying



                       Page 9                                        GAO/NSIAIHW272BR   Defense   Budget
                       Appendix I
                       Potential Reductions to the Air Force’s and
                       the Navy’s Missile and Other
                       Procurement   Budgets




                       fewer missiles, $8.2 million of the fiscal year 1991 funds will not be
                       needed until fiscal year 1992. The Air Force program manager agreed
                       that the $8.2 million will not be needed if the reprogramming request is
                       approved.



GBU-15 Improved
Data Link

Brief Description of   The improved data link is part of an Air Force plan to upgrade the
Program                GBU-15 guided glide bombs that have been fielded. The data link
                       enables a weapon systems officer in an aircraft to guide the weapon to
                       its intended target. The new data link will be less susceptible to disrup-
                       tion in a dense electronic countermeasure environment.


Results of Analysis    Our review showed a potential reduction of $22.8 million to the
                       $25.5 million fiscal year 1991 budget request. These funds were
                       requested to produce 224 new data links during the first production
                       year. However, according to the current program schedule, the develop-
                       ment program has slipped more than 1 year. Development testing of the
                       improved data link has been delayed and is not scheduled to begin until
                       March 1991. As a result, the planned production contract award has also
                       slipped to the end of fiscal year 1991, at the earliest, and could possibly
                       slip well into fiscal year 1992.

                       An Air Force program official agreed that the schedule has slipped and
                       that most of the funds will not be needed until fiscal year 1992. The
                       official stated that only about $2.7 million of the $25.5 million requested
                       will be needed to continue engineering support and for special tooling
                       and test equipment to support initial production in fiscal year 1992.




                       Page 10                                       GAO/NSIAD-W272BR   Defense   Budget
Appendix II

Objectives, Scope,and Methodology


               This review is one of a series that examines defense budget issues. Our
               objectives were to (1) review the Department of Defense’s fiscal year
               1991 budget requests for selected systems to determine whether the
               programs should be funded in the amounts requested and (2) examine
               selected aspects of prior year budgets for these systems to determine
               whether unused funds could be reduced. We examined selected aspects
               of the fiscal year 1991 procurement budget request and the fiscal years
               1989 and 1990 appropriations for the AMRAAM, QF-106 target aircraft,
               AGM-130 guided bomb, and the GBU-15 improved data link.

               We interviewed budget and program officials and reviewed pertinent
               program documents, audit reports, and budget support data obtained
               primarily from the individual program management offices located at
               Eglin Air Force Base, Florida.

               We conducted our review from May to August 1990 in accordance with
               generally accepted government auditing standards.




               Page 11
Appendix III

Major Contributors to This Report


                        Norman J. Rabkin, Associate Director
National Security and   Robert L. Pelletier, Assistant Director
International Affairs   William R. Graveline, Advisor
Division, Washington,
D.C.

                        Jimmy R. Rose, Regional Management Representative
Atlanta Regional        John L. Grant, Evaluator-in-Charge
Office                  Robert E. Kigerl, Evaluator
                        Frank S. Nagy, Evaluator
                        Starr T. Fielding, Evaluator




(292642)                Page 12                                   GAO/NSIAD-90-272BRDefense Budget
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