oversight

Navy Budget: Potential Reductions for Research, Development, Test, and Evaluation

Published by the Government Accountability Office on 1990-11-30.

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

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                                      Potential Reductions
                                      for Research,
                                      Development, Test,
                                      md Evaluation


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

                                       National Security and
                                       International Affairs Division

                                       B-241209

                                       November 30,199O

                                       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

                                       In response to your requests, we reviewed the Navy’s fiscal year 1991
                                       funding request for Research, Development, Test, and Evaluation
                                       (RDT&E). We also reviewed associated fiscal year 1990 appropriations. In
                                       July 1990, we provided the preliminary results of our review to your
                                       offices. The results of our final review are summarized below and dis-
                                       cussed in more detail in appendixes I and II of this report.

                                       We identified potential reductions in RDT&Eof $777.614 million-
                                       $534.910 million for fiscal year 1991 and $242.704 million for fiscal
                                       year 1990 as summarized in table 1. below.

Table 1: Potential Reductions in the
Navy’s Fiscal Year 1991 Budget for     Dollars in Millions
Research, Development, Test, and                                                               Fiscal Year
                                                                        Element      R-l
Evaluation                             Proaram Element Title            Number      Line       1990        1991         Total
                                       --2z.---
                                       Surface Ship Torpedo Defense
                                       --.-.                            0603506N      70     $9.000                    $9.000
                                       Ship Development                 0603564N      84                $11.598        11.598
                                       ---~-
                                       MK-48 Advanced Caoabilitv        0603691 N     98      4.600      60.300        64.900
                                       V-22 Osprey                      0604262N     134     62.786                    62.786
                                       Helicopter Development           0604213N     125                 51.000        51.000
                                       Sea Lance                        0604309N     141     49.900                    49.900
                                       -,
                                       Submarine Sonar Improvements     0604503N     154                  3.100         3.100
                                       Combat Information Center
                                           Conversion                   0604518N     161                  4.798         4.798
                                       Surface ASW System
                                          Improvement                   0604713N     184      39.900    122.610       162.510
                                       Fixed Distributed System         0604784N     193                 46.604        46.604
                                       P-3 Moderization                 0604221 N    130                234.900       234.900
                                       Undistributed Deferrals and
                                         ExcessFunds                      various   N/A       76.518                   76.518
                                       Total                                               $242.704    $534.910      777.514




                                       Page 1                                              GAO/NSL4D4l-14BR       Navy Budget
B-241209




Although the scope of our work consisted mainly of projects and pro-
grams in RDT&E,we did analyze the effects of RDT&Echanges on systems
funded in more than one appropriation account. We identified potential
reductions in fiscal year 1991 funds of $4.663 million in the Navy’s
Shipbuilding and Conversion budget and $10.2 million in its Other Pro-
curement budget account.

This review is one of a series that examines defense budget issues. Our
objectives were to (1) review the Navy’s RDT&Ebudget account for fiscal
year 1991 for selected program elements and individual programs and
systems to determine whether the funding levels requested were justi-
fied and (2) examine selected aspects of the current and prior year
budgets to determine whether unused funds could be reduced.

In conducting our evaluation, we interviewed budget and program offi-
cials and reviewed pertinent program documents and budget support
data obtained from many installations and commands. Our work was
performed at Navy Headquarters in Washington, DC.; and at Naval Lab-
oratories located in Newport, R.I.; Warminister, PA.; and San Diego, CA.

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

As requested, we did not obtain written agency comments on this report.
However, we discussed the contents with officials from the Office of the
Secretary of Defense and the Department of the Navy, and have incor-
porated their comments as appropriate. Major contributors to the report
are listed in appendix III.

If we can be of further assistance, please call Martin Ferber, Director,
Navy Issues, on 275-6504.




Frank C. Conahan
Assistant Comptroller General




Page 2                                          GAO/NSIAbSl-14BR   Navy Budget
Page 3   GAO/NSIAD-Sl-14BR Navy Budget
Cmtents


Letter                                                                                                 1

Appendix I                                                                                            6
Potential Reductions Surface Ship Torpedo Defense (SSTD)
                      Ship Development
                                                                                                      6
                                                                                                      6
to Navy’s Research,   MK-48 Advanced Capability (Advanced          Development)                       8
Development, Test,    V-22 Osprey                                                                     9
                                                                                                     10
and Evaluation Budget ~~~~~~~   Deve1opment                                                          11
                            Submarine Sonar Improvements (Engineering)                               12
                            Combat Information Center Conversion                                     13
                            Advanced Combat Direction System                                         13
                            Surface ASW Systems Improvement                                          14
                            Fixed Distributed System                                                 17
                            P-3 Modernization Program P-7A                                           18
                            Long-Range Air ASW Capable Aircraft                                      18
                            Undistributed Deferral and Excess Funds in Fiscal Year                   20
                                 1990 RDT&E Appropriation

Appendix II                                                                                          22
Potential Reductions        Shipbuilding and Conversion, Navy Trident Electronics                    22
to Other Navy Budget        OtheF;;;;F;entNavy                                                       23
Accounts                    Strategic Platform Support Equipment (Electronics)                       23

Appendix III                                                                                         24
Major Contributors to
This Report
Tables                      Table 1: Potential Reductions in the Navy’s Fiscal Year                    1
                                 1991 Budget for Research, Development, Test, and
                                Evaluation
                            Table I. 1: Projects Included in the Ship Development                      6
                                Program Element (0603564N)
                            Table 1.2: Planned Expenditures in the An/SQQ-89                         16
                                Improved Combat System
                            Table 1.3: Undistributed Deferral and Excess Funds                       20
                                Found in the Navy’s RDT&E Account for Fiscal Year
                                 1990



                            Page 4                                       GAO/NSIAIbSl-14BR   Navy Budget
Contents




Abbreviations

ACDS       Advanced Combat Direction System
ADCAP      Advanced Capability
ASW        Antisubmarine Warfare
CNO        Chief of Naval Operations
DAB        Defense Acquisition Board
GAO        General Accounting Office
MLR        Medium Lift Requirement
NAVSEA     Naval Sea Systems Command
OPN        Other Procurement, Navy
OSD        Office of the Secretary of Defense
RTD&E      Research, Development, Test, and Evaluation
SCN        Shipbuilding and Conversion, Navy
SSTD       Surface Ship Torpedo Defense


Page 5                                        GAO/NSIAD-91.14BR Navy Budget
Appendix I

Potential Reductionsto Navy’s Research,
Development,Test, and Evaluation Budget

                                           We identified potential budget reductions of $777.614 million from the
                                           Navy’s Research, Development, Test, and Evaluation (RDT&E)budget:
                                           $242,704 million for fiscal year 1990 and $534.910 million for fiscal
                                           year 1991. In this appendix, we discuss these potential reductions and
                                           the programs to which they apply.



Surface Ship Torpedo
Defense (SSTD)

Brief Description of                       The SSTDprogram, comprised of a U.S. National SSTDprogram and a joint
Program                                    U.S./United Kingdom SSTDproject, is being implemented to provide
                                           naval ships protection from Soviet-built torpedoes. Specific program
                                           information is classified.


Results of Analysis                        We identified a potential rescission of $9 million from the fiscal year
                                           1990 SSTDprogram.

                                           The Congress approved an additional $9.0 million in fiscal year 1990
                                           funds, subsequent to the fiscal year 1990 appropriation of $51.515 mil-
                                           lion. This amount includes funds for the U.S. National SSTDProgram and
                                           the Joint U.S./U.K. SSTDProject, $38.214 million and $13.301 million,
                                           respectively. The Office of the Secretary of Defense (OSD)is withholding
                                           the $9.0 million for reprogramming. A Navy program official stated that
                                           the $9.0 million is in excess of fiscal year 1990 program requirements.



Ship Development
Table 1.1: Projects Included in the Shlp
Development Program Element                Dollars in millions
(0603564N)                                 Project                                                              FY 1990       FY 1991
                                           Number            Title                                              request       request
                                           SO408             Shir, Develooment (Advanced)                        $3.442        $14.702
                                           S2043             Sub Tender Development                                   0          4.162
                                           S2087             Fast Sealift Ship Technology Development            15.000              0
                                           -.---
                                                             Totals                                             $18.442       $18.864




                                           Page 0                                                       GAO/NSIAD91.14BR   Navy Budget
                       Appendix I
                       Potential Reductions to Navy’s Reeeorch,
                       Development, Tea, and Evaluation Budget




Brief Description of   The Ship Development program element consists of three independent
Program                projects aimed at (1) enhancing the Navy’s ability to design more
                       capable ships at reduced costs, with reduced manning, and increased
                       producibility, and (2) allowing for greater utilization of the latest tech-
                       nology during this process. The overall program supports the Navy’s
                       shipbuilding plans by developing the expertise needed and performing
                       the early stage ship design work through concept studies, feasibility
                       studies, and preliminary design work. The program also develops invest-
                       ment strategies for new concepts and technology and evaluates new
                       technologies and unconventional hull form concepts suitable for future
                       acquisition.


Results of Analysis    A potential reduction of $11.598 million to the fiscal year 1991 budget
                       for RDT&E,Navy, has been identified.
.
                       We concentrated our efforts on one of the three projects in the Ship
                       Development program element, the Fast Sealift Ship Technology Devel-
                       opment project. The funds for this project were included in the fiscal
                       year 1990 authorization bill by the Congress. The Naval Sea Systems
                       Command (NAVSEA),the program’s sponsor, did not request these funds,
                       nor does it have program requirements for the project. Also, no funds
                       are budgeted for this project in fiscal year 1991. OSDwithheld the entire
                       $15.000 million in a deferred or reserve account, pending approval of an
                       overall fast sealift development plan.

                       The Congress rescinded $3 million from this project in fiscal year 1990.
                       Additionally, $402,000 of the fiscal year 1990 funding has been identi-
                       fied as a potential source for Coast Guard and Department of Energy
                       programs.

                       According to Navy officials, until they are provided direction and
                       requirements for the Fast Sealift Ship Technology Development Project,
                       they cannot initiate work. Therefore, the Navy does not have any plans
                       to use the remaining $11.598 million appropriated for the project in
                       fiscal year 1990.

                       As shown in table I. 1, NAVSEArequested $14.702 million for its fiscal
                       year 1991 Advanced Ship Development Project. If OSDdoes not provide
                       direction to the Navy for the fiscal year 1990 Fast Sealift Ship Tech-
                       nology Development Project, that project could be deleted and the
                       remaining $11.598 million could be transferred to the Advanced Ship
                       Development Project in fiscal year 1991.


                       Page 7                                          GAO/NSIAD-91-14BB Navy Budget
                       AppendixI
                       Potential Reductions to Navy’s Research,
                       Development, Test, and Rvaluation Budget




MK-48 Advanced
Capability (Advanced
Development)

Brief Description of   The ongoing MK-48 Advanced Capability (ADCAP)Torpedo product
Program                improvement program consists of a software upgrade and the develop-
                       ment of an improved propulsion system. It is designed to upgrade the
                       basic MK-48 ADCAPtorpedo. The program recently experienced testing
                       problems with the propulsion system and is in the process of being
                       restructured. These problems resulted in the delay of full-scale develop-
                       ment by about 1 year and increased estimated RDT&Ecosts by about $66
                       million over the $122 million the N&y initially planned to spend on the
                       improvement.

                       In March 1990, NAVSEXsubmitted a program management proposal to the
                       Chief of Naval Operations to restructure the program. The proposal
                       reflects the additional work deemed necessary before the program can
                       proceed to full-scale development. As of June 1990, this proposal was
                       still being evaluated by the Chief of Naval Operations. When completed,
                       the proposal must be sent to the Secretary of the Navy for review and
                       approval. Meanwhile, the MK-48 ADCAPprogram office is continuing
                       development efforts under the restructure plan proposal.


Results of Analysis    Two potential reductions totaling $64.900 million have been identified.

                       Due to earlier testing problems with the fast deep target, which uses
                       propulsion technology similar to that in the MK-48 product improve-
                       ment program, the Navy Comptroller withheld $13 million of the fiscal
                       year 1990 appropriation that was to be applied to the full-scale develop-
                       ment contract. The Navy has reprogrammed $8.4 million of this amount
                       to 21 other Navy programs, The $8.4 million falls below the threshold
                       for reprogramming limits required for congressional approval. The
                       Comptroller may reprogram the remaining $4.6 million to other Navy
                       programs.

                       The fiscal year 1991 RDT&Ebudget request for $60.3 million reflects the
                       proposed restructured program. According to program officials, this
                       request was based on the premise that the $13 million withheld by the
                       Navy Comptroller’s Office would be released for use in fiscal year 1990.


                       Page 8                                         GAO/NSIAD91-14BR Navy Budget
                       Appendix 11
                       Potmthl Redu@tio~ to Navfs Research,
                       Development, Test, and Evaluation Budget




                       However, since the Navy has reprogrammed some funds and plans to
                       reprogram the remaining funds, the program could experience further
                       delays. The fiscal year 1991 RDT&Ebudget request reflects a restruc-
                       tured program that has yet to be approved by the Secretary of the Navy.
                       Since the Navy is planning to reprogram $4.6 million of the program’s
                       fiscal year 1990 funds to other Navy areas, these funds could be with-
                       drawn and applied to the Navy’s fiscal year 1991 RDT&Ebudget request.

                       Additionally, since the restructured program has not yet been approved
                       by the Navy, the $60.3 million requested for fiscal year 1991 could be
                       appropriated, but obligational authority on the use of these funds
                       should be restricted until after the Navy reports to the Congress on the
                       restructured program and the amount of RDT&Efunds it will actually
                       need to carry out the approved fiscal year 1991 program.



V-22 Osprey

Brief Description of   The V-22 program is designed to provide an aircraft to meet the amphib-
Program                ious/vertical assault needs of the Marine Corps, the combat search and
                       rescue needs of the Navy, and the special operations needs of the Air
                       Force. The V-22 will replace the CH-46 in the Marine Corps, the HHSA
                       in the Navy, and supplement the H-53, H-60, and C-130 in the Air Force.
                       The V-22 will be capable of flying over 2,100 nautical miles without
                       refueling, giving the Services the advantage of an aircraft that can rap-
                       idly self-deploy to any location in the world.


Results of Analysis    A potential reduction of up to $62.786 million in fiscal year 1990 funds
                       may exist in the V-22 program if this aircraft is not funded by the Con-
                       gress in fiscal year 1991.

                       The Navy Comptroller is withholding $62.786 million of the fiscal year
                       1990 RDT&Eprogram approved for the V-22. The funds withheld are
                       related to long-term engineering development. The Navy curtailed work
                       related to V-22 production and chose to delay certain long-term engi-
                       neering development efforts, such as modifications to government fur-
                       nished equipment, design work, and selected developmental items. The
                       Navy indicated that this delay would not effect current RDT&Ework.




                       Page 9                                         GAO/NSIAJJ-91-14BR Navy Budget
                       If the V-22 program is continued, the Navy has tasks and modifications
                       to contracts planned for the $62.786 million. The Navy has submitted a
                       plan to the Navy Comptroller requesting release of these funds for items
                       such as developmental engines, engine test cell adapters, auxiliary
                       power units, proposed engine upgrades, and a first article maintenance
                       trainer.

                       If the V-22 program is not funded in fiscal year 199 1, part of the
                       $62.786 million will be earmarked for items such as closing out financial
                       documents and completing contracts on small pieces of hardware. The
                       remaining funds could be reprogrammed to support other RDT&Eefforts
                       in fiscal year 199 1.


Helicopter
Development

Brief Description of   The Helicopter Development program funds two separate projects -the
Program                upgrade and modernization of certain weapon systems on the AH-l
                       Cobra helicopter and the development of a Medium Lift Requirement
                       (MLR) aircraft to replace the CH-46 helicopter. We concentrated our anal-
                       ysis on the MLR aircraft since this program’s development in fiscal year
                        1991 will occur only if the V-22 Osprey program is not funded, as now
                       proposed by the Navy.

                       The MLR aircraft’s primary mission will be to provide assault transport
                       of combat troops during amphibious operations and subsequent opera-
                       tions ashore. As part of this mission, MLR aircraft will provide a capa-
                       bility to operate at night and deliver combat assault troops beyond
                       current CH-46 distances, under extreme environmental and operational
                       conditions, into a high threat environment.


Results of Analysis    A savings of $51 million in fiscal year 1991 helicopter development
                       funding could accrue if the V-22 program is funded in fiscal year 199 1.

                       The Navy requested $51 million in its fiscal year 1991 RDT&Ebudget for
                       the MLRproject. The Navy is using the lift requirements previously
                       established under the V-22 program as the basis for future helicopter
                       development. The Navy has not yet established a program office to



                       Page 10                                        GAO/NSIAD-91-14BR Navy Budget
                       lrppendix I
                       Potential lbduction6 t.41Navy% &arch,
                       Development, Tecrt, aed EvabuWn Budget




                       manage the MLRaircraft project; however, the Assistant Chief of Naval
                       Operations for Air Warfare is currently conducting the general planning
                       on this project. As of June 16,1990, no RTLMW funds had been spent on
                       the project.

                       Currently, the Navy is refining the V-22 operational requirements and
                       proceeding with a general plan to upgrade or modify an existing air-
                       frame to meet the Marine Corps’ needs if the V-22 is cancelled.
                       According to the Navy, if the V-22 is not funded in fiscal year 1991, the
                       Navy will establish a program office to conduct studies, using field
                       activities, to begin preliminary design development.

                       However, if the V-22 program is funded in fiscal year 1991, the need for
                       the MLR aircraft project under the Helicopter Development program ele-
                       ment will no longer exist. Therefore, $51 million could be deleted for the
                       MLR aircraft project in the fiscal year 1991 budget.



SeaLance

Brief Description of   The Sea Lance weapon system is designed to provide surface ships and
Program                submarines with a quick reaction, conventional, antisubmarine warfare
                       (ASW)tactical weapon capable of countering hostile submarines at long
                       ranges. The MK-50 torpedo is planned to be the conventional payload
                       for Sea Lance. The program, which, through fiscal year 1989, has cost
                       the Navy about $5!8 million, has been under development for almost 10
                       years, and has experienced many changes. On December 29, 1989, the
                       Secretary of the Navy announced that the Deputy Secretary of Defense
                       had approved the Navy’s proposal to terminate the Sea Lance program
                       and deleted funding starting in fiscal year 1991.


Results of Analysis    Potential exists to rescind $49.900 million in the fiscal year 1990 budget
                       for this program.

                       For fiscal year 1990, the Congress appropriated $127.8 million of RDT&E
                       funds for Sea Lance program development. This appropriation was
                       made prior to the Navy’s decision to terminate the program.

                       Of the total amount appropriated, the Secretary of the Navy authorized
                       the expenditure of $81.5 million to close out the program. The Navy


                       Page 11                                        GAO/NSIAD-Bl-14BB Navy Budget
                       Potential Reductions ta Navy’s Research,
                       Development, Test, aud Evaluation Budget




                       planned to reprogram $46.3 million for other purposes-$42.9 million
                       for military personnel and $3.4 million to the Department of Energy for
                       a Savannah River facility. However, these reprogramming actions were
                       rejected by the Congress. OSDand the Navy are currently reassessing
                       possible uses for these funds.

                       Despite a decision to terminate the program, the Navy plans to expend
                       $3.6 million of the $81.5 million authorized to conduct air drop tests.
                       The series of tests, scheduled for June through August 1990, concern
                       the release and separation of the MK-50 torpedo from the Sea Lance.
                       According to a Sea Lance official, the tests are being conducted to vali-
                       date MK-50 torpedo concepts. This data, along with prior test data, will
                       be available for use in future Navy programs, including the MK-50 tor-
                       pedo and Vertical Launch Antisubmarine Rocket.

                       A total of $49.9 million of fiscal year 1990 RDT&Efunds could be with-
                       drawn and used to offset the Navy’s fiscal year 1991 budget request.
                       This amount includes $46.3 million planned to be reprogrammed for
                       purposes other than what was originally intended by the Congress, plus
                       $3.6 million planned to be expended for air drop tests for a program that
                       is being terminated.



Submarine Sonar
Improvements
(Engineering)

Brief Description of   The AN/BQS-24 sonar system, one of the improvement programs funded
Program                under this program, is being designed to improve SSBN 726 Trident
                       class and SSN 688 class submarine under-ice navigation and obstacle
                       avoidance capabilities. This system is an enhancement to the AN/BQQ-5
                       sonar system and has been in development for about 3 years. The Navy
                       planned to award a full-scale development contract for the AN/BQS-24
                       system in early fiscal year 199 1.


Results of Analysis    The fiscal year 1991 budget request for this program could be reduced
                       by $3.10 million.




                       Page 12                                         GAO/NSIAD-Bl-14BR Navy Budget
                       AppendixI
                       Potential Reductions to Navy’s Research,
                       Development, Test, and Evaluation Budget




                       On April 2, 1990, the Chief of Naval Operations (CNO) terminated the
                       Trident portion of this program. The CNOalso suspended the SSN 688
                       portion of the program pending review of the AN/BQS-24 system or a
                       suitable substitute that would satisfy SSN 688 requirements.

                       The CNO has terminated the AN/BQS-24 program and is currently devel-
                       oping a new operational requirement for a high frequency sonar system
                       to replace the current system on the SSN 688 class submarine.
                       According to a Navy program official, the CNO hopes to issue this
                       requirement by the end of fiscal year 1990 and to award a contract for a
                       follow-on system in late fiscal year 199 1.

                       Of the $42.36 million requested for the Submarine Sonar Improvement
                       program element for fiscal year 1991, $3.10 million is for AN/BQS-24
                       RDT&Eefforts on the Trident and the SSN 688 class submarines.

                       The fiscal year 1991 RDT&Ebudget request for this program element
                       could be reduced by $3.10 million until the CNOinforms the Congress of
                       (1) his decision regarding the 688 class submarine and (2) the exact
                       amount of RTD&Efunds needed for fiscal year 1991.



Combat Information
Center Conversion
Advanced Combat
Direction System

Brief Description of   The Advanced Combat Direction System (ACDS)program is an upgrade to
                       the Navy Tactical Data System. The program is the Navy’s project to
Program                design and deploy a family of combat direction systems with new equip-
                       ment and computer programs. The ACDSis a multi-step program with the
                       steps designated Block 0, Block 1, and Block 2. The Block 1 software is
                       currently under development for carriers.


Results of Analysis    A budget reduction of $4.798 million in fiscal year 1991 funding has
                       been identified.
              ”


                       The Navy’s request for $29.961 million in fiscal year 1991 includes
                       $4.798 million to initiate the Block 1 program for cruisers. The Block 1


                       Page 13                                        GAO/NSIAD-91.14BR Navy Budget
                       Potential Reductions to Navy’s Research,
                       Development, Test, and Evaluation Budget




                       program for cruisers is about a $16-million option to the current Block 1
                       carrier contract.

                       The cruiser contract option, if exercised, is scheduled to start at the
                       beginning of fiscal year 1991. However, program officials stated that
                       they will decide when to exercise the contract option based on the
                       maturity of the Block 1 carrier program. It is questionable whether the
                       Navy can demonstrate the maturity of the carrier program in order to
                       exercise the contract option as scheduled. Tests demonstrating that the
                       carrier program meets specifications regarding performance, reliability,
                       survivability, and vulnerability are not scheduled to start until the
                       second quarter of fiscal year 1991. Also, program documentation in
                       November 1989 indicated that the fiscal year 1990 funding reductions in
                       the carrier program may result in the Navy delaying the cruiser contract
                       option until fiscal year 1993 or beyond.

                       In addition, the Navy is developing alternatives to the cruiser contract
                       option that may be more capable and less expensive. According to a pro-
                       gram official, the Navy will evaluate the merits of these alternatives
                       before deciding whether to exercise the contract option.

                       Fiscal year 1991 funding of $4.798 million for the contract option could
                       be deleted. Alternatively, the Congress could hold the funds until the
                       Navy (1) demonstrates that the maturity of the carrier software devel-
                       opment warrants a contractual commitment for the contract option and
                       (2) completes the cost and performance evaluations of alternatives to
                       the contract option. A program official states that the Navy could
                       demonstrate the carrier program’s maturity through other tests sched-
                       uled in July and October of 1990, allowing the Navy to exercise the con-
                       tract option as scheduled.



Surface ASW Systems
Improvement

Brief Description of   The AN/SQQ-89 Improved (AN/SQQ-891) Surface Ship Antisubmarine
Program                Warfare Combat System is intended to support the surface ship ASWmis-
                       sion by improving the integrated detection, location, tracking and fire
             *         control system capabilities currently provided under the AN/SQQ-89
                       Basic program. The AN/SQQSQI program began design definition in



                       Page 14                                       GAO/NSIAD@l-14BR Navy Budget
                      Potential Reductiou~ to Navy’s Research,
                      Development, Test, and Evaluation Budget




                      1986. In February 1987, the Navy restructured the program into
                      blocks- 1,2, and 3 -in response to funding constraints and congres-
                      sional concerns.

                      By June 1989, the Navy concluded that the program was still not exe-
                      cutable within current budget limitations and again restructured the
                      program. Block 1 was eliminated as a separate software upgrade and
                      incorporated into Blocks 2 and 3. Changes in Blocks 2 and 3 occurred as
                      well. These program restructures have resulted in existing battle-force-
                      capable ships to be provided with Block 2 systems having less active
                      performance capability than originally planned. Block 3 modifications
                      are scheduled for installation in fiscal year 1995 and beyond. The total
                      estimated RDT&Ecost of the restructured program, as of July 1990, was
                      about $1.6 billion.


Results of Analysis   Potential funding reductions totaling $162.510 million-$39.900    in
                      fiscal year 1990 and $122.610 in fiscal year lQQl-have been identified
                      for the AN/SQQ-891 program. In fiscal year 1990, the Congress appro-
                      priated $69.142 million for full-scale development of the AN/SQQ-891
                      program. The Navy Comptroller’s Office has reprogrammed about $11.8
                      million, which is below congressional threshold review requirements,
                      and has withheld an additional $1.86 1 million, primarily for a contribu-
                      tion to the Small Business Innovation Research Program.

                      After deducting the amounts reprogrammed and withheld, the program
                      has an available balance of about $55.5 million. Of this amount about
                      $25.8 million is planned for the Block 2 full-scale development contract;
                      approximately $15.6 million has been released by the Navy Comptroller
                      to Navy laboratories and the Military Sealift Command for program
                      engineering support; and about $14.1 million, deemed in excess of fiscal
                      year 1990 needs, is planned to be reprogrammed to other Navy
                      programs.

                      The program has experienced a number of Defense Acquisition Board
                      (DAB) program review delays. The DAB,initially planned for January
                      1990, is now scheduled for November 1990.

                      Although the DAB is planning to review both Blocks 2 and 3, Block 3, the
                      system for battle-force-capable ships, is not ready to go forward with a
                      total full-scale development effort. Accordingly, the Navy plans to con-
                      tinue preliminary development of Block 3. For example, it plans to con-
                      tinue funding two contractors to develop the Block 3 critical design and


                      Page 16                                        GAO/NSIADW-14BR   Navy Budget
                                         Appendix I
                                         Potential Reduction to Navy’s Research,
                                         Development, Test, aud Evaluation Budget




                                         to test selected items submitted by the competing contractors. The Navy
                                         then plans to perform an internal program review prior to competitively
                                         awarding the follow-on development and test contract in early fiscal
                                         year 1992.

                                         The Navy has been reevaluating the planned use of fiscal year 1991
                                         funds. Fiscal year 1991 planning adjustments, made between April and
                                         May 1990, and the DABdelay raise questions concerning the need for the
                                         $122.610 million requested for fiscal year 1991. In all, about $8.01 mil-
                                         lion has been realigned among various program accounts. As shown in
                                         table 1.2, the major change is in the amount of money planned for the
                                         Block 2 contractor.

Table 1.2: Planned Expenditures in the
An/SW-69 Improved Combat System          Dollars in Millions
                                         ..- .~
                                                                                      Planned FY 1991 Expenditures
                                         Activity
                                         -___.                                           April     May     Difference
                                         Contractor-Block 2                            $68.59     $62.00        -6.59
                                         Long Lead
                                                 --    Items/GFE                        26.05      24.63        -1.42
                                                                                                                -___
                                         Contractors-Block
                                         --                   3                         13.50      18.00        +4.50
                                         Field Activities                               12.20      15.66        +3.46
                                         Travel
                                         --.-___---___                                     .03        .07        + .04
                                         Support --.
                                         -_-.                                            2.24       2.25         + .Ol
                                         Total Requested                              $122.61    $122.61        .___
                                                                                                                  -O-


                                         In addition, the Navy plans to acquire six Acoustic Video Processor units
                                         at $2.4 million in fiscal year 1991. The Acoustic Video Processor pro-
                                         gram is experiencing development problems, and the full-scale develop-
                                         ment program will not be completed until August 199 1. The Navy plans
                                         to award the production contract for Acoustic Video Processor units for
                                         the AN/SQQSQI program in fiscal year 1992 instead of fiscal year 1991.
                                         Therefore, the program’s budget includes $2.4 million in excess of the
                                         program’s fiscal year 1991 needs.

                                         A Navy program official stated that fiscal year 1990 and 1991 funds are
                                         needed if the program is to maintain its present development schedule.

                                         Because the DABreview has been delayed, and issues raised by the DAB
                                         must be resolved before funds can be obligated, the following actions are
                                         appropriate.




                                         Page 16                                        GAO/NSIAD-91-14BR Navy Budget
-I


                           AppendixI
                           Potential R.eductions to Navy’s Research,
                           Development, Test, and Evaluation Budget




                       l Withdraw $39.9 million from the fiscal year 1990 appropriation, and
                         use these funds to offset the Navy’s fiscal year 1991 budget request. Of
                         this amount, $14.1 million is not needed to execute the fiscal year 1990
                         plan, which leaves $26.8 million for the Block 2 contract. Since the Block
                         2 contract will not be awarded until fiscal year 1991, funds appropri-
                         ated for that fiscal year could be used to award this contract.
                       . Reduce the program’s fiscal year 1991 RDT&Erequested appropriation by
                         $10.41 million from $122.610 million to $112.200 million. This $10.41
                         million reduction consists of $8.01 million in cost realignment and $2.4
                         million for Acoustic Video Processor units that the Navy will not be
                         ready to acquire until fiscal year 1992.
                       . Appropriate $112.200 million in fiscal year 1991 funds for the AN/SQQ-
                         891 program, but include language that would withhold or limit obliga-
                         tional authority until the program has been thoroughly reviewed by DAB
                         and officially approved by the Secretary of Defense, and the review
                         results have been reported to the Congress,



Fixed Distributed
System

Brief Description of       The Fixed Distributed System is a component of the Navy’s comprehen-
                           sive new architecture of acoustic and nonacoustic sensors for under-
Program                    water surveillance. The system includes shore processors and
                           underwater sensors connected by cables. Specific details of the program
                           are classified.


 Results of Analysis       Potential reductions totaling $46.604 million were identified.

                           The Navy’s request of $210.176 million for fiscal year 1991 includes an
                           estimate of $20.686 million for initial spares and repair parts for the
                           underwater segment of the program. However, the current contract for
                           the underwater segment already includes initial spares and repair parts.
                           The contract also provides allowances for repairs and replacements
                           needed during the manufacturing and installation process. Therefore,
                           the $20.686 million requested by the program office for spares and
                           repair parts duplicates efforts already included in the underwater seg-
                           ment contract.




                           Page 17                                         GAO/NSLAD-91-14BR Navy Budget
                       Appendix I
                       Potential Reductions to Navy’s Research,
                       Development, Test, and Evaluation Budget




                       The Navy’s request also includes an estimate of $26.918 million to fund
                       the award of a shore segment contract in June 1991. The amount is
                       based on a 1989 independent estimate of the total price of the contract,
                       which was judgementally allocated over the contract’s anticipated 5-
                       year period of performance. The program office did not provide details
                       on the work to be accomplished during the period of performance for
                       fiscal year 1991 because it is partially dependent on the scope of work
                       to be proposed by the competing contractors. A more accurate cost esti-
                       mate can be prepared once the proposals are received in the first
                       quarter of fiscal year 199 1. The $25.918 million estimate is questionable
                       given the current lack of reliable support.

                       The program manager stated that the $20.686 million identified for ini-
                       tial spares and repair parts in fiscal year 1991 is now being planned for
                       greater up-front development costs in the underwater segment contract
                       and to account for the effects of reprogramming actions levied by the
                       Navy in fiscal year 1990. Additionally, in response to our findings, the
                       program manager provided documentation on the shore segment con-
                       tract estimate of $25.918 million. While the documentation provided a
                       rationale for the estimate, the program manager commented that the
                       estimate is still subject to a great degree of variance.

                       The fiscal year 1991 budget request could be reduced by $20.686 million
                       because that amount identified for spares and repairs duplicates efforts
                       already included in the project’s request.

                       Also, the funds for the fiscal year 1991 budget request of $25.918 mil-
                       lion could be withheld for the shore segment contract until the Navy can
                       provide a more reliable estimate.


P-3 Modernization
Program P-7A
Long-RangeAir ASW
Capable Aircraft

Brief Description of   The P-7A project was intended to develop an aircraft for the Navy’s
Program     *          land-based ASWmission to replace 73 P-3A and P-3B aircraft reaching
                       the end of their service life in the 1990s. The P-7A aircraft was to pro-
                       vide greater payload and range/on station time with fewer personnel


                       Page 18                                         GAO/NSIAD-91.14BR Navy Budget
                      Appendix I
                      Potential Reductions to Navy’s Research,
                      Development, Test, and Evaluation Budget




                      and lower operating and support costs (versus the existing P-3C capabil-
                      ities). Improvements included new mission avionics to correlate naviga-
                      tion, acoustic and non-acoustic sensors, armament, and communicated
                      data to improve tactical performance. The P-7A was also intended to be
                      more survivable than the P-3 through the addition of the Navy common
                      missile detection system, 360-degree coverage missile countermeasure
                      dispensers, and other planned enhancements.


Results of Analysis   A potential reduction of as much as $234.9 million is possible in the
                      fiscal year 1991 P-7A program.

                      In January 1989, the Navy awarded a $600 million fixed-price incentive
                      contract to design, develop, fabricate, assemble, and test two prototype
                      P-7A aircraft, In late 1989, the contractor estimated a $300-million
                      overrun in development costs. In addition, the aircraft design was
                      10,000 pounds overweight.

                      In December 1989, the contractor restructured the program to address
                      the cost and weight issues. Under the revised cost estimate, the con-
                      tractor focused on using robotics to make the aircraft easier to produce.
                      This change resulted in less tooling commonality between the P-3 and
                      the P-7A aircraft. At the time of the award, the contractor proposed that
                      30 percent of the tooling would be common; now less than 5 percent of
                      the tooling would be common. Also, an independent engineering design
                      team evaluation of the program reported that the P-7A’s weight could
                      be reduced to 3,000 pounds over the specifications. Even with this
                      excess weight, Navy officials believed the P-7A could meet operational
                      requirements.

                      The Navy requested $234.9 million in fiscal year 1991 to continue devel-
                      oping the P-7A program. The P-7A program sponsor in the ASWWarfare
                      Branch informed us that on July 20, 1990, DABheld an informational
                      meeting on the program. Subsequently, the Navy decided to terminate
                      the P-7A contract, because the contractor failed to make adequate pro-
                      gress toward completion of all contract phases.

                      According to both the program sponsor and the program manager, the
                      Navy is proposing to replace the P-7A with a P-3H remanufacture pro-
                      gram. Under this program, the Navy will select P-3B and P-3C aircraft
                      for remanufacture. The Navy then plans to award a contract to replace
                      the P-39’ wings and engines. Also, the Navy will consider extending the



                      Page 19                                        GAO/NSIAD91-14BR Navy Budget
                                        Appendix I
                                        Potential Reductions to Navy’s Research,
                                        Development, Test, and Evaluation Budget




                                        fuselages 3 to 4 feet or some other measure to overcome the P-3’s center
                                        of gravity weight limitation.

                                        The Navy program manager estimates that about $89 million in research
                                        and development funds will be needed in fiscal year 1991 for the P-3H
                                        remanufacture program. If the P-3H program is funded, the fiscal year
                                        1991 request of $234.9 million for the P-7A could be reduced by $145.9
                                        million. If the Congress decides against funding any P-3 replacement or
                                        upgrade program, the total fiscal year 1991 request of $234.9 million
                                        could be withdrawn.



Undistributed Deferral
and Excess Funds in
Fiscal Year 1990
RDT&E Appropriation

Brief Description of                    Table I.3 shows funds that were deferred or unobligated in the Navy’s
                                        RDT&Eaccount for fiscal year 1990 by the Office of the Assistant Secre-
Program                                 tary of Defense and Navy Comptroller, as of June 1990. They have not
                                        been previously reported in other sections of this report.

Table 1.3: Undistributed Deferral and
Excess Fund8 Found in the Navy’8        Dollars in Millions
RDTbE Account for Flrcal Year 1990      Program                                                             Amount
                                        Undistributed Deferral                                              $59.383
                                        Skiooer Enhancements                                                  2.500
                                        Advanced Air-to-Air Missile                                           1.500
                                        IFF Systems Development                                               9.800
                                        Surface ASW Svstem lmorovements                                       1.500
                                        Industrial Preparedness                                                1.835
                                        Total                                                               $76.516



Results of Analysis                     Deferred and excess funds of $76.518 million could be reduced, trans-
                                        ferred, or rescinded from the fiscal year 1990 appropriation. The undis-
                                        tributed deferral represents the anticipated transfer out of RDT&E,Navy,
                  ”                     for the Coast Guard and the residual balance of the Department of
                                        Energy transfer from sources that were denied. As of June 1990,



                                        Page 20                                       GAO/NSIAD-91-14BR Navy Budget



                                                                ‘,.
Appendix I
Potential Reductions to Navy’s Reeearch,
Development, Test, and Evaluation Budget




$59.383 million of fiscal year 1990 RTD&E, Navy funds were still undis-
tributed by the Navy Comptroller. Skipper Enhancement funds are
deferred because they were appropriated but not authorized, and the
program is not expected to require the funds before fiscal year 1991.
IFF Systems Development funds will not be required before 1991. The
Advanced Air-to-Air Missile, Surface ASWSystems Improvements, and
Industrial Preparedness program funds are excess, according to pro-
gram documents.




Page 21                                        GAO/NSIAB91-14BR   Navy Budget
Appendix II

Potential Reductionsto Other Navy
Budget Accounts

                       In performing our reviews of program elements within the Navy’s RTD&E
                       budget account, we analyzed the effects of changes in RDT&Eon other
                       budget accounts for projects funded in more than one budget. In two
                       cases, we found that our work in RDT&Erequired that we report potential
                       reductions in those other budget accounts. In the Shipbuilding and Con-
                       version budget, we identified a potential reduction of $4.663 million and
                       in the Navy’s Other Procurement budget, we identified a potential
                       reduction of $10.2 million.


Shipbuilding and
Conversion, Navy
Trident Electronics
Equipment

Brief Description of   The AN/BQS-24 sonar system is being designed to improve SSBN 726
Program                Trident class and SSN 688 class submarine under-ice navigation and
                       obstacle avoidance capabilities. This system is an enhancement to the
                       AN/BQQ-6 submarine sonar system and has been in development for
                       about 3 years.


Results of Analysis    Because there is no longer an operational need for the AN/BQS-24
                       system to be installed on the Trident class submarine, the Trident fiscal
                       year 1991 SCNelectronics budget request could be reduced by $4.663
                       million.

                       On April 2, 1990, the Chief of Naval Operations deleted the requirement
                       for the AN/BQS-24 system to be installed on the Trident class subma-
                       rine. This decision was based on the Trident’s operational requirements
                       and the program’s high projected acquisition costs.

                       Trident program Shipbuilding and Conversion, Navy (SCN) funding for
                       the AN/BQS-24 system was scheduled to begin in fiscal year 199 1. Of
                       the $132,292 million of SCNfunds requested, $4.663 million was planned
                       to be used for the AN/BQS-24 system.

                       A Trident program spokesman stated that the funds planned for the
                       AN/BQS-24 system would be used for unfunded Trident requirements



                       Page 22                                        GAO/NSIAD-91.14BR Navy Budget
                       Appendix II
                       Potential ReducMons to Other Navy
                       Budget Accounts




                       and will be reallocated during the fiscal year 1990 SCNship cost adjust-
                       ment review.



Other Procurement,
Navy
Strategic Platform
Support Equipment
(Electronics)

Brief Description of   The AN/BQS-24 sonar system is being designed to improve SSBN 726
Program                Trident class and SSN 688 class submarine under-ice navigation and
                       obstacle avoidance capabilities. This system is an enhancement to the
                       AN/BQQ-6 submarine sonar system and has been in development for
                       about 3 years.


Results of Analysis    On April 2, 1990, the Chief of Naval Operations deleted the requirement
                       for the AN/BQS-24 system to be installed on the Trident class subma-
                       rine. This decision was based on the Trident’s operational requirements
                       and the program’s high projected acquisition costs.

                       Trident program Other Procurement, Navy (OPN) funding for the AN/
                       BQS-24 system was scheduled to begin in fiscal year 1991. Of the
                       $147.851 million of OPNfunds requested, $10.2 million was planned to be
                       used to backfit the AN/BQS-24 system on Trident submarines.

                       A Trident program official stated that the funds planned for the AN/
                       BQS-24 system would be used for unfunded Trident requirements. These
                       requirements are enhancements to the torpedo detection, radar emission
                       detection, and spectrum analyzer systems.

                       Because there is no longer an operational need for the AN/BQS-24
                       system to be installed on the Trident class submarine, the Trident fiscal
                       year 1991 communication and electronics budget request could be
                       reduced by $10.2 million.




                       Page 23                                        GAO/NSIAD-91-14BR Navy Budget
Appendix III

Major Contributors to This Report


                                      Brad Hathaway, Associate Director
National Security and                 John D’Esopo, Assistant Director
International Affairs                 Byron L. Matson, Evaluator-in-Charge
Division,      Washington,            Robert Outerbridge, Evaluator

D.C.

                                      Jeffrey Rose, Regional Assignment Manager
                                      JosephRizzo
Boston      Re@ona1          Office               , SiteSenior
                                      Kathleen Sheehan, Evaluator


                                      Revae Steinman, Regional Assignment Manager
Los Angeles Regional                  Harold Reich, Site Senior
Office                                Marie Cushing, Evaluator



Philadelphia Regiona1 Richard
Office                John Kirstein,
                                                Stengel
                                      Clifford Martin, Regional Assignment Manager
                                                   Sit-e
                                                      Senior
                                                   J&aluator
                                      Christopher Morehouse, Evaluator




(894866)                              Page 24                                        GAO/NSLAD-91.14BR Navy Budget
      .~_I.--__-____--
1 -




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