oversight

1998 DOD Budget: DOD's Procurement and RDT&E Programs

Published by the Government Accountability Office on 1997-08-25.

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

united states
General Accounting Office
Washington, D.C. 20548

National Security and
International Affahs Division



B-275494

August 25, 1997

Congressional Committees

Subject: 1998 DOD Budget: DOD’s Procurement and RDT&E Programs

We examined the Department of Defense’s (DOD) fiscal year 1998 budget request
and prior years’ appropriations for selected procurement and research,
development, test, and evaluation (RDT&E) programs. Our objective was to
identify potential reductions in the Bscal year 1998 budget request and potential
rescissions to prior years’appropriations.

This letter summa& es and updates information     provided to your staffk fkom
April through June 1997. It does not reflect any adjustments that max have
been taken by the Committees on Authorization     and Appropriations   during
their reviews of the fiscal year 1998 defense budget request. We have not
acknowledged   these Committees’ actions because, in some cases, House and
Senate actions have varied and conference actions are still pending.

We identified opportunities to reduce DOD’s fiscal year 1998 procurement and
RDT&E requests by $772.6 million and to rescind about $698.5million in
procurement and RDT&E appropriations. These reductions and/or rescissions can
be made primarily because schedules slipped, requirements changed, and issues
aJ%ectingprogram funding have emerged since the fiscal year 1998 budget request
was developed. The potential rescissions include about $31.4 million in prior years’
appropriations for which obligational author-i@will expire on September 30, 1997.
During the early portion of our review, we identified $230 million available from
prior years’appropriations that was subsequently rescinded in the f&al year 1997
Emergency Supplemental Act, These funds are excluded from the amount& shown
in this letter.




                                                 GAO/NSUD-97-212R1998 Defense Budget
B-275494


PROCUREMENTAPPROPRIA’ITON$

As shown in table 1, we identified about $489.3million in potential reductions to
DOD’s fiscal year 1998procurement budget requests and $570.9 million in potential
rescissions ftom DOD’s prior years’procurement appropriations.

Table 1: Potential Reductions and Rescissions to Procurement Programs

DoRars in millions
                               Potential fiscal year     Potential prior year
                                   1998reductions                 rescissions
 hY                                    ’ $165.822                     $6.000
~Navy                                         0.241                   44.534
 Air Force                                  272.640                  520.380
 Defense-wide                                51.185                        0
i Total                                    !a39288                  8570.914

The potential rescissionsfrom prior years’procurement appropriations include
$301.3million in Gscal year 1997funds, $259.7million in W   year 1996funds, and
$9.9 million in expiring fiscal year 1995funds.

Details regarding the potential reductions and rescissions for procurement programs
are provided in enclosure I.

PDT&E APPROPRIATIONS

As shown in table 2, we identied $283.3million in potential reductions to DOD’s
fkcal year 1998RDT&E budget requests and $37.6 million in potential rescissions
from DOD’s prior years’RDT&E appropriations.




Page 2                                           GAO/NSIAD-97-212R1998Defense Budget
B-275494


Table 2: Potential Reducuons and Rescissions to RDT&E Programs

Dollars in millions
                                Potential fiscal year      Potential prior year
                                    1998 reductions                 rescissions
 -Y                                           $24.855                   $4.775
  Navy                                        64.113                         0
 Air Force                                    39.300                    11.300
 Defense-wide                                 155.ooo                   21.500
 Total                                      $283.268                   $37.575

Potential rescissions from prior years’RDT&E appropriations in&de $21.5 million
from expiring fiscal year 1996 funds.

Details regarding the potential reductions and rescissions to RDT&E programs are
provided in enclosure IL

AGENCY COMIk@3TS

Commenting orally on a draft of this letter, DOD disagreed with many of the
potential reductions and rescissions identified. In many instances DOD believed
that the funds could be used for other requirements. We have incorporated DOD’s
comments on specific programs throughout the letter and enclosures I and II.

SCOPEAND METHODOLOGY

To identify potential reductions and rescissions, we focused on unobligated funds
and funds on withhold in addition to program cost, schedule, and performance
issues. We examined expenditure documents to determine whether requests were
adequatelyjustified and whether unobligated funds fkom prior appropriations were
still needed for the purposes requested. We conducted our review from October
1996 to June 1997 in accordance with generally accepted government auditing
standards. Enclosure III provides more information regarding our scope and
methodology.                                    ,.

                                      --w-w


Page3                                            GAO/NSlAD-97,212R1998Defense Budget
                                                                                    .:
B-275494


We are sending copies of this letter to the Secretaries of Defense, the Army, the
Navy, and the Air Force and the Director, Office of Management and Budget We
will also make copies available to others upon request.

This letter was prepared under the direction of Louis J. Rodrigues, Director,
Defense AcqGsitions Issues, who may be reached on (202) 512-4841if you or your
staffs have any questions. Other major contributors are listed in enclosure IV.



4-1                          ’
 Henry L. Hinton, Jr.
 Asistant Comptroller General

Enclosures - 4




 Page4                                           GAO/N3AD-97-212R1998DefenseFhidget
B-275494


&ist of Conmessional Committees

The Honorable Strom Thurmond
chairman
The Honorable Carl Levin
Rankhg Minority Member
Committee on Armed Services
united states senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel K Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
united states senate

The Honorable Floyd D. Spence
chairman
The Honorable Ronald V. Dellums
Ranldng Minoriw Member
Committee on National Security
House of Representatives

The Honorable C. W. Bill Young
C-m
The Honorable John P. Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House’of Representatives




Page 5                              GAOINSIAD-97-2X%1998 Defense Budget
CONTENTS


Letter                                                                      1

Enclosure I
Potential Reductions
and Rescissionsto
Procurement
~0-

Enclosure II
Potential Reductions
and Rescissionsto
Research,
Development, Test,
and Evaluation
PW3==
Enclosure III
Scope and
Methodology
Enclosure IV                                                               48
Major Contributors to
This Letter
Tables                  Table 1: Potential Reductions and Rescissions        2
                         to Procurement Programs
                        Table 2: Potential Reductions and Rescissions        3
                         to RDT&E Programs
                        Table L1: Potential Reductions and Rescissions       9
                         to Procurement Programs
                        Table L2: Potential Reductions and Rescissions      10
                         to Army Procurement Programs
                        Table L3: Potential Reductions and Rescissions      10
                         to Anuy Missile Procurement Programs
                        Table L4: Potential Reductions and Rescissions      14
                         to Army Other Procurement Programs
                        Table L5: Potential Reductions and Rescissions      17
                         to Navy Procurement Programs


                               6               GAOLMIAD-97-21233
                                                               1998DefenseBudget
Table 1.6: Potential Reductions and                 17
 Rescissions to Navy Weapons Procurement
 mw-
Table I.7: Potential Rescissions to Navy            18
 !Shipbuilding and Conversion Programs
Table L8: Potential Reductions and                  19
 Rescissions to Air Force Procurement
 programs
Table L9: Potential Reductions and                  20
 Rescissions to Air Force Aircraft Procurement
 programs
Table LlO: Potential Reductions to Air Force        26
 Ammunition Procurement Programs
Table Lll: Potential Reductions and                 28
 Rescissions to Air Force Missile Procurement
 Programs
Table L12: Potefitial Reduction to                  32
 Defense-wide Procurement Programs
Table ILl: Potential Reductions and Rescissions     34
 to RDT&E Programs
Table lL2: Potential Reductions and Rescissions     35
 to Army RDT&E Programs
Table IL3: Potential Reductions to Navy RDT&E       37
 Programs
Table IL4z Potential Reductions and Rescissions     40
 to Air Force RDT&E Programs
Table IL5 Potential Reductions and Rescissions      43
 to Defense-wide RDT&E Programs




                       GAONZZAD-97-2l2R1998DefenseBudget
Abbreviations

DOD             Department of Defense
RDT&E           research, development, test, and evaluation




                                    8                GAO/lWAD97-212R1998DefenseBudge1
ENCLOSURE I                                                                        ENCLOSURE I
                      POTENTJAL,REDUCTIONSAND RESCISSIONS
                           TO PROCUREMENTPROGRAMS

The Department of Defense (DOD) requested$42.6billion in procurement funding for
fiscal year 1998. As shown in table Ll, our review of selected budget line items in the
request and prior years’appropriations identified potential reductions of about
$489.3 million to f%cal year 1998requests;potential rescissions of about $301.3million
and $259.7 million from fiscal year 1997and 1996appropriations, respectively; and
$9.9 million in potential rescissions from expiring fiscal year 1995 appropriations-

Table Ll: Potential Reductions and Rescissionsto Procurement Programs

Dollars in millions




               I     $4,572.572          $489.288         $301.300          $259.734           $9.880
       the amount requestedfor budget line items for which we have identified a potential reduction

ARMY PROCUREMENT PROGRAMS

The Army requested $6.8 billion for procurement programs in fiscal year 1998. As
shown in table 1.2,we identified potential reductions of about $165.8 million to the
fiscal year 1998 request and potential rescissions of $6 million from fiscal year 1997
appropriation. We did not identify any rescissions from the fiscal year 1996
appropriation.




                                               9           GAO/NSIAD-97-21%1998 Defense Budget
ENcLosuEm I                                                                    ENCLOSURE1
Table L2: Potential Reductionsand Rescissionsto Army Pr ocurement Fbgrams

Dollars in millions




The Army requested $12 billion for all its missile procurement programs in Escal year
1998. As shown in table L3, we identified potential reductions of about $138.2million
to the fiscal year 1998request for four of these line items. We did not identify any
potential rescissions in prior years’appropriations.
Table L3: Potential Reductiousand Rescisions to Army Missile Procurement Programs

DoliaIsinmillions
                                                                  Fiscal year 1998

  Line                                                           Resuest         Potential
  no.       Line item description                                               reduction
  3         H-systemSummarY                                      $279.700           $43.765
  4         Javeliu (AAWSM) Missile System                        143.100             l.400
  9         Army Tactical Missile System (ATACMS)                  97.800            10.770
            (Multiyear Procurement)
  l.2       BriUiant Anti-Armor Submunition                        85.208            82.288
            Total                                                $605.808           $138.223




                                              10         GAO/NSIAD-97-212R
                                                                         1998Defense Budget
ENCLOSURE I                                                              ENCLOSUBE I
     Heibire Svstem Summarv (Line 3)

The Army’s fiscal year 1998budget request of $279.7miilion for the Hellfire system
can be reduced by $43.8million because fiscal year 1998 requirements are overstated
by $38.3million and $5.5 million in prior year funds are available to meet fiscal year
1998 program requirements.

Our May 1997 report indicated that the Army had miscaIculated the number of
Longbow HeIlfire missiles needed and recommended that until the Army restructures
its program to correct for the overstated requirement, procurement levels should not
be increased beyond its fiscal year 1997 level. DOD commented that it would not
finalize its position on the missile until the fiscal year 1999budget submission. The
total program quantities are overstated by as much as 8,300 miss&s.’ By reducing the
fiscal year 1998 procurement by 409 missiles-to the fiscal year 1997procurement
level-$38.3 million can be reduced from the fiscal year 1998budget request DOD
questioned the methodology we used to determine the recommended reductions in the
missile quantities. We contiue to maintain that the information in our report is
accurate and, therefore, that the reduction is still warranted.

In addition, the program office has $5.5 million in unobligated Cal year 1997 and       .
1996 funds-%.7 mihion aud 8755,990,respectively. These unobligated funds include
$1.5 million requested for anticipated Laser Hellfire missile engineering change orders
and $3.2 mihion originally requested for the Longbow missile cost reduction plan.
This missile is in its last year of procurement, and it has not had an engineering
change order that increased contract cost since 1995. DOD stated that the $3.2 million
was obligated; however, it provided no additional documentation to support its
position. Therefore, we continue to believe the $5.4 million in prior year funds can be
used to o&et the fiscal year 1998 budget request.

Army program officials stated that reducing the &caI year 1998Longbow missile
quantities at this time would preempt the Army Acquisition Executive’s full rate
production decision in October 1997.. They also stated that the Laser Hellike missile’s
engineering change order money needs to be retained until the last missiles are
delivered in September 1998and that the excess money requested for the Longbow
missile’s cost reduction plan is needed to fund unanticipated additional f%scaIyear
1997 contractor costs.




lArmv Acauisition: Longbow Hell&e Missile Procurement Quantities SignificantIv
Overstated (GAO/NSJ.AD-97-93,
                            May 14, 1997).
                                          11        GAO/NSUD-9%212R1998Defense Budget
ENCLOSUREI                                                               ENCLOSUREI
In response, we offer the following observations. In light of the significant Longbow
missile requirement overstatement, holding the production quantities steady until a
final decision is made is reasonable. In addition, the Laser HeMire missile’s proven
design stability over the Iast 3 years supports our position of reducing the engineering
change order funding. FXnaIIy,the Army’s proposed use of the cost reduction plan
funding to pay for contractor production costs is not the purpose for which it was
or@nalIy requested and sufficient other unobligated funds remain to pay for these
costs. Therefore, the proposed reductions are stih warranted
                                        .
    Javelin #AWSm      Missile &stem tie         4)

The Army’s fiscal year 1998 budget request of $143.1mihion for the Javelin system can
be reduced by $1.4 rniIhon because the agency does not have a requirement for the
funds. Javelin program management officials said the additionaI funds were requested
becausea higher command withheld funds from their 1997 appropriation to fund such
generaI initiatives as acquisition work force reform and antiterrorism. According to
the project office, the funds are not pIanned to meet program requirements. Since
these funds are not needed for the program, the G.scaIyear 1998budget request can be
reduced by $1.4 million.

     &mv Tactical MissiIe Sv&m (ATACMS) Mrhivear
     Procurement) G&e 91

‘Ihe Army’s fiscaI year 1998 budget request of $97.8 million for the Army Tactical.
Missile system can be reduced by $10.8 million because fiscal year 1998 requirements
are overstated by $6.4 million and $4.4 million in prior year funds is avaiiable to meet
Gscalyear 1998program requirements.

After the block IA missile experienced problems during operational testing and the
iiscal year 1998budget request was prepared, the program office restructured its
acquisition strategy to slow down procurement and eliminate the planned multiyear
contract .As a result, the Army pIans to reduce its fiscal year 1998procurement by
53 missi@ from 153 to 100, maintaining production at approximateIy the fiscal year
 19971eveL Unit cost estimates from the fiscal year 1997 contract indicate the iiscaI
year 1998contract should be about $6.4 million less than planned. Program officials
stated that they believe the proposed reduction would result in insuf&ient funds to
procure the remaining 100 missiles because they do not believe that the contractor
wouId maintain the fiscal year 1997unit price for the reduced number of missiles.
However, the Army has favorably negotiated reduced contract costs over the Iast
 2 years and has provided no basis to indicate contract costs would not remain simiIar
 or fiscaI year 1998. Consequently, the f%caI year 1998budget request can be reduced
 by $6.4 million.

                                            12        GAO/NSIAD-97-212R
                                                                      1998DefenseBudget
ENCLOSURE I                                                              ENCLOSURE I

Program officials stated that the fiscal year 1997contract was negotiated for
$2.4 million less than budgeted. Also, $2 million in unobligated &xal year 1996 funds
is available due to favorable contract negotiations. The program office wants to use
these funds for investigating problems and testing. However, the fiscal year 1997 and
1996 funds can be used to offset the fiscal year .1998budget request

     Brilliant Anti-Armor Submunition &ine 12)

The Army’s iiscal year 1998budget request of $85.2 million for the Brilliant Anti-Armor
submunition can be reduced by $82.3million because commitment to low-rate
production is premature. The fiscal year 1998budget request includes $82.3 million
for the January 1998award of the first low-rate initial production contract and related
production costs.

Our ongoing review of the program shows that the system is experiencing repeated
tesling failures and schedule slips, has an extremely ambitious test schedule to
complete before the scheduled production decision, and will not demonstrate a critical
performance parameter before that decision. In addition, our analysis shows that the
low-rate initial production contract award is scheduled to be made at least 8 months
earlier than necessaryto have its deliveries coincide with its carrier, the Army Tactical
Missile System Block II. Our analysis also shows that considering production lead
time and delivery requirements,the contract does not need to be awarded until
September 1998. Furthermore, the submunition’s carrier is also faced with resolving a
sign&ant problem that was identified during initial operational testing of its Block I
variant If the missile’s schedule is delayed by even 1 month, the submunition’s
contract award could be delayed until at least October 1998. Considering the level of
repeated testing failures still being experienced, the significant amount of testing
remaining, the performance parameters not to be demonstrated, and the missile
problem needing to be resolved, delaying the submunition’s production decision until
fiscal year 1999would be reasonable. This delay would allow the Army additional
time to correct deficiencies and properly test the submunition with its carrier.

Army program officials aclmowledge the repeated testing failures and admit that the
current schedule is extremely ambitious, but have not adjusted the low-rate
production decision. Program office representatives provided information showing
that they believe a delayed decision would increase development and procurement
costs in fiscal year 1999by about $70 milhon However, they agreed that if the system
did not complete its testing, they would have to revise the schedule and ask for the
additional funding. Therefore, the $82.3 million can be reduced from the fiscal year
1998 budget request



                                          13        GAOMI.AD-97-212R 1998Defense Budget
ENCLOSUREI                                                                      ENCLOSUREI
Other Procurement. Army

The Army requested $2.5 bilhon for other procurement programs in kxd year 1998.
As shown in table L4, we identified potential reductions of about $27.6 xniUion to the
fiscal year 1998request for four line items and a potential rescission of $6 million
ikom fiscal year 1997appropriation. We did not identify any potential rescissions in
the &al year 1996appropriation.
Table 14: Potential Reductions and Rescksions to Army Other Fbocurement
                                                                     Programs

Dollars in millions


                                                         F’iscal year 1998             Potentia
                                                                                      rescission
                                                                      pot-~          (fkcalyear
  Line no.    Line item description                     Request                         1997)
  10          Armored seauilyvehicles (canbat            $9.470          89.ooo                0
              support)
  96          ManeuverControl System @%X3)                15.699         15.699           $6.000
  149         Items Less Than $2.0Million (Petrolem        6.275             2.ooo             0
              Oil, and Lubricants)
  187         SystemFEeldingSupport                       4.900              0.900             0
              Total                                     $36.344         $27.599

       Armored Securitv Vehicles Kombat SUDDO~~I CLine 10)

The Army’s fiscal year 1998budget request of $9.5 million for Armored Security
Vehicles can be reduced by $9 million because an equivalent amount of fiscal year
1997funds is available to meet i&al year 1998 program requirements. DOD is
withhokling these funds, added to the program Iast year, for potential reprogramming.
Program officials stated that these funds are needed to procure 24 additional vehicles.
However, the vehicles were not of sufficient priority to have been included in the
President’s 1997budget request. Since DOD does not plan to use the $9 million for
the procurement effort in fiscal year 1997, this amount can be used to of&et the fiscal
year 1998budget request if the funds are not reprogrammed.

Program officials agreed with the facts but reiterated that the funds are needed.




                                                 14    GAO/NSIAD-97-212R
                                                                       1998DefenseBudget
ENCLOSUREI                                                               ENCLOSUREI
     Maneuver Control Svstem IMCS) (Line 96)

The Army’s fiscal year 1998 budget request of $15.7 milhon to buy computers for the
Maneuver Control System training base can be denied and $6 million in unobligated
fiscal year 1997funds can be rescinded because operational testing has not been
completed and the system does not meet the criteria necessary to qualify for low-rate
initial production.

The system’s version IO software was fielded without prior operational testing. The
version I1 software was canceled in 1993 because of developmental problems and cost
growth. After program restructuring, work began on version 12.01,but its scheduled
November 1995 operational test slipped to November 1996;the operational test was
later downgraded to a limited user test. In September 1996,a contract was awarded
to a different contractor to develop version 12.1 software, resulting in concurrent
development of two versions. The system’s initial operational test is now scheduled
for March 1998.

According to Army and DOD officials, the Army cannot procure the computers under
low-rate initial production because their intended use does not comply with the legally
authorized reasons for entering low-rate initial production.’ According to Army        .
officials, they plan to reprogram the $6 million in fiscal year 1997 funds to the
Automated Data Processing Equipment line item and to request Congressto reprogram
the $15.7rGllion budget request to the same line item to procure the computers.

Originally, the system production decision, now planned for September 1998,was to
occur before the computers were acquired. But program officials said that they need
to provide the training base systems before operational testing becausethe systems
are to be used not only for the Maneuver Control System specific training but also for
training for the larger Army Battle Command System-of which the Maneuver Control
System is a major component They also said the system course curricula need to be
developed and noted that equipping the training base before completion of operational
testing would avoid a 2-year lag between the completion of operational testing and the


2By statute, 10 U.S.C. 2399, a major defense acquisition program may not proceed
beyond low-rate initial production until initial operational test and evaluation of the
program is completed. The law states that low-rate initial production of systems is to
produce the minimum quantity necessary to (1) provide production-configured or
representative articles for operational test and evaluation, (2) establish an initial
production base for the system, and (3) permit an orderly increase in the production
rate for the system sufticient to lead to full-rate production upon the successful
completion of operational test and evaluation.
                                          15         GAOMQAD-97-212R1998DefenseBudget
ENCLOSUREI                                                               ENCLOSUREI
    Maneuver Control Svstem MCSl We          961

The Army’s fiscal year 1998 budget request of $15.7 million to buy computers for the
Maneuver Control System training base can be denied and $6 million in unobligated
fiscal year 1997 funds can be rescinded because operational testing has not been
completed and the system does not meet the criteria necessary to qualify for low-rate
initial production.

The system’s version 10 software was fielded without prior operational testing. The
version 11 software was canceled in 1993 because of developmental problems and cost
growth After program restructuring, work began on version 12.01,but its scheduled
November 1995 operational test slipped to November 1996; the operational test was
later downgraded to a limited user test In September 1996,a contract was awarded
to a different contractor to develop version 12.1 software, resulting in concurrent
development of two versions. The system’s initial operational test is now scheduled
for March 1998.

According to Army and DOD officials, the Army cannot procure the computers under
low-rate initial production because their intended use does not comply with the legally
authorized reasons for entering low-rate initial production.* According to Army        i
officials, they plan to reprogram the $6 million in fiscal year 1997funds to the
Automated Data Processing Equipment line item and to request Congressto reprogram
the $15.7milhon budget request to the same line item to procure the computers.

Or@nally, the system production decision, now planned for September 1998,was to
occur before the computers were acquired. But program officials said that they need
to provide the training base systems before operational testing becausethe systems
are to be used not only for the Maneuver Control System specific training but also for
training for the larger Army Battle Command System-of which the ManeuverControl
System is a major component They also said the system course curricula need to be
developed and noted that equipping the training base before completion of operational
testing would avoid a 2-year lag between the completion of operational testing and the


%y statute, 10 U.S.C. 2399, a major defense acquisition program may not proceed
beyond low-rate initial production until initial operational test and evaluation of the
program is completed. The law states that low-rate initial production of systems is to
produce the minimum quantity necessary to (1) provide production-configured or
representative articles for operational test and evaluation, (2) establish an initial
production base for the system, and (3) permit an orderly increase in the production
rate for the system sufficient to lead to full-rate production upon the successful
completion of operational test and evaluation.
                                           15        GAOMIAD-97-212R 1998DefenseBudget
ENCLOSURE I                                                              ENCLOSURE I
graduation of system trained students. However, the Army has fielded 81 computers
to the training base that can be used for developing course curricula and for training
purposes until a full-rate production decision has been made. Since operational
testing has not been completed and computers are available to initiate curricula
development and traming, the fiscal year 1998budget request can be denied if the
Army’s request to reprogram the fiscal year 1998budget request to allow the computer
buy is denied Also, $6 million in fiscal year 1997funds can be rescinded.

     Items Less Than $2.0 Million (Petroleum. Oil. and Lubricants (Line 149)

The Army’s fiscal year 1998budget request of $6.3 million for items less than
$2 million (petroleum, oil, and lubricants) can be reduced by $2 million because an
equivalent amount of fiscal year 1997 funds is available to meet fiscal year 1998
program requirements.

DOD is withholding $2 million for potential reprogramming. Army officials stated that
these funds are needed to procure 590 external fuel carrying bladder kits for the
Abrams tanks. However, the kits were not of sufficient priority to have been included
in the President’s 1997budget request Army officials agreed with the facts but
reiterated that the funds are needed for the kits. Since DOD does not plan to use the .
$2 million to procure the kits in fiscal year 1997,this amount can be used to offset the
fiscal year 1998 budget request if the funds are not reprogrammed. DOD agreed that
these funds -were available.

     Svstem Fielding Support fLine 18n

The Army’s fiscal year 1998budget request of $4.9 million for system fielding support
can be reduced by $969,699because an equivalent amount of fiscal year 1997funds is
available to meet Gscal year 1998program requirements. The Army Materiel
Command placed these funds on withhold. According to DOD, these funds were
released for other requirements; however, it provided no documentation to support
this position. Since the funds are not being used for system welding support, they can
be used to offset the fiscal year 1998 budget request.

NAVY PROCUREMENTPROGRAMS

The Navy requested $18.2billion for procurement programs for itself and the Marine
Corps in 16scalyear 1998. As shown in table L5, we identified potential reductions of
$241,096to the fiscal year 1998request and potential rescissions of $1.1 million from
the fiscal year 1997appropriation and $43.4 million from the fiscal year 1996
appropriation.


                                          16        GAO/NSIAD-97-212R
                                                                    1998Defense Budget
ENCLOSUREI
Table L5: Potential Reductionsand Rescissionsto Navy procwement Programs

DO&USin millions

                                         Fiscal year 1998                  Potential          PolMiZd
                                                                          rescision          rescision
 Procurementappropriation              Request’          Potential      (fiscal Ye=        (fiscal Y-r
                                                        reduction             19Vl                199s>
                                                                                       a
 Weapons
 S@building and Convemion
 Total                          I         $0.241            so.241           $1.100           $43.434
 &is is the amount requestedfor budget line items for which we have identified a potential reduction

WeaDonsProcurement. Navv

The Navy requested $1.1 billion for weapons procurement programs in fiscal year
1998. As shown in table L6, we identified a potential reduction of $241,000to the
fiscal year 1998request and a potential rescission of $1.1 million from the fiscal year
1997appropriation. We did not identify any potential rescissions from the fiscal year
1996 appropriation.
Table L& Potential Reductions and Fksciions   to Navy WeaponsPromrementPrograms

Dollalsinmillions

                                                            F&al year 1998                    Potential
                                                                                            rescission
  Line                                                                     Potential       c-     Ye=
  no.      Line item description                            Request       reduction              1997)

  33       564 Gun Moat Mod&&ions                            $0.241          $0.241             $1.100
           Total                                             $0.241           SO.241            $1.100




The Navy’s Iiscal year 1998budget request of $241,090for the 5/54 gun mount
modikations can be denied because an equivalent amount of fkal year 1997 funds is
available to meet fiscal year 1998program requirements. In addition, $1.1 million of
the fiscal year 1997appropriation can be rescinded because the funds are excess to
program requirements.

According to theNavy, the $1.3 million iu f&al year 1997funds on withhold is excess
to Gscalyear 1997program requirements and may be a potential reprogramming

                                                17            GAOINSIAD-97-212R
                                                                              1998Defense Budget
ENCLOSUREI                                                                  ENCLOSUREI

source for an anticipated rnihtary pay short&U. The program office agreed that these
funds are not required for the modifications and can be used for higher priority items.
Since the funds are not needed for the modification, $200,009can be used to of&et the
fiscal year 1998budget request and the remaining $1.1 mihion can be rescinded. DOD
agreed that these funds are available.

Shiobuikhna and Conversion. Navy

The Navy requested $7.4 billion for shipbuikbng and conversion programs in fiscaI
year 1998. As shown in table L?, we did not identify potent&I reductions to the fkaI
year 1998request or potential rescissions in the fiscal year 1997appropriation.
However, we did ident@ potential r escissions of $43.4 million fkom the fiscal year
1996appropriation for two line items.
Table 17: Potential Rescissionsto Navy Shipbuikhg and Conversion Programs

Dollarsinmillions




      Fast Patrol Craft (Line 18)

Of the Navy’s fiscaI year 1996appropriation for the Fast Patrol Craft, $9.2 mihion can      ’
be rescinded becausethese funds are excess to program requirements. The Navy did
not request BcaI year 1997or 1998 funds for this program.

The Navy is withholding the $9.2 mihion that was added to the Navy’s fiscaI year 1996
appropriation for a Fast Patrol Craft According to Navy budget documents and the
Navy’s official position, the fiscal year 1996 funds for a Fast Patrol Craft were excess
to program requirements and their reprogramming has been requested. Since these
funds will not be used to acquire a Fast Patrol Craft, they can be rescinded if they are
not reprogrammed.




                                             18         GAOMUD-97-212.R 1998DefenseBudget
ENCLOSUREI                                                                          ENCLOSUREI
      Am CC?CLine201

Of the Navy’s fiscaI year 1996 appropriation for the AFS (C) program, $34.3million
can be rescinded because these funds wiU not be used as planned for underway
ammunition replenishment The Navy did not request funds for the program in fiscaI
years 1997and 1998.

The Navy reprogrammed some of the fiscal year 1996program funds to the
ammunition ship conversion program. According to the Navy, the $34.3mihion on
withhold is not needed for the program and their reprogramming has been requested
Since these iiscal year 1996 funds wilI not be used for the conversion program, they
can be rescinded if they are not reprogrammed.

DOD did not agree with the reduction. It said that $33 million in &XXI yesr 1997
shipbuiIding and conversion funds was rescinded in the fiscal year 1997Emergency
Supplemental Appropriations Act, and the rescission was assessedagainst this
program. It did not provide additional information or documentation to support its
position that this program was the source of funds.

AIR FORCE PROCUREMENT PROGRAMS                                                                         .
The Air Force requested $15.3 billion for procurement programs in fiscal year 1998.
As shown in table I.8, we identified potential reductions of $272 million to the fiscaI
year 1998request and potential rescissions of $294.2milhon from the fiscaI year 1997
appropriation, $216.3million from the fiscaI year 1996appropriation, and $9.9 million
ikom the expiring fiscal year 1995 appropriation.
Table 18: Potential Reductions and Rescissionsto Air Force ProcurementProgmms

 )olhs in millions
                                       Fbal year 1998                        Potential rescision
                               I                                  I
                                                       PotEnihl       Fkal year   Fiscal year      Fiscal year
  Procurementappropriation           RW=f             reduction            1997          1996             1995
  Aircmft’                         $2,7x033           $117.932         $294.200      $216.309          $1.321
  Ammunition                           81.178           28.549               0              0                 0
 IMisile                             1,031.376          125.559              0              0              8.559
  Total                            $3,83x%7           $272.040      $294.200          $216.309        $9.880
 This is the amount requestedfor budget line items for which we have identified a potential reduction



                                                 19           GAO/N&ID-97-212R 1998DefenseBudget
ENCLOSURE I                                                                        ENCLOSURE I

Aircraft Procurement. Air Force

The Air Force requested $5.8 billion for aircraft procurement programs in &cal year
1998. As shown in table L9, we idenaed potential reductions of about $117.9million
to the fiscal year 1998request for eight line items and potential rescissions of $294.2
million from the fiscal year 1997appropriation for four line items, $216.3million fkom
the Iiscal year 1996appropriation for two Iine items, and $1.3 million from the
expiring fkal year 1995appropriation for another one line item.
Table L9: PotenthI Reductionsand Rescisions to Air Force Aircraft -ent~granls

 ollars inmilllons




 29        F-15 Modification           169.568       19.700            0             0         0
 66        F-15 Post Prodution           8.100        1100             0             0         0
           Suppoa
 69        war consumables              67.565        8.532            0             0     $1.321
           Total                     $2,721.033    $117.932     $294.200        $216.300   $1.321




                                              20          GAOMSIAD-97-212R1998DefenseBudget
ENCLOSUREI                                                                ENCLOSURE I



The Air Force’s ilscal year 1998budget request of $159 million for the F-15E aircraft
program can be reduced by $11.5 million because an equivalent amount of prior year
iisnds is available to meet fiscal year 1998 program requirements.

DOD withheld $58.5million from the program+51.4 million added to the M          year
1997 program and $7.1 million from the fk&l year 1996 appropriation. Program
officials stated that $39.6 million of the withheld fimds was excess to program
requirements,and DOD requested that the remaining $18.9 million be reprogrammed
to provide long lead procurement funds to procure three aircraft in fiscal year 1998.

The fiscal year 1997Emergency Supplemental Appropriations Act included a rescission
of $21 million in fiscal year 1997funds, and according to the DOD, $19.9million in
fiscal year 1997and $6.1 million in i%cal year 1996 funds were reprogrammed. If the
remaining $11.5million is not reprogrammed, it can be used to of&et the &cal year
1998request

     C-17 Mrltivear Procurements Q&re 8)

The Air Force’s fiscal year 1998budget request of $1,923.3million for the C-17
program can be reduced by $9.1 million because an equivalent amount of prior year
funds is available to meet fiscal year 1998 program requirements.

The G17 program office’s krancial execution forecast includes $9.1 million in fiscal
year 1997and 1996funds that is not planned for obligation until after the obligational
authority has expired. The forecast shows that the C-17 program office does not plan
to obligate $4.1 million in fiscal year 1997 funds until November 1999and $5 million in
fiscal year 1996funds until December 1998. Aircraft procurement funds must be
obligated during the first 3 fiscal years of their availability. Since these funds are not
scheduledto be used for the program before their obligational authority expires, they
can be used to offset the Air Force’s &cal year 1998 budget request.

DOD did not agree with the reduction and noted that according to the Air Force, the
C-17program has no funds forecast for obligation after obligational authority expires.
It did not provide additional documentation to support its position

     G17 fIIh.&ivea.rProcurement1 Advance Procurement (Line 91

The Air Force’s fiscal year 1998budget request of $278.2 million for G17 advance
procurement can be reduced by $12.6 million because the request is overstated by


                                           21         GAOMZAD-97-212R1998DefenseBudget
ENCLOSURE I                                                              ENCLOSUREI

$7.3 million and $5.3 million in prior year funds are available to meet f&al year 1998
program requirements.

Due to favorable contract negotiations, the fiscaI year 1998budget request for advance
procurement for contractor-furnished equipment is overstated by $7.3 million;
$263.1million was requested for lot 11, but the contract option was negotiated for
$255.8million. In addition, these favorable negotiations resulted in $1.9 million and
$3.4 mUion being excess to requirements in &caI year 1997for lot 10 and in %cal
year 1996 for lot 9 advance procurement buys, respectively. According to DOD, these
funds were used to offset a short&II in the government-furnishedequipment advance
buy requirement; however, it did not provide additional documentation to support its
position. Therefore, the fiscal year 1998 advance procurement request can be reduced
by $7.3 million, and the $1.9 million in excess fiscal year 1997funds and the $3.4
mihion in excess &cal year 1996 funds can be used to o&set the &Cal year 1998
budget request

     EG13OJ (Line 102

Of the Air Force’s fiscal year 1997 appropriation to procure one EGl3QJ aircraft, $52.3
million can be rescinded because excess G130 aircraft currently in the inventory can .
be modified to the EC-13OJcon&uratior~

An Air Force analysis concluded that the existing inventory of C-130aircraft exceeds
the Air Force’s current requirement by 14 percent Program officials stated that they
had not prepared a cost estimate to convert existing model C-130aircraft to this
special operations version because there was no operational requirement to do so.
They have, however, estimated that it would cost about $18.1 million to convert the
newest G130 model, the J, to this specialty type aircraf& A headquartersAir Force
official stated that the cost to modify an existing C-130model to this specialty model
should be similar to the J model conversion cost, $18.1 million an aircraft. The Air
Force did not request funds for the program in local year 1998. Therefore, if an
excess C-130 aircraft is m&ed      to meet the EG13OJ mission requirement at
approximately $18.1 million, $52.3 miilion can be rescinded from the fiscal year 1997
appropriation. DOD had no objection to this issue but noted that modification costs
have increased. It did not provide additional documentation to support its position.

    G13OJ (Line 111

The Air Force’s tical year 1998 budget request of $49.9 million for one Gl3tM aircraft
can be denied and $160.8 million in prior year funds can be rescinded because excess
C-130aircraft can meet this requirement This potential rescission includes
$62.8million in acal year 1997 funds and $98 million in fiscal year 1996funds.

                                          22        GAO/NSIAD-97-212R
                                                                    1998DefenseBudget
ENCLOSURE I                                                              ENCLOSTJkEI
The previously discussed Air Force analysis also e&mated that the Air Force could
save about $70 million a year if the excess aircrsft were removed from the inventory
and the remaining aircraft were restationed according to the Aircraft Master Stationing
Plan. These savings should more than offset any contract termination costs for the
procurement of two aircraft with fiscal year i996 funds. Additionahy, the Gl3UI is a
commercia.Uy produced air&aft with direct sales to foreign countries and, therefore,
should sustain production. The Air Force plans to resumeits buy of the aircraft in
fiscal year 2002. DOD had no objection to this reduction.

     WC-13&J (Line 121

Of the Air Force’s fiscal year 1997and 1996appropriations for three WGl3OJ aircraft
each year, $152 million and $118.3million, respectively, can be rescinded because
excess G130 aircraft can be modified to the WGlSOJ configuration.

As stated previously, according to an Air Force analysis, the existing inventory of
G130 aircraft exceeds the Air Force’s current requirement by 14 percent Program
officials stated that they had not prepared a cost estimate of converting Gl3OE or H
models to a weather reconnaksance version of a C-130(w) because there was no
approved operational requirement to do so. They have, however, ated           that it   .
would cost about $4.5 million to convert the newest C-130model Q to a weather
aircraft An Air Force headquarters official stated that the cost to modify an exist&g
model to perform the weather mission should be similar to the J model conversion
cost, 84.5 milhon an aircraft Thus, it would cost an estimated $27 milhon to convert
six excess aircraft to the WG130 type aircraft. Therefore, if $27 million is designated
for the modification of six aircraft, the remaining $270.3million can be rescinded.
DOD had no objection to this reduction.

     Joint Primsrv A&craft lkaininp Svstem Une 13)

The Air Force’s fiscal year 1998 budget request of $65.4million for the Joint Primary
Aircraft Training System can be reduced by $5.5 million by postponing the
procurement of two aircraft until f&al year 1999. Deferring this procurement would
not increase the unit cost of the fiscal year 1998buy and would result in a more cost
efficient rate for the future buy.

The Air Force plans to buy 18 aircraft in Bscal year 1998,but under the contract
terms, it can procure as few as 16 aircraft in fiscaI year 1998without increasing the
aircraft unit cost of $2.7 milhon. Deferring the buy of two aircraft to fiscal year 1999
would increase the quantity in fiscal year 1999from 12 to 14, which, under the
contract terms, would result in a reduction of the unit price from $2.9 million to $2.8
million in fiscal year 1999. By acquiring 16 aircraft in fiscal year 1998and 14 aircraft

                                           23         GAOMUD-97-212R 1998DefenseBudget
ENCLOSURE I                                                              ENCLOSURE I
in fiscal year 1999,the Air Force would still acquire 30 aircraft but would incur a net
saving of $1.4 million. DOD did not agree with the reduction but did not provide
additionaI information or documentation to support its position. Therefore, the tiscal
year 1998budget request can be reduced by $5.5 million.
                     .
     Small VCX K-3n &me 17)

Of the Air Force’s fiscal year 1997appropriation for the C-37A aircraft, $27.1 milbon
can be rescinded due to favorable contract negotiations. A program official told us
the contract to procure two G37A aircraft was awarded for an amount less than the
amount appropriated and, therefore, $27.1million is excess to program requirements.
DOD included $27 million in fiscal year 1997funds in the fiscal year 1997 omnibus
reprogramming request, but it was not approved. DOD did not agree with the
reduction but did not provide additional information or documentation to support its
position. Since the fiscal year 1997funds are not neeed for excess the program and
no funds are requested in flscaI year 1998,the fiscal year 1997 funds can be rescinded.

     F-15 Modification &ine 29)

The Air Force’s fiscaI year 1998request of $169.6million to modify F-15 aircraft can
be reduced by $19.7 million because an equivalent amount of fiscal year 1997funds is *
available to meet fiscal year 1998program requirements. The Air Force canceled two
mod&ations-a Global Positioning System modification to the C/D model aircraft and
an improved heads up display modi&ation. The fiscal year 1997 appropriation,
however, included $19.7 million for these two modifications. According to program
officials, the $19.7 millon is excess to program requirements, and Air Force
headquarters is withholding these funds with plans to reprogram them. DOD informed
us that the $19.7 million had been used for other purposes. DOD included $6.3 million
in fiscal year 1997funds for the canceled Global Positioning System modification in
the fiscal year 1997 omnibus reprogramming request, but it was not approved, Since
the $19.7 milhon will not be used for modikations as originaUy requested, it can be
used to of&et the fiscal year 1998budget request

     F-15 Post Production Sunnort CLine66)

The Air Force’s fiscal year 1998budget request of $8.1 million for F-15 post production
support can be reduced by $1.1 mihion becausefiscaI year 1998 program requirements
are overstated. F-15 production wilI continue with the procurement of attrition
aircraft; therefore, funds requested for the contractors to plan for the disposition of
tooling and government-furnished equipment will not be needed. Program officials
agreed that the request is overstated but said the $1.1 million could be used to meet
other requirements. Since the funds will not be needed to plan for the disposition of

                                         24         GAOMSIAD-97-212Fi
                                                                   1998Defense Budget
ENCLOSURE I                                                               ENCLOSUREI
tooling and government-furnished equipment, they can be used to offset the fiscal year
1998budget request

     War Consumables (Line 69)

The Air Force’s fiscal year 1998budget request of $67.6 million for war consumables
can be reduced by $8.5 million because the request is overstated by $3.1 million and
$5.4 million in prior year funds are adable to meet fiscal year 1998program
requirements.

The fiscal year 1998budget request for towed decoy rounds is overstated by
$3.1 million because these funds are not needed for engineering change proposals.
Towed decoy program officials told us that the .$3-l million is needed to cover
previously undisclosed requirements and the government’s share of potent&l cost
overruns. However, they have no indication at the present time that an overrunwill
occur. The iiscal year 1997and 1996 estimate for engineering change proposals is
about 7.8 percent of the total amount of funds appropriated and requested. This
percentage is over twice the rate used for engineering change proposals for other
parts of the towed decoy system, such as the launchers and controllers. In addition,
the recent initial operational test and evaluation report on the system did not indicate .
that any engineering changes were required. According to program officials, $3 million
and $2.4 million in unobligated fiscal year 1997 and 1996 funds, respectively, are no
longer needed to meet program requirements. DOD included $2 million of tical year
1997funds in the fiscal year 1997 omnibus reprogramming request, but it was not
approved. Therefore, $3.1 million can be reduced from the fiscal year 1998budget
request, and $5.4 million in excess prior year funds can be used to off&et the fiscal
year 1998 budget request

The program also has $13 million in unobligated fiscal year 1995funds fhat are no
longer needed to meet program requirements. Authority to spend these funds will
expire if they are not obligated by September 30, 1997;therefore, these funds are
available for reprogramming or rescission during the remainder of fiscal year 1997.

DOD did not agree with the reduction and noted that the fiscal year 1995funds were
used for other purposes. It did not provide additional information or documentation
to support its position.

knmunition   Procurement. Air Force

The Air Force requested $0.4 billion for ammunition procurement programs in ikal
year 1998. As shown in table LlO, we identified potential reductions of $28.5 million


                                           25         GAO/NSIAD97-212R1998DefenseBudget
ENCLOSUREI                                                                       ENCLOSUREI
to the fiscal year 1998 request for two line items. We did not identify any potential
rescissions in prior year appropriations.

Table LlO: Potential Reductions to Air Force Ammunition ProcurementProgrzuns

 tmrs in millions
                                                              Fiscal year 1998
 he
 no.       Line item description                              Request       Potential
                                                                           reduction
 20        Joint Direct Attack Munition                       861.80’7         $19.143
 21        Wind Corrected MunitionsDispenser                   19.871            9.406
           Total                                              $81.178          $28.649

       Joint Direct Attack Munition &ine 201

The Air Force’s fiscal year 1998 budget request of $61.3million for the Joint Direct
Attack Munition can be reduced by $19.1 million if the minimum contract option is
exercised to more closely align the procurement with the Joint programmable Fuse .
buy. The new fuze is to be used with the Joint Direct Attack Munition to allow pilots
to select or change functions from the cockpit The Air Force can exercise its
contract option to buy the minimum of 1,635kts for $29.9million instead of the
proposed 2,673 kits for $49 million at a small decrease in unit cost (about $63 per
unit).

Air Force officials did not agree with the reduction and noted that the Joint Direct
Attack Munition was required to be compatible with the Joint Programmable Fuze but
could function with other fuses already in the inventory. Although less capable fuses
can be used with the munition, about 81 percent of its Joint Direct Attack Munition
could be equipped with the new fuse. If the Air Force proceeds with its current
procurement plan in 1998,there will not be a sufficient number of fuses to equip the
number of the Joint Direct Attack Munition the Air Force will have on order. Only
about 41 percent will have the new fuse. On the other hand, if the Air Force procures
the minimum quantity of the kits, about 58 percent will have the more capable fuze
and the Air Force will be closer to its goal. Therefore, the fiscal year 1993budget
request can be reduced by $19.1 million.

DOD did not agree with the reduction and stated that the lower procurement level
would impact the Air Force’s ability to provide conventional capability to the bomber
force. However, if the lesser quantities are ordered, the Air Force would have 2,572
kits (including the 937 bought for 1997) which would provide initial capability for B-1

                                               26       GAOMUD-97-212R 1998Defense Budget
ENCLOSURE I.                                                             ENCLOSURE I
and B-52 bombers. The Air Force already has a guided munition to provide capability
to the B2 bomber.

     Wind Corrected Muntions Disoenser &ine 21)

The Air Force’s fiscal year 1998budget request of $19.9 million for the Wind Corrected
Munition Dispenser can be reduced by $9.4 million becausefiscal year 1998 program
funding requirements are overstated.

Funding requested for 280 initial production units can be reduced by $7.4 mihion
because the Air Force estimated the hardware cost before it had received the
competing contractors’ estimates. The Air Force requested $12 miIhon for tactical
units, but it now estimates that it can buy the units for $4.7 million. Program officials
agreed that $7.4 million was excess to the procurement request

In addition, the $4.1 mihion fiscal year 1998funding request to buy 128 safe separation
units for flight certification testing can be reduced by $2.6 mihion based on the revised
unit costs. Ofkials responsible for flight certification stated that they now need
additional certikation units-38 tactical units and 163 separation units. Based on
projected delivery and test schedules,procurement of 163 additional separation units .
could be deferred until fiscal year 1999. The 33 additional tactical units, which have a
longer production lead time, could be purchased for about $503,009. If the buy of the
38 tactical units is approved, the remaining $2.1 million can be reduced from the fiscal
year 1998 budget request According to DOD, the Air Force wants to use $7.6 mllhon
of the $9.4 million for other purposes and agreed that $1.8 milhon is not needed for
the program. DOD did not provide additional information or documentation for its
position; therefore, we continue to believe the $9.4 million reduction was warranted.

Missile Procurement. Air Force

The Air Force requested $2.6 billion for missile procurement programs in fiscal year
1998. As shown in table Ill, we identified potential reductions of $125.6million to
the fiscal year 1998request for six line items. We did not identify any potential
rescissions in fiscal year 1997or 1996appropriations; however, we did identify
$8.6 million in potential rescissions from expiring fiscal year 1995 appropriation for
three line items.




                                           27        GAO/NSlAD-97-212Fi
                                                                     1998Defense Budget
ENCLOSURE I                                                                      ENCLOSURE I
Table L11: Potential Reductionsand Rescissionsto Air Force !Xissile Procurement Programs

Dollars in millions




      &hrmd           Medium Range Air-to-Air Missile Gine 5)

The Air Force’s fiscal year 1998 budget request of $117.8million for the Advanced
Medium Range Air-to-Air Missile can be reduced by $6.6 million because the Air Force
overestimated its requirements for engineering change orders.

The missile request includes an amount for engineering change order costs. The Air
Force caIcuIates this amount as a percentageof total recurring hardware costs.
However, program officials said that for fiscal year 1998 they used $10 million, the
amount used in the fiscaI year 1994budget request, as their engineering change order
cost estimate. According to these officials, they believed fiscal year 1998 program
conditions would be similar to those in fiscal year 1994 when improvements were
being incorporated in the system. We found that the quantities and associated
hardware costs for fkal year 1994were much higher than those budgeted for fiscal
year 1998; therefore, we question its use as a comparable year. Based on the Air
Force’s methodology normahy used and our analysis of program data, we calculated
the fiscal year 1998engineering change order cost estimate as $3.4 milhon, or 5
percent of the tical year 1998 recurring hardware costs. Using this methodology, we
found the Air Force’s fiscal year 1998engineering change order cost estimate was
overstated by $6.6 million and, therefore, the fiscaI year 1998 budget request can be
reduced accordingly.


                                              28          GAO/NSlAD-97-212R1998DefenseBudget
ENCLOSTJREI                                                               ENCLO&JRE I
The Air Force identified $5.3 million of its fiscal year 1995 appropriation as excess to
program requirements and included that amount in the fiscal year 1997 omnibus
reprogramming request According to Air Force officials, the funds were requested for
engineering change orders but were not needed. Since authority to spend these
excess funds wiIl expire if they are not obligated by September 30, 1997,they are
available for reprogramming or rescission during the remainder of fiscal year 1997.

DOD did not agree with the $6.6 rnihion reduction but did not provide addition
information or documentation to support its position.

     Swres and ReDair Parts &ine 16)

The Air Force’s fiscal year 1998budget request of $28.8 million for spares and repair
parts can be reduced by $2.2 miIlion The Air Force’s $1.1 r&ion fiscaI year 1998
budget request for Advanced Medium Range Air-to-Air Missile spares and repair parts
can be denied, and the fiscal year 1998budget request for spares and repair parts can
be reduced by $1.1 million because an equivalent amount of prior year funds is
available to meet fiscal year 1998program requirements.

According to the program office, the fiscal year 1998 request for the Advance Medium.
Range Air-toAir Missile initial spares requirements can be oft&et with $1 million in
excess fiscal year 1997funds and $82,000in f&al year 1996 excess funds. Another
$1.1 mihion is excess to GscaIyear 1996requirements. Therefore, the fiscal year 1998
budget request for spares and repair parts can be reduced by $2.2 rnilhon.
Additionally, according to Air Force officials, $771,000in fiscal year 1995 funds is
excess to program requirements. Authority to spend these funds wilI expire if they
are not obligated by September30, 1997;therefore, they are available for
reprogrammmg or res&si on during the remainder of GscaI year 1997. DOD agreed
with the reductions.

     Inertial Umer   Stage &ace   (Line 21)

The Air Force’s fiscal year 1998budget request of $59 million for the Inertial Upper
Stage program can be reduced by $2.6 million because an equivalent amount of fiscaI
year 1996funds is available to meet Gscal year 1998program requirements.

Air Force officials identified $2.6 rnihion in fiscal year 1996 funds, which was initially
budgeted for engineering change orders/risk, that was declared excess to program
requirements. According to program officials, these funds wih be reprogrammed to
fund other Air Force programs. DOD did not agree with the reduction and noted that
these funds had been obligated. It did not provide additional information or
documentation to support its position. If the $2.6 million in fiscal year 1996 funds is

                                              29      GAO/?WAD-97-212R1998Defense Budget
   ENCLOSURE I                                                              ENCLOSURE I
   not reprogrammed, it can be used to offset the Air Force’s fiscaI year 1998 budget
   request

        Titan SDaceBoosters Snace (Line 221

   The Air Force’s fiscal year 1998budget request of $555.3million for Titan Space
   Boosters can be reduced by $91.2million because an equivalent amount of GscaI year
   1997funds is available to meet fiscal year 1998program requirements.

  We identified $213.2million in excess fiscaI year 1997funds. Of this amount, $122
  mihion was rescinded by the fiscal year 1997Emergency Supplemental Appropriations
  Act The remaining $91.2 milhon, according to Air Force officials, was to be used to
  purchase three Titan IV launch vehicles; however, it is not needed because of cost
  savings resulting from reductions to launch requirements, program restructuring
  &or&, and under-runson the production contracts.

  According to Air Force officials, ‘I&an IV launch requirements decreased, in part,
  because of the down&in g of certain intelligence payloads that reduced the need for
  additional launchers. The Air Force has restructured production contracts to reflect a
  decrease in purchases of launch vehicles, from 44 to 41. Therefore, the $91.2 million ,
  in fiscal year 1997funds is excess to program requirements and can be used to offset
  the Air Force’s fiscal year 1998budget request if the funds are not reprogrammed.

  DOD agreed that $213.2million in fiscal year 1997 funds was excess; however, it
  maintains that $8.8 mihion in addition to the $122 mihion was used for other
  purposes. Therefore, DOD stated that $82.4 million is currently excess to the ‘I&an
  Program-
       Medium Launch Vehicles Suace Kline 231

  The Air Force’s fiscal year 1998budget request of $165.8milhon for Medium Launch
  Vehicles can be reduced by $20.5miihon because $10.7 million requested for fiscal
  year 1998 will not be used for the purposes budgeted and $9.8 million in prior years’
  funds is available to meet f&al-year 1998program requirements.

  ‘Ihe fiscal year 1998budget request is overstated by $10.7million because, according
  to program officiak, expected costs associated with launch operations are overstated
  by $4.5 milhon and $6.2 million that the Air Force planned to use for Delta launch
  fake recovery efforts is no longer needed. ‘Ihe Air Force indicated that it plans to
  use $5.2 million of the $10.7 million for an unscheduled fifth launch in fiscal year 1998.
. The Air Force also identified $2.6 mihion in excess fiscaI year 1997 funds-U.7 million
  resulting from lower than expected cost growth and $900,000that was identied for

                                            30         GAOMilAD-97-2l2R 1998Defense Budget
ENCLOSURE I                                                             ENCLOSURE I
Delta launch failure recovery efforts-that was no longer needed. Additionahy,
$7.2 million in fiscal year 1996 funds was identified for the recovery effort, but the
funds are no longer needed. According to Air Force officials, $2 milhon of the excess
fiscal year 1996funds may be used for other Air Force contingencies. If the excess
prior year funds are not reprogrammed, they can be used to o&et the Air Force’s
i%scaIyear 1998budget request DOD did not agree with the reduction but did not
provide additional information or documentation to support its position.

     Defense SUDDO~~Program (MuItivear Procurement]
     SDace (Line 261

The Air Force’s fiscaI year 1998 budget request of $113.7million for the Defense
Support Program can be reduced by $2.5 million becausefiscal year 1998program
requirements are overstated.

The Air Force requested $2.5 miIlion in fiscal year 1998for research studies to identify
modikations needed to Iaunch the satellite on the Evolved Expendable Launch
Vehicle in Cal year 2003. A program official stated that these funds are no longer
needed. Therefore, the Air Force’s fiscal year 1998budget request can be reduced by
$2.5 million. Of the Air Force’s fiscal year 1995appropriation for the Defense Supporta
Program, $2.5 million can be rescinded becausethese funds are excess to program
requirements. The authority to spend these funds wih expire if they are not obIigated
by September 30,1997, and therefore, they are avaikible for reprogramming or
rescission during the remainder of fiscal year 1997. DOD agreed with this reduction.

DEFENSE-WIDE PROCUREMENT PROGRAMS

DOD requested $1.7 billion for Defense-wide procurement programs in fiscal year
1998. As shown in table L12, we identified a potential reduction of $51.2 rniUion to
the fiscal year 1998request for one item. We did not identify ani potential rescissions
from prior years’appropriations.




                                          31         GAOINSIAD-97-212R
                                                                     1998DefenseBudget
ENCLOSURE I                                                                ENCLOSURE I
Table Ll2: Potential Reduction to Defense-wideProcurementPrograms



                                                                F&al year 1998

 Line
 no.      he item description

 47       C-130Modifications
          Total

      C-130 Modifkations fLine 4n

The Special Operations Coinmand’s $96.6 million fiscal year 1998budget request
includes $51.2 million for the Directional Infrared Countermeasuressystem in the
C-130Modification line that can be,denied if the second lot of 21 systems is not
procured until fiscaI year 1999.

The program has experienced several program slippages since it began Currently,
developmental flight testhg is supposed to occxu-in the fall of 1997,with the lot 1       .
production decision for 15 systems currently expected in January 1998 after
completion of developmental test flights. (The Command’sfiscal year 1996
appropriatioh included $40.5 million to buy the 15 systems.)

The Command is requesting $51.2million to procure the second lot of 21 systems later
in fiscal year 1998. If the fiscal year 1998funds are provided, 36 of the total of
59 systems needed will be under contract before operational testing is completed. By
performing operational testing before the procurement of additional systems, the
program office would reduce the potential of procuring a large quantity of
unsatis~ctory systems that may require costly modifications to achieve satisfactory
performance. Deferring the plauned second buy until fiscal year 1999would not cause
a production break because the system is in production for the United Kingdom.

DOD disagreed. It maintains that developmental testing and an operational utility
evaluation will be adequate to make the second lot production decision and that $3.57
million of the fiscal year 1998 request is needed for operational testing. Furthermore,
it maintains that deferring lot 2 production wiU force the contract to be renegotiated
and create international political ramifications by undermining the Memorandum of
Understanding the United States signed with the United Kingdom for the joint venture.

We do not oppose lot 1 production using the prior year funds of $40.5 million. These
funds are currently unexpended as a result of technical problems with the system that

                                            32         GAO/NSIAD-97~212R
                                                                      1998Defense Budget
ENCLOSURE I                                                              ENCIX%URE I
caused schedule slips. If these funds are committed for lot 1 in January 1998 as is
currently planned, fiscal year 1998will end before these Grst 15 systems are installed,
tested and fielded. The opportunity existq therefore, to make the second production
decision for 21 additional systems using liscal year 1999fimds and with operational
test results in hand. In this way, DOD can assure its international partner that it is
committed to the program, and also demonstrate that it is committed to an
operationally effective system.




                                          33         GAO/IMZAD-97-212R
                                                                     1998Defense Budget
ENCLOSURE II                                                                      ENCLOSURE II
              POTENTIAL REDUCTIONSAND RESCISSIONSTO RESEARCI&
                DEVELOPMENT. TEST, AND EVALUATION PROGRAMS

DOD requested $35.9 bihion in research, development, test, and evaluation (RDT&E)
funding for fiscal year 1998. As shown in table ILl, our review of selected budget line
items in the request and prior years’appropriations identied potential reductions of
$283.3 million to fiscal year 1998requests,potential rescissions of about $16.1milhon
from the fiscal year 1997appropriation, and $21.5 million from the expiring fiscal year
1996 appropriation.

Table ILI: Potential Reductions and Rescissionsto RDT&E Programs

Dollas in millions
                                      F&Calyear 1998                  Potential        Potential
                                                                     reschion         rescission
                                                    Potential      (fiscal Ye=       m=l Ye-
                                                   reduction              1997)           1996)
                                    RW=f
                                    $216.251           $24.855         s-775                  0
   Navy                              184.459           64.113               0                 0
  Air Force                          300.909           39.300          11.300                 0
   Defense-wide                     1,182.222          155.000              0           $21.500
  Total                      I     $1,883.841       $283.268          $16.075            $21.500
  9
  9                                                                               potential
reduction


ARMY RDT&E PROGRAMS

The Army requested $4.5 billion for RDT&E programs in fiscal year 1998. As shown in
table II.2, we identified a potentiaI reduction of about $24.9 million for two line items
in the fiscal year 1998 request and a potential rescission of $4.8 million from the fiscal
year 1997 appropriation We did not identify any potential rescissions from the fiscal
year 1996 appropriation




                                             34          GAO/NSlAD-97-212R
                                                                         1998DefenseBudget
ENCLOSURE II                                                                    ENCLOSURE II
Table II.2 Potential Reductions and Rescisions to Army RDT&E Programs

Dollals inmaions

                                                          F&al year 1998              Potential
                                                                                     PSCiSSiOIt
 Line                                                                    Potential   CM     year
 no.     Lineitemdescription                             Resuest        reduction          1997)
 80      Follow-On to TulMaunched Optically-             $13.949          $10.155                 0
         tracked Wire-guided(TOW)
  104    Brilliant Anti-&mor Submunition                 202.302           14.700                 0
  115    Longbow- Engineering
                            Development                        0                0         $4.775
         Total                                          $216.251          $24.855         $4.775

                              .
Follow-On to Tube-launched Ouucallv-tracked
Wire-guided fTOm (Line 80).

The Army’s fiscai year 1998 budget request of $13.9million for the Follow-On to ‘I’ube-
launched OpticaUy-tracked Wire-guided heavy assault weapon program can be reduced&
by $10.2 rnilhon because the development contract award, and associated support
activities, can be delayed until early fiscal year 1999without adversely affecting the
program’s deployment schedule.

The &cal year 1998budget request includes $11.7million to support a June 1998
contract award for a 75month engineering and manufacturing development program.
However, according to project officials, the 75program is inefficient when compared
to the 66-month program the project office recently proposed. According to project
office estimates the cost of the 66month program is $44.2million less than that of the
75month pro&          Pending Army approval, the project office prefers to execute the
66month program in late June 1998to minimize anticipated inventory shortfalls and
avoid in-house inefiiciency it maintains will occur if contract award is delayed to
October 1998, as we recommend. DOD agreedwith the Army’s position.

Executing the &month program in October 1998,instead of June 1998,would still
allow production and subsequent deployment to begin about 5 months earher than the
planned 75month program to be executed in June 1998. It would also result in net
life-cycle savings of about $41.2 million when compared with the 75month program
and a reduction of $10.2 million in the fiscal year 1998request Since the Army has


3The G&month program’s compressed schedule would require more funding in fiscal
years 1999 through 2002 than currently programmed.
                                               35        GAOMIAD-97-212R1998DefenseBudget
ENCLOSUREIT                                                              ENCLOSUREII

not released a request for proposals, production schedules could be adjusted to
accommodate a 3- to 4month schedule slip.

FVoject officials maintain that about $1.5 million of the $11.7million is required to
support a source selection board regardlesswhen the contract is awarded.
Consequently, the balance, or $10.2 million, can be used to offset the Army’s fiscal
year 1998request.

Brilliant Anti-Armor Submunition (Line 1041

The Army’s &scal year 1998budget request of $202.3million for the Brilliant Anti-
Armor Submunition preplanned product improvement, included in the Brilliant Anti-
Armor Submunition line, can be reduced by $14.7million because the request includes
funds to accelerate the program, despite congressional concerns about concurrency
and technical risks.

As a result of congressional budget reductions for fiscal year 1997,the improvement
program was restructured to slow development. The Senate Committee on
Appropriations stated that the pace of the improvement program was not warranted
until the basic Brilliant Anti-Armor Submunition was fully proven and successfully      .
deployed Tom the Army Tactical Missile system. However, program documentation
indicates that activities planned for the next phase have been moved forward with the
fiscal year 1998budget request including $14.7 million to accelerate program activities
before the basic system will be fully proven. For example, the budget request
provides for some engineering and manufacturing development electronics work
among other activities to be completed during the demonstration/validation phase.
These activities were to begin in f&al year 1999after the engineering and
manufMuring development phase decision. In addition, continued technical problems
and the addition of three new development test flights could delay the munition’s
deployment from the missile.

According toDOD and the program manager,the proposed activities will not
accelerate the program but will help reduce risk and costs associated with the
engineering and man~acturing development phase. However, the program manager
did agree that these activities were not origuuxlly planned as part of the
demonstration/validation phase, but rather were scheduled to be done later, during the
subsequent engineering and manufacturing development phase. He noted that if the
$14.7 million reduction was taken, the program schedule would have to be
restructured again. However, to avoid acceleration of the development activities until
the congressional concerns are satisfied, the fiscal year 1998budget request can be
reduced by $14.7 million.


                                          36         GACYNSUD-97-212R
                                                                    1998DefenseBudget
ENCLOSURE It                                                              ENCLOSURE II
Longbow -    EnaineerinerDeveloDment(Line 115)

Of the Army’s fiscal year 1997appropriation for the Longbow - Engineering
Development, $4.8million can be rescinded because these funds will not be used to
develop the intended system. These funds, added for the second generation forward
looking infrared system, are being withheld by DOD, which plans to reprogram the
funds to another project. A program official said that the funds could be used if they
are made available. Since the $4.8million will not be used to develop the infrared
system, this amount can be rescinded if the funds are not reprogrammed.

NAVYRDT&EPROGRAMS

The Navy requested$7.6 billion for RDT&E programs in fiscal year 1998. As shown in
table IL3, we identified potential reductions of about $64.1 million to the liscal year
1998 request for five line items. We did not ident@ any potehtial rescissions from
prior years’appropriation.
Table JI.3: Potential Reductionsto Navy FtDT&E Progmms

Dollals inluiuions




Readiness. ‘Raininn. and Environmental Quali@
J’kchnologv (Line 8)

The Navy’s fiscal year 1998budget request of $31.8 million for readiness, trainhg, and
environmental quality technology can be reduced by $1.4 million because an equivalent
amount of tical year 1997funds is available to meet fkal year 1998 program needs.
According to the Navy, these funds on withhold are not required for the program and
are available for reprogramming. Since it appears the $1.4 million will not be released

                                              37         GAO/NSIAD97-212R1998DefenseBudget
ENCLOSURE II                                                            ENCLOSURE II

to the program, the excess fiscal year 1997funds can be used to o&et the fiscal year
1998 budget request if they are not reprogrammed. DOD said these funds were used
to offset the fiscal year 1998budget request but did not provide additional information
or documentation to support its position.

Medical Development (Line 201

‘ihe Navy’s fiscal year 1998budget request of $18.3 million for medical development
can be reduced by $1.4 million because an equivalent amount of fiscal year 1997funds
is available to meet Gscal year 1998program requirements. According to the Navy,
these funds have been withhold and are not required for the program and are available
for reprogramming. DOD has requested congressional approval to transfer these funds
to the fiscal year 1997 Military Personnel, Navy appropriation account Since the
$1.4 million is not needed for the program, this amount can be used to of&& the fiscal
year 1998budget request if the funds are not reprogrammed. DOD agreed that the
funds were available.

Advanced Submarine Combat &sterns
Dwelonment (Line 35)

The Navy’s fiscal year 1998budget request of $61.1 million for advanced submarine
combat systems development can be reduced by $2;7 million because an equivalent
amount of fiscal year 1997funds is available to meet fiscal year 1998program
requirements.

The Navy planned to use the funds to conduct a Joint Tactical Control sea test during
the fourth quarter of fkal year 1997. That test, however, has been delayed until the
third quarter of fiscal year 1999. Since authority to spend the fiscal year 1997funds
will expire if they are not obligated by September 30, 1998,they will not be available
to fund the test DOD did not agree with the reduction, noting the funds were used to
of&et the fiscal year 1998 budget request However, it did not provide additional
information or documentation to support ifs position. Therefore, the $2.7 million can
be used to offset the fiscal year 1998budget request

Submarine Combat Svstem G.&e 106)

The Navy’s fiscal year 1998budget request of $23.7 million for the Submarine Combat
System can be reduced by $21.3million because fiscal year 1998 program
requirements are overstated by. $16.2 million and $5.1 million in fiscal year 1997funds
is available to meet fiscal year 1998program requirements.



                                         38         GAO/NSUD-97-212R1998DefenseBudget
ENCLOSURE II                                                               ENCLOSUREII
Delays experienced in the SSN-21submarine program have causedthe planned
February 1997 AN/BSY-2 combat system technical evaluation and the planned
February 1998 operational evaluation to be postponed until October 1999and February
2000, respectively. In addition, funds will not be needed to initiate the submarine’s
post shakedown availability and to coordinate installation of the Joint Maritime
Command Information strategy until after the authority to spend the $5.2 million in
fiscal year 1997funds expires, due to these delays. DOD did not agree with the
reduction and noted that fiscal year 1997funds were obligated. It did not provide
additional information or documentation to support its position. Therefore, the fiscal
year 1998 budget request can be reduced by $16.2million, and the $5.1 milbon in fiscal
year 1997 funds can be used to offset fiscal year 1998program requirements.

SSN-21Developments (Line 108)

The Navy’s fiscal year 1998 budget request of $49.5million for SSN-21developments
can be reduced by $37.2 million because fiscal year 1998requirements are overstated
by $18 million and $19.2 million in fiscal year 1997funds is available to meet fiscal
year 1998 program requirements.

The Navy’s plan to begin in&l&ion of Advanced Special Hull Treatment and system i
qualification and inspection during the SSN-21’spost shakedown availability has been
tentatively deiayed until September 1998. A program official acknowledgedthat the
fiscal year 1997 funds are available due to slippage in the schedulebut stated that the
Gscal year 1998 funds are needed to begin the effort in September1998. However, due
to ongoing ship delivery delays and past history, this effort is likely to slip to the first
quarter of fiscal year 1999. DOD did not agree with the reduction and noted that
fiscal year 1997 funds were obligated However, it did not provide additional
information or documentation to support its position. Therefore, the f&al year 1998
budget request is overstated by $18 mi?lion and the $19.2mihion in fiscal year 1997
funds, which will expire in September 30,1998, can be used to offset tical year 1998
program requirements

     FORCERDT&EPROGRAMS

The Air Force requested $14.5 billion for RDT&E programs in &al year 1998. As
shown in table IL4, we identified potential reductions of $39.3million to the fiscal year
1998request for two line items and a potential rescission of $11.3million from the
fiscal year 1997 appropriation. We did not identtfy any line items for potential
rescissions from the fiscal year 1996appropriation.




                                             89        GAOMIAD-97-2l2R 1998DefenseBudget
ENCLOSURE II                                                                       ENCLOSURE II
Table II.4 Potential Reductions and Rescissionsto Air Force RDT&E Pmgrams



                                                                    Fiscal year 1998           Potential
                                                                                              rescksion
    line                                                                         Potential   (My=
    no.        line item description                               ReqUe        reduction         1997)

                                                                                  $25.3001            0
    132        AdvancedMediumRangeAir~AirMissile                    50.781         14.ooo             0
    140        Airborne Warning & Contml System (AWACS)             46.807              0       $11.300
               Total                                               $300.909       839.300       $11.300

    .      .                                              .
]                                                              2

The Air Force’s $203.3 million fiscal year 1998budget request for the Joint Air-to
Surface Standoff Missile can be reduced by $25.3million becausethe funds are
requested for engineering and manufacturing development activities planned for fiscal
year 1999 and later.                                                                  i’
The Air Force expects to present its plan for engineeringand manufacturing
development and select one of the competing contractors for this effort in the fourth
quarter of f&al year 1998. Of the fiscal year 1998request, $49.4million is for test
support, but only $24.1 million is for testing associatedwith the current program
detition and risk reduction phase effort. Funds requestedfor activities such as live
fire tests, modifications to test aircraft, and targets for developmental and operational
testing could be deferred until &cal year 1999. Therefore, the fiscal year 1998budget
request can be reduced by $25.3million.

Program officials do not agree that the funding could be postponed. They indicated
that they need $15.8 million to begin constructing targets, equipping them with
instruments for combined developmental and operational testing scheduled to begin in
fiscal year 1999. They said that they also need about $9.5 million to modify two
aircraft-one for each contractor-for the missile avionics system that allows testers to
simulate an inflight missile. They stated that testing planned for engineeringand
manufacturing development had already slipped some and that a further postponement
could slip the full-rate production decision on a month-for-month basis. DOD agreed
with the Air Force’s position.

Our review indicated that program details are still evolving and some issues will not
be settled until the Air Force receives the contractors’proposals and selects one of

                                                   40         GAO/MJAD-97-212R
                                                                             1998DefenseBudget
ENCLOSURE II                                                             ENCLOSURE II
them. The Office of the Secretary of Defense is not scheduled to be briefed on the Air
Force’s plans for engineering and manufacturing development until the fourth quarter
of fiscal year 1998. The full-rate production decision is not scheduled until April 2901.
The Air Force is still adding missile requirements that may alter either the kinds of
targets needed or the test schedule itself, or both. According to test officials, a
complete testing schedule will not be available until the competing contractors submit
their designs for consideration.

According to test officials, only two targets require totally new construction the
others are modifications of existing targets. Funding requestedto modify aircraft for
the missile avionics systems is based on working with two contractors. However, only
one contractor will build the missile avionics system during engineering and
manufacturing development By deferring these funds until &al year 1999,the
program office can use the funding to modify aircraft for only the selected contractor.

Advanced Medium Range Air-to-Air
Missile CLine 1321

The Air Force’s fiscal year 1998budget request of $50.8million for the Advanced
Medium Range Air-to-Air Missile can be reduced by $14 million because an equivalent.
amount of fiscal year 1997funds is available to meet tical year 1998program
requirements.

According to an Air Force official, the program office plans to postpone design,
development, and testing of the defensive electronic countermeasureseffort to a later
phase of the development program, possibly in f&al year 1999. As a result, $14
million in fiscal year 1997funds is available, $10.3million appropriated for the
postponed effort and a related $3.7 million in contract award fees that will be
deferred. The $14 million in fiscal year 1997 appropriations being withheld by DOD
was included in the fiscal year 1997 omnibus reprogramming request, but it was not
approved. Therefore, the $14 million in fiscal year 1997funds can be used to offset
the fkal year 1998budget request

Program officials do not agree that the $14 million is available to offset the fiscal year
1998 program requirements. They told us that the program office, as recommended by
the Air Force, was making considerable contract changesand restructuring the
research and development program to provide the funds for the fiscal year 1997
omnibus reprogramming request However, they said that if these funds are not
reprogrammed, the program office @ms to use the funding for the postponed efforts.
DOD did not agree with the reduction but did not provide additional information or
documentation to support its position. Since the program office has begun to


                                           41         GAOMsklp97-2lZR 1998DefenseBudget
ENCLOSURE II                                                            ENCLOSUREII

restructure the program to perform the work later in the program, these funds can be
used to off& the fiscal year 1998 budget request

Airborne Warning & Control &stem (AWACS) (Line 1401

The Air Force’s fiscal year 1998 budget request includes $46.8 million for the Airborne
Warning and Control System. Of the Air Force’s fiscal year 1997appropriation for the
system, $11.3 million can be rescinded because the funds wiU not be used to initiate
the nxngining program, as intended.

Funds were added to the fiscal year 1997appropriation for the Air Force to begin a re-
engining program for the Airborne Warning and Control System fleet However,
because the estimated cost to m-engine the first aircraB was substantially more than
the $25 million appropriated, DOD placed the tical year 1997re-engining funds on
withhold. The Air Force did not request funds for that effort in its tical year 1998
budget request Air Force officials agreed that the f&al year 1997 funds can be
rescinded; however, they believe the $25 mihion should be adjusted to allow for a
previous general reduction of about $1.2 million. The fiscal year 1997 Emergency
Supplemental Appropriations Act included a $12.5million rescission of fiscal year 1997
funds. Of the remaining $11.3 million, DOD included $11 million in the fiscal year   .
1997omnibus reprogramming request, but it was not approved. Since the $11.3
million will not be used to initiate the re-engming program, these fiscal year 1997
funds can be rescinded. DOD agreed that these funds are available.

DEFENSE-WIDE RDT&E PROGRAMS

DOD requested $9.1 billion for Defense-wide RDT&E programs in fiscal year 1998. As
shown in table R.5, we identied potential reductions of $155 million to the fiscal year
1998request for four line items and a potential rescission of $21.5 million from the
expiring fiscal year 1996 appropriation. We did not identify any potential rescissions
from the fiscal year 1997 appropriation.




                                          42        GAO/NSIAD-97-212R
                                                                    1998DefenseBudget
ENCLOSUREII                                                                     ENCLOSUREII
Table II.5 Potential Reductions and Rescissions to Defense-wideRDT&E Progmms

 aaIs in millions
                                                           FYscalyear 1998             Potential
                                                                                      rescision
 Line                                                                  Potential     Csscalm
 no.     Descriptionof item                              Repuest      reduction           1gw
 74      Theater High Altitude Area Defense - Theater    $294.647       s56.ooo         $21.500
         Missile Defense - Demonstration&lidation
 81      National Missile Defense-                        504.091            9.ooo            0
         Demonstration/Validation
 89      Theater Eiigh&Wde Area Defense - Theatkr         261.486        6omo                 0
        ~MissileDefense-Engine
         Development
  137     Tactica’IUmmmned Aerial Vehicle (VAV)           122.004        3omo                 0
        I                                                         I
        1 Total                                         $1,182.2221    $155.ooo         $21.600

Theater Hi&-Altitude Area Defense - Theater Miss&                                                  .
        - Demonstration/Validation (Line 74’)

The BaUistic Missile Defense Organization’s lkcal year 1998budget request of $294.6
million for the Theater High Altitude Area Defense program can be reduced by $66
million because the request is overstated.

The Army had planned to exercise a contract option to acquire 40 User Operational
Evaluation System interceptors in August 1996. The interceptors were to have been
incrementally funded over a 4year period. The W      year 1997appropriation included
funds for the second incremental payment, and the Army’s f&al ye 1998budget
request includes $56 million for the third payment

The criterion for exercising the contract option is one successfhl intercept using the
Theater High Altitude Area Defense radar. AU four intercept tests to date have failed,
and the next test is not scheduled until late 1997. Even if that test is successful, the
contract option cannot be exercised until early 1998. Delaying the contract option
until fiscal year 1998 would allow the Ballistic Missile Defense Organ&&ion to acquire
performance information from Limited User Tests to determine the interceptor’s
operational effectiveness. Contracting for the interceptors before suffkient
operational testing could result in deploying a substandard system to combat forces
and/or acquiring of an unsatisfactory weapon system that may require costly
modification. Because of schedule slips from test failures, it appears unlikely that the

                                                  43      GAO/N&ID-97-212R1998DefenseBudget
ENCLOSURE II                                                             ENCLOSURE II
interceptor contract option will be awarded in Cal year 1997. The project manager
said the User Operational Evaluation system funding being requested in the fiscal year
1998 budget would be carried forward into fkal year 1999. Since the fiscal year 1997
funds can be used to initiate the contract in fiscal year 1998 and the fiscal year budget
request will not be used until fiscal year 1999,the fiscal year 1998budget request can
be reduced by $56 million. DOD agreed with the reduction but said the amount was
$46.6 million. However, the program office agreed with the $56 million amount and
noted that ti6.6 million was from the fiscal year 1997appropriation

The User Operational Evaluation system interceptor contract option cannot be
exercised in fiscal year 1997,and the authority to spend the $21.5million remaining in
.unobligated fiscal year 1996funds will expire if they are not obligated by September
36, 1997. The project manager said he would prefer to use the expiring f7scal year
1996 funds to fund fkcal year 1997program requirements and carry forward the fiscal
year 1997funds into fiscal year 1998. DOD said that $6.1 million was used for other
purposes and $15.4 million is still unobligated. However, it did not provide additional
information or documentation to support its position. Therefore, these funds are
available for reprogramming or rescission during the remainder of Gscal year 1997.

National Missile DefenseDemonstrationAklidation
me 811

The Ballistic Missile Defense Organization’s fiscal year 1998budget request of $594.1
million for National Missile Defense can be reduced by $9 million because an
equivalent amount of fiscal year 1997 funds is available to meet fiscal year 1998
program requirements.

The Ball&tic Missile Defense Organization’s fiscal year 1997 appropriation for National
Missile Defense integration included $25 million for up to three concept definition
contra& for the study phase of the Lead System Integrator competition. On April 25,
1997,the Ballistic Missile Defense Organization awarded two concept de&&ion
contracts at $8 million each for a total of $16 million, and a budget official
representing the agency stated there was no specifk planned use for the remaining $9
million. According to DOD, the $9 million will be used to of&t the Secretary’s
request for additional funding for this program. Since these funds will not be used to
award a third concept definition contract, the $9 million can be used to o&et the
fiscal year 1998 budget request




                                          44         GAO/NsIAD97-212Fi1998DefenseBudget
ENCLOSURE II                                                         ENCLOSURE II
Theater H&h-Altitude Area Defense - Theater
     e Defense - EnP;ineerW/Manufacturinnufacturing
]Develooment (Line 891

The BaUistic Missile Defense Organization’sfiscal year 1998budget request of $261.5
million for the Theater High Altitude Air Defenseprogram can be reduced by $60
million because the request is overstated.

Flight tests failures have delayed the ~BC%Iyear 1997planned procurement of a second
Theater High Altitude Area Defense radar for the engineering and manufacturhg
development phase. Furthermore, the contract cannot be awarded unGl the decision
to proceed into that phase is approved. The earliest, the engineering and
manufacturing development contract cau be awarded is Jan-       1998. Therefore, the
Gscal year 1998request for $60 million for the second incremental payment is not
needed and can be denied to more closely align the program’s funding with its
technical progress.

In addition, during the program’s current demonstration and validation phase, the
Army procured 20 interceptors for flight t&s. Only 15 flight tests are now scheduled;
therefore, the 5 remaining interceptors are excess to the Army’s needs. Because they .
use the same components, these live interceptors can be used to meet half of the
fiscal year 1998requirement for 10 partial interceptors that are to be used for safety
and hazard assessmenttests during the early engineering and manufacturing
development phase. The project office agreedthat five demonstration and validation
interceptors could be used in the early engineerhg and manuf&tMng development
tests and stated that the interceptors were estimated to cost $3 million each or about
$15 million.

The project manager would prefer to carry forward the fiscal year 1997 funds
earmarked for the second Theater High Altitude Area Defense radar into heal year
1998. However, the second radar cannot be procured until the second Quarter of fiscal
year 1999. Further, a decision on the status of the program is currently being
reviewed at the DOD and BallMc Missile Defense Organhtion level and could result
in a complete revision of the program.

DOD agreed with the $6~million reduction and the use of the five interceptors that we
proposed. The program office plans to use the $15 million to fund additional testing.




                                         45        GAO/NsIAD-97-212R1998Defense Budget
ENCLOSIJREII                                                            ENCLOSUREII

Tactical Unmanned Aerial Vehicle rUAQ
&ine 137)

The Defense Airborne ReconnaissanceOfhCe’sfiscal year 1998budget request of $122
million can be reduced by $30 million. The $30 million, which was included for low-
rate production of up to six Outrider Tactical Unmanned Aerial Vehicle systems, can
be denied because the planned commitment to low-rate production is premature.

DOD is already acquiring 6 Outrider systems with 24 aircraft as part of an Advanced
Concept Technology Demonstration to evaluate the Outrider’s military utility. A senior
program official stated that operational demonstrations conducted as part of the
advanced concept technology demonstration will provide a sufficient basis for making
the low-rate initial production decision. However, the upcoming demonstration will
not prove whether the Outrider can meet user needs and/or is ready for the planned
low-rate initial production comrnltment in April 1998. Furthermore, our past work
shows that awarding production contracts before operational testing has resulted in
deliveries of unmanned aerial vehicle systems that are unable to meet user
requirements. Therefore, the fiscal year budget request can be reduced by $30 million.

DOD did not agree. It noted that without the $30 million in fiscal year 1998 funds, the.
low-rate initial production phase would be eliminated, production representative assets
would not be produced, and the production and fielding of the system would be
delayed at least 1 year. However, we believe that since DOD is acquiring 6 systems
with 24 airplanes, it has the opportunity to operationally test the Outrider’s
performance and ensure that they are operationally effective and suitable for low-rate
production. Furthermore, if the Outrider is assessedpositively during the Advanced
Concept Technology Demonstration, DOD could modify the demonstration hardware
to the production representative design for use during the operational testing and
could field the residual assets to provide an interim capability. If the required changes
are so sign&ant that the Advance Concept Technology Demonstration systems
cannot be made production representative, DOD guidance indicates that a new
competition should be conducted.




                                          46        GAO/NSIAD-97-212R
                                                                    1998DefenseBudget
ENCLOSUREIII                                                            ENCLOSUREIII


                            SCOPE AND METHODOLOGY

We reviewed DOD’s procurement and RDT&E programs that we identified from our
ongoing assignments and the initial phase of this assignment as having cost, schedule,
performance, or programmatic concerns. To achieve our objectives of identifying
potential reductions to the fiscal year 1998 requests and potential rescissions of prior
years’appropriations, we interviewed program officials and reviewed program
documentation such as budget requests and justifications, monthly program status
reports, correspondence, briefing reports, and accounting and fmancial reports.

We performed our work at numerous DOD and military service organizations. Some
of the organizations we visited were

- OfEce of the Secretary of Defense and Army, Navy, Air Force, and Marine Corps
  headquarters,Washington, DC.;

- Army Materiel Command, Alexandria, Vii

- Army Aviation and Troop Command, St. Louis, Missouri;

- Army Tank-Automotive and Armaments Command, Warren, Michigan;

- hy Missile Command and Ballistic Missile Defense Organization, Huntsville,
  mama;
- Army Space and Strategic Defense Command, Huntsville, Alabama;

- Program Executive office, Theater Missile Defense, Huntsville, Alabama;

- Naval Air and Sea Systems Commands, Arlington, Virgin%

- Naval Undersea Warfare Center Division, Newport, Rhode Island;

- Air Force Materiel Command, Space and Missile System Center, Los Angeles,
  Calif0rn.i~

- Air Force Materiel Command, Aeronautical Systems Center, Wright-PattersonAir .
  Force Base, Ohio; and

- Air Force Materiel Command, Electronic Systems Center, Hanscom Air Force Base,
  Massachusetts.

                                           47         GAO/IWAD-97-212R1998DefenseBudget
ENCLOSURE IV                                                    ENCLOSUREIV


                       MAJOR CONTRIBUTORSTO THIS LETI’ER

NATIONAL SECURITY AND INTERNATIONAL
       DIVISION. WASHINGTON. DC.

Robert J. Stolba, Project Director
Wanda M. Slagle, Project Manager
Raymond W. Allen
Peris Cassorla
James A. E&as
Daniel M. Fleming
Gregory K Harmon
Thomas W. Hopp
Richard J. price
Charles F. Rey
Bruce H. Thomas
Homer H. Thomson
Charles A Ward

,4YIMNTA FJEW OFFICE

Tana M. Davis
Laura L D&and
Lee k Edwards
Dayna L. Foster
Leon S. Gill
William R. Graveline
Bobby D. Hall
Barbara H. Haynes
Mark k Lambert
Carol T. Mebane
Danny G. Owens
John W. Randall, Jr.
Wendy P. Smythe
Dana S. Solomon
John S. Warren, Jr.




                                      48      GAONX4D-97-212R 1998 Defense Budget
ENCLOSURE XV                                                ENCLOSUREIV


BOSTON FIELD OFFICE

Raffaele Roffo
Ralph L. Tavares
Paul G. Williams

CHICAGO/DAYTON FIELD OFFICE

Michael W. A&en
Leonard L. Benson
Edward R. Browning
Arthur L. Cobb
Johnetta C. Gatlin-Brown
Robert D. Murphy
Richard L. Strittmatter

KANSAS CITY/ST. LOUIS F+IELDOFFICE

Gary L. Billen
Charles 0. Burgess
Richard E. Burrell
LElUlikKay
Nora L. Landgraf
Robert D. Spence

LOS ANGELES FIELD OFFICE

Carlos M. Garcia
James C. Geibel
Samuel L. Hinojosa
Noel Lance
Steve Martinez
James D. Moses
Lorene S. Same
Allen D. Westheimer




 (707214)

                                     49   GAO/NE&ID-97-212R 1998 Defense Budget
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