United States General Accounting Office GAO Report to the Secretary of Defense October 1997 ACQUISITION REFORM Effect On Weapon System Funding GAO/NSIAD-98-31 United States GAO General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-272651 October 29, 1997 The Honorable William Cohen The Secretary of Defense Dear Mr. Secretary: Over the last several years, the Department of Defense (DOD) has placed priority attention on reforming its acquisition processes and has emphasized that savings resulting from acquisition reforms are needed to help fund weapons modernization. Responding to a request by the Under Secretary of Defense for Acquisition and Technology, the military services estimated acquisition reform cost reductions on 63 major weapon programs. We have reviewed the services’ estimates to determine the extent to which the reported cost reductions from acquisition reform will provide funds from approved budgets to support modernization. In March 1996, the Under Secretary of Defense for Acquisition and Background Technology directed DOD service acquisition executives and the Director, Defense Logistics Agency, to provide consistent data supporting their acquisition reform cost reduction estimates. According to DOD, the services generally used the 1995 President’s budget as the baseline for estimating cost reductions because it reflected the financial and program content of weapon programs in mid-1994, before DOD’s current acquisition reform efforts were implemented. The services compared the 1995 President’s budget to the 1997 President’s budget to estimate cost reductions from acquisition reform. They also estimated the cost reductions relating to current acquisition reform initiatives beyond fiscal year 2002. As we discussed in our recent high-risk report1 on defense weapon systems acquisition, the ultimate effectiveness of DOD’s current initiatives to reduce the cost and improve the outcomes of its acquisition processes cannot yet be fully assessed because they are in various stages of implementation. DOD is pursuing a number of positive initiatives that could, over time, improve the effectiveness of its acquisition processes. However, it may take several years of continued implementation before tangible results can be documented and sustained. 1 High-Risk Series: Defense Weapon Systems Acquisition (GAO/HR-97-6, Feb. 1997). Page 1 GAO/NSIAD-98-31 Acquisition Reform B-272651 While we continue to support DOD’s effort to reform its acquisition Results in Brief processes, our review raises concerns about the extent to which cost reductions from acquisition reform that the services have reported will be available to fund DOD’s modernization program in the near term. Of the $29 billion in estimated cost reductions reported by the services, our analysis shows that only $7.2 billion, or 25 percent of the reductions, are expected to occur between 1995-2002 from an approved budget. Most of the remaining $21.8 billion reported by the services are reductions that either occurred before 1995 or are anticipated to occur beyond fiscal year 2002. A significant portion of the $7.2 billion had been used to meet needs within the program generating the reduction. Our review also indicates that acquisition reform cost reductions may be offset by cost increases elsewhere in the programs. Our analysis of 33 of the 63 programs reporting acquisition reform cost reductions shows that after taking into account these reductions and after adjusting for inflation and quantities of systems being bought, total acquisition costs for these programs increased an average of 2 percent. This suggests that the estimated cost reductions from acquisition reform are being offset by cost increases elsewhere in the programs or reinvested within the programs. Consequently, few funds will be available for other DOD acquisition programs. We excluded classified programs and others that could not be fairly compared to the baseline from our analysis. The services estimated that acquisition reform reduced the cost of One Quarter of DOD’s acquiring major weapon systems by about $29 billion. However, our Estimated Cost review indicated that only about one quarter of that amount ($7.2 billion) Reductions Reflect represents reductions from approved budgets and is expected to occur between fiscal year 1995 and 2002. About $5.6 billion represents Reductions From unbudgeted cost reductions based on actions occurring in years before the Approved Budgets baseline 1995 President’s budget and about $13.9 billion is expected to occur after fiscal year 2002—the last year covered by the President’s 1997 budget. The remaining $2.3 billion of the $9.5 billion in cost reductions of the services’ estimates occurring between fiscal year 1995 and 2002 were unbudgeted cost reductions. (See fig. 1.) Page 2 GAO/NSIAD-98-31 Acquisition Reform B-272651 Figure 1: DOD’s Estimated Cost Reductions From Acquisition Reform Dollars in billions 1995 Baseline 2002 $5.6 $9.5 $7.2 $2.3 $13.9 Reductions from approved budgets Unbudgeted reductions DOD reported cost reductions from acquisition reform for 63 of its major weapon programs. Ten of these programs account for about 65 percent of the estimated $29-billion reduction in the cost of developing and procuring these programs. One program, the Air Force’s C-17 program, accounts for $5.4 billion, or about 19 percent of the $29 billion. In February 1997, we reported that C-17 program costs had only decreased by $174 million.2 Although the C-17 program production costs decreased, these savings were offset by increases for research and development, aircraft modifications, military construction, and field support. Figure 2 shows DOD’s estimated cost reductions due to acquisition reform for the 10 programs claiming the largest reductions. (See app. I for a description of 2 Military Airlift: Options Exist for Meeting Requirements While Acquiring Fewer C-17s (GAO/NSIAD-97-38, Feb. 19, 1997). Page 3 GAO/NSIAD-98-31 Acquisition Reform B-272651 each of these 10 weapon programs and the types of acquisition reform initiatives DOD says it is implementing to achieve the cost reductions.) Figure 2: Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions Dollars in billions C-17 5.4 F/A-18E/F 3 JDAM 2.9 Javelin 1.4 DDG-51 1.2 F-22 1.1 NAVSTAR GPS 1 Longbow Apache 1 LPD-17 1 JTIDS 0.7 0 1 2 3 4 5 6 Reductions from a budget Unbudgeted reductions Page 4 GAO/NSIAD-98-31 Acquisition Reform B-272651 Among the services, the Air Force is claiming the largest amount of total acquisition reform cost reductions, estimated at $14.9 billion, or 51.6 percent. The Navy follows with about $8.9 billion (30.6 percent), and the Army with about $5.2 billion (17.8 percent). Using estimates contained in the December 1993 and December 1995 Estimated Cost of Selected Acquisition Reports (SAR), we analyzed the costs for 33 of 63 Major Weapon weapon programs reporting acquisition cost reductions to determine the Programs Increased effect of acquisition reform on program cost estimates. The 33 programs account for about $17.7 billion of the $29 billion in acquisition reform cost Despite Acquisition reductions reported by the services (see app. III). Our analysis shows that Reform the cost of the programs increased, on average, by about 2 percent, after adjusting for quantity changes and inflation. Among the services, the Army showed a 0.5-percent decrease, the Navy an increase of 1.4 percent, and the Air Force showed an increase of 3.2 percent. Twenty-three of the 33 programs experienced an average cost increase of 3.1 percent, with the increase ranging from 0.5 to 66 percent. Cost increases for these programs ranged from $19.9 million to $2.2 billion and averaged about $478 million (fiscal year 1997 dollars). These increases suggest that acquisition reform cost reductions for these programs have been offset by cost increases or by reinvestments within the programs. Ten of the programs we analyzed experienced cost decreases ranging from 0.3 to 19 percent, with an average cost decrease of 4 percent. The cost reductions for these programs ranged from $15.3 million to $716.1 million with an average decrease of $293.4 million (fiscal year 1997 dollars). In commenting on a draft of this report, DOD generally concurred with the Agency Comments comments and views presented in the report and stated that DOD shares and Our Evaluation our concern about the extent to which acquisition reform cost reductions would be available to fund modernization. DOD’s comments are presented in their entirety in appendix IV. We analyzed the services’ estimates of cost reductions attributed to Scope and acquisition reform for development and procurement of their major Methodology weapon programs.3 To determine if acquisition reform initiatives 3 For the purposes of this report, we define cost reductions as reductions to the costs of developing and procuring weapon systems. We exclude reductions claimed in operations and maintenance (O&M) costs since most programs did not report O&M cost reductions. Of the total of about $16 billion in O&M cost reductions that was reported, about $14 billion was claimed by the LPD-17 program, which estimated that the reductions would occur after fiscal year 2002. Page 5 GAO/NSIAD-98-31 Acquisition Reform B-272651 generated additional funds for modernization, we compared the cost estimates of 33 of the 63 programs reporting acquisition reform cost reductions to determine whether the costs had increased or decreased. Initially, we included all major weapon systems that reported acquisition reform cost reductions. However, we then eliminated 30 programs that (1) had classified cost information, (2) did not have a SAR that we could use as a baseline, (3) experienced a significant program restructuring, and/or (4) did not report production costs for the system. Our methodology was adapted from one previously used by our office and the Rand Corporation to evaluate the effect of acquisition reform on weapon system costs.4 For the 33 programs selected for analysis, we used current program estimates from the December 1993 SAR as a baseline and compared them to the current estimate of the December 1995 SAR. These two periods were selected because they coincided with the time periods DOD used to estimate cost reductions from acquisition reform. The programs were adjusted for quantity changes and the effects of inflation because such changes are often caused by forces outside the program. We normalized the quantity differences between the 1993 and 1995 SARs by adjusting the total costs reported in the December 1995 SAR to reflect the 1993 SAR baseline quantity. To normalize the quantity, we subtracted the cost changes attributed to variances in program quantities. This is one of three common techniques used to normalize quantity.5 To determine any cost differences between the December 1993 and 1995 SAR, we calculated the cost variance for each system by comparing the adjusted current estimate of the December 1995 SAR total program cost to the current estimate of the December 1993 SAR. All of the calculations were performed using base year dollars. In some cases, the base year dollar from the December 1993 SAR differed from the December 1995 SAR. In those cases, we used the same inflator the program used to inflate the December 1993 SAR information. If the SAR did not contain information on the inflation factor that was used, we used the DOD deflators published by the Office of the Under Secretary of Defense (Comptroller). 4 Acquisition: DOD’s Defense Acquisition Improvement Program: A Status Report (GAO/NSIAD-86-148, July 23, 1986) and Edmund Dews and Giles K. Smith, Acquisition Policy Effectiveness: Department of Defense Experience in the 1970s, Rand Corp. (R2516-DR&E, Oct. 1979). 5 Paul G. Hough, Pitfalls in Calculating Cost Growth from Selected Acquisition Reports Rand (N-3136-AF, 1992). Page 6 GAO/NSIAD-98-31 Acquisition Reform B-272651 The results using this methodology have three important limitations: • First, the results of our analysis cannot be exclusively linked to the acquisition reform initiatives because of the effect of other factors such as prior improvement programs, program stretch-outs, and other unknown factors. • Second, the acquisition reform initiatives have only been in use for a few years. The full cost impact of acquisition reform will likely not be known for several years until programs developed and produced under the new acquisition process are delivered. • Third, the effect of reinvesting the cost reductions in programs cannot be separated from other program cost changes. The National Defense Authorization Act for Fiscal Year 1997 required DOD to conduct a Quadrennial Defense Review. As part of the review, DOD assessed a wide range of issues, including the defense strategy of the United States and the force structure required to support that strategy. As a result, DOD may reduce the quantities being bought of some weapon programs. Our analysis does not take into account the effect of any restructuring resulting from the Quadrennial Defense Review. We reviewed reports from the Congressional Research Service and DOD, as well as our own prior reports. We also interviewed Office of the Secretary of Defense, Navy, Army, and Air Force officials responsible for developing and implementing acquisition reform. This review was conducted in accordance with generally accepted government auditing standards. We are sending copies of this report to appropriate congressional committees; the Secretaries of the Army, the Navy, and the Air Force; and the Director of the Office of Management and Budget. Copies will be made available to others upon request. Page 7 GAO/NSIAD-98-31 Acquisition Reform B-272651 If you or your staff have any questions concerning this report, please contact me on (202) 512-4841. Major contributors to this report were Charles W. Thompson, Assistant Director; Jose A. Ramos, Evaluator-in-Charge; and Mary Offerdahl, Senior Evaluator. Sincerely yours, David E. Cooper Associate Director Defense Acquisitions Issues Page 8 GAO/NSIAD-98-31 Acquisition Reform Page 9 GAO/NSIAD-98-31 Acquisition Reform Contents Letter 1 Appendix I 12 C-17 Globemaster III 12 Weapon Programs F/A-18 E/F Naval Strike Fighter 12 Claiming the Largest Joint Direct Attack Munition 13 Javelin Advanced Antitank Weapon System-Medium 14 Acquisition Reform DDG-51 Guided Missile Destroyer 14 Cost Reductions F-22 Advanced Tactical Fighter 15 NAVSTAR GPS 15 Longbow Apache 16 LPD-17 Amphibious Transport Dock Ship 16 Joint Tactical Information Distribution System 17 Appendix II 18 Department of Defense Estimates of Acquisition Reform Cost Reductions by Program Appendix III 21 List of Weapon Systems We Reviewed Appendix IV 23 Comments From the Department of Defense Figures Figure 1: DOD’s Estimated Cost Reductions From Acquisition 3 Reform Figure 2: Weapon Programs Claiming the Largest Acquisition 4 Reform Cost Reductions Page 10 GAO/NSIAD-98-31 Acquisition Reform Contents Abbreviations DOD Department of Defense GPS Global Positioning System JTIDS Joint Tactical Information Distribution System JDAM Joint Direct Attack Munition O&M operations and maintenance SAR Selected Acquisition Reports Page 11 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions The C-17 is a wide body, air refuelable, four engine, turbofan aircraft that C-17 Globemaster III is the replacement for the C-141 transport, and it will complement the larger, but less maneuverable, C-5 aircraft. The Air Force’s C-17 program estimated cost reductions of about $5.4 billion due to acquisition reform cost reductions. This amount was arrived at by adding the $2.7 billion in savings resulting from a Should Cost review, $1.7 billion in savings projected from accelerating the production schedule, and $1 billion in savings due to using a multiyear procurement strategy.1 The Air Force attributed these reductions to the use of acquisition streamlining, best practices, and cost reduction initiatives. Specifically, according to the Air Force, it used integrated product teams and reduced specifications, standards, and contract data requirements. Also, the team identified reductions in direct labor, overhead, and work to offload from the prime contractor to suppliers. In February 1997, we reported that despite the cost reduction initiatives taken by the government and the contractor, the total estimated program cost for the C-17 had only decreased by about $174 million from the $43 billion January 1994 Air Force cost estimate.2 C-17 production cost savings were offset by increased cost estimates for research and development, aircraft modifications, military construction, and field support. The contract prices for the last 50 aircraft could increase by an additional $1 billion because of the ceiling prices contained in the multiyear production contract. The Navy’s F/A-18 E/F program follows prior unsuccessful attempts to F/A-18 E/F Naval modernize the Navy’s tactical aviation fleet. The program originated from Strike Fighter the 1988 Hornet 2000 study conducted by the Naval Air Systems Command and McDonnell Douglas Aerospace Corporation and was approved as a major modification program in 1992. This aircraft is a high-performance twin-engine, multimission aircraft that provides flight escort, interdiction, fleet air defense, close-air support, and tactical reconnaissance. According to the Navy, the estimated total program cost will be $89.2 billion, $5.8 billion in development costs and $83.4 billion in procurement costs for 1,000 aircraft.3 1 In 1994, the Air Force performed a should cost review to promote economies and efficiencies that would make the C-17 program more affordable. This review covered the remaining 88 aircraft buy. 2 For additional information on the C-17 program, see Military Airlift: Options Exist for Meeting Requirements While Acquiring Fewer C-17s (GAO/NSIAD-97-38, Feb. 19, 1997). 3 For additional information on the F/A-18 E/F program, see Navy Aviation: F/A-18E/F Will Provide Marginal Operational Improvement At High Cost (GAO/NSIAD-96-98, June 18, 1996). Page 12 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions According to the Navy, the program avoided about $3 billion in costs prior to fiscal year 1995. It attributes these cost avoidances to innovations and changes in the relationship with the contractors that led to a design that could affordably meet operational mission and inventory requirements. A multidisciplinary government-industry integrated product team was used throughout the engineering and manufacturing design process. Concurrent design and manufacturing implementation efforts, according to the Navy, eliminated serial work and multiple design iterations. In addition, investment in high speed machining, laser alignment tools, and use of modern tooling techniques contributed to achieving the affordability goal, according to the Navy. The Joint Direct Attack Munition program (JDAM) is a joint Air Force and Joint Direct Attack Navy program to provide current fighter and bomber aircraft the capability Munition to accurately and precisely attack fixed, or relocatable, land and maritime targets under adverse weather conditions from medium and high altitudes. JDAM is a tail guidance kit, consisting of an inertial navigation system aided by the Global Positioning System (GPS), that is used to upgrade existing general purpose bombs. Through controlled tail fin movements, the kit directs the bomb to the target.4 The Air Force estimates that the JDAM program cost reductions will be about $3 billion. Research, development, test, and evaluation cost savings accounted for $49.8 million of the $78.1 million reported as cost reductions from an approved budget. These cost reductions were attributed to efficient use of wind tunnel testing, which resulted in reducing or eliminating some tests, reduced the cost of test instrumentation, and streamlined the B-1/JDAM test program. The Air Force attributed the remainder ($28.3 million) to reducing the unit costs from $42,000 to $14,000. The balance of the cost reduction is comprised of a $2.9-billion cost avoidance, which the Air Force attributes to the reduction in the unit price of the system. The Under Secretary of Defense (Acquisition and Technology) designated JDAM as one of the Defense Acquisition Pilot Programs.5 4 For additional information, see Joint Direct Attack Munition: Low-Rate Initial Production Decision (GAO/NSIAD-97-116R, Mar. 17, 1997). 5 Defense Acquisition Pilot Programs are given regulatory and statutory relief to explore new approaches to doing business. Page 13 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions The Javelin program is a joint Army and Marine Corps program expected Javelin Advanced to increase the infantry’s lethality against advanced armor threats. Javelin Antitank Weapon is a man portable, fire-and-forget, antitank weapon system that is System-Medium composed of two major components—a command launch unit and a round, which is a missile sealed in a disposable launcher container. For operation of the system, the round is mated with the launch unit, but the launch unit may also be used in a stand-alone mode for battlefield surveillance and target detection. The Army expects Javelin to defeat armored targets out to distances of 2,000 meters, during the day or night and in adverse weather.6 The Army estimates that Javelin cost reductions will be about $1.4 billion. According to the Army, cost reduction efforts, accelerated procurement, multiyear contracting, and a productivity improvement program will result in these savings. The procurement savings were used to accelerate production and finance producibility and operation and support cost reduction initiatives, and a portion was returned. The DDG-51 is a multimission guided missile destroyer that can operate DDG-51 Guided independently or as a unit of Carrier Battle Groups and Surface Action Missile Destroyer Groups, in support of Underway Replenishment Groups and Marine Amphibious Task Forces. These ships operate in multithreat environments that include air, surface, and subsurface threats. Further, the DDG-51 can respond to low intensity conflict/coastal and littoral offshore warfare in addition to open ocean conflict providing or augmenting power projection and forward presence requirements. The ship features an all steel hull and deckhouse and a gas turbine engine propulsion system. The DDG-51 program estimates that it will save over $1.2 billion in program costs. Part of the savings was attributed to an affordability initiative started by the program manager who voluntarily offered to reduce the program’s budget by $30 million per ship, beginning with the Flight IIA ships in fiscal year 1994. The program office maintains a database to track the initiatives and estimates that the program will achieve about $20 million of the $30 million. According to program officials, the savings were achievable due to adherence to acquisition reform principles. 6 For additional information on this program, see Army Acquisition: Javelin Is Not Ready for Multiyear Procurement (GAO/NSIAD-96-199, Sept. 26, 1996). Page 14 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions The F-22, the Air Force’s next-generation air superiority fighter, is F-22 Advanced expected to be a low-observable, highly maneuverable aircraft and is to be Tactical Fighter used to penetrate enemy airspace and achieve a first-look, first-kill capability by using air-to-air weapons against enemy aircraft. The F-22 is characterized by its low observable highly maneuverable airframe, a new engine capable of supersonic cruise without having to use an afterburner, and advanced integrated avionics. According to the Air Force, the F-22 achieved cost savings of $5 million by reducing contract data requirements and staffing. In addition, the F-22 achieved a cost avoidance of $1.1 billion by employing lean logistics, according to the Air Force. These savings may be offset by the recommendations of the F-22 Joint Cost Estimating Team, which recommended extending the engineering and manufacturing development phase to reduce program risk. As a result, an additional $2.2 billion will be required, which, the Air Force says, will be funded by eliminating $706 million budgeted for preproduction verification aircraft and infusion of $1,453 million, which is funded by extending the production ramp up and decreasing the number of aircraft procured during production ramp up. In addition, the Joint Cost Estimating Team expects to contain the $13.1 billion in production cost growth through the use of multiyear contracts, producibility enhancements, business and human resource consolidations, outsourcing, and aggressive material management. Our review of the Air Force’s F-22 restructuring plan found that the projected costs are optimistic.7 The Air Force’s planned reductions are greater than those achieved on prior fighter programs. NAVSTAR GPS is a space-based radio positioning, navigation, and time NAVSTAR GPS distribution system. GPS provides precise, continuous, all-weather, common-grid positioning, velocity, navigation, and time reference capability to multiple users worldwide. The GPS Block IIF program is expected to develop, produce, verify, and field and support space and ground systems to sustain GPS in the next century. The Air Force anticipates procuring 33 Block IIF satellites. The Air Force estimates that GPS cost reductions exceeded $1 billion. According to the Air Force, the GPS Block IIF program saved $181 million by implementing acquisition reform and competing the satellite buy. In addition, the program reduced the number of military specifications and 7 For additional information, see Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program (GAO/NSIAD-97-156, June 4, 1997). Page 15 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions military standards from 100 to 2 and reduced the number of contract data requirements from 300 to 3. Further savings were achieved by using a multiyear procurement to purchase the Block IIF satellites, as well as the use of commercial off-the-shelf hardware and software for the satellite production and the control system development. In addition, the program estimated an additional $821 million in unbudgeted cost reductions that were attributed to the same efforts used to achieve the savings reductions. This program reported cost reductions of $1 billion. All helicopters in the Longbow Apache Apache fleet are to be modernized with new avionics and be capable of firing both the laser-guided Hellfire missile and a radar-aided Longbow Hellfire “fire-and-forget” missile. These improvements are designed to, among other things, allow the Apache to conduct precision attacks in adverse weather, automatically engage multiple targets, and operate on the digital battlefield of the future. Additionally, 227 of the 758 upgraded Apaches will be equipped with a new mast-mounted, millimeter-wave fire control radar and more powerful engines. The Longbow Apache weapon system is composed of three components—a modernized Apache helicopter, a fire control radar, and a Longbow Hellfire missile. The Army plans to upgrade 227 of its AH-64A Apache attack helicopters into a new version known as the AH-64D Longbow Apache. The $1 billion cost reduction is attributed to continuous use of a multiyear procurement strategy and increasing the yearly quantities to an economic order quantity of 72 aircraft per year. Additionally, the Longbow Apache has incorporated a number of acquisition reform initiatives, according to the Army. For example, in the request for proposals, the Army said performance specifications replaced 18 military specifications, military standards were reduced from 29 to 1, and the statement of work was reduced from 113 to 25 pages. Further, the contract data requirements were reduced from 117 to 14, and the DOD Cost/Schedule Control System Criteria were replaced with the contractors’ management systems. These cost savings for aircraft procurement, according to the Army, were applied within the program to increase the procurement quantities in the first multiyear contract and the outyear savings were given back to the service. The Navy estimates that the LPD-17 program, a functional replacement for LPD-17 Amphibious the LPD-4, LSD-36, LKA-113, and LST-1179 classes of amphibious ships Transport Dock Ship used for embarking, transporting, and landing elements of the Marine landing force, will avoid $1 billion in procurement costs. According to the Page 16 GAO/NSIAD-98-31 Acquisition Reform Appendix I Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions Navy, acquisition reform reduced costs due to a reduction of specifications, equipment, and the application of advanced computerized modeling and simulation. Procurement cost avoidances of $1 billion were achieved, according to the Navy, by eliminating the need for a dual-source arrangement for the program. The Navy expects to improve the ship’s quality and reduce ownership costs by selecting higher quality systems and components during ship design and construction. Also, they expect to avoid costs by using more commercial design and construction methods and the use of commercial off-the-shelf equipment. The Joint Tactical Information Distribution System (JTIDS) is a family of Joint Tactical terminals to provide improved combat capability in fighter aircraft, Information command and control centers, and surface air defense units by providing Distribution System real-time, netted, jam-resistant, secure data, and voice communications. JTIDS is a joint service program with the Air Force as the lead service. The Air Force estimates that JTIDS cost reductions exceeded $745 million. According to the Air Force, the JTIDS program office incorporated various acquisition reform initiatives that contributed to reducing the cost of the terminals. The Air Force estimated a $143-million cost reduction in terminal production costs from acquisition reform initiatives such as eliminating contract data and testing requirements. In addition, Multifunction Information Distribution System terminal costs were reduced by $486 million by implementing the cost savings initiatives developed by the Air Force’s Affordability Manufacturing Technology Demonstration program. Page 17 GAO/NSIAD-98-31 Acquisition Reform Appendix II Department of Defense Estimates of Acquisition Reform Cost Reductions by Program Dollars in millions Acquisition reform Total cost from Total cost from cost reduction 12/93 SAR 12/95 SAR Air Force programs Advanced Medium Range Air-to-Air Missile $701.0 $12,917.2 $11,388.0 E-3 Airborne Warning and Control System 211.7 893.4 903.4 Radar B-1 Conventional Mission Upgrade Program 8.2 No SAR 1,089.1 B-2 Advanced Technology Bomber 60.0 No SAR No SAR C-130J 300.5 No SAR No SAR C-17A Globemaster III 5,366.0 21,368.1 41,750.6 Cheyenne Mountain Update/Cheyenne 15.0 1,652.0 1,761.4 Mountain Complex C/ITWAA Common Missile Warning System 207.7 See Army See Army Defense Meteorological Satellite 0.0 2,042.2 2,343.4 Program/NPOESS F-22 Air Superiority Fighter Program 1,129.7 71,590.9 70,093.1 NAVSTAR GPS 1,002.0 11,538.1 16,840.1 JDAM 2,960.3 681.5 2,470.6 Joint Primary Aircraft Training System 300.0 302.8 3,663.8 Joint Service Imagery Processing System 18.9 666.6 646.2 Joint Surveillance Target Attack Radar System 42.7 9,043.9 9,351.6 JTIDS 745.5 2,005.3 2,089.8 MILSTAR 578.6 Classified Classified Space Based Infrared System 644.0 No SAR 2,576.8 Titan IV Expendable Launch Vehicle 661.8 37,708.5 23,562.2 Army programs Advanced Field Artillery Tactical Data System 0.1 949.7 1,161.6 Advance Threat Infrared 27.2 No SAR 3,378.2 Countermeasures/Common Missile Warning System Abrams Upgrade 744.0 6,397.8 6,694.2 Longbow Apache 1,001.5 8,211.8 8,275.2 Brilliant Anti-Armor Submunitions 50.2 3,254.0 3,042.1 Blackhawk UH-60L 133.2 9,970.2 4,778.6 Bradley Fighting Vehicle System Upgrade 296.6 4,185.3 4,125.9 Chemical Demilitarization 6.6 No SAR 13,612.6 Crusader 29.0 No SAR 2,641.1 Family of Medium Tactical Vehicles 0.1 15,875.3 16,376.0 (continued) Page 18 GAO/NSIAD-98-31 Acquisition Reform Appendix II Department of Defense Estimates of Acquisition Reform Cost Reductions by Program Dollars in millions Acquisition reform Total cost from Total cost from cost reduction 12/93 SAR 12/95 SAR Joint Surveillance Target Attack Radar $15.8 $1,585.7 $1,387.1 System Ground Service Module Javelin 1,425.5 5,096.6 3,826.2 Longbow Hellfire 0.0 3,498.1 2,606.9 Multiple Launch Rocket System 12.5 6,281.5 6,802.8 Palletized Load System 8.6 1,042.2 1,237.2 Patriot (PAC-3, DOD) 158.0 1,772.0 5,899.3 Sense and Destroy Armor (SADARM ) 12.9 4,785.0 2,703.6 Single Channel Ground and Airborne Radio 264.6 4,366.3 3,806.2 System Secure Mobile Anti-Jam Reliable Tactical 540.0 944.8 978.5 Terminal Army Tactical Missile System 340.4 2,590.5 4,409.1 Theater High Altitude Air Defense 101.5 4,819.0 4,947.2 Navy programs Sidewinder AIM-9X 134.4 No SAR 682.3 AN/SQQ-89 Surface Ship Undersea Warfare 48.0 3,820.0 3,996.1 Combat System AV-8B Remanufacture 21.8 No SAR 2,318.3 Cooperative Engagement Capability 367.8 No SAR 2,587.8 DDG-51 Destroyer 1,195.0 56,799.9 57,095.2 E-2C Hawkeye Carrier Based Airborne Early 590.6 No SAR 3,331.1 Warning Command and Control System EHF SATCOM 47.1 2,334.0 2,150.2 F/A-18C/D 24.0 38,921.3 0.0 F/A-18E/F 3,000.0 89,128.1 80,958.7 Joint Standoff Weapon System 143.0 2,878.0 10,564.9 LHD-1 55.0 8,514.4 7,907.9 LPD-17 Amphibious Transport Dock Ship 1,000.0 59.1 72.9 Multifunction Information Distribution System- 12.0 1,092.1 1,129.9 Low-Volume Terminal New Attack Submarine Program 555.3 No SAR 64,891.4 Standard Missile-2 Block I, II, III, A, B 1.0 8,263.8 8,759.5 Standard Missile-2 IV 0.3 4,915.5 864.7 SSN-21 Seawolf- AN/BSY-2 62.8 12,908.2 13,124.3 Naval Undergraduate Jet Flight Training 41.8 5,980.9 5,417.0 System (T-45TS) Tomahawk 566.2 12,649.8 13,847.1 Trident II Missile 190.0 25,513.5 27,702.5 (continued) Page 19 GAO/NSIAD-98-31 Acquisition Reform Appendix II Department of Defense Estimates of Acquisition Reform Cost Reductions by Program Dollars in millions Acquisition reform Total cost from Total cost from cost reduction 12/93 SAR 12/95 SAR UHF Follow-on Communication Satellite $185.0 $1,720.5 $1,868.5 V-22 639.9 6,636.4 46,599.7 Page 20 GAO/NSIAD-98-31 Acquisition Reform Appendix III List of Weapon Systems We Reviewed Dollars in millions 12/95 SAR Program cost Percent of normalized for Program cost program cost quantity 12/93 SAR Increase or Increase or Service Program Base year changes Program cost (decrease) (decrease) Army Advanced Field Artillery Tactical 1996 $1,133.6 $919.9 $213.7 23 Data System Brilliant Anti-Armor Submunitions 1991 2,508.0 2,578.1 (70.1) (3) Blackhawk UH-60L Utility 1971 1,858.7 1,917.5 (58.8) (3) Helicopter Bradley Fighting Vehicle System 1994 3,455.4 3,065.6 389.8 13 Upgrade Joint Surveillance Target Attack 1989 1,064.4 1,272.9 (208.5) (16) Radar System Ground Service Module Javelin Advanced Anti-Tank 1990 3,382.6 3,728.8 (346.2) (9) Weapon System-Medium Longbow Apache 1996 7,366.6 7,010.6 356.0 5 Longbow Hellfire Missile System 1996 2,402.9 2,968.0 (565.0) (19) Multiple Launch Rocket System 1978 3,118.3 3,052.8 65.5 2 Palletized Load System 1993 896.3 997.6 (101.3) (10) Sense and Destroy Armor 1989 1,502.9 906.7 596.2 66 Single-Channel Ground and 1984 2,597.5 3,090.6 (493.1) (16) Airborne Radio System Secure Mobile Anti-Jam Reliable 1992 811.0 754.3 56.7 8 Tactical Terminal Average Cost Increase or (0.5) (Decrease) Navy AN/SQQ-89 Surface Ship 1985 3,418.9 3,429.8 (10.9) (<1) Antisubmarine Warfare System DDG-51 Guided Missile 1987 41,948.2 41,023.5 924.7 2 Destroyer F/A-18 E/F Naval Strike Fighter 1990 54,687.6 53,858.8 828.8 2 LHD-1 Amphibious Assault Ship 1982 6,042.2 6,288.8 (246.6) (4) Navy EHF SATCOM Program 1990 1,891.7 1,875.0 16.7 1 SSN-21/AN/BSY-2 Attack 1990 12,201.2 12,039.9 161.3 1 Submarine-Combat System Standard Missile-2 Block IV 1984 2,565.4 2,619.3 (53.9) (2) Surface-to-Air Missile Standard Missile-2 Block I, II, III 1984 7,061.6 6,975.0 86.6 1 A, B Surface-to-Air Missile Trident II Sea Launched Ballistic 1983 19,776.8 19,563.5 213.3 1 Missile (continued) Page 21 GAO/NSIAD-98-31 Acquisition Reform Appendix III List of Weapon Systems We Reviewed Dollars in millions 12/95 SAR Program cost Percent of normalized for Program cost program cost quantity 12/93 SAR Increase or Increase or Service Program Base year changes Program cost (decrease) (decrease) Ultra High Frequency Follow-on 1988 $1,558.7 $1,433.6 $125.1 9 Communications Satellite Average Cost Increase or 1.4 (Decrease) Air Force Advanced Medium Range 1992 12,003.3 11,923.4 79.9 1 Air-to-Air Missile E-3 Airborne Warning and 1989 730.3 696.2 34.1 5 Control System Radar C-17A Globemaster III 1996 23,174.6 23,053.6 121.0 1 Cheyenne Mountain Update 1989 1,665.0 1,570.8 94.2 6 Defense Meteorological Satellite 1975 875.2 778.9 96.3 12 Program F-22 Advanced Tactical Fighter 1990 50,885.9 49,074.3 1,811.6 4 Joint Surveillance Target Attack 1983 6,119.2 5,813.4 305.8 5 Radar System NAVSTAR Global Positioning 1979 3,364.1 2,593.7 770.4 30 System Satellite NAVSTAR Global Positioning 1979 3,133.0 3,089.3 43.7 1 System User Equipment Titan IV Space Booster 1985 23,653.3 23,160.5 492.8 2 Average Cost Increase or 3.2 (Decrease) Page 22 GAO/NSIAD-98-31 Acquisition Reform Appendix IV Comments From the Department of Defense See comment 1. Page 23 GAO/NSIAD-98-31 Acquisition Reform Appendix IV Comments From the Department of Defense The following are GAO’s comments on the Department of Defense’s letter dated October 3, 1997. 1. DOD’s technical comments were considered and changes were made GAO Comments where appropriate. (707155) Page 24 GAO/NSIAD-98-31 Acquisition Reform Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. For information on how to access GAO reports on the INTERNET, send an e-mail message with "info" in the body to: firstname.lastname@example.org or visit GAO’s World Wide Web Home Page at: http://www.gao.gov PRINTED ON RECYCLED PAPER United States Bulk Rate General Accounting Office Postage & Fees Paid Washington, D.C. 20548-0001 GAO Permit No. G100 Official Business Penalty for Private Use $300 Address Correction Requested
Acquisition Reform: Effect on Weapon System Funding
Published by the Government Accountability Office on 1997-10-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)