oversight

Fiscal Year 2000 Budget: DOD's Procurement and RDT&E Programs

Published by the Government Accountability Office on 1999-09-23.

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

9        Acwuntabilii   * Integrity * ReliebilHy

United States General Accounting                   Office                                 National Security and
Washington, DC 20548                                                            International Affairs Division




           B-282103

           September 23,1999

           Congressional Committees

           Subject: Fiscal Year 2000 Budget: DOD’s Procurement and RDT&E Programs

           The Department of Defense’s (DOD) fiscal year 2000 budget request includes
           $53 billion for weapon system procurement programs and%4 billion for research,
           development, test, and evaluation (RDT&E) programs. As in the past, to assist you in
           your budget deliberations, we examined DOD’s fiscal year 2000 budget request and
           prior years’ appropriations for selected weapon system procurement and RDT&E
           programs. Our objectives were to identify potential reductions in the fiscal year 2000
           budget request, potential rescissions to prior years’ appropriations, and potential
           spending restrictions.

           This letter summarizes and updates information      provided to your staffs from
           April through July 1999. It does not reflect any adjustments     such as
           rescissions of prior year funds or reductions  to requested funding levels that
           may have been taken by the authorizing     and appropriating  committees
           during their reviews of the fiscal year 2000 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.

           In summary, we identified opportunities to reduce the aggregate fiscal year 2000
           procurement and RDT&E requests by about $966.9 million and to rescind prior years’
           total procurement and RDT&E appropriations by $27.5 million. Based on the results
           of our ongoing program reviews and budget scrub review, we found these reductions
           and/or rescissions can be made because schedules have slipped, requirements have
           changed, and issues affecting program funding have emerged since the budget
           request was developed. The potential rescissions include $21.1 million in prior years’
           appropriations for which obligational authority expires on September 30,1999. In
           addition, we identified issues on several program funding requests that Congress may
           want to assure have been satisfactorily resolved before appropriated funds are spent.
           Such potential funding restrictions total $301.9 million.



                                                            /6P 778GAOLNSIAD-99-233R2000Defense Budget
B-282103

PROCUREMEXI’       APPROPRIATIONS

As shown in table 1, we identified about $756.3 million in potential reductions to
DOD’s fiscal year 2000 procurement budget request and about $15.8 mihion in
potential rescissions from DOD’s prior years’ procurement appropriations.

Table 1: Summary     of Potential   Reductions   and Rescissions     to Procurement
Programs


                        I    Potential fiscal year 1     Potential   prior year
                                   2000 reduction                    rescission
                                           $309.322                       $5.000
  Navy                                     163.645                         1.292
  Air Force                                228.292                         9.533
  Defensewide                               55.002
  Total                                  $756.261                      $15.8250


Of the $15.8 million in potential rescissions from prior years’ appropriations,
$9.5 mihion is from expiring fiscal year 1997 appropriations. Details regarding
the potential reductions and rescissions to procurement programs are provided in
appendix I.

We also identified $86 mihion in potential spending restrictions that relate to
procurement programs in DOD’s fiscal year 2000 request. A discussion of the
particulars related to these potential spending restrictions is provided in
Appendix III.

RDT&E      APPROPRIATIONS

As shown in table 2, we identified $210.6 million in potential reductions to DOD’s
fiscal year 2000 RDT&E budget request and a potential rescission of $11.7 mihion
from DOD’s fiscal year 1998 expiring RDT&E appropriations. The potential
reductions include about $14.5 mihion in the F-16 Squadrons line item that DOD has
requested congressional approval to reprogram as part of the fiscal year 1999 DOD
omnibus reprogramming request.




Page 2                                           GAO/MUD-99-233R 2000 Defense Budget
B-282103

Table 2: Summary      of Potential   Reductions    and Rescission   to RDT&E
Programs




Details regarding these potential reductions and rescission are provided in
appendix II.

In addition, we identified potential spending restrictions of $215.9 million in the fiscal
year 2000 request related to RDT&E programs. The particulars relating to these
potential spending restriction are provided in appendix III.

AGENCY     COMMENTS

DOD provided oral comments on a draft of this letter. In general, DOD agreed with
the facts presented in the report but did not necessarily agree with the identified
potential reductions, rescissions, and restrictions. In these instances, where DOD
disagreed, it provided reasons for the disagreements. Where appropriate, we have
revised the individual discussions of the potential reductions, rescissions, and
restrictions in the report to reflect DOD’s disagreements.

SCOPE AND METHODOLOGY

To identify potential reductions, rescissions, and restrictions, we focused on budget
line items with unobligated funds and funds being withheld from the programs in
addition to program cost, schedule, and performance issues. A budget line number is
a designation of a specific program/system within the defense budget. We examined
expenditure documents to determine whether requests were adequately justified and
whether unobligated funds from prior appropriations should be retained. We
obtained status updates from program officials, discussed issues identified, and
obtained their positions on proposed reductions and/or rescissions. Appendix IV
provides more information regarding our scope and methodology.




Page 3                                            GAO/NSIAD-99-233R2000 Defense Budget
B-282103

We are sending copies of this report to the Honorable William S. Cohen, Secretary of
Defense; the Honorable Louis Caldera, Secretary of the Army; the Honorable Richard
Danzig, Secretary of the Navy; the Honorable F. W. Peters, Secretary of the Air Force,
and Jacob J. Lew, Director of the 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
Acquisitions Issues, who may be reached on (202) 5124341. If you or your staffs have
any questions concerning this report, please call James F. Wiggins, Associate
Director, on (202) 5124530. Key contributors to this assignment were Robert J.
Stolba, Project Director, and Wanda M. Slagle, Project Manager.




Henry’L. Hinton, Jr. /
                     J
Assistant Comptroller General




 Page 4                                         GAO/NSIAD-99-233R2000 Defense Budget
B-282103


List of Congressional   Committees


The Honorable John W. Warner
Chairman
The Honorable Carl Levin
Ranking 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 Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

The Honorable Jerry Lewis
Chainnan
The Honorable John P. Murtha
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives




Page 5                               GAO/NUD-99-233R 2000 Defense Budget
                                    CONTENTS


Letter                                                                           1

Appendix I                                                                       9
Potential Reductions and
Rescissions to Procurement
Programs

Appendix II                                                                     32
Potential Reductions and
Rescission to Research,
Development, Test, and
Evaluation Programs

Appendix III                                                                    43
Potential Restrictions to
Procurement and Research
Development, Test, and
Evaluation

Appendix IV                                                                      50
Scope and Methodology

Tables          Table 1: Summary of Potential Reductions and                      2
                  Rescissions to Procurement Programs

                Table 2: Summary of Potential Reductions and                      3
                  Rescission to RDT&E Programs

                Table 1.1: Potential Reductions and Rescissions                   9
                  to Procurement Programs

                Table 1.2: Potential Reductions and Rescission to                10
                  Army Procurement Programs

                Table 1.3: Potential Reductions to Army Missile                  11
                  Procurement Programs




                                           6        GAO/MUD-99-233R 2000 Defense Budget
Table 1.4: Potential Reduction and Rescission                       14
  to Army Procurement of Weapons and’
  Tracked Combat Vehicles Programs

Table 1.5: Potential Reductions to Army Cther                       15
  Procurement Programs

Table 1.6: Potential Reductions and Rescission                      18
  to Navy Procurement Programs

Table 1.7: Potential Reduction to Navy Weapons                      19
  Procurement Programs

Table 1.8: Potential Rescission to Navy Shipbuilding                21
  and Conversion Procurement Program

Table 1.9: Potential Reductions and Rescission                      22
  to Air Force Procurement Programs

Table 1.10: Potential Reductions and Rescission                     23
  to Air Force Aircraft Procurement Programs

Table I.11 Potential Reductions to Air Force                        27
  Missile Procurement Programs

Table 1.12: Potential Reduction to Defense-wide                    30
  Procurement Programs

Table II. 1: Potential Reductions and Rescission                   32
  to RDT&E Programs

Table 11.2: Potential Reductions to Army RDT&E                     33
  3.3.OglYUklS

Table II.3: Potential Reduction to Navy RDT&E                      36
  Programs

Table II.4: Potential Reductions and Rescission to      _          37
  Air Force RDT&E Programs

Table II.5: Potential Reduction to Defense-wide                    41
  RDT&E Programs


                          7         GAONUD-99-233R     2000 Defense Budget
                                                                                           ‘/!
                                                                                            i..


                Table III. 1: Potential Restrictions to Procurement               43
                  and RDT&E Programs




Abbreviations

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


                                            8         GAOMUD-99-233R 2000 Defense Budget
APPENDIX I                                                                               APPENDIX I

                POTENTIAL          REDUCTIONS           AND RESCISSIONS            TO
                                 PROCUREMENT            PROGRAMS

The Department of Defense (DOD) requested $53 billion in procurement funding for
fiscal year 2000. As shown in table 1.1, our review of selected budget line items in the
request and prior years’ appropriations identified potential reductions of about
$756.3 million to the fiscal year 2000 request. We also identified potential rescissons of
$5 million from fiscal year 1998 appropriations, $9.5 million from expiring fiscal year
1997 appropriations, and about $1.3 million from a fiscal year 1989 appropriations with
an extended obligational authority.

Table I.1 Potential      Reductions    and Rescissions        to Procurement       Programs



               I        Fiscal year 2000           I           Potential  rescission
                                     Potential             Fiscal        Fiscal         FiSCd
                   Request          reduction          year 1998     year 1997      year 1989
      Y               $9,738.400        $309.322           $5.000              0              0
  Navy                21,986.700         163.645                0             0         $1.292
  Air Force           19,166.400         228.292                0        $9.533              0
  Defense-
                       2,129.ooo          55.002                0              0              0
  wide
  Total            $53,020.500        $756.261            $5.000        $9.533          $1.292


ARMY PROCUREMENT              PROGRAMS

The Army requested $9.7 billion for procurement programs in fiscal year 2000. As shown
in table 1.2,we identified potential reductions of $309.3 million to the fiscal year 2000
request and a potential rescission of $5 million from fiscal year 1998 appropriations.




                                                               GAOIWJAD-99-233R 2000 Defense Budget
APPENDIX         I                                                                          APPENDIX I

Table 1.2: Potential          Reductions   and Rescission         to Army Procurement         Programs

 dhrs in millions
                                                                                       Potential
                                                       Fiscal year 2000               rescission
                                                                    Potential         Fiscal year
  Procurement         appropriations                  Request      reduction                 1998
  Procurement (inflation adjustment)                $9,738.400              $49.000                0
     Missile                                         1,358.lOO”             162.600                0
     Weapons and Tracked Combat
                                                     1,416.800”               3.000         $5.000
     Vehicles
     Other                                           3,423.900”              94.722                0
  Total                                                                   $309.322         $5.00(1
 his amount is part of the Annyk procurement request of $9,738.4million

Procurement,          Army

          Inflation    Adiustment

The Army’s fiscal year 2000 procurement budget request of $9.7 billion can be reduced
by $49 million because an equivalent amount of fiscal year 1999funds is available to
meet fiscal year 2000 program requirements. DOD is withholding these Army
procurement funds, identified as inflation savings. Since the actual fiscal year 1999
inflation rates are lower than previously forecast, $49 million of the fiscal year 1999
funds can be used to offset the fisca.l year 2000 budget request.

Missile      Procurement,       Armv

The Army requested $1.4 billion for niissileprocurement programs in fiscal year 2000. As
shown in table 1.3,we identified potential reductions of $162.6million to the f=cal year
2000 request.




                                                       10           GAOLNSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                         APPENDIX I

Table 1.3: Potential     Reductions    to Army Missile      Procurement    Programs




      Hellfire   &stem    Summarv     (Line   31

The Army’s fiscal year 2000 budget request of $296.5 million for the Hellfire system can
be reduced by $4.1 million because an equivalent amount of prior year funds is available
to meet fiscal year 2000 program requirements. These fiscal year 1998 funds are
available as a result of the Army’s favorable contract negotiations for the Longbow
Hellfire missiles, containers, tooling, and environmental covers. Program officials said
that the $4.1 million is needed to offset prior congressional reductions and to
supplement engineering services and acceptance testing. They maintain that a
$4.1 million reduction would have a significant impact on their ability to execute the
current program. However, the Army did not consider the need to supplement
engineering services and acceptance testing of sufficient priority to include them in the
fiscal year 2000 budget request. Therefore, since the $4.1 million in fiscal year 1998
funds is not needed to buy the fiscal year 1998 missiles, these funds can be used to offset
the fiscal year 2000 budget request.

      Javelin    (AAWS-M)    System Summarv         (Line   51

The Army’s fiscal year 2000 budget request of $307.7 million for the Javelin can be
reduced by $57 million if the procurement quantity is restricted to the program’s
minimum sustaining rate until uncertainty about the accuracy of the total requirement
cahlation  is resolved.

The Army has procured 8,068 missiles through fiscal year 1999 and has a total missile
requirement of 24,403. However, the Army reports it has recently lowered its
procurement objective to 20,793. The number of weapons needed is determined through


                                               11           GAOMSIAD-99-233R 2000 Defense Budget
APPENDIX I                                                                   APPENDIX I

the capabilities based munitions requirement process. A review of the Army’s latest
published capabilities based munitions requirement process model results shows a
minirnal amount of the requirement is actually based on threat. Uncertainty factors,
reserves, and training account for the remaining portion of the figure. DOD recently
completed its review of the process, and the results are being incorporated into the
Army’s Antiarmor Master Plan. Currently, the services are in the process of updating
their input into the fiscal year 2000 capabilities based munitions requirement report. The
preliminary results show that they may have a greater need for Javelin. However, we
believe that if the new results show a higher Javelin requirement, it would also have to
show increased amounts of uncertainty, reserves, and training unless it takes targets
from the Army’s other weapons because the overall number of targets is decreasing.

According to program officials, the Javelin’s mission is to support early entry forces. The
number of mobile armored targets being assigned to the Army‘s early entry forces has
been reduced since the last calculation. Also, the number of mobile armored targets
assigned to the Army in the early phase of the conflict was reduced by over lOpercent in
one theater and almost 60 percent in the other. These changes would further reduce the
Javelin requirement.

Given the uncertainty related to the total Javelin missile requirement, the number of
missiles procured can be limited to 1,320 missiles, the program’s minimum sustaining
rate. The Army’s fiscal year 2000 budget request includes $307.7 million to procure
Javelin missiles and their associated training equipment. Of this amount, $161.3 million
is to procure 2,682 missiles. Excluding the economic order quantity benefits included in
the fiscal year 1999 price, we estimated the cost of 1,320 missiles to be about
$104.3 million, $57 million less than requested. Army program officials do not believe
that the missiles can be purchased for $79,000 each-the price we estimated if the buy is
cut to the minimum rate. However, they did not know what the price of the missiles
would be.

The program offrice objected to the reduction based on its impact on the average unit
cost of the missile. DOD said that in addition to increasing the average unit cost, the
reduction wouId delay National Guard fieldings and has the potential of negatively
affecting foreign military sales of the antitank weapon system. While the reduction
would probably increase unit cost, DOD and the Army did not provide documentation on
the potential impact on fielding and foreign military sales. If, however, the Army
continues with its acquisition plans without validating the impact of threat on
requirements, it will commit itself to a $1.6 billion, 5-year multiyear procurement.
Therefore, we continue to believe that until the Javelin requirement is validated, the level
of procurement can be maintained at the minimum rate. If the Javelin procurement is
restricted to the minimum sustaining rate, the fiscal year 2000 budget request can be
reduced by $57 million.


                                             12         GAOLNSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                  APPENDIX I

      JAVELIN CAAWS-MI System Summarv             Advance
      Procurement (Line 6)

The Army’s fiscal year 2000 budget request of $98.4 million for Javelin advance
procurement can be denied because awarding the multiyear contract is premature and
the accuracy of the total requirement calculation is questionable.

The Army’s fBca1 year 2000 budget request includes $98.4 million to procure economic
order quantities of Javelin parts to support the planned fiscal years 2001 through 2004
procurement of missiles and related equipment, such as command launch units.
However, we believe that the award of this multiyear contract is premature because, as
discussed in the previous Javelin line item, there are uncertainties. The multiyear
contract would commit future funds for Javelin parts procurement before DOD
completes its ongoing review of the adequacy of the requirements determination
process.

The Army has procured 8,086 missiles and 1,159 launch units through fiscal year 1999
and has a total requirement of 24,403 missiles. However, the Army reports it has recently
lowered its procurement objective to 20,793. In the proposed 5-year multiyear contract,
the Army plans to procure 16,335 missiles and related equipment such as 2,791 command
launch units. According to program officials, the fiscal year 2000 funding request for
Javelin missiles is not dependent on this planned fiscal year 2000 economic order
quantity buy of Javelin parts. DOD’s disagreement with the potential reduction and our
rebuttal are included in the previous discussion of the Javelin System Summary. We
continue to believe that the $98.4 million budget request for the multiyear procurement
can be denied.

      Armv Tactical Missile   System CATACMS)       - System
      Summa~ (Line 11)

The Army’s fiscal year 2000 budget request of $95.6 million for the Army Tactical Missile
System can be reduced by $3.1 million because an equivalent amount of prior year funds
is available to meet fiscal year 2000 program requirements.

The Army’s fiscal year 1999 budget request included $68.1 million to procure 96 missile
systems. The contractor’s December 1998 firm fixed-price proposal contained a not to
exceed amount of $65 million, which is $3.1 million less than the originally budgeted
amount. Contract negotiations were completed, and the contract was awarded on
June 30,1999, for $64.9 million, which is below the not to exceed amount.

Army program officials said that they plan to use the $3.1 million for anticipated
engineering change orders for motor rework and a thermal unit design improvement.


                                           13         GAONUD-99-233R 2000 Defense Budget
APPENDIX I                                                                                APPENDIX I

Since the Army does not plan to use the $3.1 million in fiscal year 1999 funds to procure
missile systems, these funds can be used to offset the fiscal year 2000 budget request.

Procurement          of WeaDons and Tracked      Combat Vehicles.          Armv

The Army requested $1.4 billion for weapons and tracked combat vehicles procurement
programs in fiscal year 2000. As shown in table 1.4,we identified a $3 million potential
reduction to the fiscal year 2000 request and a potential rescission of $5 million in the
fiscal year 1998 appropriations.

Table 1.4: Potential Reduction and Rescission                  to Army Procurement        of Weapons
and Tracked Combat Vehicles Programs



                                                                                    Potential
                                                     Fiscal year 2000              rescission
   Line                                                            Potential       Fiscal year
    no.        Line item description             Request          reduction               1998
    12         Carrier, MOD (Modification)           $53.500                   0        $5.000
    21         Ml Abrams Tank Modification            29.800          $3.000                 0
  Total                                                               %3-nnn           .$FiAmn


          Carrier,   MOD (Modification1      (Line    12)

The Army’s fiscal year 1998 appropriations for the Carrier Modification can be rescinded
by $5 million because funds will not be used for the purpose appropriated.

DOD is withholding the $5 million that the Congress added to the program in fiscal year
1998 to conduct an armor tile study. DOD plans to reprogram these procurement funds
to RDT&E to conduct the study. Program officials stated that the funds are not needed
because the Army does not have a requirement for armor tiles. F’urther, they said that
even if the funds were reprogrammed to research, development, test, and evaluation
(RDT&E) and a firm requirement was determined, the program could not be executed
before the RDT&E funds would expire. Since the $5million in fiscal year 1998 funds is
not being used for the armor tile study, these funds can be rescinded if they are not
reprogrammed.




                                                     14          GAONXAD-99-233R 2000 Defense Budget
APPENDIX I                                                                         APPENDIX I

      Ml Abrams Tank Modification          (Line    21)

The Army’s fiscal year 2000 budget request of $29.8 million for the Ml Abrams Tank
Modification Program can be reduced by $3 million because an equivalent amount of
prior year funds is available to meet fiscal year 2000 program requirements.

DOD is withholding $3 million the Congress added to the Army’s fiscal year 1999
appropriations to initiate work on a Cordless Vehicle Intercom System for the Abrarns
Tanks. The system, according a program official, is designed to be used like a cordless
telephone for communicating when one or more of the soldiers that operate the tank are
outside of the tank. He said that he did not think the funds would be released to the
program for the intercom system but that the program office would like to use the funds
for another purpose if they are released.

Since these funds are not being used for the intercom system, these fiscal year 1999
funds can be used to offset the fiscal year 2000 budget request.

Other Procurement?       Army

The Army requested $3.4 billion for other procurement programs in fiscal year 2000. As
shown in table 1.5,we identified potential reductions of $94.7 million to the fiscal year
2000 request.

Table 1.5: Potential     Reductions   to Army Other Procurement         Programs




      Tactical   Trailers/Dolly   Sets (Line   11

The Army’s fiscal year 2000 budget request of $15.277 million for Tactical Trailers/Dolly
Sets can be reduced by $5.444 million because fiscal year 2000 program requirements are
overstated.



                                               15         GAO/MZAD-99-233R 2000 Defense Budget
APPENDIX I                                                                     APPENDIX I

The Army’s fiscal year 2000 budget request for Tactical Trailers/Dolly Sets includes
$5.444 million to fund the first year of a follow-on multiyear contract to produce the High
Mobility Trailer. The contract award has been delayed from March 2000 to the second
quarter of fiscal year 2001 because of technical problems. Therefore, these funds are not
required for the contract during fiscal year 2000 and can be denied.

The project manager for Light Tactical Vehicles does not agree with this proposed
reduction because the Army, in recognition of the High Mobility Trailer Program delays,
has eliminated the program’s fiscal year 2001 funding, making the fiscal year 2000 funds
necessary for system upgrades and for funding the first year of the multiyear contract.
He believes that reducing the fiscal year 2000 funding in addition to the Army’s action
will cripple efforts to resolve technical problems that prevent the fielding of the trailers
and will further delay the follow-on procurement. We believe that the funds should be
requested in the year they will be obligated and that the funding for the follow-on
contract should be included in the fiscal year 2001 budget request, the year in which the
Army currently plans to award the contract. Since these requested funds will not be
used in fiscal year 2000 to procure the trailers, the fiscal year 2000 budget request can be
reduced by $5.444 million.

      Dititization   Amliaue   (Line   911

The Army’s fLscal year 2000 budget request of $66.4 million for Digitization Applique can
be denied because initial operational test and evaluation has been delayed 2 years and
the Army’s revised acquisition strategy for low-rate initial production does not appear
justified.

The Army intended to use the fiscal year 2000 budget request to begin procurement of
the Force XXI Battle Command, Brigade, and Below system and to provide for total
fielding to the first digitized division, the Army’s 4th Infantry Division. Originally, the
system schedule included an initial operational test and evaluation in October 1999, a
full-rate production decision about January 2000, and completed fielding to the 4th
Infantry Division by September 2000. As a result of issues raised by the DOD Director,
Operational Test and Evaluation, the system testing program was restructured, resulting
in a revised.initial operational test and evaluation date of November 2001. Although
initial operational testing has been delayed 2 years, the Army wants to proceed with the
fiscal year 2000 procurement as the start of a low-rate initial production acquisition
phase that will last 3 years. Low-rate initial production units will be acquired at a rate of
 1,700 per year, for a total of 5,100 units.

DOD and the Army officials stated that limited production of test quantities would not
provide adequate quantities to prove out dual production lines or address training,
sparing concepts, maintenance, technical manual development, collective training,


                                              16        GAOLNSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                                  APPENDIX I

logistics support plans, and doctrine development. In addition, the officials stated that
none of the procured systems were configured appropriately for the initial operational
test and evaluation. However, as noted in our report, we remain concerned that
equipping an entire division with low-rate initial production units is excessive prior to
completing operational testing. We continue to be equally concerned that the Army is
adding unnecessary risk to an already aggressive digitization schedule and may field
unproven systems beyond the first division.

DOD Regulation 5000.2R states that low-rate initial production quantities shall be
minimized. The regulation states that the objective of low-rate initial production is to
produce the minimum quantity necessary to (1) provide production configured or
representative articles for operational tests, (2) establish an initial production base for
the system, and (3) permit an orderly increase in the production rate for the system. The
Army stated in the December 1998 system evaluation plan that it needed 600 systems for
the initial operational test and evaluation. The Army received appropriations in fiscal
years 1998 and 1999 to support the originally planned initial operational test and
evaluation in October 1999. The funding appears to have been sufficient to acquire 300
systems with the newest configuration, upgrade about 220 existing systems, and develop
software for an additional 80 systems; therefore, the Army should still be able to do the
initial operational test and evaluation with the recently acquired and upgraded systems.

As the principal command and control system for the Army, the Battle Command,
Brigade, and Below is the linchpin of the future digital battlefield. The revised
acquisition strategy of fielding such a critical system before completing operational
testing exposes the overall digitization initiative to unnecessary risk. If the risk
materializes into performance problems, costly fixes to fielded systems may be required.
We continue to believe that it is premature to acquire additional systems before
determining operational effectiveness and suitability; therefore, the $66.4 million fiscal
year budget request can be denied.

        Maneuver      Control    System (MCSI         (Line   110)

The Army’s fiscal year 2000 budget request of $52.049 million for the Maneuver Control
System can be reduced by $22.878 million because fiscal year 2000 program
requirements are overstated by $21.7 million, and $1.178 million of fiscal year 1999 funds
is available to meet fiscal year 2000 program requirements. The Army does not plan to
fully proceed with the planned acquisitions under this budget line, and the planned fiscal
year 1999 equipment buy will not occur.



’ Battlefield Automation: Performance Uncertainties Are Likelv When Armv Fields Its First Digitized
Division (GAO/NSIAD-99-150,July 27,1999).


                                                     17          GAOMXAD-99-233R 2000 Defense Budget
APPENDIX      I                                                                          APPENDIX       I

Based on a June 1998 initial operational test and evaluation of the system, the DOD
Director of Operational Test and Evaluation found the system “not yet operationally
effective or operationally suitable.” Consequently, the Army is not seeking full-rate
production approval at this time. Program officials stated that the Army no longer needs
$21.7 million of the fiscal year 2000 procurement funds budgeted and will be requesting
that they be applied elsewhere. The Army planned to use the remaining funds within the
program to acquire computers for use in tests, including the next initial operational test
and evaluation that is scheduled for the summer of 2001 but is also considering buying
the computers with RDT&E funds. Jn addition, the Army is not seeking a full-rate
production decision at this time and does not plan to buy the 46 computers that were
part of its fiscal year 1999 planned buy. A program official indicated that they plan to
use the remaining $1.178 million in unobligated 1999 funds for other Maneuver Control
System related costs.

Since the system is not ready to begin full-rate production and these funds will not be
used to buy computers, the fiscal year 2000 budget request can be reduced by at least
$21.7 million and $1.178 million in fiscal year 1999 funds can be used to offset the fiscal
year 2000 budget request.

NAVY PROCUREMEXT                PROGRAMS

The Navy requested $22 billion for procurement programs in fiscal year 2000. As shown
in table 1.6, we identified potential reductions of $163.6 million to the fiscal year 2000
request. We also identified a potential rescission of about $1.3 million in a program
whose fiscal year 1989 appropriations obligational authority had been extended.

Table 1.6: Potential        Reductions      and Rescission        to Navy Procurement        Programs




  Total                                                              $163.645   1   $1.292
  his amount is part of the Navy’sprocurement requestof $2l,986.‘7million.




                                                       18           GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                              APPENDIX I

Procurement?          Naw

       Inflation      Adjustment

The Navy’s fiscal year 2000 procurement budget request of $22 billion can be reduced by
$120 million because an equivalent amount of fiscal year 1999 funds is available to meet
fiscal year 2000 program requirements. DOD is withholding these Navy procurement
funds, including $5 million from the procurement, Marine Corps appropriations account,
identified as inflation savings. Since the actual fiscal year 1999 inflation rates are lower
than previously forecast, $120 million of the fiscal year 1999 funds can be used to offset
the fiscal year 2000 budget request.

Weauons Procurement,               Naw

The Navy requested $1.4 billion for weapons procurement programs in fiscal year 2000.
As shown in table 1.7,we identified a potential reduction of $43.6 million in the fiscal
year 2000 request.

Table 1.7: Potential        Reduction    to Navy Weapons        Procurement       Programs

  Aklrs in millions
                                                                                  /
                                                      Fiscal year 2000
   Line                                                               Potential
    no.      Line item description                    Request        reduction
     9       StandardMissile                          $198.867           $43.645-
  Total                                                                $4.3.645



Standard     Missile    (Line   9)

The Navy’s fiscal year 2000 budget request of $198.867 million for the Standard Missile
can be reduced by $43.645 million because fiscal year 2000 requirements are overstated
due to delays in the program schedule.

The Navy’s fiscal year 2000 budget request for the Standard Missile includes
$43.645 million for the Standard Missile-2, Block TVA interceptor missile which is to be
used by the Navy Area Theater Ballistic Missile Defense Program: The Navy intends to
fund 16 Block TVA interceptor missiles for the first year of low-rate initial production for

* The Ballistic Missile Defense Organization and the Navy share funding for the missile. A potential
reduction in the Ballistic Missile Defense Program budget request is discussed on pages 30-31.


                                                 19             GAOLNSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                             APPENDIX I

the Navy Area program. However, there have been delays in the Area program’s
schedule, caused by several reasons, including difficulties in upgrading the Navy’s Aegis
Weapon System. Because of these delays, low-rate initial production is not expected to
be approved until March 2001. Furthermore, the delays have postponed the completion
of developmental tests and operational assessments at White Sands Missile Range until
fiscal year 2001. Thus, any missiles purchased before fiscal year 2001 would be
purchased without the benefit of realistic testing.

Navy officials told us that the $43.645 million is needed in fiscal year 2000 because the
Navy must contract for major components of the Block IVA missile in March 2000 in
order to provide an early prototype system for use in contingencies and to avoid costly
breaks in Standard Missile production. We note, however, that this plan would commit
the Navy to producing major missile components after only two non intercept missile
flight tests using interceptor missiles that are not the same configuration as the planned
production missiles. The Navy plans to approve fabrication of the’complete missiles in
March 2001 after two successful intercept tests.

In its 1998 independent review of the program’s test plans, a panel of military and civilian
officials concluded that two successful flight tests are not likely to provide enough
information to establish confidence in a usable operational capability: According to this
study, the Block IVA missile must perform a far more complex mission than that
demanded of any previous version of the Standard Missile. While delaying the start of
Block IVA missile production until fiscal year 2001 could result in a gap in production of
some missile components, the cost to fix components already produced could exceed
restart costs if subsequent tests reveal problems.

DOD disagreed with the potential reduction, stating that it would further delay and
disrupt the current acquisition strategy because this funding is needed to procure long
lead materials for missile fabrication in fiscal year 2001. Also, DOD says that without
such funding, a gap will be created in the Standard Missile, Block IVA production line
that could result in a $30 to $40 million cost impact. As noted above, thelong lead
procurement decision would be made prior to any intercept flight tests and the
fabrication decision would be made based on only two flight tests, which one
independent study has deemed inadequate. Thus, we are concerned about the
procurement of a total of 23 missiles, including the Ballistic Missile Defense Organization
 7 missile buy (see pp. 30-31), without realistic testing. If these missiles, which cost over
 $2 million each, must be modified based on subsequent operational testing, modification
 costs could exceed the cost impact of a production line gap. Therefore, we continue to
believe that the fiscal year 2000 budget request can be reduced by $43.645 million.


3ReDort of Naw Area Defense IndeDendent Review   GrOUD   ,1998.


                                                  20              GAO/NSIAD-99233R2000 Defense Budget
APPENDIX I                                                                                    APPENDIX I

Shi~buildinPr    and Conversion!         Naw

The Navy requested $6.7 billion for ShipbuiIding and Conversion programs in fiscal year
2000. As shown in table 1.8, we identified a potential rescission of about $1.3 rnihion
from the fiscal year 1989 appropriations.

Table 1.8: Potential  Rescission            to Navy Shipbuilding          and Conversion
Procurement   Program


                                                              Fiscal year        Potential
                                                                     2000       rescission
  Line                                                                         Fiscal year
   no.      Line item description                                Request              1989”
    17      LCAC Landing Craft                                             0         $1.292
  Total                                                                             $1.292
  nefiscal year 1989appropxiaiions obligational authority was extended.

          LCAC   Landing     Craft   Wine     17)

The Navy’s fLscaI year 1989 appropriations for the LCAC Landing Craft, for which the
obligational authority was extended, can be rescinded by $1.292 million because the
funds exceed program requirements.

Navy program officials said that the $1.292 mihion in fiscal year 1989 funds appropriated
for the procurement of the Landing Craft is not needed to meet program requirements.
Of this amount, $1.256 million has been returned to the Navy comptroller. DOD does not
concur with this potential rescission because the funds have been identified as a funding
source on the Navy 1999 Ship Cost Adjustment for the LHD-17.

Since the $1.292 million wiII not be used for the LCAC, the fiscal year 1989
appropriations can be rescinded if the funds are not approved for transfer.

AIR FORCE PROCUREMENT                    PROGRAMS

The Air Force requested $19.2 billion for procurement programs in fiscal year 2000. As
shown in table 1.9, we identified potential reductions of about $228.3 miII.ion to the fiscal
year 2000 request and a potentiaI rescission of $9.5 mihion from fiscal year 1997
appropriations.




                                                      21           GAOMXAD-99-233R 2000 Defense Budget
APPENDIX I                                                                                    APPENDIX I

Table 1.9: Potential           Reductions      and Rescission     to Air Force    Procurement
Programs

  dlars in m.illions

                                                                                  Potential
                                                  Fiscal year 2000               rescission
  Procurement                                                     Potential       Fiscal year
  Appropriations                                 Request         reduction               1997
  Procurement (inflation
  adjustment)                                  $19,166.400           $70.860                 0
      AiXEift                                   9,302.100"           115.034            $9.533
      Missile                                   2,359.600"            42.398                 0
  Total                                                           $228.292             $9.533
  ‘his amount is part of the Air Force’sprocurement requestof $19,166.4million

Procurement.           Air Force

          Inflation    Adiustment

The Air Force’s fiscal year 2000 procurement budget request of $19.2 billion can be
reduced by $70.86 million because an equivalent amount of fiscal year 1999 funds is
available to meet f=caI year 2000 program requirements. DOD is withholding these Air
Force procurement funds, idenGfied as inflation savings. Since the actual fiscal year
1999 inflation rates are lower than previously forecast, $70.86 million of the fiscal year
1999 funds can be used to offset the fiscal year 2000 budget request.

Aircraft        Procurement,       Air Force

The Air Force requested $9.3 billion for aircraft procurement in fiscal year 2000. As
shown in table 1.10,we identified potential reductions of $115 mihion and a potential
rescission of $9.5 million from the expiring fiscal year 1997 appropriations.




                                                           22        GAO/NWD-99-233R 2000 Defense Budget
APPENDIX I                                                                                    APPENDIX I

Table 1.10: Potential  Reductions               and Rescission        to Air Force Aircraft
Procurement   Programs




  Total                                                                   I   $115.034   1     $9.533

       F-22 RaWor Advance           Procurement        (Line     52

The Air Force’s fiscal year 2000 budget request of $277.1 million for the F-22 Raptor
Advance Procurement can be reduced by $65.1 million by maintaining the F-22
production rate in fiscal year 2001 at six aircraft per year until manufacturing and cost
problems are resolved and delayed structural and avionics testing are accomplished, as
previously planned by the Air Force.

The contractor has experienced problems manufacturing wings and for F-22s during the
engineering and manufacturing development phase of the program. In March 1999:we
reported about manufacturing problems with the large titanium castings that attach the
wing to the aircraft’s body and the aft fuselage (the rear aircraft body section). The wing
manufacturing problems, according to DOD, were recently resolved, however, the
problems are resulting in longer than expected assembly times, work being done out of
sequence and at locations other than planned, and delayed deliveries of wing and test
aircraft.

In April 1999,the Air Force discovered a structural strength problem with a section of
the aft fuselage that could cause a buckling of the section under certain flight conditions.
Repairs to the engineering and manufacturing development flight test aircraft took
2 to 3 weeks. Flight tests were limited until the repairs were completed in June 1999.
Repairs still need to be accomplished on the two structural test articles and the
production representative test vehicles for which a contract was awarded in December
1998. Redesigned components are to be installed on all production aircraft. The Air

4 F-22 Aircrafk Issues in Achieving Engineer&    and Manufacturing: DeveloDment Goals (GAOMSLAD-9555,
Mar. 15,1999).


                                                      23          GAONXAD-99-233R 2000 Defense Budget
APPENDIX I                                                                                   APPENDIX I

Force estimated the cost to correct this problem at $4.8 million to $7.2 million for the
engineering and manufacturing development program and will attempt to formulate cost
reduction initiatives to offset these cost increases. Production cost increases related to
the redesign of the aft fuselage section is estimated to range from $900,000to
$1.3 million. Until manufacturing problems are fully resolved, we believe increasing the
production rate is inappropriate.

F-22 costs have exceeded budgets since the engineering and manufacturing development
phase began in 1991 and have continued to exceed budgets after an Air Force study in
1997 recommended adding about $1.5 billion to this phase of the program. In October
1998, the Air Force projected that engineering and manufacturing development costs
could exceed budgets by another $667 million, mainly because of problems associated
with producing engineering and manufacturing development aircraft and developing
avionics. While the Air Force said that they have identified ways to offset these cost
increases,’ they expect costs to exceed budgets through the end of fiscal year 1999. In
addition, the Air Force recently identified an additional $93 million to $126 million of
potential engineering and manufacturing development cost increases, but maintains it
also has plans to offset these increases. However, we continue to believe that until F-22
costs are more stable and predictable, it may be premature to increase the production.

Because of delays in the engineering and manufacturing development program, the Air
Force has reduced or delayed the structural and avionics testing. The Air Force had
planned to accomplish the testing prior to awarding advance procurement contracts to
initiate an increase in the production rate. For example, tests of the F-22 structure
(static and fatigue tests), have been delayed until after advance procurement begins.
Further, no flight testing of an F-22 equipped with integrated avionics is planned prior to
advance procurement, as it had been before. The Office of the Secretary of Defense’s
Director of Operational Test and Evaluation, in March 1999testimony before the AirLand
Forces Subcommittee of the Senate Armed Services Corm-&tee, noted concern that a
commitment to increase production rates will be made without any integrated avionics
testing in F-22 flight test aircraft.

The Air Force requested fiscal year 2000 advance procurement funds to support an
increase in F-22 production from 6 aircraft in fiscal year 2000 to 10 aircraft in fiscal year
2001. Air Force officials told us DOD will conduct a production readiness review prior
to a December 1999 contract award to ensure critical processes are mature enough to
meet production goals. F-22 program officials are also meeting regularly with officials



5 The reported offsets include deferring external weapon testing, reassessingthe flight test effort required
for the AIM-9X missile and the helmet targeting system, reduc@g contractor laboratory cost and other
government costs, and implementing Lockheed Martin cost reduction plans.


                                                      24           GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                    APPENDIX I

from the Offke of the Under Secretary of Defense (Acquisition and Technology) to
maintain continued emphasis on executing the program within the congressional cost
caps.

DOD and Air Force maintain that reducing production lot sizes from those planned
would void an aircraft pricing agreement between the government and the prime
contractor for the initial F-22 production lots. DOD did not agree with the potential
reduction maintaining that a reduction in production quantity for fiscal year 2001 will
increase costs and preclude delivery of the currently planned 339aircraft within the
congressionally mandated production cap of $39.8 billion.

We recognize that changes in the approved production plan would require adjusting the
pricing agreement. The pricing agreement allows for adjusting target prices to account
for production lot quantity changes that were not reasonably foreseeable when the
prices were originally established. If adjustments are made to this pricing agreement in
accordance with our recommendation to reduce the fiscal year 2001 production quantity
from 10 to 6 aircraft, the cost of the production program could increase. This possibility
should be weighed against the potentially negative results of buying increased quantities
of production aircraft before manufacturing and cost problems are resolved. We believe
it is premature to increase the procurement of F-22 aircraft until the manufacturing and
cost performance problems are resolved and delayed structural and avionics testing is
accomplished, as previously planned by the Air Force. If procurement is maintained at
six aircraft for f=cal year 2001, the fiscal year 2000 budget request for advance
procurement can be reduced by $65.1 million.

      C-17 (Mnltivear    Procurement)     (Line 9)

The Air Force’s fiscal year 2000 budget request of $3.1 billion for multiyear procurement
for the C-17 can be reduced by $46.4 million because the fiscal year 2000 program
requirements are overstated by $10 million, and $36.4 million in fiscal year 1999 funds is
available to meet fiscal year 2000 program requirements.

The negotiated price of the fiscal year 2000 C-17 purchase was $10 million less than
estimated in the fiscal year 2000 budget request. Program office officials said they plan
to use the $10 million for C-17 peculiar support equipment in fiscal year 2000. However,
funding for this equipment was not of sufficient priority to be included in the President’s
fiscal year 2000 budget request. If the Air Force needs the support equipment for the
C-17, it should be justified through the budget process. Therefore, we continue to
believe that the fiscal year 2000 budget request can be reduced by $10 million.

In addition, the Air Force is withholding $7.3 million for other Air Force programs, and it
planned to reprogram $29.1 million of fiscal year 1999 funds as part of the fiscal year


                                            25         GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                  APPENDIX I

1999 DOD omnibus reprogrammin g request. However, the $29.1 million is not included
in the omnibus reprogrammin g request. Since the $36.4 million in fiscal year 1999 funds
will not be used for the C-17 program, these funds can be used to offset the fiscal year
2000 budget request if they are not reprogrammed.

Also, the Air Force’s fiscal year 1997 appropriations for the C-17 can be rescinded by
$9.533 million because these expiring funds are not needed for contractor logistics
support. Due to favorable negotiations for contractor logistics support, the program
office deobligated these funds, and it plans to use these funds to upgrade the aircraft
maintenance systems trainers. Since the $9.533 million will expire if not obligated by
September 30,1999, it is available for reprogrammin g or rescission during the remainder
of fiscal year 1999.

      F-15 (Modification)   (Line 321

The Air Force’s fiscal year 2000 budget request of $263.49 milhon for F-15 modifications
can be reduced by $0.967 million because the fiscal year 2000 program requirements are
overstated.

Favorable F-15 modification contract negotiations in fiscal year 1999 for the (1) super
convective shroud, (2) high pressure turbine case, and (3) first brush seal modifications
kits resulted in Air Force revised estimates totaling $967,000less than requested.
Program officials agreed that these requested funds are excess to their needs for these
three modifications in fiscal year 2000 and stated that the Air Force plans to reprogram
these funds for higher Air Force priorities. DOD agreed with the Air Force plans to use
the funds on higher priorities. If the Air Force needs funding for higher priority
programs, they should request such funding.

Since the fiscal year 2000 funding requirement for F-15 modifications has decreased, the
fiscal year 2000 budget request can be reduced by $0.967 million.

      F-16 (Line   331

The Air Force’s fiscal year 2000 budget request of $249.536million can be reduced by
$2.567 million because fiscal year 2000 program requirements are overstated. The
overstatement is the result of revised Air Force cost estimates.

After submitting its budget request for fiscal year 2000, the Air Force reduced the
estimated unit cost of the equipment it plans to buy for four of the modifications by
$1.054 rnilhon for engine controls, $0.675 rnilhon for countermeasures set, $0.559 milKon
for flare/chaff dispenser, and $0.279miIIion for engine upgrades. Program officials said
that they plan to use the excess fiscal year 2000 funds for other F-16 modifications.


                                            26        GAOMUD-99-233R 2000 Defense Budget
APPENDIX I                                                                         APPENDIX I

However, funding for these modifications was not of sufficient priority to be included in
the President’s fiscal year 2000 budget request. Since these funds are not needed for the
above mentioned modifications, the ffical year 2000 budget request can be reduced by
$2.567 million.

Missile   Procurement,     Air Force

The Air Force requested $2.4 billion for missile procurement programs in fiscal year
2000. As shown in table 1.11,we identified potential reductions of about $42.4 million.

Table 1.11: Potential      Reductions    to Air Force Missile   Procurement       Programs



                                                          Fiscal year 2000
   Line                                                               Potential
    no.     Line item description                        Request     reduction
    13      Minuteman III Modifications                   243.000         $4.900
    22      NAVSTAR Global Positioning System             139.000          3.100
            NAVSTAR Global Positioning System
    23      (Space) Advance Procurement                    31.798         31.798
    31      Medium Launch Vehicles (Space)                 64.800          2.600



      Minuteman      III Modifications    (Line    131

The Air Force’s fiscal year 2000 budget request of $243 million for the Minuteman III
Propulsion Replacement Program can be reduced by $4.9 million because fiscal year
2000 program requirements are overstated.

Program officials could not provide documentation supporting the need for $4.9 million
of the $11.8 million requested for program risk in fiscal year 2000. In July 1993, the
Under Secretary of Defense waived the requirements for developmental test and
evaluation prior to beginning low-rate initial production because the program was
assessed to have minimal technical risk. Program officials contend the funds may be
needed for anticipated Office of the Secretary of Defense and Office of the Secretary of
Air Force funding reductions. However, according to DOD budget guidance, the services
are not allowed to request funding to offset possible budget reductions. Therefore,
requirements are overstated, and the fiscal year 2000 budget request can be reduced by
$4.9 million.



                                                  27     GAONSIAD-99-233R 2000 Defense Budget
APPENDIX1                                                                       APPENDIX I

      NAVSTAR       Global Positioning    Svstem (Line 221

The Air Force’s fiscal year 2000 budget request of $139 million for the NAVSTAR Global
Positioning System Program can be reduced by $3.1 million because an equivalent
amount of fiscal year 1999 funds is available to meet fiscal year 2000 program
requirements. According to program officials, the Air Force is withholding the
$3.1 million as a source of funding for the Defense Support Program. Since the
$3.1 million will not be used for the program, these fiscal year 1999 funds can be used
to offset the fiscal year 2000 budget request if they are not reprogrammed.

      NAVSTAR Global Positioning          Svstem (Space)
      Advance Procurement   (Line        23)

The Air Force’s fiscal year 2000 budget request of $31.798million for NAVSTAR Global
Position System advance procurement for three Block IIF satellites-7 through g-can be
denied because fiscal year 2000 program requirements are overstated. The m-orbit Block
IIA satellites are predicted to last an average 2 years longer than previously estimated,
which affects the need to initiate advance procurement of these Block IIF satellites in
fiscal year 2000.

In October 1997, the predicted life of Block IIA satellites was increased by 2.45 years,
and the Air Force delayed the advance procurement of Block IIF satellites 7 through 9 by
1 year. Because the predicted life of Block IIA satellites has now been increased by an
additional 2 years, it is reasonable to expect that the advance procurement can be
delayed by at least 1 year.

A reduction of advance procurement funding should not affect acceleration of the
modernization program, if DOD decided to do so. DOD is considering program
acceleration, in conjunction with addressing constellation sustainment and
modernization requirements that would modify 12 Block IIR satellites and/or modernize
Block IIF satellites 1 through 6. Most Block IIR satellites are in storage awaiting launch,
and Block IIF satellites 1 through 6 are under a production contract

According to program officials, the elimination of advance procurement funds will delay
the satellite system modernization program. They emphasized that satellites 7 through 9
are being designed to (1) begin countering an evolving military threat that places the
satellite signal at risk and (2) meet a vice presidential announcement for a new safety of
life signal for the civilian aviation community. They also stated that the elimination of
advance procurement funds would result in a break in the vendor-manufacturing base,
resulting in potential life-cycle cost increases to the satellites. However, they did not
provide any supporting evidence for this assertion. In addition, they stated that



                                               28          GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                     APPENDIX I

hardware failures associated with the secondary nuclear detonation detection mission
are not reflected in a satellite life analysis.

Air Force Space Command officials commented that it is inappropriate to decide the
future of the satellite program based solely on the increased predicted life of the Block
IIA satellites. However, until program officials complete an analysis of these hardware
failmes, the effect on satellite launches is not known. DOD said that the increase in
Block IIA mean mission duration does allow a l-year delay in Block IIF procurement;
but, the total funding requested is still required to continue modernization of Global
Positioning System satellites and ground control. However, these funds were requested
for advance procurement, not modernization. Therefore, we continue to believe that,
since the satellite buy can be delayed based on the estimated extended life of the in-orbit
satellites, the $31.798million fiscal year 2000 budget request for advance procurement
can be denied.

       Medium   Launch Vehicles     (SDacej   (Line   311

The Air Force’s fiscal year 2000 budget request of $64.8 million for the Medium Launch
Vehicle program can be reduced by $2.6 million because an equivalent amount of fiscal
year 1999 funds is available to meet fiscal year 2000 program requirements.

The Air Force budgeted $5 million for launch services for the Global Positioning System
Block IIR satellite in fiscal year 1999. According to program officials, $2.6 million is no
longer needed because of delays associated with damage to the satellite. Further, they
said they requested funding for planned launch service requirements in fiscal year 2000.
Since the $2.6 million will not be used to launch the satellite, these fiscal year 1999 funds
can be used to offset the fiscal year 2000 budget request.
DEFENSE-WIDE       PROCUREMENT         PROGRAMS

DOD requested $2.1 billion for Defense-wide procurement programs in fiscal year 2000.
As shown in table 1.12,we identified a potential reduction of $55 million to the fiscal year
2000 request.




                                              29        GAOINSIAD-99-233R2000 Defense Budget
APPENDIX I                                                                            APPENDIX1

Table I.12 Potential    Reduction    to Defense-wide     Procurement         Programs



                                                              Fiscal year 2000
  Line                                                                    Potential
   no.    Line item description                              Request     reduction
   30     Navy Area Theater Ballistic Missile
                                                              $55.002        $55.002
          Defense (TBMD) Program



Procurement.    Defense-wide

      Naw Area Theater Ballistic        Missile    Defense     CI’BMD~
      Promam [Line 301

The Ballistic Missile Defense Organization’s fiscal year 2000 budget request of
$55.002million for the Navy Area Theater Ballistic Missile Defense Program can be
denied because fiscal year 2000 program requirements are overstated due to a delay in
the program schedule.

The fiscal year 2000 budget request includes $34.584 million for seven Standard
Missile-2, Block IVA interceptor missiles for the first year of low-rate initial production
for the Navy Area Theater Ballistic Missile Defense Program. It also includes
$20.418millio n t o modify the Aegis Weapon System to perform a theater ballistic missile
defense mission. The Organization is buying seven interceptor missiles for the Navy
Area program. However, delays in the Navy Area Program’s schedule have occurred, as
discussed on pages 19 and 20. Thus, any missiles purchased prior to fiscal year 2001
would be purchased without the benefit of realistic testing.

Agency officials claim that in order to provide an early prototype system for use in
contingencies, and to avoid costly breaks in Standard Missile production, the
Organization must contract for major components of the Block IVA missile in March
2000. We note, however, that this action would commit to production of major missile
components after only two non intercept missile flight tests using interceptor missiles
that are not the same configuration as the planned production missiles. The Navy plans
to approve fabrication of the complete missiles in March 2001 after two successful
intercepts.

In its 1998 independent review of the program’s test plans, a panel of military and civilian
officials concluded that two successful flight tests are not likely to provide enough



                                                  30          GAO/MUD-99-233R 2000 Defense Budget
APPENDIX I                                                                       APPENDIX I

information to establish confidence in a usable operational capability: According to this
study, the Block IVA missile must perform a far more complex mission than that
demanded of any previous version of the Standard Missile. The study also pointed out
that there are significant risks in developing the Aegis Weapon System software to be
used in the Navy Area program. To date, the software schedule has been extended by
18 months and, according to the study, the software may have to be reduced in scope to
meet even the current schedule. While delaying the start of Block TVA missile
production until fiscal year 2001 could result in a gap in production of some missile
components, the cost to fix components already produced could exceed restart costs if
subsequent tests reveal problems.

DOD disagreed with the potential reduction, stating that it would further delay and
disrupt the current acquisition strategy because the funding is needed to procure long
lead materials for missile fabrication in fiscal year 2001. Also, DOD says that without
such funding, a gap will be created in the Standard Missile, Block TVAproduction line
that could result in a $30 to $40 million cost impact. As noted above, the long lead
procurement decision would be made prior to any intercept flight tests and the
fabrication decision would be made based on only two flight tests, which one
independent study has deemed inadequate. Thus, we are concerned about the
procurement of a total of 23 missiles, including the Navy’s 16 missile buy, without
realistic testing. If these missiles, which cost over $2 million each, must be modified
based on subsequent operational testing, modification costs could exceed the cost
impact of a production line gap. Therefore, we continue to believe that the fiscal year
2000 budget request can be reduced by $55.002 million.




6Reuort of Naw Area Defense Indeuendent Review Gram J 1998.
                                               31         GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX II                                                                   APPENDIX II

          POTENTIAL  REDUCTIONS   AND RESCISSION             TO RESEARCH,
             DEVELOPMENT,   TEST, A.ND EVALUATION            PROGRAMS

DOD requested $34.1 billion for RDT&E programs in fiscal year 2000. As shown in table
II.1, our review of selected budget line items in the request and prior years’
appropriations identified potential reductions of $210.6 million to fiscal year 2000
requests and a potential rescission of $11.7 mihion from fiscal year 1998 expiring
appropriations

Table 11.1: Potential   Reductions   and Rescission   to RDT&E   Programs

 Alas inmillions

                                                                  Potential
                               Fiscal vear 2000                  rescission
  RDT&E




ARMY RDT&E         PROGRAMS

The Army requested $4.4 bihion for RDT&E programs in fiscal year 2000. As shown in
table II.2, we identified potential reductions of $72.1 miIlion to the fiscal year 2000
request.




                                             32       GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX II                                                                                      APPENDIX II

Table 11.2: Potential           Reductions     to Army RDT&E            Programs


                                                                         Fiscal year 2000
  Line                                                                               Potential
   no.          Line item description                                   Request     reduction
                RDT&E (inflation adjustment)                           $4,426.194       $20.000
   49             Line-of-Sight Technology Demonstration                  41.619”        41.619
            I
   94             Combat Feeding, Clothing, and
                                                                         110.829”         6.900
                  Equipment
   112            Landmine WarfareBarrier-Engineering
                                                                          40.916”          2.988
                  Development
   159            Force Twenty-One (XXI) Warfighting
                                                                          55.921”          0.600
                  Rapid Acquisition Program
  Total                                                                               $72.107
  his amount is part of the Army’s RDT&.Elrequestof $4,426.2million.

         Inflation       Adjustment

The Army’s fiscal year 2000 RDT&E budget request of $4.4 billion can be reduced by
$20 million because an equivalent amount of fiscal year 1999 funds is available to meet
fiscal year 2OOO~program   requirements. DOD is withholding these Army RDT&E funds,
identified as inflation savings. Since the actual fiscal year 1999 inflation rates are lower
than previously forecast, $20 million of the fiscal year 1999 funds can be used to offset
the fiscal year 2000 budget request.

         Line-of-Sight        Technolom      Demonstration       (Line     491

The Army’s fiscal year 2000 budget request of $41.619 million for the Line-of-Sight
Technology demonstration can be denied. According to the Advanced Concept
Technology Demonstration management plan, the objective of this technology is to
develop an antiarmor weapon that will increase lethality capability of the Army’s early
entry forces. Currently, the Army’s early entry forces use the Javelin and the Dragon
against armored targets. However, as discussed on page 12, the number of mobile
armored target projected to be faced by the Army’s early entry force has been reduced
since the last requirement was calculated.

During our ongoing review of antiarmor requirements, we determined that a very small
percentage of the Army’s requirement for antiarmor weapons in inventory or production
is actually based on threat. Uncertainty factors, reserves, and training account for the


                                                      33           GAOMSIAD-99-233R 2000 Defense Budget
APPENDIX II                                                                 APPENDMII

largest portion of these requirements. These requirements are determined through the
capabilities based munitions requirement process that DOD is reviewing to determine its
adequacy in supporting requirements. In addition, the number of mobile armored targets
assigned to the Army’s early entry forces was reduced over 10 percent in one theater and
almost 60 percent in the other.

According to program officials, the technology demonstration will evaluate whether the
Line-of-Sight antitank weapon system will provide overwhelming lethality and reduce
vulnerability for early entry forces. They consider this technology to be an essential
element of future Army systems to be used with early entry forces. While this may be a
promising technology, our review of antiarmor requirements shows that for the Army’s
early entry force targets, threat is not a significant factor in its computation and the
number of targets has decreased. Therefore, the need for a new Army early entry force
antiarmor weapon is questionable.

The program offke representatives did not offer any evidence to the contrary.
Therefore, given the uncertainty related to the Army’s requirement process and the
decreased number of armored targets assigned to the Army’s early entry forces, we
believe that the Army’s $41.619million fLscal year 2000 budget request can be denied.

      Combat   Feeding   Clothing,   and Eauhment     (Line   94)

The Army’s fiscal year 2000 budget request of $110.829 million for Combat Feeding,
Clothing, and Equipment includes $86.6 million for Land Warrior, of which $6.9 million
can be denied.

The Land Warrior program entered engineering and manufacturing development in
January 1996. The Army has been revising its acquisition plan since August 1998 because
of development production delays and the Army has postponed production. The Army’s
fiscal year 2000 budget request does not reflect the current program restructure plan that
is being reviewed, including revised funding requirements.

According to program officials, under the current restructure plan, $6.9 million is
available because tasks that have been deferred can be further deferred. Therefore, the
$6.9 million can be reduced from the fiscal year 2000 request.

       Landmine   Warfare/Barrier    - Encineeriner   DeveloDment   (Line   1121

The Army’s fiscal year 2000 budget request of $40.916 million for Landmine
Warfare/Barrier - Engineering Development can be reduced by $2.988 million because an
equivalent amount of fiscal year 1999funds is available to meet fiscal year 2000 program
requirements.


                                            34         GAONXAD-99-233R 2000 Defense Budget
APPENDIX II                                                                  APPENDIX II

The Army’s fiscal year 1999 appropriations include $14.830 million to continue the
development of the Explosive Standoff Minefield Clearer. After obligating $8,000 of
these funds, the Army terminated the minefield clearer project, reprogrammed
$6.334 million of the project funds to other programs, and transferred $5.5 million to
another project within the same program element. The remaining $2.988 million is
available for reduction.

An Army program official agreed that the $2.988 million is available for reduction since
the Army does not plan to use these fiscal year 1999 funds to continue developing the
Explosive Standoff Minefield Clearer, the purpose for which it was appropriated.
Therefore, the $2.988 million in prior year funds can be used to offset the fiscal year 2000
budget request.

       Force Twenty-One   (XXI) Warfightimz      RatGd
       Acauisition Program (Line 1591

The Army’s fiscal year 2000 budget request of $55.921 rnillion for the Force Twenty-One
War-fighting Rapid Acquisition Program can be reduced by $600,000 because an
equivalent amount of fiscal year 1999 funds is available to meet fiscal year 2000
requirements.

The Rifle-Launched Entry Munition Program is one of the fiscal year 1999/2000Force
Twenty-One Warfightmg Rapid Acquisition Program initiatives. The munition program’s
fiscal year 1999 appropriations includes $600,000 to acquire 468 munition rounds for
fielding. However, the munition will not be ready for fielding until fiscal year 2001
because further testing must be done before the munition can be Type Classified. Type
Classification, required of all munitions prior to fielding to ensure safety and
effectiveness, is not scheduled until late fiscal year 2000.

Although the Army’s Operational Test and Evaluation Command generally supports the
initiative, it does not support the need for the 468 rounds because the Army has not
proven that the munition will perform as expected. According to the Command, more
testing is needed, including testing associated with Type Classification, before the Army
accumulates an inventory in the field. In addition, the Command noted that the program
requirement does not identify specific measures of effectiveness, such as “hit
probabilities,” to be achieved prior to fielding.

According to a program official, the munition system acquisition would not be harmed
by the proposed funding reduction. Since the munition system is not ready for fielding,
the $600,000in fiscal year 1999 funds can be used to offset the fiscal year 2000 budget
request.



                                            35        GAONXAD-99-233R 2000 Defense Budget
APPENDIX II                                                                          APPENDIXII

NAVY RDT&E        PROGRAMS

The Navy requested $8 billion for RDT&E programs in fiscal year 2000. As shown in
table II.3, we identified a potential reduction of $37.9 million to the fiscal year 2000
request.

Table 11.3: Potential     Reduction     to Navy RDT&E     Programs



                                                          Fiscal year 2000
   Line                                                                  Potential
    no.     Line item description                       Request         reduction
             RDT&E (inflation   adjustment)         $7,984.016               $37.925
  Total                                                                     m7.925


      Inflation   Adiustment

The Navy’s fiscal year 2000 RDT&E budget request of $8 billion can be reduced by
$37.925 miUion because an equivalent amount of fiscal year 1999 funds is available to
meet fiscal year 2000 program requirements. DOD is withholding these funds, identified
as inflation savings. Since the actual fiscal year 1999 inflation rates are lower than
previously forecast, $37.925 mihion of the fiscal year 1999 funds can be used to offset the
fiscaI year 2000 budget request.


AIR FORCE RDT&E          PROGRAMS

The Air Force requested $13.1 bihion for RDT&E programs in fiscal year 2000. As shown
in table II.4, we identified potential reductions of about $95.8 million to the fiscal year
2000 request and a potential rescission of $11.7 million from expiring fiscal year 1998
appropriations.




                                               36          GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX II                                                                                      APPENDIX II

Table 11.4: Potential        Reductions      and Rescission       to Air Force RDT&E              Programs



                                                                                                   Potential
                                                                Fiscal year 2000                  rescission
                                                                                 Potential       Fiscal year
  kt!?      1 Line item description                            Request          reduction               1998
                                                            $13,077.829             $51.926                 c-l
                                                                  53.344"              5.300                   0

                                                                328.653"
                                                                            I          3.500                   0


                                                                 38.804"                     0


                 Defense Satellite Communication




  ti amount is part of the Air Force’sRDT&.Erequest of $13,077.8millior~

         Inflation   Adiustment

The Air Force’s fiscal year 2000 RDT&E budget request of $13.1 billion can be reduced
by $51.926 million because an equivalent amount of fiscal year 1999 funds is available to
meet fiscal year 2000 program requirements. DOD is withholding these Air Force
RDT&E funds, identified as inflation savings. Since the actual fiscal year 1999 inflation
rates are lower than previously forecast, $51.926 million of the fiscal year 1999 funds can
be used to offset the fiscal year 2000 budget request.

         Wideband      MILSATCOM          (Suace)    <Line 52)

The Air Force’s fiscal year 2000 budget request of $53.344 million for the Wideband
MILSATCOM can be reduced by $5.3 million because an equivalent amount of fiscal year
1999 funds is available to meet fiscal year 2000 program requirements.


                                                     37           GAOLWAD-99-233R 2000 Defense Budget
APPENDIX II                                                                   APPENDIX II

The Air Force planned to buy 68 Global Broadcast Service receiver suites in fiscal year
1999, funded under this line item. Program officials told us that they recently deferred
the purchase of some of these receiver suites until later years, resulting in $5.3 million
being excess to fiscal year 1999 program requirements.

Since the $5.3 million will not be used to buy the receiver suites, these fiscal year 1999
funds can be used to offset the fiscal year 2000 budget if they are not reprogrammed.

       Space Based Infrared Svstem TSBIRS) High - Engineering
       and Manufacturina   DeveloDment (Line 701

The Air Force’s fiscal year 2000 budget request of $328.653 million for the Space Based
Infrared System High program can be reduced by $3.5 million because an equivalent
amount of fiscal year 1999funds is available to meet fiscal year 2000 program
requirements.

These funds were provided for the integration of the Space Based Atmospheric Burst
Reporting Sensor. However, the Intelligence Program Review Group has deferred its
decision on the sensor until fiscal year 2002. As a result, DOD is withholding these
funds.

Since the $3.5 million will not be used for the sensor, these fiscal year 1999 funds can be
used to offset the fiscal year 2000 budget request.

       Intercontinental     Ballistic Missile Enerineeriner   and
       Manufacturiner     DeveloDment (Line 911

The Air Force’s fiscal year 1998 funding for the Guidance Replacement Program, within
the Intercontinental Ballistic Missile line, can be rescinded by $11.7 million because the
obligational authority wilI expire on September 30,1999.

In fiscaI year 1998, $13.9 milhon was appropriated for the Guidance Replacement
Program to preserve the option to configure the missiles with the Peacekeeper
MK 21 reentry vehicle and an advanced inertial measurement unit. In December 1998,
the Air Force was ahowed to use a portion of these funds for a trade study to determine
the best approach to preserve the option. The trade study was submitted to the
Congress on August l&1999. Use of the remaining $11.7 milhon is restricted until the
Air Force establishes a plan to sustain the option and notifies the defense committees.

DOD did not concur with this potential rescission because it said the Air Force has a
plan to spend the remaining funds as the Congress requested. It said that the Air Force is
ready to award the contract following the 30-day congressional notification. However, if


                                              38         GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX II                                                                       APPENDIX II

the Congress does not agree with the trade study recommendations, the expiring
$11.7 million in fiscal year 1998 funds is available for reprogramming or rescission during
the remainder of fiscal year 1999.

       F-16 Sauadrons        (Line   128)

The Air Force’s fiscal year 2000 budget request of $112.52 million for the F-16 Squadrons
can be reduced by $15 million because an equivalent amount of fiscal year 1999 funds is
available to meet fiscal year 2000 program requirements.

The Air Force’s fiscal year 1999 appropriations included $15 million to define a service
life extension program and capability enhancement package for F-16- aircraft. The
Air Force does not plan to define this life extension program or the capability
enhancement package. The Air Force is withholding $514,000, and the remaining
$14.486million of the fiscal year 1999 fimds is included in the fiscal year 1999 DOD
omnibus reprogrammin g request to provide funds for the F-16 C/D advance
procurement. DOD did not agree with the potential reduction because it believes the
Congress will approve the proposed reprogramming.

Since the $15 million will not be used for the F-16 service life extension program and the
capability enhancement package, these fiscal year 1999 funds can be used to offset the
fiscal year 2000 budget request if they are not reprogrammed.

       Defense   Satellite     Communication    Svstem   (SDace)   (Line   1683

The Air Force’s fiscal year 2000 budget request of $8.985 million for the Defense Satellite
Communication System program can be reduced by $2.5 million because an equivalent
amount of fiscal year 1999 funds is available to meet the fiscal year 2000 program
requirements.

According to program officials, delays in integrating two satellites with the Evolved
Expendable Launch Vehicle resulted in the program having a total of $5.9 million in
excess fiscal year 1999 funds. These officials told us $3.4 million was transferred to the
Military Satellite Communications Terminals program. They said the remaining
$2.5 million is expected to be part of the fiscal year 1999 DOD omnibus reprogramming
request.

The $2.5 million is not included in the omnibus reprogramming request and will not be
used for the satellite program; therefore, these fiscal year 1999 funds can be used to
offset the fiscal year 2000 budget request if they are not reprogrammed.




                                               39        GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX II                                                                   APPENDIX II

       Satellite   Control   Network   C%ace> (Line   179)

The Air Force’s fiscal year 2000 budget request of $61.918 million for the Satellite Control
Network can be reduced by $10.3 million because an equivalent amount of fiscal year
1999funds is available to meet fiscal year 2000 program requirements.

These funds were identified as available for the fiscal year 2000 DOD omnibus
reprogr amming request. The funds were appropriated in fiscal year 1999 for the
Operational Switch Replacement, Archival Wide Area Network Interface Units, and
Range and Communications Development efforts. According to program officials, the
funds are available because of reduced program requirements and favorable contract
negotiations.

The $10.3 million is not included in the omnibus reprogramming request and will not be
used for these development efforts; therefore, these fiscal year 1999 funds can be used to
offset the fiscal year 2000 budget request if they are not reprogrammed.

       NAVSTAR Global Positioning  System
       [User EauiDment) (Line 1911

The Air Force’s fiscal year 2000 budget request of $53.963 million for Global Positioning
System user equipment can be reduced by $4.05 million because fiscal year 2000 program
requirements are overstated.

The Air Force requested $4.5 million to continue technology demonstration efforts for
the Navigation Warfare Advanced Concept Technology Demonstration Protection
Program during fiscal year 2000. However, the protection program approved by the
Under Secretary of Defense for Advanced Technology in July 1998 only requires
$0.450 million for technology demonstrations, or $4.05 million less than the amount
requested. Joint Program Office officials agreed that $4.05 million was not required to
support the approved protection program. They explained that this amount is needed to
fund technology demonstrations in fiscal years 2000 and 2001 that are not included in the
approved Advanced Concept Technology Demonstration. They further stated that a
reduction in funding could delay deployment of these planned critical technologies.
These officials, however, could not identify specific technology demonstrations that
would be funded during this period.

Because these funds are not required for the protection program, the $4.05 million can
be reduced from the fiscal year 2000 budget request.




                                             40         GAO/NSIAJJ-99-233R2000 Defense Budget
APPENDIX II                                                                            APPENDIX II

         C-17 Aircraft     (Line   208-j

The Air Force’s fiscal year 2000 budget request of $170.718million for the C-17 aircraft
can be reduced by $3.2 million because an equivalent amount of fiscal year 1999 funds is
available to meet fiscal year 2000 program requirements.

The Air Force is withholding $1.7 million to use for other Air Force programs and
planned to reprogram $1.5 million of fiscal year 1999 funds as part of the fiscal year 1999
DOD omnibus reprogrammin g request. However, the funds are not included in the
omnibus reprogramming request.

Since the $3.2 million will not be used for the C-17 program, these fiscal year 1999 funds
can be used to offset the fiscal year 2000 budget request if they are not reprogrammed.

DEFENSE-WIDE             RDT&E     PROGRAMS

DOD requested $8.6 billion for defense-wide RDT&E programs in fiscal year 2000. As
shown in table II.5, we identified a potential reduction of $4.8 million to the fiscal year
2000 request.

Table 11.5: Potential       Reduction      to Defense-wide     RDT&E     Programs


                                                              Fiscal year 2000
  Line                                                                    Potential
   no.      Line item description                            Request     reduction
    19      Weaponsof Mass Destruction (WMD)
            Related Technologies                             $203.512         $4.816
            TOId                                                             $4.816


      Weauons of Mass Destruction             (WMD)    Related
      Techuolopries (Line 19)

The Defense Threat Reduction Agency’s fiscal year 2000 budget request of
$203.512 million for Weapons of Mass Destruction Related Technologies can be reduced
by $4.816 million because the fiscal year 2000 program requirements are overstated.

The Agency plans to use these funds to conduct research and development activities that
are similar to other activities being conducted elsewhere in DOD. Specifically, the
Agency plans to use $2.366 million for the Weapons System Lethality project and
$2.45 million for the Weapons System Operability account for research and development


                                                  41           GAONZAD-99-233R 2000 Defense Budget
APPENDIX II                                                                APPENDIXII        ~

of Electromagnetic Hardening Technologies to protect systems from emerging threats
such as radio-frequency and high power microwave attack. According to Office of the
Secretary of Defense and service officials, similar research and development efforts are
also being done by the services’ laboratories and warfare centers.

The Agency did not agree with the potential reduction. It maintains that its program is
coordinated within DOD, the services, and their respective laboratories. AIso, it stated
that other high power microwave efforts within DOD are focused on source
development rather than defense. However, we identified multiple high power
microwave research efforts in the military, services including efforts with defensive
applications. Thus, we continue to believe that because the Agency’s planned research
and development efforts are similar to other ongoing service efforts, $4.816 million can
be reduced from the fiscal year 2000 budget request.




                                            42        GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX IIl                                                                              APPENDIX Ill

  POTENTIAL           RESTRICTIONS           TO PROCUREMENT             AND RDT&E        PROGRAMS

Our review of selected budget line items in the DOD fiscal year 2000 procurement and
RDT&E budget request identified issues on several programs that Congress may want to
assure have been satisfactorily resolved before appropriated funds are spent. These
issues were identified in six programs with a total of $301.9million that warrant
potential spending restriction. The potential restrictions include $86 million related to
two procurement programs and about $216 million associated with four RDT&E
programs in the fucal year 2000 budget request. This information is summarized in table
III.1.
Table 111.1: Potential        Restrictions     to Procurement         and RDT&E      Programs


                                                 Fiscal year 2000
                              Potential   procurement                    Potential    RDT&E
                                           restrictions                         restrictions
                                                          0                         $135.365
  Navy                                           $35.600                               30.567
  Air Force                                       50.400                                       0
  Total                                         $86.000                            $215.932


PROCUREMENT              PROGRAMS

The DOD fiscal year 2000 budget request includes requested funding for a joint Navy and
Air Force missile procurement program-$35.6 million and $50.4 million, respectively-
that warrants potential spending restriction. The issues are discussed below.

Missile      Procurement.     Navv

          Joint   Standoff   WeaDon (JSOW)        (Line       71

The Navy’s fiscal year 2000 budget request of $154.9 million for the Joint Standoff
Weapon includes $35.6 million for production of 97 antiarmor variants that should be
restricted until quantity requirements can be reassessed considering limitations in the
weapon’s capability to counter moving targets at standoff ranges. If these limitations are
not addressed, the theater commander will be limited to attacking enemy armor at choke
points or in staging areas, which should require fewer weapons than originally predicted
for this weapon.



                                                    43             GAO/NSKD-99-233R 2000 Defense Budget
APPENDIX III                                                                         APPENDIX III

The Navy and the Air Force did not prepare an analysis of alternatives for the antiarmor
variant before entering production. However, the Sensor Fuzed Weapon with Wind
Corrected Munitions Dispenser as well as the Maverick missile could provide
alternatives for attacking maneuvering armor. At a minimum, a reassessment of the
quantities is needed to justify the quantities of the antiarmor variant to be produced.
Navy and Air Force officials did not agree with the funding restriction for the antiarmor
variant. They stated that a restriction would very likely lead to a break in production.
They also stated that the weapon was effective, as required in the operational
requirements, and that no change in threat or capabilities warranted the expense of
preparing an analysis of alternatives at the production milestone.

As noted in our report,’ we believe that substantial changes have occurred in the
required capabilities since the last reassessment was prepared. The requirement for self-
targeting has slipped from the initial requirements to an objective requirement. Further,
the Sensor Fuzed Weapon with Wind Corrected Munitions Dispenser has been developed
and tested and is a potential alternative. Both of these events would appear to affect the
quantities of the antiarmor variant needed. The restriction need not lead to a break in
production for the antiarmor variant and the warhead if the services begin the analysis
immediately. Also, a break in production would not occur because the antiarmor variant
and the baseline variant of the Joint Standoff Weapon use the same body and the
warhead for the antiarmor variant and the Sensor Fuzed Weapon use the same
production line. We continue to believe that the $35.6 million fiscal year 2000 budget
request should be restricted until a reassessment of the quantities justifies the planned
procurement.

Missile     Procurement,      Air Force

          Joint   Standoff   WeaDon (Line   5’1

The Air Force’s fiscal year 2000 budget request for the Joint Standoff Weapon includes
$50.4 million that should be restricted until the Air Force reassesses the quantity of
antiarmor variants it needs considering limitations in the capability of the weapon to
counter moving targets at standoff ranges. If these limitations are not addressed, the
theater commander will be limited to attacking enemy armor at choke points or in
staging areas, which should require fewer weapons than originally predicted for this
weapon.

DOD and the Air Force did not agree with the potential restriction on procurement
funding for the antiarmor variant. They stated that an analysis of alternative is not


’ Defense Acauisitions: Reduced ODerational Effectiveness of Joint Standoff Weaon , (GAO/MUD-99-137,
August 31,1999).


                                                  44          GAO/NSIAD-99-233R2000 Defense Budget
APPENDIX III                                                                      APPENDIX III

necessary because the assumptions and conclusions in their 1995 cost and operational
effectiveness analysis are still valid. According to DOD and the Air Force, there are no
limitations that would prevent the antiarmor variant from countering moving targets, and
the variant is not required to be self-targeting. Officials further stated that they did not
believe that an analysis could be prepared in time to meet contract award dates for the
second low-rate production buy in December 1999 or the initial operational test and
evaluation scheduled for April 2000. Officials stated that the full-rate production
decision would be a more natural time for an analysis to be provided. In addition, DOD
and the Air Force stated that any decreases in the number of missiles to be procured
would affect the price of the wide area variant since both the antiarmor and wide area
variants are the same except for their payloads.

As noted in the previous discussion, an analysis of alternatives for the antiarmor variant
was not conducted prior to entering production. We do not believe the assumptions in
the 1995 analysis are still valid because the missile requirements have changed and
capabilities have been reduced since the analysis was performed: Antiarmor variants
using preplanned targeting will only be effective against stationary targets-a more
limited target set than anticipated. However, the Sensor Fuzed Weapon with Wind
Corrected Munitions Dispenser and the Maverick missile could provide alternatives for
attacking maneuvering armor. The Air Force’s analysis of the relative performance of
the Sensor Fuzed Weapon with Wind Corrected Munitions Dispenser shows little
difference in the effectiveness of the two weapons. Further, delaying the analysis until
the full-rate production decision could result in the procurement of missiles that may be
less capable than existing alternatives for attacking maneuvering armor. After the Navy
Acquisition Executive waived the requirement to prepare an analysis of alternatives prior
to the low-rate initial production decision, test results call into question the efficacy of
the weapon system. Until these concerns are resolved, some restriction on continued
procurement of the antiarmor variant appears to be warranted. We note that
procurement quantities could be adjusted to lessen the impact on the cost of the
antiarmor weapon. Therefore, we believe the $50.4 million for procurement of the
antiarmor variant should be restricted until the services have a more precise idea of the
quantities they will need considering the capabilities of the weapon to counter
maneuvering armor.




* Defense Acauisitions, CGSONSIAD-99-137.Aumrst 31.1999 .


                                                 45         GAOLNSIAD-99-233R2000 Defense Budget
APPENDIX III                                                                 APPENDIX III

RDT&E    PROGRAMS

The DOD fiscal year 2000 budget request includes $215.9 million related to four RDT&E
programs that warrant potential spending restriction. Of this amount, about
$185.4 million is related to three Army programs and $30.6 million is related to one Navy
program. The issues are discussed below.



      Joint   Tactical   Radio (Line 77)

The Army’s fiscal year 2000 budget request of $36.797million for Joint Tactical Radio
includes $24.365 million that can be restricted until the Army has a detailed definition of
the expenditure plan for these funds.

The Army is requesting these funds for architecture-related activities. However, there is
only a preliminary definition of the architecture, and it is not known whether a single
architecture is achievable. Based on the Army’s plan to continue with the architecture
development phase, a validated architecture is not estimated to occur until fiscal year
2001. The architecture development phase that is scheduled to begin in September 1999
is expected to be completed within 12 to 18 months and result in a validated
architecture. DOD is also reevaluating how many existing (legacy) radio signal
communication formats the system will eventually need to support. Some have possibly
become obsolete.

The Army said that they completed the architecture definition phase in June 1999, issued
a solicitation for proposals to develop and validate the architecture, and plan to award
the contract in September 1999. The program office has $8 million in fiscal year 1999
funds that it plans to use to support architecture development. DOD and the Army said
they do not agree with the potential restriction because the timely release of funds is
critical to continued program success. They said that the fiscal year 2000 funds are
needed to support a significant portion of the September 1999 contract to be awarded as
well as the additional validation prototypmg activities.

Until the Army more fully defines and develops the architecture(s), it is premature to
obligate funds for architecture-related activities beyond the $8 million available from
fiscal year 1999 funds. Therefore, the $24.365 million in the fiscal year 2000 budget
request can be restricted until the Army defines a detailed expenditure plan and
milestones for the architecture development phase.




                                             46        GAO/NSIAD-99-233R2000 Defense Budget
APPENDIXIII                                                                  APPENDIX III

      Combat   Feeding.   Clothinpt,   and Eauiument   (Line   941

The Army’s fiscal year 2000 budget request of $110.829 million for Combat Feeding,
Clothing, and Equipment includes $86.6 million for Land Warrior, of which $79.7 million
can be restricted.

The Land Warrior program entered engineering and manufacturing development in
January 1996. The Army has been revising its acquisition plan since August 1998 because
of development production delays, and the Army has postponed production. The Army’s
fiscal year 2000 budget request does not reflect the current program restructure plan that
is being reviewed, including revised funding requirements. In addition, approval of the
restructure plan scheduled for March 1999 has been postponed indefinitely. Because the
Army does not have an approved restructure plan, we believe it is reasonable to restrict
$79.7 million requested in fiscal year 2000 for the Land Warrior program until the plan is
approved and funding requirements are known.

      Brilliant Anti-Armor   Submunition   (BAT>
      [Demonstration     and Validation) (Line 103)

The Army’s fiscal year 2000 budget request of $128.026 million for the development of
the Brilliant Anti-Armor Submunition includes $81.3 million for the development of the
preplanned product improvement that should be restricted to ensure it is used as
planned.

In the National Defense Authorization Act for fiscal year 1998, the conferees agreed to
eliminate procurement funding for the basic Brilliant Anti-Armor Submunition. They
authorized a transfer of $35 million in procurement funding to the Brilliant Anti-Armor
Submunition RDT&E budget to accelerate development and production of the
preplanned product improvement Brilliant Anti-Armor Submunition. All Brilliant Anti-
Armor Submunition and Army Tactical Missile System RDT&E programs are included in
the same budget line. When the $35 million was transferred, the program office used the
funds for the basic program development, not the preplanned product improvement
program. In the fiscal year 1999 appropriations bill, the Senate recommended reducing
the procurement funding for the basic Brilliant Anti-Armor Submunition and the Army
Tactical Missile System in half. The bill stated that neither the current threat
environment nor the urgency of schedule milestones justified the acquisition strategy,
indicating it was more reasonable to develop the near-term product improvement rather
than the baseline capability.

For the past 2 years, the Army has reprogrammed funding requested for development of
its preplanned product improvement program to the basic program. It reprogrammed



                                             47        GAO/NSIAD-99-233R 2000 Defense Budget
APPENIXX III                                                                 APPENDIX III

about $8 million in fiscal year 1998 and $18 million in fiscal year 1999. The effect has
been to delay the preplanned product improvement program 2 years.

According to program off&&, because of the high degree of commonality between the
two programs, the dollars spent were beneficial to the preplanned product improvement
program. They said that restricting funds would limit the flexibility of the Army to apply
funding where the maximum benefit to each program could be realized. However, if the
Congress intends for the funding to be used for the preplanned product improvement
program, the $81.3 million should be restricted.



      Joint Standoff   WeaDon (Engineering      and
      Manufacturing    DeveloDment)   (Line    1,243

The Navy’s fiscal year 2000 budget request of $30.567 million for the Joint Standoff
Weapon should be restricted until the Navy begins preparation of an analysis of
alternatives based on significant changes in the capability of the redesigned unitary
variant.

In 1998, DOD approved a redesign and restructure of the unitary variant to reduce its
cost. As part of the redesign, the Navy eliminated the man-in-the-loop data link and
installed a less sophisticated seeker. As a result, the weapon is no longer suitable for
countering moving targets because the operator does not have a method of updating the
aimpoint after weapon launch. However, according to a 1998 capabilities based
munitions requirements analysis, this type of target comprised the overwhelming
majority of targets the Navy planned to attack with the unitary variant. A recently
updated requirements analysis continues to project significant unitary variant use against
moving targets.

In approving the redesign and restructure of the unitary program, DOD did not require
the Navy to prepare an analysis of alternatives. For example, potential alternatives such
as the Standoff Land Attack Missile-Expanded Response and the Air Force’s AGM-130
are available, and the Joint Air-to-Surface Standoff Missile is in development.
Considering its limited efficacy against moving targets and the availability of alternatives,
such an analysis appears to be necessary to determine whether the requirements for the
unitary Joint Standoff Weapon justify continued development and production.

DOD and the Navy disagreed with the potential restriction. They stated that they saw no
need to prepare an analysis of alternatives since the requirements had not changed, and
there were no new alternatives that were less costly. They also stated that regardless of
their cost, each of the proposed alternatives to the unitary variant is intended for a


                                              48        GAO/NSLAD-99-233R2000 Defense Budget
APPENDIX III                                                                     APPENDlX lIl

different group of targets. We believe that requirements have changed regarding the
number and kinds of targets the Joint Standoff Weapon can be expected to be effective
against.3 Further, requirements changed to the extent that the operational requirements
document has been revised based on the updated operational capabilities. Moreover, the
Joint Air-to-Surface Standoff Missile, now in development, was not considered in the
previous analysis, but it has greater capabilities in range and warhead size than the Joint
Standoff Weapon unitary variant. F’inally, the Navy now plans to use this weapon against
artillery and defensive infantry fortifications designated as less critical targets.
Alternatives for attacking less critical targets, including the Joint Direct Attack Munition
and laser guided bombs, are less expensive and potentially more lethal. Therefore, we
continue to believe the $30.567 million in the fLscal year 2000 budget request should be
restricted until the Navy can justify the development based on an analysis of alternatives.




’ Defense Acauisitions, (GAO/MUD-99-137, August 31,1999).
                                                49          GAO/MUD-99-233R 2000 Defense Budget
APPENDIX V                                                                 APPENDIX V

                            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, programmatic, or acquisition issues. To identify potential reductions to
the fiscal year 2000 requests, potential rescissions of prior years’ appropriations, and
potential restrictions on the expenditure of funds, we interviewed program officials and
reviewed program documentation such as budget requests and justifications, monthly
program status reports, correspondence, briefing reports, and accounting and financial
reports.

We conducted various analyses based on the data obtained on program status, test
results, and contract awards. Our analyses included assessments of potential effects of
changes or decisions that occurred after the budget submission, such as delays in testing
schedules and contract negotiations, decisions to postpone planned procurement, and
changes in program start-ups. We also assessedplanned system buys based on changes
in funding decisions and program funding needs as they related to systems’ development
progression. In addition, we evaluated test results for problems encountered, appraised
the potential effect of test results on current procurement plans, and evaluated
production problems and their impact on funding requirements. In some instances, our
analysis identified potential spending restrictions which result from issues that Congress
may want to assure have been satisfactorily resolved before appropriated funds are
spent. Also, we identified potential reductions due to inflation adjustments based on
funds withheld by DOD, which represent lower inflation than previously forecast in
fiscal year 1999. According to DOD, funds related to the inflation adjustment but not on
withhold were reprogrammed to meet program needs.

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

    Office of the Secretary of Defense and Army, Navy, and Air Force headquarters,
    Washington, D.C.;
    Secretary of the Army, Research, Development, and Acquisition, Washington, D.C.;
    Ballistic Missile Defense Organization, Washington, D.C.;
    Army Tank-Automotive and Armament Command, Warren, Michigan;
    Army Aviation and Missile Command, Huntsville, Alabarn%
    Army Space and Missile Defense Command, Huntsville, Alabama;
    Program Executive Office, Air and Missile Defense, Huntsville, Alabama;
    Offke of Naval Research, Arlington, Virginia;
    Naval Air Systems Command, Patuxent River, Maryland;
    Naval Sea Systems Command, Arlington, Virginia;
    Naval Undersea Warfare Center Newport Division, Middletown, Rhode Island


                                            50         GAO/MUD-99-233R 2000 Defense Budget
APPENDIX V                                                               APPENDIX V

l   Navy SPARWAR, San Diego, California;
l   National Polar-Orbiting Operations Environmental Satellite System Integrated
    Program Offrce, Silver Spring, Maryland;
l   Advanced Amphibious Assault Vehicle Program Office, Woodbridge, Virginia;
l   Navy Operational Test and Evaluation Force, Norfolk, Virginia;
l   Air Force Materiel Command, Aeronautical Systems Center, Wright-Patterson Air
    Force Base, Ohio;
l   Eglin Air Force Base, Florida; and
l   Air Force Materiel Command, Space and Missile System Center, Los Angeles,
    California.

We conducted our review from March 1999 to July 1999 in accordance with generally
accepted government auditing standards.




(707304)


                                         51        GAOMZAD-99-233R 2000 Defense Budget
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