DOD Weapon Systems Acquisition
Congress and the Department of Defense (DOD) have long sought to improve the acquisition of major weapon systems, yet many DOD programs are still falling short of cost, schedule, and performance expectations. The results are unanticipated cost overruns, reduced buying power, and in some cases a reduction in the capability ultimately delivered to the warfighter. In March 2014, we reported that DOD expects to invest $1.5 trillion (fiscal year 2014 dollars) on the development and procurement of its portfolio of 80 major defense acquisition programs. With the prospect of slowly growing or flat defense budgets for years to come, DOD must get better returns on its weapon system investments and find ways to deliver capability to the warfighter for less than it has in the past.
Top leadership at DOD is committed to improving the acquisition of weapon systems. We added this area to our High Risk List in 1990. While DOD has made progress in addressing challenges, the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics has issued a series of memorandums on Better Buying Power initiatives since 2010 that outline steps DOD needs to take across its acquisition portfolio to achieve better results. While DOD has made strides in addressing challenges with the acquisition workforce, the department still lacks the capacity to fully implement reforms, particularly in the areas of cost estimating, program assessment, systems engineering, and developmental testing. Although there is no comprehensive action plan within the department for removing this area from the High Risk List, the Better Buying Power initiatives are a step in the right direction as DOD has prescribed a number of concrete changes. In 2014, DOD issued the second in an annual series of performance reports on the portfolio of major defense acquisition programs. Continuing and expanding this series of reports should help DOD measure its progress over time. DOD has made some progress in updating its policies to enable better weapon systems outcomes. However, even with this call for change we remain concerned about the full implementation of proposed reforms as DOD has, in the past, failed to convert policy into practice. In addition, although we reported in March 2014 on the progress many DOD programs are making in reducing their cost in the near term, individual weapon programs are still failing to conform to best practices for acquisition or to implement key acquisition reforms and initiatives that could prevent long-term cost and schedule growth.
Our work continues to reveal significant cost and schedule growth in DOD’s portfolio of major defense acquisition programs. In 2014, we reported that the total acquisition cost of DOD’s fiscal year 2013 portfolio of 80 programs grew by almost $13 billion, or about 1 percent, from the previous year. The majority of the net cost growth can be attributed to a single program—the Evolved Expendable Launch Vehicle. Overall, the schedule to deliver initial capabilities to the warfighter grew an additional 2 months. While the overall cost of the 2013 portfolio did increase, 50 of the 80 programs within the portfolio actually reduced their costs. Our analysis also showed that the majority of programs actually improved their buying power, or the amount of goods procured for dollars spent, from 2012 to 2013. Despite these gains, DOD’s major acquisition programs continue to fare poorly against the three cost-growth targets we use to measure DOD’s progress in the weapon system acquisition high-risk area (see figure 7).
Figure 7: Comparison of the Cost Performance of DOD’s 2011, 2012, and 2013 Portfolios
Across the portfolio, DOD has unevenly implemented knowledge-based acquisition practices that might prevent or mitigate cost growth. Our 2014 assessment of weapon programs found that while DOD continues to show progress in following a knowledge-based approach to reduce risk, it has significant room for improvement. While programs that have recently passed through major decision points have demonstrated best practices—such as constraining development times and achieving design stability—key practices like demonstrating technology maturity or controlling manufacturing processes are still not being fully implemented. Of the seven programs we assessed that had recently passed through one of three key decision points in the acquisition process, none had implemented all of the applicable knowledge-based practices. These programs will carry technology, design, and production risks, which increases cost and schedule risks, into subsequent phases of the acquisition process.
DOD continues to demonstrate a strong commitment, at the highest levels, to improving the management of its weapon system acquisitions. Over the past 5 years the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics has released a series of memorandums on its Better Buying Power initiative that outline the steps DOD needs to take across its acquisition portfolio to achieve better results. These initiatives include measures such as setting and enforcing affordability constraints, instituting a long-term investment plan for portfolios of weapon systems, implementing “should cost” management to control contract costs, and eliminating redundancies within portfolios. The initiatives also emphasize the need to adequately grow and train the acquisition workforce. The release in January 2015 of an update to the department’s acquisition instruction furthers this commitment as it incorporates many of the Better Buying Power initiatives as well as acquisition reforms from the Weapon Systems Acquisition Reform Act of 2009 and other legislation. These actions are consistent with our past findings and recommendations.
If these initiatives are to have a lasting, positive effect, however, decision makers need to be held accountable for implementing them. Our recent work shows there is much ground yet to cover. In 2014, we reported that implementation of the Better Buying Power and acquisition reform initiatives varied across programs. While 82 percent of programs successfully implemented “should-cost” initiatives and reported significant cost savings, only 54 percent had established affordability constraints. Implementation of the direction to improve competition is also incomplete. Of the future programs we assessed in our 2014 report on selected weapon programs, many did not plan to conduct competitive prototyping before the start of development and many current programs did not have acquisition strategies that ensure competition through the end of production. Fifteen future and current programs reported they will not take actions to promote any competitive measures before or after development starts.
DOD has made some progress in its efforts to assess the root causes of poor weapon system acquisition outcomes and monitors the effectiveness of its actions to improve its management of weapon systems acquisition. In 2014, DOD issued the second in what is promised to be an annual series of performance reports on its portfolio of major defense acquisition programs. The report examines a wide range of acquisition-related information, such as contract type, contractor incentives, and the effects of statutes and policies to determine if there is any statistical correlation between these factors and good or poor acquisition outcomes. The report is a good step, but DOD needs to continue to refine and enhance this reporting to further its monitoring of progress.
 In December 2008 we, DOD, and the Office of Management and Budget discussed a set of cost growth metrics and goals to evaluate DOD’s progress on improving program performance for purposes of our high-risk report. These metrics were designed to capture total cost-growth performance over 1-and 5-year periods as well as from the original program estimate on a percentage basis as opposed to dollar amount to control for the differences in the amount of funding among programs. DOD no longer supports the use of these metrics. We continue to believe that the current metrics have value.
At this point, there is a need to build on existing reforms—not necessarily by revisiting the process itself but by augmenting it by tackling incentives. Drawing on our extensive body of work in weapon systems acquisition, we see several areas of focus:
- examining best practices to integrate critical requirements, resources, and acquisition decision-making processes;
- attracting, training, and retaining acquisition staff and managers so that they are both empowered and accountable for program outcomes;
- at the start of new programs, using funding decisions to reinforce desirable principles such as well-informed acquisition strategies;
- identifying significant risks up front and resourcing them;
- exploring ways to align budget decisions and program decisions more closely; and
- investigating tools, such as limits on system development time, to improve program outcomes.
GAO-14-749: Published: Jul 30, 2014. Publicly Released: Jul 30, 2014.
GAO-14-563T: Published: Apr 30, 2014. Publicly Released: Apr 30, 2014.
GAO-14-190: Published: Apr 10, 2014. Publicly Released: Apr 10, 2014.
GAO-14-351: Published: Apr 1, 2014. Publicly Released: Apr 1, 2014.
GAO-14-340SP: Published: Mar 31, 2014. Publicly Released: Mar 31, 2014.
GAO-14-322: Published: Mar 24, 2014. Publicly Released: Mar 24, 2014.
GAO-14-145T: Published: Oct 29, 2013. Publicly Released: Oct 29, 2013.
GAO-13-103: Published: Dec 14, 2012. Publicly Released: Dec 14, 2012.
GAO-12-339: Published: Feb 24, 2012. Publicly Released: Feb 24, 2012.