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The federal government’s annual budget for developing and acquiring major defense, homeland security, and space systems is about $90 billion. These systems include fighter aircraft and submarines, electronic baggage screening equipment, and telescopes intended to explore the universe – each of which will cost billions of dollars to acquire.

Managing complex, major system acquisitions has been a long-standing challenge for the federal government. Systems often cost more and take longer to develop and produce than originally planned, which forces agencies to request more funding to complete them, make trade-offs among programs, defer other priorities, or cancel programs after significant amounts of money have already been spent.

Federal agencies can reduce risk on major system acquisitions by focusing on several areas:

• Setting realistic requirements and holding them stable by conducting early systems engineering analysis of requirements, working closely with industry to ensure requirements are clearly defined, and making trade-offs as necessary.
• Establishing reliable cost and schedule estimates that reflect best practices and are based on high levels of knowledge about program attributes, such as its requirements and the technology needed to meet them.
• Acquiring key product knowledge before moving forward bydemonstrating the maturity of critical technologies, completeness and performance of the design, and predictability of manufacturing processes by key points in the acquisition process.
• Maintaining stable program funding by balancing investments in major systems with available funding and making decisions to reduce the number of programs if funding needs outstrip an agency’s projected resources.
• Developing strong program managers who are experienced, willing to engage in direct and candid communication, and empowered to make good decisions.

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