GAO-11-318SP: Defense: Employing best management practices could help DOD save money on its weapon systems acquisition programs

Defense

Employing best management practices could help DOD save money on its weapon systems acquisition programs

Why Area Is Important

Over the next 5 years, the Department of Defense (DOD) expects to invest almost $343 billion (in fiscal year 2011 dollars) on the development and procurement of major defense acquisition programs. Defense acquisition programs usually take longer, cost more, and deliver fewer quantities and capabilities than DOD originally planned. For several decades, Congress and DOD have taken steps to improve the acquisition of major weapon systems, yet some program outcomes continue to fall short of what was agreed to when the programs started. With the prospect of slowly growing or flat defense budgets for the foreseeable future, DOD must get better value for its weapon system spending and find ways to deliver needed capability to the warfighter for less than it has spent in the past.

What GAO Found

Increasing combat demands and fiscal constraints make it critical for DOD to ensure that its weapon systems investments not only meet the needs of the warfighter but make the most efficient use of available resources. Over the last several years, GAO's work has highlighted a number of underlying systemic causes for cost growth and schedule delays in weapon programs. At the strategic level, DOD's processes for identifying warfighter needs, allocating resources, and managing acquisitions, which together define its weapon system investment strategy, are often not fully aligned. For example, the department often fails to balance the competing needs of the warfighter and commits to more programs than available resources can support. At the program level, GAO's work has shown that DOD's culture and environment often allow programs to start with too many unknowns, such as entering the acquisition process without a full understanding of requirements; cost and schedule estimates based on overly optimistic assumptions; and insufficient knowledge about the maturity of technology, the completeness and the performance of the design, and predictability of manufacturing processes when decisions are made to move forward into the next phase of the acquisition process. Poor outcomes in DOD's weapon system programs reverberate across the entire federal government as every additional dollar spent on acquiring weapon systems is less money available for other priorities.

Since fiscal year 2000, DOD has significantly increased the number of major defense acquisition programs and its overall investment in them. From that time to the present, acquisition outcomes in some cases continued to fall short of what was agreed to when the programs started. In most cases, the programs GAO assessed failed to deliver capabilities when promised—often forcing the department to spend additional funds on maintaining legacy systems. In March 2009, GAO reported that programs experienced, on average, a 22-month delay in delivering initial capabilities to the warfighter. Continued cost growth in such acquisitions results in less funding being available for other DOD priorities and programs. Schedule delays prevent timely delivery of critical capabilities to the warfighter.

GAO has reported that greater adherence to proven management practices at key phases of the acquisition process can reduce weapon system costs, help contain pressures for increased funding, and better address critical warfighter needs. Early systems engineering, ideally beginning before a program is initiated and a business case is set, is critical to designing a system that meets requirements within available resources. In addition, an analysis of alternatives can help ensure that new programs have a sound, executable business case and represent a cost-effective solution to meeting warfighters' needs. Another key step in the process involves managing requirements changes, which if minimized, could decrease the amount of cost growth experienced by acquisition programs. Finally, more prototyping early in programs could help DOD ensure that a system's proposed design can meet performance requirements.

Additionally, DOD requirements continue to be driven primarily by the individual services with little involvement from the combatant commands, which are largely responsible for planning and carrying out military operations. By continuing to rely on capability proposals that lack a joint perspective, DOD may be losing opportunities to improve joint warfighting capabilities and reduce the duplication of capabilities in some areas.

DOD has demonstrated a strong commitment, at the highest levels, to address the management of its weapon system acquisitions, and has started to reprioritize and rebalance its weapon system investments. In 2009 and 2010, the Secretary of Defense proposed canceling or significantly curtailing certain weapon programs, such as the Army's Future Combat System Manned Ground Vehicle and the Navy's DDG-1000 Destroyer—which he characterized as too costly or no longer relevant for current operations. DOD plans to replace several of the canceled programs and therefore has an opportunity to pursue knowledge-based acquisition strategies on the new programs. In addition, DOD plans to eliminate redundant programs within capability portfolios and make affordability a key requirement for weapon programs. These actions are consistent with past GAO findings and recommendations. However, if these initiatives are going to have a lasting, positive effect, they need to be translated into better day-to-day management and decision making.

GAO's recent observations present a mixed picture of DOD's adherence to a knowledge-based acquisition approach, which is key for improving acquisition outcomes. For 42 programs GAO assessed in depth in 2010, there was continued improvement in the technology, design, and manufacturing knowledge the programs had at key points in the acquisition process. However, most programs were still proceeding with less knowledge than best practices suggest, putting them at higher risk for cost growth and schedule delays.

GAO's recent observations present a mixed picture of DOD's adherence to a knowledge-based acquisition approach, which is key for improving acquisition outcomes. For 42 programs GAO assessed in depth in 2010, there was continued improvement in the technology, design, and manufacturing knowledge the programs had at key points in the acquisition process. However, most programs were still proceeding with less knowledge than best practices suggest, putting them at higher risk for cost growth and schedule delays.

Congress passed a number of acquisition reforms in the Weapon Systems Acquisition Reform Act of 2009 to emphasize and increase oversight and reporting on cost estimating, early systems engineering, developmental testing, and technology maturity for major weapon system programs. Since then, DOD has begun to implement a revised acquisition policy based on these congressional reforms to address these and other areas of acquisition risk. If DOD consistently implements these reforms, the number of programs adhering to a knowledge-based acquisition approach should increase and the outcomes for DOD programs should improve.

Actions Needed

 

DOD can take steps to maximize its use of taxpayer dollars by improving its business operations, including the acquisition process. By employing best management practices at all phases of its weapon system acquisition process—including early systems engineering, analyzing alternatives, managing changes in system requirements, and more prototyping early in programs development testing—DOD could achieve significant cost savings. While activities, such as early prototyping, require upfront investments, the knowledge gained can help products proceed more quickly and smoothly through development into production, thereby lowering the costs to develop them.

While DOD's acquisition policies and process may be improving, fiscal pressures continue to build. In addition to the federal government's long-term fiscal challenges, DOD faces its own near- and long-term fiscal pressures as it attempts to balance competing demands, including ongoing operations in Afghanistan and Iraq, initiatives to grow and modernize the force, and increasing personnel and health care costs. DOD's fiscal year 2010 budget request started the process of reprioritizing acquisition dollars to meet warfighters' most pressing needs, but the department must still address the overall affordability of its weapon system investments.

As DOD competes for resources in a constrained fiscal environment, it can not afford to miss opportunities to achieve greater efficiencies and free up resources for higher-priority needs. Because of the complexity and magnitude of the challenges facing DOD in transforming its business operations, it will need strong and sustained leadership, as well as sound strategic planning to guide and integrate its efforts. Ultimately, DOD still needs to do a better job planning and executing programs on a day-to-day basis to achieve better outcomes. Critical to achieving successful outcomes is establishing and sustaining knowledge-based, realistic program baselines. Without realistic baselines, there is no foundation for accurately measuring the knowledge and health of programs.

Framework for Analysis

The information contained in this analysis is based on the related GAO products listed under the "Related GAO Products" tab.

Area Contact

For additional information about this area, contact Mike Sullivan at (202) 512-4841 or sullivanm@gao.gov.

Related GAO Products

Defense Acquisitions:

Observations on Weapon Program Performance and Acquisition Reforms
GAO-10-706T:
Published: May 19, 2010. Publicly Released: May 19, 2010.

Defense Acquisitions:

Strong Leadership Is Key to Planning and Executing Stable Weapon Programs
GAO-10-522:
Published: May 6, 2010. Publicly Released: May 6, 2010.

Defense Acquisitions:

Assessments of Selected Weapon Programs
GAO-10-388SP:
Published: Mar 30, 2010. Publicly Released: Mar 30, 2010.

Budget and Spending:

Maximizing DOD's Potential to Face New Fiscal Challenges and Strengthen Interagency Partnerships
GAO-10-359CG:
Published: Jan 6, 2010. Publicly Released: Jan 6, 2010.

Defense Acquisitions:

Many Analyses of Alternatives Have Not Provided a Robust Assessment of Weapon System Options
GAO-09-665:
Published: Sep 24, 2009. Publicly Released: Oct 26, 2009.

Defense Acquisitions:

Measuring the Value of DOD's Weapon Programs Requires Starting with Realistic Baselines
GAO-09-543T:
Published: Apr 1, 2009. Publicly Released: Apr 1, 2009.

Defense Acquisitions:

Assessments of Selected Weapon Programs
GAO-09-326SP:
Published: Mar 30, 2009. Publicly Released: Mar 30, 2009.

Defense Acquisitions:

DOD Must Prioritize Its Weapon System Acquisitions and Balance Them with Available Resources
GAO-09-501T:
Published: Mar 18, 2009. Publicly Released: Mar 18, 2009.

DOD's High Risk Areas:

Actions Needed to Reduce Vulnerabilities and Improve Business Outcomes
GAO-09-460T:
Published: Mar 12, 2009. Publicly Released: Mar 12, 2009.

Defense Acquisitions:

DOD's Requirements Determination Process Has Not Been Effective in Prioritizing Joint Capabilities
GAO-08-1060:
Published: Sep 25, 2008. Publicly Released: Sep 25, 2008.

Defense Acquisitions:

Fundamental Changes Are Needed to Improve Weapon Program Outcomes
GAO-08-1159T:
Published: Sep 25, 2008. Publicly Released: Sep 25, 2008.

Defense Acquisitions:

Defense Acquisitions:

Assessments of Selected Weapon Programs
GAO-08-467SP:
Published: Mar 31, 2008. Publicly Released: Mar 31, 2008.

Best Practices:

Successful Application to Weapon Acquisitions Requires Changes in DOD's Environment
NSIAD-98-56:
Published: Feb 24, 1998. Publicly Released: Feb 24, 1998.