Budgetary Pressures Created by the Army's Plan To Procure New Major Weapon Systems Are Just Beginning

MASAD-82-5: Published: Oct 20, 1981. Publicly Released: Oct 20, 1981.

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GAO reviewed new weapon system acquisition programs to determine the likely effect on the budget for the next several years of financing the procurement, operation, and support of the Army's new major weapon systems and identifying ways for relieving the pressure which characterized the preparation of the Army's 1982-1986 5-Year Defense Program.

The 1970's marked the Army's most intensive peacetime effort to modernize its forces with new weapon systems. Most of the procurement of these systems became a reality in preparing the fiscal year 1982 budget. With less funds available than were needed to procure the weapons in the quantities desired, together with substantial cost increases, the Army proposed to stretch out the production schedules of nearly all of the systems which would have resulted in higher prices and program delays. Additional funds in the revised fiscal year 1982 budget alleviated this problem. The systems production has been characterized by substantial cost growth, stemming mainly from the actual production processes being more complex than anticipated and requiring more labor hours and machine time. Much of the cost growth was due to inflation. The use of optimistic inflation rates in developing cost estimates also accounts for some of the cost growth. Operating and supporting the new weapon systems once they are fielded will require very large amounts of resources. Since the budgetary effect of operations and support will not be felt until after the weapons are deployed, these costs are not receiving as much attention as procurement costs. Fielding all of the systems will seriously strain the Army's resources. Most of the systems will require more skilled personnel, more fuel and ammunition, a greater expenditure for spare parts, and will impose a logistics burden on the Army.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: This is an ongoing recommendation which will require action each year. Defense is implementing the action through existing management mechanisms.

    Recommendation: The Secretary of Defense should direct the Army to fully fund those new systems deemed by the Army to be essential to bring its missions to the desired capability, even at the expense of canceling or reducing other acquisition programs.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: This is an ongoing recommendation which will require action each year. Defense is implementing the action through existing management mechanisms.

    Recommendation: The Secretary of Defense should direct the Army to identify, in each 5-year plan, the additional resources that will be needed to operate and support all major weapon systems in inventory and to procure and determine the resources that can reasonably be expected to become available for these purposes so that the results of such assessments can be considered in procurement funding decisions. New major weapon system procurements should not be undertaken unless a positive determination has been made that the systems can be adequately operated and supported.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: This is an ongoing recommendation which will require action each year. Defense is implementing the action through existing management mechanisms.

    Recommendation: The Secretary of Defense should direct the Army: (1) to ascertain, in consultation with the prime contractors, that foreseeable production risks of the 11 systems for which deliveries are still to begin have been identified; (2) to revise procurement cost estimates accordingly; and (3) to consider the steps necessary to forestall or minimize such risks.

    Agency Affected: Department of Defense

 

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