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Aircraft Acquisition: Affordability of DOD's Investment Strategy

NSIAD-97-88 Published: Sep 08, 1997. Publicly Released: Oct 09, 1997.
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Highlights

GAO reviewed the Department of Defense's (DOD) aircraft acquisition investment strategy, focusing on: (1) DOD's and the Congressional Budget Office's estimates of the annual funding needed for aircraft programs, as a percentage of the overall DOD budget, and a comparison of that percentage to a long-term historical average percentage of the defense budget; (2) the potential long-term availability of funding for DOD's planned aircraft procurements; and (3) DOD's traditional approach to resolving funding shortfalls.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense The Secretary of Defense should, in close consultation with the defense and budget committees of the Congress, define realistic, long-term projections of overall defense funding and, within those amounts, the portion of the annual procurement funding that can be expected to be made available to purchase new or significantly improved aircraft. In developing the projections, the Secretary should consider whether the historical average percentage of the total budget for aircraft purchases is appropriate in today's security and budgetary environment.
Closed – Implemented
DOD partially concurred with the recommendation, stated that it was fully aware of the investment challenge and that its recent Quadrennial Defense Review (QDR) addressed both near- and long-term affordability of all DOD modernization programs. Although this is still a contentious issue and solutions are not clear, the Congress is well informed about the problem. DOD believes that the procurement budget must increase to $60 billion to achieve sufficient funding for modernization, including aircraft procurement.
Department of Defense The Secretary of Defense should reassess and report to the Congress on the overall affordability of DOD's aircraft investment strategy in light of the funding that is expected to be available. The Secretary should clearly identify the amount of funding required by source, including: (1) any projected savings from infrastructure and acquisition reform initiatives; and (2) any reductions elsewhere within the procurement account or within the other major accounts.
Closed – Implemented
DOD stated that the QDR essentially fulfilled this recommendation. The QDR included some actions to improve affordability of aircraft investment plans. However, DOD and the Congress have not reached agreement on the infrastructure reductions and reforms that DOD is counting on to provide funding for modernization investments (i.e., increasing the procurement budget to $60 billion by 2001). The intent of the recommendation has essentially been fulfilled; however, the affordability still depends on agreements to reduce infrastructure and implement reforms, or a substantial increase in the overall defense budget.
Department of Defense The Secretary of Defense should fully consider the availability of long-term funding for any aircraft program before approving the procurement planned for that system.
Closed – Not Implemented
DOD agreed that long-term projections can be useful in making near-term decisions on defense programs. However, DOD believes that uncertainties in long-term planning preclude its use for setting binding constraints for elements of near-term defense programs.

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Topics

Weapons systemsAir warfareCost analysisDefense budgetsDefense cost controlFighter aircraftFuture budget projectionsMilitary procurementProcurement appropriationsAircraft acquisition program