From the U.S. Government Accountability Office, www.gao.gov Transcript for: Reviewing DOD’s Portfolio of Major Weapon Programs Description: Audio interview by GAO staff with Michael Sullivan, Director, Acquisition and Sourcing Management Related GAO Work: GAO-13-294SP: Defense Acquisitions: Assessments of Selected Weapon Programs Released: March 2013 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's March 2013. Each year, GAO reviews the Department of Defense's portfolio of major weapon system acquisitions, an area that has been on GAO's High Risk List for more than 20 years. A team lead by Mike Sullivan, a director in GAO's Acquisition and Sourcing Management team, recently completed this year's review. GAO's Jeremy Cluchey sat down with Mike to talk about what they found. [ Jeremy Cluchey: ] Why does GAO assess DOD's Weapon System acquisition? [ Mike Sullivan: ] Well, the major weapon systems in DOD have been on GAO's High Risk List—a list we started more than 20 years ago since the beginning—and there's probably a number of reasons. Number one is the high dollar value attached to those programs. And in addition, they're very risky programs by their nature. This is our 11th year to do the quick look and it kind of came out of a series of acquisition reforms and best practices work that we had done in the past. Around 2000 or so, we had accumulated enough knowledge about how to impact the weapon systems area—product development, best practices, and things like that. [ Jeremy Cluchey: ] In this most recent version of the quick look, you look at DOD's portfolio as it currently stands. Can you talk about that portfolio and what some of the biggest projects are? [ Mike Sullivan: ] Yeah. The portfolio—there’s 86 major weapon system programs in there. These are the biggest programs in the Department of Defense's arsenal, if you will. This year that portfolio, when you take a look at the total cost to develop and acquire all of those 86 weapon systems, the portfolio stands at about $1.6 trillion. That's down from last year when it was about $1.75 trillion. I know that's an awful lot of money. That's one of the reasons we keep track of this. And in addition to that, the number of programs has decreased from 96 last year to 86 this year. Now some of the big programs, the biggest of all is the F-35 Lightning II Fighter Program which most people—we just issued a report on that and that's the biggest acquisition program in the department's history, so that's' the biggest one. There's the Virginia-Class Sub, the DDG-51 Destroyer for the Navy is one of the bigger ones, the Air Force has the Tanker Program now—it’s very big. Those are all in the top 10. [ Jeremy Cluchey: ] Your team also looked at how these programs are being managed, including the knowledge that's gained and reform initiatives that are being taken on. What did you find there? [ Mike Sullivan: ] I think what we're finding—the last couple of years we've done this, we're finding kind of a positive trend actually in the number of programs, the cost, and also in the knowledge that they're gaining at key junctures in their development processes. So this year, you know we measure this at three distinct points—we measure it at the beginning of program where they should have technology maturity. And I believe this year we looked at programs in that area that are coming into beginning—programs that are beginning their acquisition process and found that the newer programs are—have a much better understanding of their technologies than they have in the past, so that was a good trend. The second knowledge point that we like to look at is design knowledge which usually takes place about midway through the program. And that one is not quite as clear as the first one. I think about 1/3 of the programs that we looked at this year had a stable design and had good design knowledge about midway through the program. That's up from past years, but still not really great. And then the third knowledge point we look at is whether or not they have knowledge of their manufacturing processes so they can ramp up to a full-rate production. And that, while there has been some slight improvement, they're still lacking in that too. [ Jeremy Cluchey: ] Finally, defense spending on these major weapon acquisition programs is clearly a very large piece of the federal budget pie. For taxpayers interested in this area of government spending, what's the bottom line here? [ Mike Sullivan: ] Well the bottom line is that there's an awful lot of money invested in this area. Taxpayers need to be concerned. If you think about the Department of Defense's budget, its half of the discretionary budget that we talk about every year. And then if you think about the inside of that, maybe a third of that money is spent on these acquisitions. So you're talking year-in/year-out anywhere between $150-$ 200 billion of taxpayer money being invested in these programs. Yeah, and on one side it's very important to our country to maintain our security in a really unstable world. On the other side, it costs an awful lot of money and we should always be looking for efficiencies there. [Background Music] [ Narrator: ] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional Watchdog, the U.S. Government Accountability Office.