From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Annual Quick Look at DOD's Portfolio of Major Weapon
Programs

Description: Audio interview by GAO staff with Mike Sullivan, Director,
Acquisition and Sourcing Management

Related GAO Work: GAO-14-340SP: Defense Acquisitions: Assessments of
Selected Weapon Programs

Released: March 2014

[ 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,
2014. 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 led by Mike Sullivan, a
director in GAO's Acquisition and Sourcing Management team, recently
completed this year's review. GAO's Sarah Kaczmarek sat down with Mike
to talk about what they found. 

[Sarah Kaczmarek:] Why does GAO assess DOD's weapon system acquisition
each year? 

[Mike Sullivan:] These are huge capital investments and they're very
high-risk. So, it's a lot of money. I think this year the request was
about $154 billion from the department to develop and procure these
weapon systems, and half of that $154 billion I talked about go to the
programs that we talk about in this report. Also, the portfolio of these
programs, when you add up all of the costs of the portfolio, it's one
and a half trillion dollars of the taxpayers' money and there's
significant cost growth and schedule delays on these, so it's very
important, I think, to our national security and, and really to our
budget, to be able to focus on this on an annual basis. 

[Sarah Kaczmarek:] In this most recent version of the Quick Look, you
looked at DOD's portfolio as it currently stands. Can you talk about
that portfolio and what some of the biggest projects are? 

[Mike Sullivan:] Sure. The portfolio currently stands at 80 programs. It
was actually down from a high of 97 a few years ago, so the portfolio
has actually shrunk. As I said a little bit earlier, it's $1.5 trillion.
Some of the biggest programs in the portfolio are programs such as the
F-35 Joint Strike Fighter, which is the new fighter program. It's a
joint program, so all of the services are buying that, and that's a huge
program, it's $335 billion. It actually takes up almost a quarter of
this entire portfolio. And then some of the other programs, there's a
lot of ship-building programs on here. There's a new aircraft carrier,
there's a destroyer program that's one of the bigger programs, and a new
submarine program as well. 

[Sarah Kaczmarek:] Your team also looked at how these programs are being
managed, including the knowledge that's gained in the acquisition
process. What did you find there? 

[Mike Sullivan:] Yes, so we looked at how they were managed in terms of
cost and schedule, and then we looked at how they were gaining knowledge
on the programs to, of course, reduce risk. So this year, the portfolio
actually increased in cost by about $13 billion, so on a
$1.5-trillion-dollar program, that's not a lot of cost growth, but
nonetheless, it was cost growth. When we went in and looked at it, and
looked at the 80 programs separately, we found some interesting things.
For example, on 50 of the 80 programs, there was no cost increase, in
fact, a lot of those had cost decreases to the tune of about $30.9
billion. And so what we found is the other 30 programs is where the cost
growth was and, in fact, one of those programs, the expendable launch
vehicle, accounted for most of that. I think that cost increase was
about 28 billion of an overall increase of programs where it went up of
43 billion. 

[Sarah Kaczmarek:] What are some of the reform initiatives that are
being taken on? 

[Mike Sullivan:] Okay, well the department has its own reforms that it's
doing under what it calls the Better Buying Power Initiative, and then
there are some reforms that were introduced through congressional
acquisition reform legislation. The Better Buying Power Initiatives, the
department has two that we focused on. One is Should-Cost Management,
and that program actually has saved about $24 billion now across the 80
programs that we looked at. So that's been a very good initiative, and
essentially what that's doing is trying to get program managers to focus
more on finding savings in their programs. The other one is an
initiative called Affordability Requirement, and that is to make actual
affordability, or the cost of the weapons system, one of the main
requirements on the program, so it would have equal weight to, say,
capability requirements, which means, you know, how fast something can
go or how much weapons it can carry, things like that. So that's
important, but they, they have just implemented that and that one I
think is a little harder to implement. We didn't get a lot of data on
it, but it has been going slowly. 

[Sarah Kaczmarek:] Clearly defense spending on these major weapons
acquisition programs is a very large piece of the federal budget. For
taxpayers interested in this area of government spending, what do you
see as the bottom line here? 

[Mike Sullivan:] I think the bottom line is exactly that, it's a huge
part of what the taxpayers give to the government to spend every year.
And, as I said earlier, about a third of that is spent on these major
capital investments, and they have not had great records in the past, so
taxpayers, bottom line is that there's money here that needs to be spent
in better ways. 

[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.