From the U.S. Government Accountability Office, www.gao.gov Transcript for: Weapons Programs Quick Look Description: Audio interview by GAO staff with Mike Sullivan, Director, Acquisition and Sourcing Management Related GAO Work: GAO-16-329SP: Defense Acquisition: Assessments of Selected Weapon Programs Released: March 2016 [ 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 2016. Every year, GAO looks at the Department of Defense's major weapons system acquisitions, an area on GAO's High Risk List. A team led by Mike Sullivan, a director in our Acquisition and Sourcing Management team, recently completed the 2016 quick look review of DOD's weapons portfolio. Jacques Arsenault sat down with Mike to talk about what they found. [ Jacques Arsenault: ] Can you give me a sense of what DOD's major weapons systems include and how much money we're talking about here? [ Mike Sullivan: ] Yeah, the portfolio that we look at, the major acquisition programs, are 79 programs this year and they're what you would expect large weapon system programs to be. We're talking about aircraft, like the F-35 Joint Strike Fighter and the tanker program, for example, which is another big aircraft program. Talkin' about ships like aircraft carriers and destroyers, submarines. On the land we're talking about things like tanks and Howitzer cannons and things like that. The portfolio this year, I think is around $1.4 trillion. You know, that's over the course of a whole weapon system program, so that money is over many years. And I think on any given year, the department may spend anywhere from a $125 to $200 billion on that portfolio. [ Jacques Arsenault: ] So then, what changes did you see in the portfolio in this year's quick look? [ Mike Sullivan: ] Okay, we saw a kind of incremental change this year but what most struck us is that the trend towards the positive kind of continued, but it was incremental. The $1.4 trillion, the total cost of the portfolio, only went down by 15 billion, but that's good and it's been coming down for the last 5 or 6 years. Programs went up from 78 to 79, I think it was--there might have been 5 or 6 that came in, 4 or 5 that left. And we saw savings, you know across, the department has a lot of initiatives in place, that are beginning to pay off. I think for the maybe the second or third year in a row we saw I believe about $21 billion savings in one of their initiatives that they call the "should cost initiative." So they're doing things to make it more efficient as well. [ Jacques Arsenault: ] Now GAO has been looking at DOD's weapons programs for many years. Can you talk about some of the big challenges that DOD has faced historically? [ Mike Sullivan: ] Sure, and I, and I think most of those challenges are still with them although as we said they've been trending positive the last couple of years. But, you know, it really always kind of boils down to too many programs chasing too few dollars. You know, the three services trying to compete for these weapons systems so there's an awful lot of people that want to start new programs and that competition sometimes gets a little unhealthy. The capabilities that they are trying to develop are very risky. We like to look at the knowledge versus risk equation which, you know the more knowledge you have about a product you're going to develop, the less risk you're going to have. So that's a portion of the quick look, looks at knowledge in terms of technologies at the start of a program and then design knowledge at the right times and manufacturing knowledge. They still are not perfect with this, they've gotten a lot better, policies have changed, the Congress has done some things, frankly I think the budget constraints have tightened them up pretty well too. So they're getting more efficient but it's a very incremental thing and a lot of it is driven by the risky requirements that they start with. [ Jacques Arsenault: ] So, it sounds like that efficiency is certainly leading to some progress. What still needs to be done to improve oversight and planning? [ Mike Sullivan: ] I think they need to keep working on these, with what they call "the better buying power initiatives," which we've seen pay off a little bit. They have to work on requirements, I think we've seen a trend over the last several years of the programs that are the new star programs--do have more incremental and more reasonable requirements. So they have begun to address that. They just have to have better business cases, the funding has to match the risk at the outset. Continuity in leadership and things like that is important. They've had that now for a while and I think probably that's a factor in how they're improving. And then I think a lot of programs have what we call concurrent development and production, and that's very risky too. We think they're doing too much of that so they need to work on that as well. [ Jacques Arsenault: ] So, is that sort of like building the airplane while they're flying it kind of thing? [ Mike Sullivan: ] Yes, it's fly before you buy. It's kind of what we think they should do which means, you know make sure you develop the whole thing before you start actually procuring aircraft, for example. And they overlap flight testing and purchases of aircraft a lot. With ships or tanks, it's the same thing. [ Jacques Arsenault: ] And finally, what would you say is the bottom line of this report? [ Mike Sullivan: ] I think the bottom line is more or less consistently what it has been as this is very high-risk proposition. The 79 programs in this portfolio are all needed for our national security. They're all very complex, they're very expensive, and so we're constantly looking at how you can reduce the risk on these programs as you go along. And, you know this is on our High Risk list and its likely to continue on our High Risk list not because they're bad at it or anything like that but it just is a very high-risk proposition. It's an awful lot of money for the taxpayers to have to pony up in order to keep our nation secure, so they want to consistently do it the right way. [ 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.