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DOD Weapon Systems Acquisition

This information appears as published in the 2017 High Risk Report.

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In March 2016, we reported that the Department of Defense (DOD) expects to invest $1.4 trillion (fiscal year 2016 dollars) to develop and procure its portfolio of 79 major defense acquisition programs. Congress and DOD have long sought to improve how major weapon systems are acquired, yet many DOD programs fall short of cost, schedule, and performance expectations, meaning DOD pays more than anticipated, can buy less than expected, and, in some cases, delivers less capability to the warfighter. With the prospect of slowly-growing or flat defense budgets for years to come, DOD must get better returns on its weapon system investments and find ways to deliver capability to the warfighter on time and within budget.

DOD Weapon Systems Acquisition

Top leadership at DOD is committed to improving the way DOD acquires weapon systems. Since we added this area to our High-Risk List in 1990, DOD has made progress in addressing challenges, such as through the Better Buying Power initiatives outlined by the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics since 2010. Although DOD lacks a comprehensive action plan for fully addressing this high-risk area and its root causes, the Better Buying Power initiatives are a step in the right direction, as DOD has prescribed a number of concrete changes. DOD has partially met the criteria for monitoring by issuing a series of annual performance reports on the portfolio of major defense acquisition programs. In 2016, DOD issued the fourth report in this series. Continuing and expanding this series of reports should help DOD measure its progress over time.

DOD has partially met the criteria for capacity by, for example, updating some policies to enable better outcomes and assessing the acquisition workforce. However, we remain concerned about whether DOD will fully implement its proposed reforms or continue to track progress in meeting workforce goals, as DOD has, in the past, failed to convert policy into practice. DOD has partially met the criteria for demonstrating progress as it relates to the cost and schedules of its weapon programs. Although we reported in March 2016 on the progress many DOD programs are making in reducing their cost, as demonstrated by improvements when measured against cost-growth targets, individual weapon programs are still not conforming to best practices for acquisition, or implementing key acquisition reforms and initiatives that could prevent long-term cost and schedule growth.1

Our work reveals that, while there is still cost and schedule growth in major defense acquisition programs, DOD is making progress in decreasing the amount of cost growth realized in the portfolio as a whole. In March 2016, we reported that the total acquisition cost of DOD's fiscal year 2015 portfolio of 79 programs decreased by $2.5 billion from the previous year.2 The decrease, however, was due primarily to reductions in a few programs. The majority of individual programs, 42 of the 79, increased in cost.

In terms of schedule, the time it took to deliver initial capabilities to the warfighter increased, on average, an additional 2.4 months. Our analysis also showed evidence that DOD made progress in improving efficiencies in its programs from 2014 to 2015. When we account for increased costs attributable to increased program quantity, 38 programs improved their buying power—that is, the amount of goods procured for dollars spent.

DOD's major acquisition programs also showed some improvement when measured against the three cost-growth targets we have used to measure DOD's progress in the weapon system acquisition high-risk area since 2011. Most notably, 72 percent of programs meet the threshold for less than 10 percent growth over the past 5 years, and 76 percent meet the threshold for less than 2 percent growth in the past year, both an improvement over past assessments (see figure 18).3

Figure 18: Comparison of the Cost Performance of DOD's 2011-2015 Portfolios

Comparison of the Cost Performance of DOD's 2011-2015 Portfolios

Note: For the 2014 portfolio we did not calculate a 5-year comparison as there were no December 2008 Selected Acquisition Reports issued.

In addition, Congress has been working to reform the process for acquiring weapon systems for several years. In the National Defense Authorization Acts (NDAA) for just the past 5 years, for example, Congress has enacted the following reforms, among others:

  • In the 2013 NDAA, Congress introduced measures to control costs on acquisition programs by requiring DOD to limit the use of cost-type contracts for production, and to open programs to competition at the subcontract level.
  • In the 2014 NDAA, Congress expanded requirements for cost reporting by requiring DOD to include additional cost and schedule estimates in its annual reports to Congress.
  • In the 2016 NDAA, Congress made numerous reforms to the acquisition process including requiring more close involvement of the service chiefs; requiring DOD to report on efforts to streamline the requirements, acquisition, and budgeting processes; stipulating the use and contents of an acquisition strategy; and reducing the number of certifications required for programs at milestone reviews.
  • In the 2017 NDAA, Congress enacted reforms to require modular open system approaches in major programs, further ensure the achievement and reporting of program goals, modify requirements for independent cost estimates, and reorganize the acquisition authority within the Office of the Secretary of Defense.

[1] GAO, Defense Acquisitions: Assessments of Selected Weapon Programs, GAO-16-329SP (Washington, D.C.: Mar. 31, 2016).

[3] In December 2008 we, DOD, and the Office of Management and Budget discussed a set of cost growth metrics and goals to evaluate DOD's progress on improving program performance for purposes of our high-risk report. These metrics were designed to capture total cost-growth performance over 1- and 5-year periods as well as from the original program estimate on a percentage basis, as opposed to dollar amount to control for the differences in the amount of funding among programs. DOD no longer supports the use of these metrics. We continue to believe that the current metrics have value.

At this point, DOD needs to build on existing reforms—not necessarily revisiting the process itself but augmenting it by tackling incentives. Based on our extensive body of work in weapon systems acquisition, DOD could

  • examine best practices to integrate critical requirements, resources, and acquisition decision-making processes;
  • attract, train, and retain acquisition staff and managers so that they are both empowered and accountable for program outcomes;
  • use funding decisions at the start of new programs to reinforce desirable principles such as well-informed acquisition strategies;
  • identify significant risks up front and resource them;
  • explore ways to align budget decisions and program decisions more closely; and
  • investigate tools, such as limits on system development time, to improve program outcomes.

Further, we have open priority recommendations related to four acquisition programs that would benefit from greater attention given the size of DOD's investments in them and their cost, schedule, and performance challenges, including the following:

  • In April 2015, we made one priority recommendation for the F-35 Joint Strike Fighter program, that DOD analyze the affordability of the program's current procurement plan that reflects various assumptions about future technical progress and funding availability. DOD stated that it would analyze affordability as part of an internal deliberative process culminating in the services' annual budget request.
  • We made one priority recommendation for the Littoral Combat Ship program in July 2014. This recommendation stated that the program should successfully complete key tests—such as shock, anti-air warfare self-defense testing, or final survivability assessments—before contracting for additional ships. The Navy's recent decision to restructure the program alters the timing of our recommendation, but does not change our intent to ensure that the Navy does not continue to commit to additional ships until it demonstrates that it has attained some level of knowledge in key areas, such as ship survivability.
  • In September 2013, we made three priority recommendations for the lead ship in the Ford-class aircraft carrier fleet, designated as CVN 78. DOD should explore capability trade-offs, update the Ford-class program's test and evaluation master plan to allot sufficient time for testing, and adjust the post-delivery test schedule to ensure that system integration testing is completed prior to operational testing. DOD has made progress in implementing these recommendations by, for example, completing a cost-benefit analysis to determine the acquisition strategy for the follow-on ship. DOD, however, failed to fully explore capability trade-offs, and it remains to be seen whether additional time has been allotted to complete testing, as an updated test and evaluation master plan has not been approved.
  • We made two priority recommendations in April 2013 for the Missile Defense Agency and its programs. We recommended that the agency both stabilize its acquisition baselines to enable meaningful comparisons over time and make its cost estimates more comprehensive by including military services' operation and support costs. While DOD generally concurred with our recommendations, the Missile Defense Agency's baselines continue to change, and agency decision makers still have not been informed of full program costs.

Finally, Congress has an important role to play in advancing weapon system acquisition reform overall, particularly in what it sanctions via funding approvals. Programs that propose optimistic or rushed acquisition strategies represent opportunities for Congress to either maintain or change the defense acquisition culture—a prevailing set of incentives that encourages decisions to go forward with programs before they are ready, and a willingness to accept cost growth and schedule delays as the likely byproduct of such decisions. When programs that do not follow acquisition best practices are denied funding approval, those risky acquisition strategies, in effect, lack congressional sanction.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.
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    • Michael J. Sullivan
    • Director, Acquisition and Sourcing Management
    • (202) 512-4841