GAO-11-380R, Published: Mar 25, 2011. Publicly Released: Mar 25, 2011.
In June 2009, following the expenditure of close to $3 billion and a critical Nunn-McCurdy breach of the cost growth threshold, the Department of Defense (DOD) terminated the Navy's VH-71 presidential helicopter acquisition program and contract because of cost growth, schedule delays, and projected system performance. The Presidential Helicopter VXX program is a successor Navy program to the terminated VH-71 program acquisition and has been initiated to develop aircraft to replace the current, aging presidential helicopter fleet. The Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (the Act) directed GAO to review and report annually to the congressional defense committees on the VXX program through 2013. This is the first of the required GAO reports. It discusses (1) major lessons learned from the terminated VH-71 program that should be applied to the follow-on VXX program and (2) the current acquisition approach of the VXX program and sufficiency of the underlying acquisition plans and related documentation.
Several lessons learned from the acquisition strategy and eventual termination of the VH-71 program apply to the VXX program. For example, had the VH-71 program followed acquisition best practices and conducted early systems engineering, it could have led to a feasible, stable preliminary design ideally before development start. In turn, a stable, early design allows for more accurate program cost estimates and a better foundation for sufficient funding commitments. Instead, it began without completing systems engineering until well after development start. As a consequence, it never achieved design stability and experienced significant cost and schedule problems in development. Its cost estimates doubled--from about $6.5 billion at development start in 2005 to about $13 billion when terminated in 2009. More than good systems engineering is necessary, however. A key to successful development is the ability to make early trade-offs either in the design of a product or the customer's expectations to avoid outstripping the resources available for product development. The VH-71 program was not afforded room needed to pursue these needed trade-offs. Stringent performance requirements (some with no flexibility) were laid out for the system prior to the start of development and did not appear to involve significant consideration of trade-offs of cost, performance, and schedule negotiated between the customer and the developer. The VH-71 program's experience validated the need to execute a knowledge-based acquisition process with discipline, confirming the danger of not replacing risk with knowledge earlier in the acquisition process. VXX program officials seem to understand this lesson learned from the VH-71 program and appear to be establishing a knowledge-based acquisition process emphasizing early systems engineering. One of the primary lessons they learned from the VH-71 program's experience is that there must be an early, solid business case with a rational balance between requirements, cost, and schedule. To accomplish this, they have stated that a rigorous four-phase systems engineering and technical review process will be used. Early VXX program efforts appear to reflect the intent to pursue a knowledge-based acquisition. The VXX program is currently in the materiel solution analysis phase of the acquisition process, and an ICD has been developed to formally document the capabilities required to perform the defined mission, the specific capability gaps that exist, and the need to address them. Our review of the VXX program's ICD indicates that it addresses all three of these areas and also appears to align with acquisition best practices. An AOA has been initiated but not yet completed. According to DOD officials, it will be more robust than the AOA developed for the VH-71 program. The program is in the earliest stages of development, still developing a business case to launch product development. We will, as you have requested, assess and report on a wide range of VXX program activities moving forward. Throughout, we will be looking for the implementation of a knowledge-based acquisition through application of key best practice process controls.