Tactical Missile Acquisitions:

Understated Technical Risks Leading to Cost and Schedule Overruns

NSIAD-91-280: Published: Sep 17, 1991. Publicly Released: Sep 17, 1991.

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Pursuant to a congressional request, GAO examined missile acquisition programs to determine: (1) whether they are meeting their cost and schedule goals; and (2) why some programs fail to meet those goals.

GAO found that: (1) all 12 of the missile systems reviewed experienced cost and schedule overruns; (2) the unit or total acquisition cost estimates for 9 of the 12 systems have increased by 20 percent or more, and the scheduled completion dates for all 12 systems were extended; (3) optimistic planning assumptions by program officials were a common factor underlying major overruns because program offices often develop cost and schedule estimates that do not adequately reflect the risks associated with the program's design, development, and production; (4) Department of Defense (DOD) independent technical risk assessments did not adequately reflect the risks associated with program design, development, and production; (5) DOD recently implemented revised regulations and procedures designed to improve technical risk management; (6) good internal controls are essential to achieving the proper conduct of government business with full accountability and serve as checks and balances against undesired actions; and (7) a 1989 study of weapon system cost and schedule trends found that tactical missiles experienced the highest total growth of any class of systems examined.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD revised Directive 5000.1--Defense Acquisition Program Policies Guidelines and Management Responsibilities--included a section stating "The OSD Cost Analysis Improvement Group will independently validate program risks and component-developed cost estimates for DAB reviews. The directive also contains a section establishing policy guidelines for conducting risk assessments and managing risks.

    Recommendation: The Secretary of Defense should ensure that the Defense Research and Engineering Directorate independently review program office technical risk assessments. The Secretary should also ensure that the results of these technical reviews be reflected in the Cost Analysis Improvement Group's cost analyses.

    Agency Affected: Department of Defense


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