Weapons Acquisition:

Better Use of Limited DOD Acquisition Funding Would Reduce Costs

NSIAD-97-23: Published: Feb 13, 1997. Publicly Released: Feb 13, 1997.

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GAO reviewed the Department of Defense's (DOD) weapons acquisition procedures, focusing on: (1) DOD's practice of reducing the annual production of weapons below planned optimum rates during full-rate production; (2) the reasons for this practice; and (3) the effect of this practice on the costs and availability of weapons.

GAO found that: (1) DOD has inappropriately placed a high priority on buying large numbers of untested weapons during low-rate initial production to ensure commitment to new programs and thus has had to cut by more than half its planned full production rates for many weapons that have already been tested; (2) this practice is wasteful because DOD must often modify, at high cost, the large numbers of untested weapons it has bought before they are usable and must lower annual buys of tested, proven weapons, stretching out full-rate production for years due to a lack of funds; (3) GAO has repeatedly reported on DOD's practice of procuring substantial inventories of unsatisfactory weapons requiring costly modifications to achieve satisfactory performance and, in some cases, deployment of substandard weapons to combat forces; (4) GAO found the practice of reducing planned full production rates to be widespread; (5) primarily because of funding limitations, DOD has reduced the annual full-rate production for 17 of the 22 proven weapons reviewed, stretching out the completion of the weapons' production an average of 8 years longer than planned; (6) according to DOD's records, if these weapons were produced at their originally planned rates and respective cost estimates, the quantities produced as of the end of fiscal year 1996 would have cost nearly $10 billion less; (7) at the same time, DOD is funding increased annual quantities of weapons in low-rate production that often are in excess of what is needed to perform operational tests and establish the production base; (8) if DOD bought untested weapons during low-rate initial production at minimum rates, more funds would be available to buy other proven weapons in full-rate production at more efficient rates and at lower costs; and (9) this would reduce costly modifications to fix substandard weapons bought in low-rate production and allow full-rate production of weapons with demonstrated performance to be completed and deployed to combat forces earlier.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Although DOD generally concurred with the intent of the final report, it believes that no further DOD actions are needed to address the recommendations. For example, DOD maintains that the latest revision to its acquisition policy documents deals very clearly with the suggestions contained in this recommendation.

    Recommendation: The Secretary of Defense should revise DOD's weapon acquisition policies to require that: (1) annual quantities of weapons bought during low-rate initial production be limited to the minimum necessary to complete initial operational test and evaluation and prove the production line; and (2) rates and quantities not be increased during low-rate production to ease the transition into full-rate production unless DOD clearly establishes that the increase is critical to achieving efficient, realistic, and affordable full-production rates and can be accomplished without affecting the efficient production of proven systems.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD concurred with the intent of this recommendation but stated that this strategy is and continues to be its acquisition policy. Despite the report's findings, DOD states that it makes every effort to fund full-rate production systems in an efficient manner.

    Recommendation: The Secretary of Defense should direct the Under Secretary of Defense for Acquisition and Technology and the Under Secretary of Defense (Comptroller and Chief Financial Officer) to submit future budgets which place priority on funding the efficient production of weapons in full-rate production.

    Agency Affected: Department of Defense


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