Defense Industry: Issues Concerning Five Weapon Systems Provided or Developed by McDonnell Douglas Corporation

GAO discussed issues concerning weapons systems provided or developed by a defense contractor, focusing on the: (1) A-12 aircraft; (2) C-17 aircraft; (3) T-45 aircraft; (4) Apache aircraft; and (5) Longbow Apache helicopter. GAO noted that: (1) each of the systems experienced significant technical or production problems and often major cost increases; (2) three systems experienced technical or production problems that contributed to cost overruns of about $2.7 billion; (3) the Navy's termination of its contract for the A-12 aircraft caused the contractor to lose $350 million and, unless its protest is upheld, it may lose an additional $850 million; (4) the Department of Defense (DOD) estimated a cost overrun ranging from $350 million to $1.4 billion for the $6.7 billion full-scale engineering development C-17 aircraft contract; (5) DOD estimated that design changes, which could require contract price adjustments, could increase the C-17 development contract cost to $9 billion; (6) the contractor estimated that T-45 aircraft costs will exceed the $512 million ceiling by about $110 million; (7) the contractor has filed or plans to file claims against the government on each of these programs; and (8) if the Army properly applies the lessons learned from the Apache to the Longbow, it could prevent a reoccurence of the technical and logistics problems experienced by the Apache.