By Geoff Fein
A January review of 41 major acquisition programs by Pentagon acquisition chief John Young showed that a number of programs were impacted by a variety of issues that had the appearance of cost growth.
“There were a set of programs that I would tell you that had an inadequate foundation at Milestone B, where we started the major development and manufacturing design,” Young told reporters at a briefing earlier this month.
Programs were impacted by issues ranging from requirements growth, to changes in quantity ordered, to misunderstanding of systems.
The example he pointed to is the F-35 Joint Strike Fighter (JSF).
“In that case, we built technology demonstrators to prove out the lift fan concept and to prove that we could have one design with a high degree of commonality that could be used by three services,” Young said. “We did not build prototypes that adequately informed us of the structure of the airplane.”
Back in 2001, there wasn’t a good understanding of how much JSF was going to weigh, Young said.
“We had an optimistic weight estimate. That optimistic weight estimate was used to parametrically estimate the cost of buying a couple thousand airplanes over 20 years,” he noted. “When you got into the design process and determined that the aircraft was, structurally, going to weigh a couple of thousand pounds more, these parametric estimates just took that weight and at price per pound and propagated them forward.”
Additionally, during the final stages of development, the Department of Defense had to take almost two years to essentially do a redesign of the airplane to take weight out and just to get it back to the higher weight estimate, Young added. “I never got back to the original weight estimate.”
“You ask yourself is that cost growth? Is that cost growth because well meaning people without enough knowledge estimated the weight of the airplane? The weight of the airplane, when we turned it into a final design, grew by a few thousand pounds,” he said.
“No question the acquisition team had some responsibility for that, and in one form of what I told [Defense] Secretary [Robert] Gates, we need to tell people more about what we do and don’t know about programs at the right stages so that people don’t take optimistic schedules and optimistic estimates of weight, optimistic estimates of cost and then promulgate those forward. And then when we bring more knowledge to the table, everybody charges the acquisition team with cost growth,” Young added. “That’s one of the challenges I have.”
Young also noted there is a set of programs that had changing or excessive requirements. He is trying to remedy those issues now.
“When I issue acquisition decision memorandums (ADM) on programs, I freeze the requirements at the current requirements set and essentially prohibit changes in requirements,” he said.
Among those programs are: the Joint Tactical Radio System (JTRS), the Army’s UH-60 Black Hawk helicopter upgrade, the Navy’s MH-60 R and S helicopters, and the Global Hawk unmanned aircraft.
“All these systems experienced significant change in their requirements and some fluctuation in their budget,” he told reporters.
Another set of programs that were reported out as having large cost growth numbers were really impacted by increases in the quantity procured, Young said.
DDG-51 had an original baseline of 23 ships. We bought 62. The additional 39 ships in a GAO (Government Accountability Office) study looked like cost growth–they are just a bigger number,” he said.
The Army’s AH-64 Apache helicopter program was originally pegged at 227 aircraft, but 671 were eventually bought. “But if you use SAR (Selected Acquisition Reports) data, that’s cost growth,” Young added.
Another Army effort, the Stryker vehicle, had an original baseline of 2,131, but DoD bought 3,537, Young said.
The original plan for the Air Force and Navy Joint Direct Attack Munition (JDAM) was to buy 88,000, but that quantity was increased to 202,000, Young added.
“Those are programs widely stated [as] out of control acquisition systems. The cost number that is used to [condemn] that system is a bunch of programs where we bought more than envisioned and, in my view, has nothing to do with cost growth,” he said.
Another group of programs had apparent cost growth due to “playing with the budget,” Young said.
Chief among those was the Virginia-class submarine program.
“When that program started, there was an intention to buy two to three submarines per year at a relatively early point in the program. We didn’t do that. We actually bought at one year for a longer period and are just now talking about getting to two a year,” Young said. “That changed the development of Virginia cost more than expected. It cost us $2 billion more than expected. It was supposed to be $3.8 [billion] and it was $5.5 [billion].”
The production cost has grown almost $20 billion, he added, largely driven by reducing the annual buy rate and stretching out the program.
Other programs in that set include the Evolved Expendable Launch Vehicle and the Trident II D-5 Fleet Ballistic Missiles, according to Young.
“So I have a set of programs which have multi-billion or single-digit billion dollar cost growth that gets rolled up into big numbers that people want to advertise because the enterprise did not have the will or discipline to buy these programs efficiently,” he said.
There are also a number of programs that Young said executed reasonably well. That list includes: the E-2D Advanced Hawkeye, the P-8 Maritime Patrol Aircraft, PAC-3 missile, EA-18-G, Light Utility Helicopter, SSGN-Ohio-class conversion, F/A/-18E/F Super Hornet and the Small Diameter Bomb.
“Then there are a set of programs that I am trying to be honest as possible with [Secretary Gates]. I think the jury is still out on these programs–it’s early,” Young said. “The SAR data says they are fine but I think I could not honestly tell him these programs are fine and guarantee them. I am not saying they won’t be fine. I have every reason to believe a couple of them…JLTV and JAGM…where we have competitive prototyping and I believe we have every chance to succeed on these programs.
“I am trying to be as honest as I can with [Secretary Gates] and not claim credit for programs that have a lot of ground to cover,” he added.