By Emelie Rutherford

The Pentagon’s major acquisition programs have exceeded their original estimates by $296 billion, a level that has decreased since last year yet still is "staggering" and indicates programs must be canceled, government auditors said yesterday.

The Government Accountability Office’s (GAO) seventh-annual assessment of major weapon programs also says the Department of Defense’s (DoD’s) two largest efforts–the Army’s Future Combat Systems (FCS) and multi-service F-35 Joint Strike Fighter (JSF)–"represent significant cost risk moving forward and will dominate the portfolio for years."

The GAO reported a cumulative cost growth of $296 billion for the Department of Defense’s (DoD’s) portfolio of 96 fiscal year 2008 major acquisition programs; this is a higher cost-growth figure than the GAO found five years ago, but is less than reported last year, when the oversight office found 95 FY ’07 programs exceeded original estimates by $295 billion–or $301 billion in current-fiscal-year dollars.

In addition, the GAO reported the FY ’08 portfolio programs are delayed in delivering initial capabilities by an average of 22 months, which is an increase from the 21-month average delay it reported last year.

Gene Dodaro, the acting comptroller general at the GAO, says in a March 30 letter to lawmakers that there have been "modest" improvements in DoD acquisition outcomes, including newer programs having more knowledge about technology and design at key points in the acquisition process. Yet he states the cumulative cost overruns are "staggering" and the "time for change is now."

"To improve the efficiency of DoD’s weapon system portfolio, it is essential for DoD to eliminate underperforming or lower priority programs, by completing or canceling them, and to initiate new programs, based on sound business cases and knowledge-based acquisition approaches," Dodaro says in the letter.

The GAO analyzed data for 96 weapon programs and its new report includes mini-fact sheets on 67 efforts. The auditors analyzed data from varied program offices and the DoD’s Selected Acquisition Reports (SARs), with the most-recent SAR coming from December 2007.

According to the GAO’s analysis of total-program costs:

  • the Army’s FCS, developed by a Boeing [BA]-SAIC [SAI] team, rose 44.5 percent between May 2003 and December 2007;
  • the multi-service JSF, developed by Lockheed Martin [LMT], increased 18.6 percent from October 2001 to September 2008;
  • the Navy’s Littoral Combat Ship effort, shared by competitors Lockheed Martin and General Dynamics [GD], soared by 198.9 percent between May 2004 and July 2008;
  • the Air Force’s F-22 stealth fighter, made by Lockheed Martin, rose 62.7 percent between March 2003 and August 2008; and
  • the Marine Corps’ Expeditionary Fighting Vehicle, developed by General Dynamics, increased 54.8 percent from December 2000 to September 2008.

The GAO report says new programs are performing better than older programs. It applauds recent DoD acquisition policy changes and says newer programs may benefit from them. It says developmental programs–including the Joint Light Tactical Vehicle and Joint Air-to-Ground Missile–may benefit from DoD’s recent push to include competitive prototyping and other risk-reduction efforts in the technology-development phase.

Outgoing Pentagon acquisition czar John Young says in a March 17 letter to the GAO that he believes changes he initiated in 2007 and 2008 have controlled costs and will continue to do so. He points to how the GAO reports positively on early systems-engineering reviews and increasing technology-readiness levels for new programs.

"I strongly believe as these initiatives are implemented across the major defense acquisition programs…they will be key to restraining cost growth," Young says, adding he is optimistic about a plan to bolster the acquisition workforce.

Young bemoans the "large, sensational numbers" in the GAO report, which he says "are a result of many factors, some of which are unrelated to the DoD acquisition process and management of programs." He also laments that the $78 billion in cost growth already experienced by the FCS and F-35 programs will continue to be cited in future GAO reports.

Dodaro’s letter to lawmakers says DoD and the GAO agree on sources of programmatic cost growth, including when programs start with poor foundations and proceed with artificially-low cost estimates, optimistic schedules, immature technologies, and changing requirements.

The Senate Armed Services Committee (SASC) is slated on Thursday to mark up legislation intended to combat such problems.

SASC Chairman Carl Levin (D-Mich.) often cites the $295 billion in cost overruns–the GAO’s reported figure from last year, before adjusting for inflation–when touting this bill he filed with SASC Ranking Member Sen. John McCain (R-Ariz.). President Obama also cited the figure early this month when announcing a government-contracting review.

The DoD is expected to propose eliminating several high-dollar programs in its $533.7 billion FY ’10 budget request, the details of which have not yet been unveiled.