The Department of Defense 2012 portfolio of 86 major defense acquisition programs is estimated to cost a total of $1.6 trillion, reflecting decreases in both size and cost from the 2011 portfolio, a new Government Accountability Office (GAO) report said.
This is GAO’s annual assessment of DoD weapon system acquisitions, an area that has been on the office’s high-risk list for more than 20 years. The 190 page report GAO-13-294SP was released this month.
DoD commented on the draft report, agreeing the cost reductions in its portfolio over the past year were largely due to programs leaving the portfolio and reductions in procurement quantities. However, DoD said the metrics GAO used did not adequately address program performance or answer the questions of “when, why, and how” changes occurred. GAO said it believes the report addresses these concerns.
DoD invested a total of more than $805 billion in its 2012 portfolio and currently estimates that $664 billion is needed to complete the programs that have cost baselines, the assessment said.
“Notably, a majority of programs in the portfolio gained buying power in the last year as their acquisition unit costs decreased,” the assessment said. “DoD’s 10 costliest programs, excluding the Missile Defense Agency’s Ballistic Missile Defense System (BMDS), drive most of the portfolio’s cost performance and funding needs. The majority–65 percent–of the funding that DoD estimates it will need to complete its current programs is associated with those 10 programs, and almost all of that funding is for procurement,” it said.
The 10 costliest programs include the Joint Strike Fighter, DDG 51 destroyer, Virginia-class submarine, F/A-18E/F Super Hornet and V-22 Osprey. Rounding out the top 10 are the Trident II missile, KC-46 tanker, CVN 78 class, P-8A Poseidon and the Littoral Combat Ship seaframes.
The GAO assessors said they identified a positive trend over the past four years: “newer acquisition programs are demonstrating higher levels of knowledge at key decision points, although many programs are still not fully adhering to a knowledge-based acquisition approach.”
Implementation of key selected acquisition initiatives varies among the programs GAO assessed, and the report said programs continue to accept risks associated with concurrently conducting developmental testing and production.
Many programs reported they had established affordability requirements and noted that they were meeting those requirements, Most programs in this year’s assessment have also conducted “should cost” analyses, and have identified cost savings as a result.
In its comments, DoD said that the introduction of Better Buying Power 2.0 is expected to increase productvity and better control costs. “As a result, we expect to see continued improvement in the performance of the DoD weapons system acquisition process, over time.”