While it is committing substantially more investment dollars to  develop and procure new weapon systems, our analysis shows that the  2007 portfolio of major defense acquisition programs is experiencing  greater cost growth and schedule delays than programs in fiscal years 2000  and 2005. In other words, every  dollar spent on inefficiencies in acquiring one weapon system is less  money available for other priorities and programs. The majority of programs in our assessment this year  proceeded with lower levels of knowledge at critical junctures and  attained key elements of product knowledge later in development than  expected under best practices (see fig. Only a small  portion of the programs in our assessment that have held a design review  captured the necessary knowledge to ensure that they had mature  technologies at system development start and a stable system design  before entering the more costly system demonstration phase of  development. In addition, we found that over 80 percent of the programs providing data  did not or did not plan to demonstrate the successful integration of the key  subsystems and components needed for the product through an  integration laboratory, or better yet, through testing an early system  prototype by the design review. Additional Factors Can Contribute to Poor Weapon Program Outcomes

This year, we gathered new data focused on other factors we believe could  have a significant influence on DOD’s ability to improve cost and schedule  outcomes. The Way Forward: Potential Solutions

Our work shows that acquisition problems will likely persist until DOD  provides a better foundation for buying the right things, the right way. This  involves (1) maintaining the right mix of programs to invest in by making  better decisions as to which programs should be pursued given existing  and expected funding and, more importantly, deciding which programs  should not be pursued; (2) ensuring that programs that are started are  executable by matching requirements with resources and locking in those  requirements; and (3) making it clear that programs will then be executed  based on knowledge and holding program managers responsible for that  execution. We have made similar recommendations in past GAO reports. This  includes changing the environment and incentives that lead DOD and the  military services to overpromise on capability and underestimate costs in  order to sell new programs and capture the funding needed to start and  sustain them. Recent DOD Actions Provide Opportunities for Improvement

DOD has taken actions related to some of these steps. Based in part on  GAO recommendations and congressional direction, DOD has recently  begun to develop several initiatives that, if adopted and implemented  properly, could provide a foundation for establishing sound, knowledge- based business cases for individual acquisition programs and improving  program outcomes. GAO-08-294. Defense Acquisitions: Assessments of Selected Weapon Programs. DOD Acquisition Outcomes: A Case for Change. Best Practices: Successful Application to Weapon Acquisition Requires  Changes in DOD’s Environment. Best Practices: Commercial Quality Assurance Practices Offer  Improvements for DOD.
Why GAO Did This Study

DOD's investment in weapon systems represents one of the largest discretionary items in the budget. The department expects to invest about $900 billion (fiscal year 2008 dollars) over the next 5 years on development and procurement with more than $335 billion invested specifically in major defense acquisition programs. Every dollar spent inefficiently in acquiring weapon systems is less money available for other budget priorities--such as the global war on terror and growing entitlement programs. This testimony focuses on (1) the overall performance of DOD's weapon system investment portfolio; (2) our assessment of 72 weapon programs against best practices standards for successful product developments; and (3) potential solutions and recent DOD actions to improve weapon program outcomes. It is based on GAO-08-467SP , which included our analysis of broad trends in the performance of the programs in DOD's weapon acquisition portfolio and our assessment of 72 defense programs, and recommendations made in past GAO reports. DOD was provided a draft of GAO-08-467SP and had no comments on the overall report, but did provide technical comments on individual assessments. The comments, along with the agency comments received on the individual assessments, were included as appropriate.

What GAO Found

We recently released our sixth annual assessment of selected DOD weapon programs. The assessment indicates that cost and schedule outcomes for major weapon programs are not improving. Although well-conceived acquisition policy changes occurred in 2003 that reflect many best practices we have reported on in the past, these policy changes have not yet translated into practice at the program level. None of the weapon programs we assessed this year had proceeded through system development meeting the best practices standards for mature technologies, stable design, and mature production processes--all prerequisites for achieving planned cost, schedule, and performance outcomes. In addition, only a small percentage of programs used two key systems engineering tools--preliminary design reviews and prototypes to demonstrate the maturity of the product's design by critical junctures. This lack of disciplined systems engineering affects DOD's ability to develop sound, executable business cases for programs. Our work shows that acquisition problems will likely persist until DOD provides a better foundation for buying the right things, the right way. This involves making tough decisions as to which programs should be pursued, and more importantly, not pursued; making sure programs are executable; locking in requirements before programs are ever started; and making it clear who is responsible for what and holding people accountable when responsibilities are not fulfilled. Moreover, the environment and incentives that lead DOD and the military services to overpromise on capability and underestimate costs in order to sell new programs and capture funding will need to change. Based in part on GAO recommendations and congressional direction, DOD has begun several initiatives that, if adopted and implemented properly, could provide a foundation for establishing sound, knowledge-based business cases for individual acquisition programs and improving outcomes.