In addition to monitoring these high-risk areas, we also monitor actions  that DOD has taken in response to our findings, conclusions, and  recommendations. Over the next 5 years, DOD plans to spend more than  $357 billion on the development and procurement of major defense  acquisition programs. We will continue to seek to improve the efficiency  and effectiveness of DOD’s weapon system investments through our work  on individual programs and crosscutting areas that affect acquisition  outcomes. Failure to Match Requirements with Technology and Other Resources Underlie Poor Weapon Program Outcomes and Undermine Accountability

Over the past several years our work has highlighted a number of  underlying systemic causes for cost growth and schedule delays at both  the strategic and program levels. At the strategic level, DOD’s processes  for identifying warfighter needs, allocating resources, and developing and  procuring weapon systems—which together define DOD’s overall weapon  system investment strategy—are fragmented. As a result, DOD fails to  effectively address joint warfighting needs and commits to more programs  than it has resources for, thus creating unhealthy competition for funding. Furthermore, DOD officials are rarely held  accountable for poor decisions or poor program outcomes. We recently reviewed the effect of the PPBE process on major  defense acquisition programs and found that the process does not produce  an accurate picture of the department’s resource needs for weapon system  programs. Initiating Programs with Inadequate Knowledge of Requirements and Resources Often Results in Poor Outcomes

At the program level, the key cause of poor outcomes is the approval of  programs with business cases that contain inadequate knowledge about  requirements and the resources—funding, time, technologies, and  people—needed to execute them. Not only does DOD not conduct disciplined  systems engineering prior to the beginning of system development, it has  allowed new requirements to be added well into the acquisition cycle. In some of the programs we reviewed, cost estimates have been off  by billions of dollars. Recent DOD Policy Changes Could Improve Future Performance of Weapon System Programs

DOD understands many of the problems that affect acquisition programs  and has recently taken steps to remedy them. Concluding Observations on What Remains to Be Done

A broad consensus exists that weapon system problems are serious and  that their resolution is overdue. Acquisition problems are likely to persist until DOD’s approach to  managing its weapon system portfolio (1) prioritizes needs with available  resources, thus eliminating unhealthy competition for funding and the  incentives for making programs look affordable when they are not; (2)  ensures that programs that are started can be executed by matching  requirements with resources; and (3) balances the near-term needs of the  joint warfighter with the long-term need to modernize the force. However, DOD could do more in this regard too by  requiring new programs to have manageable development cycles, requiring  programs to establish knowledge-based cost and schedule estimates, and  requiring contractors to perform detailed systems engineering analysis  before proceeding to system development. Recently proposed acquisition reform legislation addresses some of these  areas. However, while  legislation and policy revisions may lead to improvements, they will not be  effective without changes to the overall acquisition environment. The  department has tough decisions to make about its weapon systems and  portfolio, and stakeholders, including the DOD Comptroller, military  services, industry, and Congress, have to play a constructive role in the  process toward change. Defense Acquisitions: Perspectives on Potential Changes to DOD’s  Acquisition Management Framework. Status of Recommendations to the Department of Defense (Fiscal Years  2001-2007). Defense Acquisitions: Major Weapon Systems Continue to Experience  Cost and Schedule Problems under DOD’s Revised Policy.
Why GAO Did This Study

Since fiscal year 2000, the Department of Defense (DOD) has significantly increased the number of major defense acquisition programs and its overall investment in them. However, acquisition outcomes have not improved. Over the next 5 years, DOD expects to invest $357 billion on the development and procurement of major defense acquisition programs and billions more on their operation and maintenance. Last year, we reported that the total acquisition cost of DOD's portfolio of major defense programs under development or in production has grown by $295 billion (in fiscal year 2008 dollars). In most cases, the programs we assessed failed to deliver capabilities when promised--often forcing warfighters to spend additional funds on maintaining legacy systems. Continued cost growth results in less funding being available for other DOD priorities and programs, while continued failure to deliver weapon systems on time delays providing critical capabilities to the warfighter. This testimony describes the systemic problems that have contributed to poor cost and schedule outcomes in DOD's acquisition of major weapon systems; recent actions DOD has taken to address these problems; and steps that Congress and DOD need to take to improve the future performance of DOD's major weapon programs. The testimony is drawn from GAO's body of work on DOD's acquisition, requirements, and funding processes.

What GAO Found

Since 1990, GAO has consistently designated DOD's management of its major weapon acquisitions as a high-risk area. A broad consensus exists that weapon system problems are serious, but efforts at reform have had limited effect. For several years, GAO's work has highlighted a number of strategic- and program-level causes for cost, schedule, and performance problems in DOD's weapon system programs. At the strategic level, DOD's processes for identifying warfighter needs, allocating resources, and developing and procuring weapon systems, which together define the department's overall weapon system investment strategy, are fragmented. As a result, DOD fails to balance the competing needs of the services with those of the joint warfighter and commits to more programs than resources can support. At the program level, DOD allows programs to begin development without a full understanding of requirements and the resources needed to execute them. The lack of early systems engineering, acceptance of unreliable cost estimates based on overly optimistic assumptions, failure to commit full funding, and the addition of new requirements well into the acquisition cycle all contribute to poor outcomes. Moreover, DOD officials are rarely held accountable for poor decisions or poor program outcomes. Recent changes to the DOD acquisition system could begin to improve weapon program outcomes. However, DOD must take additional actions to reinforce the initiatives in practice including (1) making better decisions about which programs should be pursued or not pursued given existing and expected funding; (2) developing an analytical approach to better prioritize capability needs; (3) requiring new programs to have manageable development cycles; (4) requiring programs to establish knowledge-based cost and schedule estimates; and (5) requiring contractors to perform detailed systems engineering analysis before proceeding to system development. Recently proposed acquisition reform legislation addresses some of these areas. However, while legislation and policy revisions may lead to improvements, they will not be effective without changes to the overall acquisition environment. DOD has tough decisions to make about its weapon systems portfolio, and stakeholders, including the DOD Comptroller, the military services, industry, and Congress, have to play a constructive role in the process of bringing balance to it.