U.S. weapons are the best in the world, but the programs to acquire them  frequently take significantly longer and cost more money than promised  and often deliver fewer quantities and capabilities than planned. It is not  unusual for time and money to be underestimated by 20 to 50 percent. Considering that DOD is investing $1.4 trillion to acquire over 75 major  weapon systems as of March 2015, cost increases of this magnitude  have sizeable effects. Typically, when costs and schedules increase, the  buying power of the defense dollar is reduced. Consequences associated  with this history of acquisition include:  the warfighter gets less capability than promised; weapons perform well, but not as well as planned and are harder to  trade-offs made to pay for cost increases—in effect, opportunity  costs—are not explicit. This state of weapon acquisition is not the result of inattention. Key to Better Acquisition Outcomes: Better Business Cases

The decision to start a new program is the most highly leveraged point in  the product development process. Establishing a sound business case for  individual programs depends on disciplined requirements and funding  processes. A solid, executable business case provides credible evidence  that (1) the warfighter’s needs are valid and that they can best be met  with the chosen concept, and (2) the chosen concept can be developed  and produced within existing resources—that is, proven technologies,  design knowledge, adequate funding, and adequate time to deliver the  product when it is needed. A program should not go forward into product  development unless a sound business case can be made. Establishing a business case calls for a realistic  assessment of risks and costs; doing otherwise undermines the intent of  the business case and invites failure. Rather, it is more  accurate to view the problem as a sophisticated process whose  consistent results are indicative of its being in equilibrium. There are strong incentives within the  acquisition culture to overpromise a prospective weapon’s performance  while understating its likely cost and schedule demands. Thus, a  successful business case—one that enables the program to gain  approval—is not necessarily the same as a sound one. These incentives, coupled with a  marketplace that is characterized by a single buyer (DOD), low volume,  and limited number of major sources, create a culture in weapon system  acquisition that encourages undue optimism about program risks and  costs. What to Do

Since 1990, GAO has identified a number of reforms aimed at improving  acquisition outcomes. Several of those are particularly relevant to  changing the acquisition culture and will take the joint efforts of Congress  and DOD. Decision makers must ensure that new programs  exhibit desirable principles before funding is approved. Identify significant program risks upfront and resource them: Weapon  acquisition programs by their nature involve risks, some much more than  others. But, DOD and Congress need to explore  ways to bring funding decisions closer in alignment with program  decisions. Program managers  are essential to the success of any program. Concluding Remarks

Describing the current acquisition process as “broken” is an  oversimplification, because it implies that it can merely be “fixed”. The  current process, along with its outcomes, has been held in place by a set  of incentives—a culture—that has been resistant to reforms and fixes.
Why GAO Did This Study

DOD's acquisition of major weapon systems has been on GAO's high risk list since 1990. Over the years, Congress and DOD have continually explored ways to improve acquisition outcomes, including reforms that have championed sound management practices, such as realistic cost estimating, prototyping, and systems engineering. Too often, GAO reports on the same kinds of problems today that it did over 20 years ago.
This testimony discusses (1) the performance of the current acquisition system; (2) the role of a sound business case in getting better acquisition outcomes; (3) systemic reasons for persistent problems; and (4) thoughts on actions DOD and Congress can take to get better outcomes from the acquisition process. This statement draws from GAO's extensive body of work on DOD's acquisition of weapon systems and the numerous recommendations GAO has made on both individual weapons and systemic improvements to the acquisition process.

What GAO Found

U.S. weapon acquisition programs often take significantly longer, cost more than promised and deliver fewer quantities and capabilities than planned. It is not unusual for time and money to be underestimated by 20 to 50 percent. As the Department of Defense (DOD) is investing $1.4 trillion to acquire over 75 major weapon systems as of March 2015, cost increases of this magnitude have sizeable effects. When costs and schedules increase, the buying power of the defense dollar is reduced. Beyond the resource impact, consequences include the warfighter receiving less capability than promised, weapons performing not as well as planned and being harder to support, and trade-offs made to pay for cost increases—in effect, opportunity costs—not being made explicit.
GAO's work shows that establishing a sound business case is essential to achieving better program outcomes. A program should not go forward without a sound business case. A solid, executable business case provides credible evidence that (1) the warfighter's needs are valid and that they can best be met with the chosen concept, and (2) the chosen concept can be developed and produced within existing resources—such as technologies, design knowledge, funding, and time. Establishing a sound business case for individual programs depends on disciplined requirements and funding processes, and calls for a realistic assessment of risks and costs; doing otherwise undermines the intent of the business case and makes the above consequences likely.
Yet, business cases for many new programs are deficient. This is because there are strong incentives within the acquisition culture to overpromise a prospective weapon's performance while understating its likely cost and schedule demands. Thus, a successful business case is not necessarily the same as a sound one. Competition with other programs for funding creates pressures to overpromise. This culture is held in place by a set of incentives that are more powerful than policies to follow best practices. Moreover, the budget process calls for funding decisions before sufficient knowledge is available to make key decisions. Complementing these incentives is a marketplace characterized by a single buyer, low volume, and limited number of major sources. Thus, while it is tempting to describe the acquisition process as broken, it is more instructive to view it as in equilibrium: one in which competing forces consistently lead to starting programs with slim chances of being delivered on time and within cost.
Over the years, GAO has identified a number of reforms aimed at improving acquisition outcomes. Several of those are particularly relevant to changing the acquisition culture and will take the joint efforts of Congress and DOD:
Ensure that new programs exhibit desirable principles before funding is approved.
Identify significant program risks up front and allot sufficient resources.
More closely align budget and program decisions.
Mature technology before including it in product development.
Develop system engineering and program manager capacity—sufficient personnel with appropriate expertise and skills.