However, Congress did not  require DOD to report when a program has been rebaselined. In addition to the comprehensive annual report to  Congress for the period ending December 31, DOD also prepares a  quarterly report for the second, third, and fourth quarters of the fiscal year  when there has been    an increase of 15 percent or greater in the current estimate of the  program acquisition unit cost or average procurement unit cost in base- year dollars;    a 6-month or greater delay in the current estimate of any schedule  milestone since the current estimate of the previous report; or    a milestone B or C and associated acquisition program baseline  approval within 90 days prior to the quarterly report as of that date. Information for Congress on Unit Cost Performance Could Be More Complete

DOD could be reporting more complete information on unit cost  performance to Congress for its authorization and appropriations  deliberations. However, by comparing the latest unit cost estimate with the  most recent approved baseline, DOD provides an incomplete perspective  on a program’s performance because a rebaseline shortens the period of  performance reported and resets the measurement of cost growth to zero. In providing information to Congress, DOD does not measure and report  two meaningful perspectives—cumulative unit cost growth in constant  dollars and the change in unit cost between one budget request and the  next. For example,  DOD reported in the December 2003 SAR that the Marine Corps’ H-1  helicopter upgrade program’s unit cost has shrunk by 1 percent in the last  20 months; however, DOD did not report that the program’s unit cost had,  in constant dollars, doubled in the last 87 months. DOD did not  report that the costs increased by more than one-third, once the effects of  inflation are removed. Reporting of Rebaselinings Could Be More Timely and Unclassified Data Is Unnecessarily Restricted

DOD could be more timely in reporting to Congress that it has rebaselined  individual programs. A key factor here is DOD is  not required by statute or its own policies to report a program’s rebaseline  to Congress. A new baseline approved after early April may not be reported  to Congress before the enactment of authorization and appropriations  legislation. For example, the DD(X) Destroyer program established a new baseline on  April 23, 2002, but did not report this new baseline to Congress in a SAR  until April 2003. As result, between the April 2002 and the passage of the  fiscal year 2003 defense budget, the SAR provided to Congress did not  reflect the approved baseline for the DD(X) program. DOD classified about 50 percent of the SARs it submitted to  Congress in 2003, involving a total acquisition investment of $454 billion. However, only a small amount of data contained in each classified SAR is  actually classified. Because  these SARs are classified, special handling procedures must be used by  those congressional staff with the appropriate clearances even to access  the unclassified cost and schedule data. As a result, congressional oversight of DOD’s  adherence to established cost and schedule baselines is unnecessarily  constrained. Recommendations for Executive Action

To provide Congress with more complete, timely, and accessible  information, we recommend that the Secretary of Defense implement the  following four recommendations in the department’s reporting of data on  major defense acquisition program baselines (APB) and performance    measure and report a full history of unit cost performance in constant  dollars by comparing the latest cost and quantity estimates with:  the first full estimate (typically the original acquisition program  baseline established at Milestone B);   the current approved program baseline or, if the program  rebaselines, the prior approved program baseline; and  the estimate established with the previous year’s budget request.
Why GAO Did This Study

DOD has more than $1 trillion worth of major defense acquisition programs, on which it must report to Congress, including a comparison of a current program's costs to a baseline containing its cost, quantity, schedule, and performance goals. When these goals are changed, the program is "rebaselined" to reflect current status. However, measuring current estimates against the most recent baseline without additional perspectives may obscure for Congress how programs are performing over time. Concerned over this, you asked GAO to examine how DOD's use of rebaselining has affected the adequacy of data provided to Congress on major defense acquisition programs.

What GAO Found

DOD could be reporting more complete information beyond what is required by law on the unit cost performance of major defense acquisition programs to Congress for its authorization and appropriations deliberations. DOD does present Congress with valuable information about a program's performance by comparing the latest unit cost estimate against the most recent approved baseline. However, this provides only one perspective on performance because rebaselining shortens the period of performance reported and resets the measurement of cost growth to zero. Other meaningful perspectives are not reported. First, DOD does not report the cumulative unit cost growth, in constant dollars, that a program has experienced since the first full baseline was established. For example, DOD reported in the 2003 Selected Acquisition Report (SAR), the most recent available, that the F/A-22 Raptor program's unit cost decreased by 0.33 percent in the previous 4 months--since the latest rebaselining. DOD did not report that the program's unit cost had cumulatively increased by 72 percent in the last 143 months. Second, the change in unit cost between one budget request to Congress and the next is not measured or reported. For example, DOD reported in the 2003 SAR that unit cost for the Stryker program increased by 1.34 percent in the 2 months since the latest rebaselining; it did not report that unit cost had grown by 21 percent in the previous 12 months. DOD could be more timely in reporting to Congress that it has rebaselined individual programs. A key factor is that DOD is not required by statute or its own policies to report a program's rebaseline to Congress. Although DOD includes the latest rebaselining actions in the April SARs, a rebaseline approved after early April may not be reported to Congress before it enacts the authorization and appropriations legislation. For example, the DD(X) Destroyer program established a new baseline on April 23, 2002, but did not report this new baseline to Congress in a SAR until April 2003. As a result, between April 2002 and the passage of the fiscal year 2003 defense budget, the SAR provided Congress did not reflect the approved baseline for the DD(X) program. Congressional oversight of DOD's adherence to established cost and schedule baselines is unnecessarily constrained because DOD classifies about 50 percent of the SARs it submits to Congress, despite the fact that only a small amount of data in each of these SARs is actually classified. This reporting practice restricts access to the unclassified cost, quantity, and schedule data for congressional staff without security clearances and requires special handling procedures of that unclassified data by those with clearances.