Operational test and evaluation is a key internal control to ensure that decisionmakers have objective information available on a weapon system’s performance to minimize risks of procuring costly and ineffective systems. DOD acquisition regulations generally provide that programs successfully complete these tests before starting full-rate production. Fleet Demands and Rapidly Advancing Technology Cited for the High Percentage of Low-Rate Initial Production Purchases

SPAWAR officials cited three primary reasons for high-percentage buys during low-rate initial production. Navy and SPAWAR Take Steps to Reduce Low-Rate Initial Production Risks

The Navy and SPAWAR have taken or plan to take a number steps to mitigate the risks of large low-rate initial production procurements. To add more discipline and rigor to the low-rate initial production decision process, the Command now requires program managers to use a standardized checklist and report template as part of reviewing and approving low-rate initial production purchase requests. SPAWAR has also established an Acquisition Reform Office to serve as a focal point and command-wide disseminator of lessons learned and process improvements. Conclusions

In seeking to provide new information systems to the fleet as quickly as possible, SPAWAR officials procured and fielded relatively large quantities of systems during low-rate initial production and before completing operational testing. Our subsequent review of seven of these systems found that six had experienced operational problems that negatively impacted the fleet. To obtain information about the operational testing, evaluation, interoperability, and fielding of low-rate initial production systems, we interviewed officials and obtained documentation from the Office of the Director of Navy Test, Evaluation, and Technology Requirements; the Office of the Navy Commander Operational Testing and Evaluation Force; the Office of the Program Manager for Battle Group Systems Integration Testing; and the Office of the Director of Operational Test and Evaluation, Office of the Assistant Secretary of Defense.
Why GAO Did This Study

During its review of the Navy's Space and Naval Warfare (SPAWAR) Systems Command's fiscal year 2001 budget request, GAO found that many information technology systems were being procured and fielded in relatively large quantities--sometimes exceeding 50 percent of the total--during low-rate initial production and before completion of operational testing. The primary purpose of low-rate initial production is to produce enough units for operational testing and evaluation and to establish production capabilities to prepare for full-rate production. Commercial and Department of Defense (DOD) best practices have shown that completing a system's testing before producing significant quantities substantially lowers the risk of costly fixes and retrofits. For major weapons systems, statutory provisions limit the quantities of systems produced during low-rate initial production to the minimum quantity necessary. These statutory provisions also require justification for quantities exceeding 10 percent of total production. Although these provisions do not apply to non-major systems, DOD and Navy acquisition regulations encourage these programs to make use of the low-rate initial production concept. This report reviews (1) information systems being procured and fielded for SPAWAR in large numbers before operational testing, (2) what effects this practice was having on SPAWAR and the fleet, and (3) what the Navy is doing to mitigate the risks associated with this practice.

What GAO Found

GAO found that the main reason for the high percentage of low-rate initial production quantities is to more quickly respond to fleet demands for information systems improvements. Many information technology systems purchased and fielded during low-rate initial production and prior to completing operational testing experienced problems that negatively impacted fleet operations and capabilities. SPAWAR has taken several steps to mitigate the risks of high percentage low-rate initial production procurements, such as requiring program managers to use a standardized checklist and establishing an Acquisition Reform Office to serve as a focal point and command-wide disseminator of lessons learned and process improvements.