This best practices model enables decision  makers to be reasonably certain about their products at critical junctures  during development and helps them make informed investment decisions. This knowledge-based process can be broken down into three cumulative  knowledge points. While the user may not initially  receive the ultimate capability under this approach, the initial product is  available sooner and at a lower, more predictable cost. DOD’s Revised Policy Provides a Framework for Knowledge-Based, Evolutionary Acquisitions

DOD’s leaders have made significant improvements to DOD’s acquisition  policy by adopting the knowledge-based, evolutionary approach used by  leading commercial companies. In placing greater emphasis on  evolutionary product development, the policy sets up a more manageable  environment for achieving knowledge. Leading companies have  used this approach to reduce risks and to make costs and delivery dates  more predictable. Controls Are Needed to Ensure Knowledge-Based Approach Is Followed

While DOD has strengthened its acquisition policy with a knowledge- based, evolutionary framework, the policy does not include many of the  same controls that leading companies rely on to attain a high level of  knowledge before making additional significant investments. To determine if DOD has the necessary controls, we compared controls in  DOD’s policy with those used in the best practices model at three critical  junctures. DOD was responsive to all three  requirements. Each report is required to (1) identify  any major acquisition program that entered system development and  demonstration during the preceding calendar year with immature key  technology that was not demonstrated in, at minimum, a relevant  environment, as required by the new policy; (2) justify the incorporation  of any key technology on an acquisition program that does not meet that  requirement; (3) identify any instances that the Deputy Under Secretary  of Defense for Science and Technology did not concur with the technology  assessment and explain how the issue has been or will be resolved;  (4) identify each case in which a decision was made not to conduct an  independent technology readiness assessment for a critical technology on  a major defense acquisition; and (5) explain the reasons for the decision  each year through 2006. Conclusions

DOD can maximize its $1 trillion investment in new weapons over the next  6 years by ensuring effective implementation of the new acquisition policy. DOD stated that it  agrees in principle with the advantages of using knowledge-based controls  at key points in the acquisition process to assess risk and ensure readiness  to proceed into the next phase of the acquisition process. DOD’s  policy does not include all the necessary controls to ensure a high level of  product knowledge is attained and used for making decisions to move a  program forward in the product development process. We reviewed the relevant sections of the Bob Stump National Defense  Authorization Act for Fiscal Year 2003 and the accompanying Senate  Armed Services Committee report to identify the requirements applicable  to DOD’s acquisition policy. We compared these requirements with DOD’s  responses to determine whether they have been addressed. Appendix I: Section 802, Evolutionary Acquisition

Section 802 of the Defense Authorization Act for Fiscal Year 2003 required  the Secretary of Defense to submit a report to Congress explaining how  the Department of Defense (DOD) plans to meet certain statutory and  regulatory requirements for acquisition programs following an  evolutionary approach. As shown in the table, DOD’s policy generally responded to the  requirements in the act concerning guidance for implementation of spiral  development programs. Best Practices: Better Management of Technology Development  Can Improve Weapon System Outcomes.
Why GAO Did This Study

The Department of Defense's (DOD) investment in new weapon systems is expected to exceed $1 trillion from fiscal years 2003 to 2009. To reduce the risk of cost and schedule overruns, DOD revamped its acquisition policy in May 2003. The policy provides detailed guidance on how weapon systems acquisitions should be managed. The Senate report accompanying the National Defense Authorization Act for Fiscal Year 2004 required GAO to determine whether DOD's policy supports knowledge-based, evolutionary acquisitions and whether the policy provides the necessary controls for DOD to ensure successful outcomes, such as meeting cost and schedule goals. The report also required GAO to assess whether the policy is responsive to certain requirements in the Bob Stump National Defense Authorization Act for Fiscal Year 2003 concerning DOD's management of the acquisition process.

What GAO Found

DOD's new policy supports knowledge-based, evolutionary acquisitions by adopting lessons learned from successful commercial companies. One of those lessons is a knowledge-based approach, which requires program managers to attain the right knowledge at critical junctures--also known as knowledge points--so they can make informed investment decisions throughout the acquisition process. The policy also embraces an evolutionary or phased development approach, which sets up a more manageable environment for attaining knowledge. The customer may not get the ultimate capability right away, but the product is available sooner and at a lower cost. Leading firms have used these approaches--which form the backbone of what GAO calls the best practices model--to determine whether a project can be accomplished with the time and money available and to reduce risks before moving a product to the next stage of development. By adopting best practices in the acquisition policy, DOD's leadership has taken a significant step forward. The next step is to provide the necessary controls to ensure a knowledge-based, evolutionary approach. Implementing the necessary controls at all three knowledge points along the acquisition process helps decision makers ensure a knowledge-based approach is followed. Without controls in the form of measurable criteria that decision makers must consider, DOD runs the risk of making decisions based on overly optimistic assumptions. Each successive knowledge point builds on the preceding one, and having clearly established controls helps decision makers gauge progress in meeting goals and ensuring successful outcomes. DOD was responsive to the requirements in the Bob Stump National Defense Authorization Act for Fiscal Year 2003. DOD's responses reflected the committee's specific concerns about the application of certain statutory and regulatory requirements to the new evolutionary acquisition process, for more guidance for implementing spiral development, and about technology readiness at program initiations.