Our nation is on an unsustainable fiscal path. Further, current military operations,  such as those in Afghanistan and Iraq, consume a large share of DOD  resources and are causing faster wear on existing weapons. Refurbishment  or replacement sooner than planned is putting further pressure on DOD’s  investment accounts. At the same time DOD is facing these problems, programs are  commanding larger budgets. DOD is undertaking new efforts that are  expected to be the most expensive and complex ever and on which DOD is  heavily relying to fundamentally transform military operations. If these megasystems are managed with traditional margins of error, the  financial consequences can be dire, especially in light of a constrained  discretionary budget. DOD knows what to do to improve acquisitions but finds it difficult to  apply the controls or assign the accountability necessary for successful  outcomes. Achieving a high level of technology maturity at the start  of system development is an important indicator of whether this match  has been made. Effective controls  help decision makers gauge progress in meeting cost, schedule, and  performance goals and ensure that managers will (1) conduct activities to  capture relevant product development knowledge, (2) provide evidence  that knowledge was captured, and (3) hold decision reviews to determine  that appropriate knowledge was captured to move to the next phase. Our work has shown that DOD’s requirements process  generates more demand for new programs than fiscal resources can  support. DOD compounds the problem by approving so many highly  complex and interdependent programs. Once too many programs are approved to start, the budgeting process  exacerbates problems. Because programs are funded annually and  department wide, cross-portfolio priorities have not been established,  competition for funding continues over time, forcing programs to view  success as the ability to secure the next funding increment rather than  delivering capabilities when and as promised. GAO itself has issued hundreds of  reports. The key recommendations we have made have been focused on  the product development process: constraining individual program requirements by working within  available resources and by leveraging systems engineering; establishing clear business cases for each individual investment; enabling science and technology organizations to shoulder the ensuring that the workforce is capable of managing requirements  trades, source selection, and knowledge-based acquisition strategies;  and establishing and enforcing controls to ensure that appropriate  knowledge is captured and used at critical junctures before moving  programs forward and investing more money. As we conduct this work, we will be asking who is currently accountable for acquisition decisions; who should be held accountable; how much deviation from the original business case is allowed before  the entire program investment is reconsidered; and what is the penalty when investments do not result in meeting  promised warfighter needs? Defense Acquisitions: Assessments of Selected Major Weapon Programs. Defense Acquisitions: DOD’s Revised Policy Emphasizes Best Practices,  but More Controls Are Needed. Best Practices: Better Management of Technology Development Can  Improve Weapon System Outcomes.
Why GAO Did This Study

The Department of Defense (DOD) is shepherding a portfolio of major weapon systems valued at about $1.3 trillion. How DOD is managing this investment has been a matter of concern for some time. Since 1990, GAO has designated DOD's weapon system acquisitions as a high-risk area for fraud, waste, abuse, and mismanagement. DOD has experienced cost overruns, missed deadlines, performance shortfalls, and persistent management problems. In light of the serious budget pressures facing the nation, such problems are especially troubling. GAO has issued hundreds of reports addressing broad-based issues, such as best practices, as well as reports focusing on individual acquisitions. These reports have included many recommendations. Congress asked GAO to testify on possible problems with and improvements to defense acquisition policy. In doing so, we highlight the risks of conducting business as usual and identify some of the solutions we have found in successful acquisition programs and organizations.

What GAO Found

DOD is facing a cascading number of problems in managing its acquisitions. Cost increases incurred while developing new weapon systems mean DOD cannot produce as many of those weapons as intended nor can it be relied on to deliver to the warfighter when promised. Military operations in Afghanistan and Iraq are consuming a large share of DOD resources and causing the department to invest more money sooner than expected to replace or fix existing weapons. Meanwhile, DOD is intent on transforming military operations and has its eye on multiple megasystems that are expected to be the most expensive and complex ever. These costly conditions are running head-on into the nation's unsustainable fiscal path. DOD knows what to do to achieve more successful outcomes but finds it difficult to apply the necessary discipline and controls or assign much-needed accountability. DOD has written into policy an approach that emphasizes attaining a certain level of knowledge at critical junctures before managers agree to invest more money in the next phase of weapon system development. This knowledge-based approach results in evolutionary--that is, incremental, manageable, predictable--development and inserts several controls to help managers gauge progress in meeting cost, schedule, and performance goals. But DOD is not employing the knowledge-based approach, discipline is lacking, and business cases are weak. Persistent practices show a decided lack of restraint. DOD's requirements process generates more demand for new programs than fiscal resources can support. DOD compounds the problem by approving so many highly complex and interdependent programs. Once too many programs are approved to start, the budgeting process exacerbates problems. Because programs are funded annually and departmentwide, cross-portfolio priorities have not been established, competition for funding continues over time, forcing programs to view success as the ability to secure the next funding increment rather than delivering capabilities when and as promised. Improving this condition requires discipline in the requirements and budgetary processes. Determining who should be held accountable for deviations and what penalties are needed is crucial. If DOD cannot discipline itself now to execute programs within fiscal realities, then draconian, budget-driven decisions may have to be made later.