	DOD’s Major Acquisition Programs Continue to Experience Significant Cost Growth and Schedule Delays

DOD is not receiving expected returns on its large investment in weapon  systems. The total acquisition cost of DOD’s 2007 portfolio of major  programs under development or in production has grown by nearly  $300 billion over initial estimates. On average, the current portfolio of programs has  experienced a 21-month delay in delivering initial operational capability to  the warfighter, and 14 percent are more than 4 years late. Fragmented Processes, Unexecutable Business Cases, and Lack of Knowledge Underlie Poor Acquisition Outcomes

Over the past several years our work has highlighted a number of  underlying systemic causes for cost growth and schedule delays both at  the strategic and at the program level. At the strategic level, DOD’s  processes for identifying warfighter needs, allocating resources, and  developing and procuring weapon systems—which together define DOD’s  overall weapon system investment strategy—are fragmented and broken. At the same time, program  managers frequently change during a program’s development. The Way Forward: Potential Solutions

Our work shows that acquisition problems will likely persist until DOD  provides a better foundation for buying the right things, the right way. This  involves (1) maintaining the right mix of programs to invest in by making  better decisions as to which programs should be pursued given existing  and expected funding and, more importantly, deciding which programs  should not be pursued; (2) ensuring that programs that are started can be  executed by matching requirements with resources and locking in those  requirements; and (3) making it clear that programs will then be executed  based on knowledge and holding program managers responsible for that  execution. They will require DOD to  reexamine not only its acquisition process, but its requirement setting and  funding processes as well. Finally, none of this will be achieved without a true  partnership among the department, the military services, the Congress,  and the defense industry. To enable accountability to be exercised at the program level once a  program begins, DOD will need to (1) match program manager tenure with  development or the delivery of a product; (2) tailor career paths and  performance management systems to incentivize longer tenures;  (3) strengthen training and career paths as needed to ensure program  managers have the right qualifications to manage the programs they are  assigned to; (4) empower program managers to execute their programs,  including an examination of whether and how much additional authority  can be provided over funding, staffing, and approving requirements  proposed after the start of a program; and (5) develop and provide  automated tools to enhance management and oversight as well as to  reduce the time required to prepare status information. Recent Congressional Initiatives and DOD Actions Aim to Promote a More Disciplined, Knowledge-Based Acquisition Approach

Recognizing the need for more discipline and accountability in the  acquisition process, Congress recently enacted legislation that, if followed,  could result in a better chance to spend resources wisely. Likewise, DOD  has recently begun to develop several initiatives, based in part on  congressional direction and GAO recommendations that, if implemented  properly, could also provide a foundation for establishing a well balanced  investment strategy and sound, knowledge-based business cases for  individual acquisition programs. Past efforts have had similar goals, yet we continue to find all  too often that DOD’s investment decisions are too service- and program- centric and that the military services overpromise capabilities and  underestimate costs to capture the funding needed to start and sustain  development programs. It should not be necessary to take  extraordinary steps to ensure needed capabilities are delivered to the  warfighter on time and within costs. Defense Acquisitions: Results of Annual Assessment of DOD Weapon  Programs. Defense Acquisitions: Assessments of Selected Weapon Programs. Best Practices: An Integrated Portfolio Management Approach to Weapon  System Investments Could Improve DOD’s Acquisition Outcomes. Best Practices: Better Support of Weapon System Program Managers  Needed to Improve Outcomes. Defense Acquisitions: Major Weapon Systems Continue to Experience  Cost and Schedule Problems under DOD’s Revised Policy.
Why GAO Did This Study

Since 1990, GAO has designated the Department of Defense's (DOD) management of major weapon system acquisitions a high risk area. DOD has taken some action to improve acquisition outcomes, but its weapon programs continue to take longer, cost more, and deliver fewer capabilities than originally planned. These persistent problems--coupled with current operational demands--have impelled DOD to work outside of its traditional acquisition process to acquire equipment that meet urgent warfighter needs. Poor outcomes in DOD's weapon system programs reverberate across the entire federal government. Over the next 5 years, DOD expects to invest more than $357 billion on the development and procurement of major defense acquisition programs. Every dollar wasted on acquiring weapon systems is less money available for other priorities. This testimony describes DOD's current weapon system investment portfolio, the problems that contribute to cost and schedule increases, potential solutions based on past GAO recommendations, and recent legislative initiatives and DOD actions aimed at improving outcomes. It also provides some observations about what is needed for DOD to achieve lasting reform. The testimony is drawn from GAO's body of work on DOD's acquisition, requirements, and funding processes, as well as its most recent annual assessment of selected DOD weapon programs.

What GAO Found

DOD is not receiving expected returns on its large investment in weapon systems. Since fiscal year 2000, DOD significantly increased the number of major defense acquisition programs and its overall investment in them. During this same time period, the performance of the DOD portfolio has gotten worse. The total acquisition cost of DOD's 2007 portfolio of major programs under development or in production has grown by nearly $300 billion over initial estimates. Current programs are also experiencing, on average, a 21-month delay in delivering initial capabilities to the warfighter--often forcing DOD to spend additional funds on maintaining legacy systems. Systemic problems both at the strategic and at the program level underlie cost growth and schedule delays. At the strategic level, DOD's processes for identifying warfighter needs, allocating resources, and developing and procuring weapon systems--which together define DOD's overall weapon system investment strategy--are fragmented and broken. At the program level, weapon system programs are initiated without sufficient knowledge about system requirements, technology, and design maturity. Lacking such knowledge, managers rely on assumptions that are consistently too optimistic, exposing programs to significant and unnecessary risks and ultimately cost growth and schedule delays. Our work shows that acquisition problems will likely persist until DOD provides a better foundation for buying the right things, the right way. This involves making tough decisions as to which programs should be pursued, and more importantly, not pursued; making sure programs can be executed; locking in requirements before programs are ever started; and making it clear who is responsible for what and holding people accountable when responsibilities are not fulfilled. Recent congressionally mandated changes to the DOD acquisition system, as well as initiatives being pursued by the department, include positive steps that, if implemented properly, could provide a foundation for establishing a well balanced investment strategy, sound business cases for major weapon system acquisition programs, and a better chance to spend resources wisely. At the same time, DOD must begin making better choices that reflect joint capability needs and match requirements with resources. DOD investment decisions cannot continue to be dictated by the military services who propose programs that overpromise capabilities and underestimate costs to capture the funding needed to start and sustain development programs. To better ensure warfighter capabilities are delivered when needed and as promised, incentives must encourage a disciplined, knowledge-based approach, and a true partnership with shared goals must be developed among the department, the military services, the Congress, and the defense industry.