DoD Releases Selected Acquisition Reports

December 8, 2005

The Department of Defense (DoD) released details on major defense acquisition program cost and schedule changes. This information is based on the Selected Acquisition Reports (SARs) submitted to Congress for the Sept. 30, 2005 reporting period.

SARs summarize the latest estimates of cost, schedule and technical status and are prepared annually in conjunction with the president's budget.

The total program cost estimates include research and development, procurement, military construction and acquisition-related operation and maintenance (except for pre-Milestone B programs that are limited to development costs pursuant to 10 USC 2432). Total program costs reflect actual costs to date as well as anticipated costs. All estimates include anticipated inflation allowances.

There was a 4.4% net cost increase of almost $65B during the September 2005 reporting period due to cost increases associated with the four-year stretch out and restructure of the Future Combat System (FCS) program.

The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (June 2005) was $1,474,049.4M. Subsequent quarterly exception reports are required only for those programs experiencing unit cost increases of at least 15% or schedule delays of at least six months. Quarterly SARs are also submitted for initial reports, final reports and for programs that are rebaselined at major milestone decisions.

For the September 2005 reporting period, there were quarterly exception SARs submitted for 13 programs. The reasons for the submissions are provided below.

U.S. Army:

• ACS (Aerial Common Sensor) - Submitted to report schedule slips of at least six months due to sensor integration challenges on the selected platform resulting in space, weight, power and cooling issues. A 90-day contract stop-work order is currently in place. Alternative solution sets are being investigated. Impacts to performance and cost are not known at this time.

• ARH (Armed Reconnaissance Helicopter) - This is the initial SAR submission following approval to proceed into System Development and Demonstration (Milestone B) on July 26, 2005.

• ATIRCM/CMWS (Advanced Threat Infrared Countermeasure/Common Missile Warning System) - Submitted to report schedule delays of more than 30 months for ATIRCM Initial Operational Test and Evaluation (IOT&E), First Unit Equipped and Full Rate Production (FRP). The delays are due to CMWS acceleration and ATIRCM performance and reliability issues which resulted in separate IOT&E and FRP decisions Program costs decreased $8.1M (-0.1%) from $4,717.0M to $4,708.9M due to acceleration of the A-Kit (installation kit) buy by three years.

• FCS (Future Combat Systems) - Program costs increased $62,541.4M (+63.3%) from $98,878.6M to $161,420.0M due to program restructure (+$54,270.6M) and extension of schedule by four years (+$8,270.8M).

• JLENS (Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System) - This is the initial SAR submission following approval to proceed into System Development and Demonstration (Milestone B) on Aug. 5, 2005.

U.S. Navy:

• CVN 21 - Submitted to report a schedule delay of the Defense Acquisition Board (DAB) program review from June 2006 to July 2007 due to a delay in the funding of the lead ship (CVN-78). No cost changes reported.

• DD(X) - Submitted to report schedule slips of seven months in the decision to approve System Development and Demonstration (Milestone B) and nine months in the Lead Ship Award date. The Milestone B is currently scheduled for November 2005 and the Lead Ship Award date is planned for January 2006. Both events slipped due to continuing resolution of the DD(X) acquisition strategy. No cost changes reported.

• H-1 Upgrades - Submitted to report a schedule slip of eight months (from January 2006 to September 2006) in the completion of Operational Evaluation (OPEVAL) testing. This slip was due to delays in completing aircraft block modifications and Helmet Mounted System Display (HMSD) issues. Incremental improvements to the HMSD are being made to address the issues. Program costs increased $28.3M (+0.4%) from $8,004.5M to $8,032.8M due to an increase in RDT&E for studies and analyses (+$10.8M) and additional procurement funds for UH-1Y Government Furnished Equipment and recurring costs (+$17.5M).

• LHD 1 - This is the final SAR for the LHD 1 since it is more than 90% expended. The program began in 1981 and has now delivered 6 of 7 ships to date. The final ship, LHD-8, is under construction and is scheduled to be delivered in July 2007. Program costs decreased $49.9M (-0.5%) from $10,001.2M to $9,951.3M due to revised actual costs.

U.S. Air Force:

• F/A-22 - Submitted to rebaseline from a development to a production estimate following the April 2005 approval of Full Rate Production (Milestone III). No cost changes reported.

• NPOESS (National Polar-Orbiting Operational Environmental Satellite System) - Submitted to report an increase in the Average Procurement Unit Cost Program (APUC) of 15% or more (Nunn-McCurdy unit cost breach). Congress was notified Sept. 28, 2005 of the breach. Program costs increased $1,485.2M (+21.8%) from $6,800.0M to $8,285.2M due to technical issues arising during the engineering and manufacturing development portion of the program. The NPOESS Tri-Agency Executive Committee (EXCOM) has directed that an independent program assessment team review the program and provide recommendations for replanning options. The EXCOM is expected to approve a restructure of the program during December 2005.

• SBIRS (Space Based Infrared System) High – Submitted to report increases in the Program Acquisition Unit Cost and Average Procurement Unit Cost of 15% or more (Nunn-McCurdy unit cost breach). Program costs increased $1,024.8M (+10.7%) from $9,613.3M to $10,638.1M due to a revised estimate of development and production costs and the addition of program office operating costs to complete production of GEO 3-5.

• WGS (Wideband Gapfiller Satellites) – Submitted to report schedule slips of six months or more. The Initial Operational Capability (IOC) slipped from May 2007 to March 2009 and Full Operational Capability (FOC) has been revised to a "to be determined" date, pending a review of Satellites 4 and 5 cost and schedule. The schedule slips were due to a fastener problem in the manufacturing process reported by the contractor (Boeing). The need to go back and replace the fasteners pushed back the launch date, thus affecting the IOC and FOC dates. Program costs decreased $22.3M (-1.2%) from $1,837.4M to $1,815.1M due to a reduction to fund higher priority programs.

New SARs (as of Sept. 30, 2005)

The DoD submitted initial SARs for two new programs listed below. These reports do not represent cost growth. Baselines established on these programs will be the point from which future changes will be measured. The current cost estimates are provided:

Source: U.S. Department of Defense (DoD).