ASK OCE — June, 14, 2006 — Vol. 1, Issue 9

Despite changes to its acquisition system, the Department of Defense continues to experience cost overruns, schedule delays, and reduced performance in many of its major weapons systems, according to a recent report by the Government Accountability Office (GAO).

With DOD planning to invest $1.3 trillion dollars on these systems over the next four years, the GAO points to effective management of major weapons system as a long-running concern for Congress.

Over the past three decades, DOD’s acquisition environment has undergone numerous changes to address issues of rising costs, delayed schedules and other problems, GAO notes, but DOD’s revamped policies have thus far been largely ineffective in addressing inefficiencies in procurement, research, design, and production processes.

The GAO assessed 23 major programs and found that 10 are already anticipating development cost overruns greater than 30% or have delayed delivery of initial operational capability to the field by a year or more. The result is a reduction of the value of DOD’s defense dollars and a lower return on investment for taxpayers.

The GAO cited poor execution of the revised acquisition policy as a major source of the agency’s problems. Further, DOD frequently bypasses critical steps in their stated knowledge-based process, fails to attain necessary levels of knowledge, and continues to pursue revolutionary — rather than evolutionary or incremental — advances in capability.

Almost 80% of the programs reviewed in the report did not fully follow a knowledge-based process to develop a sound business case before committing to system development. Most programs began system development with immature technologies, and half of the programs have held design reviews before the realization of a high degree of design maturity. These factors raise the probability that problems will be discovered late in development when they are more costly to remedy.

The GAO found that DOD has not closed all the gaps in the policy that was identified nearly three years ago, particularly with regard to adding controls and criteria. Effective controls require key decision-makers to measure progress against specific criteria and ensure than managers capture key knowledge before moving to the next acquisition phase. DOD’s policy continually allows managers to approach major investment decisions with many unknowns.

In the absence of specific and effective controls requiring program officials to satisfy specific criteria, it is difficult to hold decision makers or program managers accountable for cost and schedule targets. The GAO also noted that DOD lacks decision-making transparency.

Read the GAO report. (PDF)