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441 G St. N.W.

Washington, DC 20548

June 26, 2014

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

Defense Acquisitions: Review of Private Industry and Department of Defense Open 

Systems Experiences 

This letter formally transmits the enclosed briefing that we presented to your staff on April 23, 

2014. House Committee on Armed Services Report No. 113-102, which accompanied a House 

bill on the National Defense Authorization Act for Fiscal Year 2014, mandated GAO to provide a 

briefing on private industry best practices for implementing an open systems approach to 

product development (i.e., an approach that includes a modular design and standard 

interfaces).1 This correspondence contains additional information not included in the briefing 

slides and addresses (1) industry practices and experiences for implementing an open systems 

approach during product development, (2) Department of Defense (DOD) initiatives and 

experiences for implementing an open systems approach on weapon acquisition programs, and 

(3) challenges DOD faces in implementing identified open systems practices on weapon system 

acquisition programs.

To conduct this work, we interviewed officials from four private companies (BP, Chevron, 

DreamHammer, and Iridium), standards organizations, and academia, and conducted literature 

reviews. The companies were selected based on their recent implementation of an open 

systems approach on a product. We reviewed relevant DOD policies, guidance, and handbooks, 

and interviewed officials from the Office of the Secretary of Defense and military services. We 

also discussed challenges selected private companies and some military programs had to 

overcome to implement an open systems approach with appropriate officials. Finally, we 

leveraged information from previous GAO reports where applicable.

We conducted this performance audit from February 2014 to June 2014, in accordance with 

generally accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives.

 

1 H.R. 1960, 113th Cong. (1st Sess. 2013). A related bill, H.R. 3304, became the National Defense Authorization Act 

for Fiscal Year 2014, Pub. L. No. 113-66 (2013).
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Summary

GAO identified four private sector companies across various industries whose officials

discussed examples of how they use an open systems approach to reduce product 

development time and life-cycle costs; increase competition and innovation; and enable

interoperability between systems from different vendors, among other things. For example, 

major producers in the oil and gas industry use thousands of sensors on a typical oil drilling rig

that are embedded in equipment managed by numerous service contractors. Because of this, 

they are using open standards to ensure that, regardless of who provides software for the 

disparate systems and sensors, they are interoperable because their data can be transferred in 

a common format and in near-real time for analysis at a central monitoring location. This open 

systems approach has helped oil companies avoid costly drilling mistakes that could cause 

drilling activities to shut down for a period of time and subsequent productivity losses. Another 

company that has benefited from using an open systems approach is Iridium, a satellite voice

and data services provider, which expanded its customer base by transitioning from its initial 

proprietary service offering to one that allows partner companies to access Iridium’s satellite 

communications network using commercially available modular components with open 

interfaces. This approach has increased innovation and opened competitive market 

opportunities through more than 300 partner companies, many of which have used these 

components to develop new tools such as tracking systems that function in remote areas 

worldwide. Further, it has also enabled Iridium to significantly increase its revenue from satellite 

communication services. Finally, DreamHammer reduced development costs and time by 

leveraging available software code for its unmanned vehicle control systems. 

To achieve successes with open systems, officials we consulted—regardless of the industry 

sector they represent—highlighted a number of common enablers and practices. These include 

broad industry support and coordination with independent standards organizations; a long-term 

commitment to develop, implement, test, and refine standards; technical expertise to identify 

which components of a system should be designed to use open standards and interfaces; and 

knowledge sharing across all segments of an enterprise to build continuous support for open 

systems. 

In recent years, DOD has emphasized the benefits of using an open systems approach in 

weapon acquisition programs, particularly through its 2010 and 2012 Better Buying Power 

Initiatives.

2

 A 2013 Interim DOD Instruction 5000.02, “Operation of the Defense Acquisition 

System,” provides that program managers are responsible for applying open systems 

approaches in product designs where feasible and cost-effective. Some of the tools indentified 

in the instruction were developed by an Open Systems Architecture Data Rights team cochaired by the Office of the Under Secretary of Defense for Acquisition, Technology and 

Logistics and the Office of the Assistant Secretary of the Navy for Research, Development, Test 

and Evaluation. This team is a service-level organization that leverages prior open systems 

resources and current initiatives to develop contracting and other guidance for open system

acquisitions. 

While each of the military services has policies for incorporating open systems on their weapon 

acquisition programs, the Navy has made the greatest strides in institutionalizing open system 

 

2 Office of the Under Secretary of Defense, Acquisition, Technology and Logistics Memorandum: “Better Buying 

Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending” (Sept. 14, 2010). Office of 

the Under Secretary of Defense, Acquisition, Technology and Logistics Memorandum: “Better Buying Power 2.0: 

Continuing the Pursuit for Greater Efficiency and Productivity in Defense Spending” (Nov. 13, 2012).
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acquisitions, and a number of its programs have implemented such an approach from early 

development. Examples include three unmanned aircraft systems, the P-8 Poseidon maritime 

patrol aircraft, and the most recent effort to develop a replacement Presidential Helicopter. The 

Air Force and the Army are beginning to embrace open systems acquisitions as well, albeit in a 

more ad-hoc fashion, with some programs such as the Air Force’s KC-46 Tanker showing

promise for future life-cycle cost savings, according to program officials. 

Despite the positive developments we identified in this review, as well as our July 2013 report, 

DOD continues to face a number of challenges to consistently applying practices for effectively 

implementing an open systems approach to weapon acquisition.3 The most difficult challenge is 

overcoming a general cultural preference within the services for acquiring proprietary systems 

that puts life-cycle decisions in the hands of the contractors that developed and produced those 

systems. Those contractors, therefore, benefit from maintaining the status quo with respect to 

long-term weapon system sustainment. Although new open systems guidance, tools, and 

training are being developed, DOD is not tracking the extent to which programs are 

implementing this approach or if programs have the requisite expertise to implement the 

approach.

In our July 2013 report, we made four recommendations to improve DOD’s implementation of 

an open systems approach for weapon acquisition programs, as well as its visibility of open 

systems implementation and program office expertise. We recommended that (1) the Air Force 

and Army implement their open systems policies, (2) DOD develop metrics to track open 

systems implementation, (3) the services report on these metrics, and (4) the services assess 

and address any gaps in expertise. DOD partially concurred with the recommendations, stating 

that existing policies and guidance are sufficient and any assessments to track and report on 

open system metrics should be made and reported on during existing reviews. DOD did not 

indicate how it would assess and address gaps in expertise. 

DOD has not taken steps to implement our recommendations. Based upon additional 

information we obtained during this review, we continue to believe our recommendations are 

applicable. 

Agency Comments

We requested comments from DOD, but none were provided.

____________________________________________________________________________

We are sending copies of this report to the appropriate congressional committees. We are also 

sending copies to the Secretary of Defense and the Under Secretary of Defense for Acquisition, 

Technology and Logistics. This report will also be available at no charge on our website at 

http://www.gao.gov. Should you or your staff have questions concerning this report, please 

contact me at (202) 512-4841 or at sullivanm@gao.gov. 

 

3 In our July 2013 report we discussed both positive developments as well as challenges DOD faced in implementing 

an open systems approach to product development. See GAO, Defense Acquisitions: DOD Efforts to Adopt Open 

Systems for Its Unmanned Aircraft Systems Have Progressed Slowly, GAO-13-651 (Washington, D.C.: July 31, 

2013).
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Contact points for our Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. Key contributors to this report were Cheryl Andrew, Assistant 

Director; Andrew H. Redd; Robert K. Miller; Katheryn Hubbell; Marie Ahearn; and Laura 

Greifner.

Michael J. Sullivan

Director, Acquisition and Sourcing Management
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Enclosure
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