GAO

United States General Accounting Office

Report to Congressional Committees

April 2000 UNMANNED AERIAL

VEHICLES

Progress of the Global

Hawk Advanced

Concept Technology

Demonstration

GAO/NSIAD-00-78

Page 1 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-284511 Letr

April 25, 2000

Congressional Committees

The Department of Defense (DOD) has built five prototype Global Hawk

reconnaissance aircraft for use in a High Altitude Endurance Unmanned

Aerial Vehicle Advanced Concept Technology Demonstration.1 The

Advanced Concept Technology Demonstration’s purpose is to determine

through design and construction of Global Hawk prototypes, and a

subsequent assessment of their utility in military user demonstrations, if

the concept is effective as an Air Force reconnaissance aircraft before DOD

decides whether to acquire a production version of it. Reconnaissance

aircraft such as Global Hawk are used to obtain information about the

activities and resources of enemy forces.

If DOD decides to acquire Global Hawk, the production version is expected

to provide the Air Force with the ability to fly for 40 continuous hours and

conduct reconnaissance for up to 24 hours at a radius of 3,000 nautical

miles. In 1994, when the Advanced Concept Technology Demonstration

was initiated, DOD established a $10-million average unit flyaway price

goal in fiscal year 1994 dollars for air vehicles numbered 11 through 20.2

The unit flyaway price covers the cost of the vehicle, its reconnaissance

sensors, and the contractor’s fee. Unit flyaway price excludes costs for

systems engineering and program management, system test and evaluation

and non-recurring tooling, engineering and manufacturing development,

and non-flying support equipment such as the ground control station.

Because of concerns about Global Hawk’s affordability, Congress directed

us to review the Global Hawk Advanced Concept Technology

1

Advanced Concept Technology Demonstrations do not follow DOD’s formal approval

process for its acquisition programs. Instead, before a formal decision to acquire a product

is made, a given mature technology is demonstrated to military commanders who determine

if the technology has military application, and is cost-effective.

2

In accordance with DOD’s agreement with the Global Hawk contractor, the first 10

production aircraft were to be Global Hawk aircraft numbered 11 through 20. Aircraft

numbered 1 through 10 were to be prototypes for the demonstration. However, to save

money, only five demonstration prototypes were built.
B-284511

Page 2 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Demonstration.3 Our objectives were to determine (1) whether the average

unit flyaway price for the 10 Global Hawk production aircraft numbered 11

through 20 will be within DOD’s price goal of $10 million each in fiscal year

1994 dollars; (2) the status of the military user demonstration, including the

extent to which Global Hawk has demonstrated reconnaissance

capabilities; and (3) DOD and Air Force plans to transition to a formal

acquisition program. This is our second report addressing the status of

DOD’s progress toward meeting its price goal for Global Hawk.4 In our

prior report, we concluded that DOD was not making progress toward the

goal.

Results in Brief The Global Hawk Advanced Concept Technology Demonstration has made

progress in terms of achieving performance objectives, but has not made

progress toward the price goal. Neither DOD nor the Global Hawk

contractor expects to achieve the $10 million average unit flyaway price

goal for the 10 production air vehicles numbered 11 through 20. The most

recent projection from the contractor in July 1999 is an average unit

flyaway price of $15.3 million in fiscal year 1994 dollars. The $15.3 million

unit price represents an increase of $0.5 million per unit from DOD’s July

1998 estimate of $14.8 million per unit. The contractor’s projection is based

on data from actual costs incurred for construction of the third prototype

built, assumes there will not be significant design changes to the prototype

aircraft, and assumes higher annual production rates than DOD is now

planning. Moreover, the Air Force, which manages the Global Hawk

Advanced Concept Technology Demonstration, has not finalized its design

requirements for a future production version or completed an analysis to

determine the total number of Global Hawks it needs. Although the Air

Force expects to address these issues before the Advanced Concept

Technology Demonstration is complete in September 2000, based on a set

of draft minimum requirements the Air Force is considering adopting, the

actual average unit flyaway price paid by DOD in the future for the

production version could be significantly higher than $15.3 million.

To assess whether Global Hawk has military utility, the Air Force began

demonstrating the prototype aircraft in June 1999 for military users and

3

National Defense Authorization Act for Fiscal Year 1998, section 216.

4

Unmanned Aerial Vehicles: Progress Toward Meeting High Altitude Endurance Aircraft

Price Goals (GAO/NSIAD-99-29, Dec. 15, 1998).
B-284511

Page 3 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

their assessment is ongoing.5 To date, the Global Hawk prototype has

demonstrated basic flying capabilities but has not yet undergone sufficient

testing to determine whether it can successfully conduct reconnaissance

missions on a regular basis. According to an October 1999 test report from

the Air Force, the prototype has flown at altitudes in excess of 66,000 feet

and for lengths of more than 27 hours. However, of the 1,200 flight-test

hours planned for the user demonstrations, only about 260 were completed

by the end of January 2000. DOD plans to increase the number of flight-test

hours dedicated to demonstrating reconnaissance capability before the

flight-test phase is complete in June 2000. According to DOD, while fewer

hours have been dedicated to testing reconnaissance sensors, the sensors’

different operating modes have been tested, and over 2,700 recorded

images have been transmitted to military users to assess the aircraft’s

reconnaissance capability.

Although the Air Force had hoped to secure an early decision to proceed

with the acquisition of Global Hawk in July 1999, DOD delayed a formal

decision on whether to acquire it until September 2000 after the Advanced

Concept Technology Demonstration, including the user demonstration and

assessment, is complete. In the meantime, at DOD’s request, Congress has

authorized the Air Force to procure the sixth and seventh prototype air

vehicles to sustain the Global Hawk industrial base. DOD’s decision to wait

for the conclusion of the Advanced Concept Technology Demonstration

before committing to formally acquire Global Hawk is prudent because by

September 2000, a number of important unknowns will be addressed.

These include the Air Force’s final requirements for a production version of

Global Hawk, determination of how many Global Hawks the Air Force may

need, and analyses of the user demonstration and assessment results and

cost data from the Advanced Concept Technology Demonstration.

Eliminating these unknowns before an acquisition decision is consistent

with the best practices of leading commercial firms. These firms do not

commit to produce a new product until knowledge about technological

maturity and cost-effectiveness is available.6

5

During the military utility assessment, the Air Force is operationally demonstrating the

Global Hawk prototype’s capabilities during military exercises in realistic operational

environments so that military users can assess its mission effectiveness.

6

Best Practices: Successful Application to Weapon Acquisitions Requires Changes in DOD’s

Environment (GAO/NSIAD-98-56, Feb. 24, 1998).
B-284511

Page 4 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Background In 1994, DOD began the Global Hawk Advanced Concept Technology

Demonstration as one of a number of advanced concept technology

demonstrations. As an Advanced Concept Technology Demonstration,

Global Hawk does not follow DOD’s formal approval process for

acquisition programs. Rather, through the use of prototypes, a mature

technology is field tested by military users to determine whether there is an

effective military application. Based on the results of the Advanced

Concept Technology Demonstration, a decision is made whether to

transition the demonstration product into a formal acquisition program.

DOD’s original manager for the effort, the Defense Advanced Research

Projects Agency, and Global Hawk’s prime contractor, NorthropGrumman’s Ryan Aeronautical Center, envisioned Global Hawk to be an

affordable way to augment the Air Force’s manned U-2 high altitude

reconnaissance aircraft. The Air Force assumed program management

responsibility for the Advanced Concept Technology Demonstration in

October 1998.

Global Hawk is a large aircraft measuring longer than 40 feet with a

wingspan of more than 100 feet. (See fig. 1.) During the Global Hawk

Advanced Concept Technology Demonstration, the contractor has built five

prototypes. The fifth prototype was delivered to DOD in November 1999.

One of the vehicles was destroyed when it crashed in March 1999. This

crash delayed the start of the Air Force’s user demonstration from April

until mid-June 1999. DOD expects to make a formal acquisition decision in

September 2000.
B-284511

Page 5 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Figure 1: Global Hawk High Altitude Endurance Unmanned Aerial Vehicle

Source: U.S. Air Force.

DOD and Contractor

Do Not Expect Global

Hawk to Achieve Price

Goal

Neither Global Hawk’s prime contractor nor DOD expects to achieve the

$10-million average unit flyaway price goal in fiscal year 1994 dollars. The

price goal was established by agreement between DOD and the contractor

and was to be applicable to the 10 production air vehicles numbered 11

through 20 should DOD proceed with a formal acquisition program after

the Advanced Concept Technology Demonstration. The contractor’s most

recent average unit flyaway price projection (dated July 1999) is

$15.3 million in fiscal year 1994 dollars. The contractor’s projection is based

on data from actual costs incurred for construction of the third prototype,

assumes there will not be significant design changes between the prototype

aircraft and the aircraft built in a future production phase, and assumes

higher annual production rates than DOD is now planning. The

$15.3-million unit price projection also represents an increase of

$0.5 million per unit from DOD’s unit price projection of $14.8 million made

in July 1998. A comparison of these projections to the original goal is

shown in table 1.
B-284511

Page 6 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Table 1: 1994, 1998, and 1999 Average Unit Flyaway Price Projections for Production

Air Vehicles Numbered 11 Through 20

a

Projections assume production aircraft will not differ significantly from prototype aircraft.

b

For its July 1999 projection, the contractor did not show its fee separately. Rather, a 12-percent fee is

included in component subtotals.

Sources: DOD and Northrop-Grumman Ryan Aeronautical Center.

According to DOD, most of the $5.3-million overall increase since 1994 in

the projected average flyaway price for Global Hawk is due to the need to

achieve the aircraft’s range and endurance objectives. This required the

contractor to modify the wings and other structural parts, adding a

projected $3.5 million to the structural cost of each aircraft. The second

largest projected increase is in the price of the electro-optical, infrared, and

synthetic aperture radar reconnaissance sensors selected by the

contractor.7 The contractor’s original projection of $4.1 million per aircraft

for these reconnaissance sensors was a significant underestimate

compared with its July 1999 projection of $6.7 million per aircraft. Further,

the contractor’s July 1999 $15.3 million unit price projection includes the

effects of two factors that were not considered in developing the 1994

projection. First, breaks in construction between the second and third

prototypes, and after the fifth prototype, prevented the contractor from

Fiscal year 1994 millions of dollars

Category

Contractor

projection (1994)a

DOD projection

(July 1998)

Contractor

projection (July

1999)

Structure $2.6 $6.1 $6.1

Avionics 0.4 0.5 0.6

Sensors 4.1 5.2 6.7

Propulsion 1.6 1.6 1.9

Fee 1.3 1.4 b

Total $10.0 $14.8 $15.3

7

The aircraft’s sensors are used by the aircraft’s operators on the ground to make images of

what is below the aircraft for analysis.
B-284511

Page 7 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

reducing costs per aircraft as rapidly as anticipated.8 The second factor is

DOD’s lower planned annual production rate of 2 per year versus the

original plan to acquire 10 Global Hawk production aircraft in a single year.

This reduced the contractor’s plans to achieve unit cost savings through

greater economies of scale.

The Air Force and the contractor continue to collect actual cost data for

use in updating their projections of average unit flyaway price. Continuing

to collect and update this knowledge until the end of the Advanced

Concept Technology Demonstration in September 2000 is important

because it will form the basis for determining Global Hawk’s costeffectiveness. In addition, the actual average unit flyaway price paid by

DOD in the future for the production version could differ significantly from

$15.3 million because the Air Force has not finalized its design

requirements for a future production version or completed an analysis of

alternatives to determine how many Global Hawks it will need.

Unit Price May Change

Once Operational

Requirements Are Finalized

Concurrent with the ongoing Advanced Concept Technology

Demonstration, the Air Force is preparing an operational requirements

document for Global Hawk. This document will formally identify all the

performance capabilities that the Air Force will require for Global Hawk to

be considered ready to operationally deploy successfully. The Air Force

expects to complete this document by September 2000.

During the requirements generation process, the Air Force expects to use

affordability as a factor in prioritizing Global Hawk performance

requirements. For example, according to a draft Air Force operational

requirements document, improvements to current Global Hawk prototype

reconnaissance sensors must be funded. Conversely, active defensive

systems to protect Global Hawk from missiles (e.g., a towed decoy

capability), though included in the contractor’s design, are identified as

lower priority objectives to be included in production when funding

becomes available. Improved sensors would increase the average unit

flyaway price by $700,000. Not requiring defensive systems would lower it

by $600,000. A more precise and comprehensive estimate on the impact to

8

A “break in construction” occurs when a manufacturing process comes to a stop. In this

case, DOD did not immediately authorize the contractor to begin building the third or sixth

prototypes when it was ready to do so and work ceased. The subsequent disruption to the

continuity of the work, according to the Global Hawk contractor, caused its employees to

not become as efficient at building Global Hawks as it projected they would.
B-284511

Page 8 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

the average unit flyaway price can be made once the operational

requirements document is approved in September 2000.

Analysis of Alternatives for

Reconnaissance Aircraft Is

Ongoing

Another key program document that is currently being drafted by the Air

Force is an Analysis of Alternatives evaluating other approaches to

performing the mission the Global Hawk is being designed to perform. The

primary alternative being evaluated is the purchase of additional U-2

manned reconnaissance aircraft. The Air Force expects to publish this

document in April 2000. The outcome of this analysis could further affect

Global Hawk’s average unit flyaway price by influencing the total number

of Global Hawks the Air Force concludes it may need.

Global Hawk Military

Utility Assessment Is

Progressing

The Global Hawk Advanced Concept Technology Demonstration, including

ongoing user demonstrations and the military utility assessment, is to be

completed by September 2000. During the user demonstrations, Global

Hawk prototypes are being flown in military exercises so military users can

assess their usefulness as high-altitude, endurance reconnaissance aircraft.

The prototype was originally expected to fly to altitudes greater than

65,000 feet and spend 40 hours aloft. An October 1999 report concludes that

the prototype has successfully demonstrated basic flying capabilities,

reaching altitudes in excess of 66,000 feet and flying for lengths of more

than 27 hours.9 On one assessment flight, a Global Hawk successfully flew

over a large section of the western United States, encompassing California,

Nevada, Idaho, and Utah, while being controlled from a ground station in

California.

However, while the assessment plan calls for flying 1,200 hours between

June 1999 and June 2000, only about 260 hours had been flown as of

January 2000. Additionally, Air Force testers noted that of the hours flown,

only a limited number have been dedicated to demonstrating the aircraft’s

sensors can successfully complete the reconnaissance mission. DOD plans

to address this by increasing the number of test hours dedicated to

demonstrating reconnaissance capability as the assessment proceeds.

Furthermore, according to DOD, though flight hours flown in support of

sensor demonstrations are lower than anticipated, all of the aircraft’s

sensor modes have been successfully evaluated, and over 2,700 recorded

9

Global Hawk Quick Look Report, U.S. Air Force, October 1999.
B-284511

Page 9 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

images have been distributed to assessment participants for analysis.

Future reports should provide a better indication of Global Hawk’s military

usefulness. This information, together with the cost data, will allow DOD to

make an informed tradeoff between cost and technical performance as part

of the decision whether to transition to a formal acquisition program and

proceed with production.

Acquisition Decision

Delayed Until

Completion of

Advanced Concept

Technology

Demonstration

Although the Air Force had hoped to secure in July 1999 an early decision

to proceed with the acquisition of Global Hawk, DOD delayed a formal

decision on whether to acquire it until after the Advanced Concept

Technology Demonstration is complete in September 2000. In the

meantime, an Intelligence Program Decision Memorandum issued in

August 1999 directed the Air Force to add funding to initiate an acquisition

program with an expected acquisition decision for engineering and

manufacturing development at the end of fiscal year 2000. DOD’s decision

to wait is prudent because by September 2000, the actual costs incurred to

build the first five aircraft, the operational requirements document, the

analysis of alternatives, and the Global Hawk user demonstration and

military utility assessment results should be available for use in deciding

whether to formally acquire Global Hawk.

Air Force Preparing for

Transition to Production

Concurrent with the ongoing assessment, the Air Force has been preparing

for the Global Hawk acquisition decision. To that end, in July 1999, the Air

Force developed a number of acquisition strategy alternatives and

presented them to the Under Secretary of Defense for Acquisition,

Technology and Logistics. In response, the Under Secretary approved

continuing activities to prepare for a transition to acquisition, including

procuring a sixth and seventh aircraft of the prototype design to sustain the

Global Hawk industrial base. However, he delayed a formal decision to

proceed beyond the Advanced Concept Technology Demonstration until it

is complete in September 2000.

The Under Secretary’s decision to wait for the conclusion of the Advanced

Concept Technology Demonstration before committing DOD to acquire

Global Hawk is prudent because there are still a number of important

unknowns that need to be addressed. These include the actual costs

incurred to build the first five aircraft, the operational requirements

document, the analysis of alternatives, and the Global Hawk user

demonstrations and military utility assessment results. Our work in the

best practices area shows leading commercial firms do not commit to
B-284511

Page 10 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

produce a new product until knowledge about technological maturity and

cost-effectiveness is available. Product development is thereafter a clearly

defined undertaking to design and manufacture an end item for delivery to

a customer that the customer needs and can afford.

If a decision to acquire Global Hawk is made in September 2000, the Air

Force’s preferred acquisition strategy would begin with an engineering and

manufacturing development phase before production. According to the Air

Force, the objective of the proposed development phase would be to make

design changes to improve the prototype Global Hawk so the production

version will be operationally ready to be deployed. As directed by the

Defense Acquisition Executive, this 1-year engineering and manufacturing

development phase would begin in fiscal year 2001 and is estimated to cost

$87.4 million.

As part of the 1-year engineering and manufacturing development phase,

the Air Force would complete the two additional Advanced Concept

Technology Demonstration prototype aircraft requested by DOD and

approved by Congress while preparing to produce the improved aircraft.

Following this engineering and manufacturing development phase, the Air

Force will begin initial production of eight of the improved aircraft (and

two ground control stations) from fiscal years 2002 through 2005. The total

cost of procurement planned during this phase is $365.6 million. The total

estimated cost of the overall program implementing the Air Force’s

preferred acquisition strategy for Global Hawk would be $772.9 million, as

shown in table 2.
B-284511

Page 11 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Table 2: Estimated Cost to Improve Global Hawk and Procure Improved Production

Versions (Preferred Air Force Acquisition Strategy)

a

This figure includes funding for procuring the 2 additional, congressionally approved, prototype air

vehicles in fiscal year 2001, the 1-year engineering and manufacturing development period in fiscal

year 2001 to improve the prototype design, and funding for further development in fiscal years 2002-

2005 for a future Global Hawk aircraft with more improvements.

b

This figure includes procurement of all equipment necessary to operate Global Hawk, not just the

aircraft.

Source: U.S. Air Force.

Agency Comments DOD provided written comments on a draft of this report (see app. I). DOD

generally concurred with the report and suggested technical changes for

clarification and accuracy that we incorporated as appropriate.

Scope and

Methodology

To determine DOD’s progress toward meeting its price goal, the status of

the user demonstrations, and DOD and the Air Force’s acquisition plans, we

met with DOD, Air Force, and contractor officials, and analyzed Global

Hawk cost data, an assessment report, draft requirements documents, and

program plans. We conducted our work at the Division of Intelligence,

Surveillance, and Reconnaissance Systems, Office of the Secretary of

Defense, Washington D.C; Air Combat Command and U.S. Atlantic

Command (now Joint Forces Command), Norfolk, Virginia; the Air Force

Reconnaissance System Program Office, Wright-Patterson Air Force Base,

Ohio; and Ryan Aeronautical Center, Northrop-Grumman Corporation.

We conducted our work from January 1999 through January 2000 in

accordance with generally accepted government auditing standards.

Major cost category

Estimated cost in then-year millions of

dollars, fiscal years 2001-05

Research, Development, Test, and

Evaluation $306.3a

Procurement (includes 8 improved aircraft

and 2 ground stations) 365.6b

Operations and maintenance 51.0

Military construction 50.0

Total $772.9
B-284511

Page 12 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

We are sending copies of this report to the Secretaries of Defense and the

Air Force, and the Director of the Office of Management and Budget. We

will also provide copies to others upon request. If you or your staff have

any questions, please contact me at (202) 512-4841. Principal contributors

to this report were Charles Ward, Richard Strittmatter, and Michael

McGuire.

Louis J. Rodrigues

Director, Defense Acquisitions Issues
B-284511

Page 13 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

List of Congressional Committees

The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Richard C. Shelby

Chairman

The Honorable Robert Kerrey

Vice Chairman

Select Committee on Intelligence

United States Senate

The Honorable Floyd D. Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

The Honorable Porter J. Goss

Chairman

The Honorable Norman Dicks

Ranking Minority Member

Permanent Select Committee on Intelligence

House of Representatives
Page 14 GAO/NSIAD-00-78 Unmanned Aerial Vehicles

Appendix I

Comments From the Department of Defense ApApenednxidexiIs

(707385) Letr
Ordering Information The first copy of each GAO report is free. Additional copies of

reports are $2 each. A check or money order should be made out to

the Superintendent of Documents. VISA and MasterCard credit

cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any list

from the past 30 days, please call (202) 512-6000 using a touchtone

phone. A recorded menu will provide information on how to obtain

these lists.

Orders by Internet:

For information on how to access GAO reports on the Internet,

send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

To Report Fraud,

Waste, or Abuse in

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. GI00