United States Government Accountability Office

GAO Testimony 

Before the Armed Services Committee, 

House of Representatives 

DEFENSE ACQUISITIONS

Actions Needed to Get 

Better Results on Weapons 

Systems Investments 

Statement of David M. Walker 

Comptroller General of the United States 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Wednesday, April 5, 2006

 

GAO-06-585T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 5, 2006

DEFENSE ACQUISITIONS 

Actions Needed to Get Better Results on 

Highlights of GAO-06-585T, a testimony Weapons Systems Investments 

before the Armed Services Committee, 

House of Representatives

In the past 5 years, DOD has 

doubled its planned investments in 

weapons systems, but this huge 

increase has not been accompanied

by more stability, better outcomes, 

or more buying power for the 

acquisition dollar. Rather than

showing appreciable improvement,

programs are experiencing

recurring problems with cost 

overruns, missed deadlines, and 

performance shortfalls. GAO was 

asked to testify on ways to obtain a 

better return on DOD’s weapons 

systems investments.

This testimony identifies the

following steps as needed to 

provide a better foundation for 

executing weapon programs: (1)

developing a DOD-wide investment

strategy that prioritizes programs 

based on realistic and credible 

threat-based customer needs for 

today and tomorrow, (2) enforcing 

existing policies on individual 

acquisitions and adhering to 

practices that assure new programs

are executable, and (3) making it

clear who is responsible for what 

and holding people accountable 

when these responsibilities are not 

fulfilled. Past GAO reports have

made similar recommendations. 

DOD has a mandate to deliver high-quality products to warfighters, when 

they need them and at a price the country can afford. Quality and timeliness 

are especially critical to maintain DOD’s superiority over others, to counter 

quickly changing threats, and to better protect and enable the warfighter. 

Cost is critical given DOD’s stewardship responsibility for taxpayer money, 

combined with long-term budget forecasts which indicate that the nation 

will not be able to sustain its currently planned level of investment in 

weapons systems, and DOD’s plans to increase investments in weapons 

systems that enable transformation of various military operations. At this 

time, however, DOD is simply not positioned to deliver high quality products 

in a timely and cost-efficient fashion. It is not unusual to see cost increases 

that add up to tens or hundreds of millions of dollars, schedule delays that 

add up to years, and large and expensive programs frequently rebaselined or 

even scrapped after years of failing to achieve promised capability. 

Additional Investment: Top Five Programs in 2006 Plan, Billions in Constant 2006 Dollars 

29% Increase

$122.4 $427.6 

Source: GAO analysis of DOD data.

First full estimate for 

completing the 5 programs

Additional investment needed 

for completing the 5 programs

Fiscal year 2006: $550 billion total

Note: Estimate includes total research, development, test, and evaluation (RDT&E); procurement; 

military construction; and acquisition, operation, and maintenance.

Recognizing this dilemma, DOD has tried to embrace best practices in its 

policies, and instill more discipline in requirements setting, among numerous 

other actions. Yet it still has trouble distinguishing wants from needs, and 

many programs are still running over cost and behind schedule. 

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 tradeoff decisions as to which programs should be 

pursued, and more importantly, not pursued, making sure programs are 

executable, locking in requirements before programs are ever started, and 

making it clear who is responsible for what and holding people accountable 

when these responsibilities are not fulfilled. These changes will not be easy 

to make. They require DOD to re-examine the entirety of its acquisition 

process—what we think of as the “Big A”—including requirements setting, 

funding, and execution. Moreover, DOD will need to alter perceptions of 

what success means, and what is necessary to achieve success.

www.gao.gov/cgi-bin/getrpt?GAO-06-585T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Katherine 

Schinasi at (202) 512-4841 or 

schinasik@gao.gov. 
Defense Acquisitions

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss how to get better results from the 

Department of Defense’s (DOD) weapons systems investments and why 

we must ensure that DOD be held accountable for doing so. DOD has a 

mandate to deliver high-quality products to warfighters, when they need 

them and at a price the country can afford. Quality and timeliness are 

especially critical to maintain DOD’s superiority over others, to counter 

quickly changing threats, and to better protect and enable the warfighter. 

Cost is also critical given DOD’s stewardship over taxpayer money, longterm budget forecasts which indicate that the nation will not be able to

sustain its currently planned level of investment in weapons systems, and 

plans to increase investments in weapons systems that enable 

transformation of various military operations. At this time, however, DOD 

is simply not positioned to deliver high quality products in a timely and 

cost-efficient fashion. It is not unusual to see cost increases that add up to

tens or hundreds of millions of dollars, schedule delays that add up to 

years, and large and expensive programs continually rebaselined or even 

scrapped after years of failing to achieve promised capability. 

Recognizing this dilemma, DOD has tried to embrace best practices in its 

policies, instill more discipline in requirements setting, strengthen training 

for program managers, reorganize offices that support and oversee 

programs, and require the use of independent cost estimates and systems 

engineering. Yet despite these and many other actions, the Department 

still has trouble distinguishing wants from needs, and many programs are 

still running over cost and behind schedule. 

Our work shows that poor performance and cost overruns will likely 

persist until DOD provides a better foundation for executing its weapons 

programs. As I will further discuss today, this foundation includes 

(1) a DOD-wide investment strategy that prioritizes programs based on 

realistic and credible threat-based customer needs for today and 

tomorrow (“Big A” acquisition); (2) enforcing existing policies on 

individual acquisitions and adhering to practices that assure new programs 

are executable (“little a” acquisition); and (3) making it clear who is 

responsible for what and holding people accountable when these 

responsibilities are not fulfilled. While such steps represent basic and 

commonly accepted sound business practices, they will be extremely 

difficult to implement within DOD, given the myriad of missions that 

compete for the attention of DOD’s leadership and resources, frequent 

turnover in leadership and key personnel, DOD’s intricate and outdated 

organizational structure, outmoded and flawed supporting business 

Page 1 GAO-06-585T
Defense Acquisitions

processes, as well as entrenched cultural behaviors and internal pressures. 

As a result, solutions demand the highest levels of leadership attention and 

commitment from DOD, the Administration, and the Congress over a 

sustained period of years.

Today we are at a key crossroad. In the next few decades, the nation will 

be struggling with a large and growing structural deficit. At the same time, 

however, weapons programs are commanding larger budgets as DOD 

undertakes increasingly ambitious efforts to transform its ability to 

address current and potential future conflicts. These costly current and 

planned acquisitions are running head-on into the nation’s unsustainable 

fiscal path. In the past 5 years, DOD has doubled its planned investments 

in weapons systems, but this huge increase has not been accompanied by 

more stability, better outcomes, or more buying power for the acquisition 

dollar. Rather than showing appreciable improvement, programs are 

experiencing recurring problems with cost overruns, missed deadlines, 

and performance shortfalls. 

A Mandate for Change 

Dollars Available for 

Weapons Will Face 

Serious Budget 

Pressures 

As I have testified previously, our nation is on an imprudent and 

unsustainable fiscal path. Budget simulations by GAO, the Congressional 

Budget Office, and others show that, over the long term, we face a large

and growing structural deficit due primarily to known demographic 

trends, rising health care costs, and lower federal revenues as a 

percentage of the economy. Continuing on this path will gradually erode, if 

not suddenly damage, our economy, our standard of living, and ultimately 

our national security. Federal discretionary spending, along with other 

federal policies and programs, will face serious budget pressures in the 

coming years stemming from new budgetary demands and demographic 

trends. Defense spending falls within the discretionary spending accounts. 

Further, current military operations, such as those in Afghanistan and Iraq, 

consume a large share of DOD budgets and are causing faster wear on 

existing weapons. Refurbishment or replacement sooner than planned is 

putting further pressure on DOD’s investment accounts. 

It is within this context that we must engage in a comprehensive and

fundamental reexamination of new and ongoing investments in our 

nation’s weapons systems. Weapons systems are one of the single largest 

investments the federal government makes. In the last 5 years, DOD has 

doubled its planned investments in new systems from about $700 billion in

2001 to nearly $1.4 trillion in 2006. Annual procurement totals are 

Page 2 GAO-06-585T
Defense Acquisitions

expected by DOD to increase from about $75 billion to about $100 billion 

during 2006 to 2011. 

Programs Are Seeking 

Larger Budgets 

At the same time DOD is facing future budget constraints, programs are 

seeking larger budgets. To illustrate, the projected cost of DOD’s top five 

programs in fiscal year 2001 was about $291 billion. In 2006, it was 

$550 billion1

. A primary reason why budgets are growing is that DOD is 

undertaking new efforts that are expected to be the most expensive and 

complex ever. Moreover, it is counting on these efforts to enable 

transformation of military operations. The Army, for example, is 

undertaking the Future Combat Systems (FCS) program in order to enable

its combat force to become lighter, more agile, and more capable. FCS is

comprised of a family of weapons, including 18 manned and unmanned 

ground vehicles, air vehicles, sensors, and munitions, which will be linked 

by an information network. These vehicles, weapons, and equipment will 

comprise the majority of the equipment needed for a brigade combat team

in the future. When considering complementary programs, projected 

investment costs for FCS are estimated on the order of $200 billion. 

Affordability of the FCS programs depends on two key assumptions. First, 

the program must proceed without exceeding its currently projected costs. 

Second, FCS has expected large annual procurement costs beginning in 

2012. FCS procurement will represent 60 to 70 percent of Army 

procurement from fiscal years 2014 to 2022. As the Army prepares the next

Defense Plan, it will face the challenge of allocating sufficient funding to 

meet increasing needs for FCS procurement in fiscal years 2012 and 2013.

If all the needed funding cannot be identified, the Army will have to 

consider reducing the FCS procurement rate or delaying or reducing items 

to be spun out to current Army forces. 

At the same time, the Air Force is undertaking two new satellite programs 

that are expected to play a major role in enabling FCS and other future 

systems. The Transformational Satellite Communications System, which is 

to serve as a linchpin in DOD’s future communications network, and 

Space Radar, which is focused on generating volumes of radar imagery 

data for transmission to ground-, air-, ship-, and space-based systems. 

Together, these systems are expected to cost more than $40 billion. The 

 1

The top five programs in 2001 were: the F-22A Raptor aircraft, DDG 51 class destroyer 

ship, Virginia class submarine, C-17 Globemaster airlift aircraft, and the F/A-18 E/F Super 

Hornet fighter aircraft. The top 5 programs in 2006 are: the Joint Strike Fighter aircraft, 

Future Combat Systems, Virginia class submarine, DDG 51 class destroyer ship, and the F22A Raptor aircraft. 

Page 3 GAO-06-585T
Defense Acquisitions

Department has also been focused on modernizing its tactical aircraft 

fleet. These efforts include the Joint Strike Fighter (JSF) aircraft program, 

currently expected to cost more than $200 billion, and the Air Force’s 

F-22A Raptor aircraft, expected to cost more than $65 billion.

Concurrently, the Navy is focused on acquiring new ships and submarines 

with significantly advanced designs and technologies. These include the 

Virginia Class Submarine, expected to cost about $80 billion, and the DDG51 class destroyer ship, expected to cost some $70 billion, and the newer 

DD(X) destroyer program, which is focused on providing advanced land 

attack capability in support of forces ashore and to contribute to U.S. 

military dominance in the shallow coastal water environment. The Navy 

shipbuilding plan requires more funds than may reasonably be expected. 

Specifically, the plan projects a supply of shipbuilding funds that will 

double by 2011 and will stay at high levels for years to follow. 

Despite doubling its investment the past 5 years, our assessments do not 

show appreciable improvement in DOD’s management of the acquisition 

of major weapons systems. A large number of the programs included in

our annual assessment of weapons systems2

 are costing more and taking

longer to develop than estimated. It is not unusual to see development cost 

increases between 30 percent and 40 percent and schedule delays of 

approximately 1, 2 or more years. 

Problematic 

Acquisitions Continue 

to Reduce DOD’s 

Buying Power 

The consequence of cost and cycle-time growth is manifested in a 

reduction of buying power of the defense dollar—causing programs to 

either cut back on planned quantities, capabilities, or to even scrap multibillion dollar programs, after years of effort, in favor of pursing more 

promising alternatives. Figure 1 illustrates seven programs with a 

significant reduction in buying power; we have reported similar outcomes 

in many more programs. This is not to say that the nation does not get 

superior weapons in the end, but that at currently projected twice the level 

of investment, DOD has an obligation to get better results. 

 2

GAO, Defense Acquisitions: Assessments of Selected Major Weapon Programs, 

GAO-06-391 (Washington, D.C.: Mar. 31, 2006). 

Page 4 GAO-06-585T
Defense Acquisitions

Figure 1: Examples of Programs with Reduced Buying Power 

Initial 

estimate Program

Initial 

quantity

Latest 

estimate

Latest 

quantity

Percent of unit 

cost increase 

$189. 8 billion

Joint

Strike 

Fighter

2,866 aircraft $206.3 billion 2,458 aircraft 26.7 

$82.6 billion 15 systems $127.5 billion

$65.4 billion

15 systems 54.4

Future 

Combat 

Systems

$81.1 billion 648 aircraft 181 aircraft 188.7

137.8

F-22A 

Raptor

$15.4 billion 181 vehicles $28.0 billion

$10.2 billion

138 vehicles

Evolved 

Expendable 

Launch 

Vehicle

$4.1 billion 5 satellites 3 satellites 315.4

Space 

Based 

Infrared 

System High

$8.1 billion 1,025 vehicles $11.1 billion 1,025 vehicles 35.9

Expeditionary 

Fighting 

Vehicle

Source: GAO analysis of DOD data. Images sourced in their respecitve order: JSF Program Office; Program Manager, Unit of Action, 

U.S. Army; F-22A System Program Office; (Left) © 2003 ILS/Lockheed Martin, (right) © 2003 The Boeing Company; Lockheed Martin 

Space Systems Company; General Dynamics Land Systems.

Furthermore, the conventional acquisition process is not agile enough to 

meet today’s demands. Congress has expressed concern that urgent 

warfighting requirements are not being met in the most expeditious 

manner and has put in place several authorities for rapid acquisition to 

work around the process. The U.S. Joint Forces Command’s Limited 

Acquisition Authority and the Secretary of Defense’s Rapid Acquisition 

Authority seek to get warfighting capability to the field quicker. According 

to U.S. Joint Forces Command officials, it is only through Limited 

Acquisition Authority that the command has had the authority to satisfy 

the unanticipated, unbudgeted, urgent mission needs of other combatant 

commands. With a formal process that requires as many as 5, 10, or 

Page 5 GAO-06-585T
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15 years to get from program start to production, such experiments are 

needed to meet the warfighters’ needs. 

Our reviews have identified a number of causes behind the problems just 

described, but several stand out. First, DOD starts more weapons 

programs than it can afford and sustain, creating a competition for funding 

that encourages low cost estimating, optimistic scheduling, over 

promising, and suppressing of bad news. Programs focus on advocacy at 

the expense of realism and sound management. Invariably, with too many 

programs in its portfolio, DOD and the Congress are forced to continually 

shift funds to and from programs—undermining well-performing programs 

to pay for poorly performing ones. Adding pressure to this environment 

are changes that have occurred within the defense supplier base. Twenty 

years ago, there were more than 20 fully competent prime contractors 

competing for multiple new programs annually; today, there are only 6 that 

compete for considerably fewer programs, according to a recent DODcommissioned study. This adds pressure on DOD to keep current suppliers 

in business and limits DOD’s ability to maximize competition. 

Underlying Causes of 

Acquisition Problems 

Second, DOD has exacerbated this problem by not clearly defining and 

stabilizing requirements before programs are started. At times, in fact, it 

has allowed new requirements to be added well into acquisition cycle—

significantly stretching technology and creating design challenges, and 

exacerbating budget overruns. For example, in the F-22A program, the Air 

Force added a requirement for air-to-ground attack capability. In its Global 

Hawk program, the Air Force added both signals intelligence and imagery

intelligence requirements. While experience would caution DOD not to 

pile on new requirements, customers often demand them fearing there 

may not be another chance to get new capabilities since programs can 

take a decade or longer to complete. Yet, perversely, such strategies delay 

delivery to the warfighter, oftentimes by years. 

Third, DOD commits to its programs before it obtains assurance that the 

capabilities it is pursuing can be achieved within available resources and 

time constraints. Funding processes encourage this approach, since 

acquisition programs attract more dollars than efforts concentrating solely 

on proving out technologies. Nevertheless, when DOD chooses to extend 

technology invention into acquisition, programs experience technical 

problems that have reverberating effects and require large amounts of time 

and money to fix. When programs have a large number of 

interdependencies, even minor technical “glitches” can cause disruptions. 

Only 10 percent of the programs in our latest annual assessment of 

Page 6 GAO-06-585T
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weapons systems had demonstrated critical technologies to best practice 

standards at the start of development; and only 23 percent demonstrated 

them to DOD’s standards.3

 The cost effect of proceeding without 

completing technology development before starting an acquisition can be

dramatic. For example, research, development, test and evaluation costs 

for the programs included in our review that met best practice standards 

at program start increased by a modest average of 4.8 percent over the 

first full estimate, whereas the costs for the programs that did not meet 

these standards increased by a much higher average of 34.9 percent over 

the first full estimate. 

Fourth, officials are rarely held accountable when programs go astray. 

There are several reasons for this, but the primary ones include the fact 

that DOD has never clearly specified who is accountable for what, 

invested responsibility for execution in any single individual, or even 

required program leaders to stay until the job is done. Moreover, program 

managers are not empowered to make go or no-go decisions, they have 

little control over funding, they cannot veto new requirements, and they 

have little authority over staffing. Because there is frequent turnover in 

their positions, program managers also sometimes find themselves in the

position of having to take on efforts that are already significantly flawed. 

Likewise, contractors are not always held accountable when they fail to

achieve desired acquisition outcomes. In a recent study,4

 for example, we 

found that DOD had paid out an estimated $8 billion in award fees on 

contracts in our study population regardless of outcomes. In one instance, 

we found that DOD paid its contractor for a satellite program—the SpaceBased Infrared System High—74 percent of the award fee available, or 

$160 million, even though research and development costs increased by 

more than 99 percent, the program was delayed for many years and was 

rebaselined three times.5

 In another instance, DOD paid its contractor for 

 3

DOD’s policy states technologies should be demonstrated in at least a relevant 

environment before a program enters system development; whereas, GAO utilizes the best 

practice standard that calls for technologies to be demonstrated one step higher—

demonstration in an operational environment.

4

GAO, Defense Acquisitions: DOD Has Paid Billions in Award and Incentive Fees 

Regardless of Outcomes, GAO-06-66 (Washington, D.C.: Dec. 19, 2005). 

5

When calculating the percentage of award fee paid (i.e., percentage of award fee paid =

total fee paid to date / (total fee pool – remaining fee pool)), we included rolled-over fees in 

the remaining fee pool when those fees were still available to be earned in future

evaluation periods. 

Page 7 GAO-06-585T
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the F-22A aircraft more than $848 million, 91 percent of the available 

award fee, even though research and development costs increased by 

more than 47 percent, the program has been rebaselined 14 times, and 

delayed by more than 2 years. 

Fifth, these strategies work, because they win dollars. DOD and 

congressional funding approval reinforces these practices and serves to 

undercut reform efforts. Stated differently, typically no one is held 

accountable for unacceptable outcomes and there are little or no adverse

consequences for the responsible parties. This is a shared responsibility of 

both the executive and legislative branches of government. 

Of course, there are many other factors that play a role in causing 

weapons programs to go astray. They include workforce challenges, poor 

contractor oversight, frequent turnover in key leadership, and a lack of 

systems engineering, among others. Moreover, many of the business 

processes that support weapons development—strategic planning and 

budgeting, human capital management, infrastructure, financial 

management, information technology, and contracting—are beset with 

pervasive, decades-old management problems, including outdated 

organizational structures, systems, and processes. In fact, these areas—

along with weapons system acquisitions—are on GAO’s high risk list of 

major government programs and operations. 

DOD has long recognized such problems and initiated numerous 

improvement efforts. In fact, since 1949, more than 10 commissions have 

studied issues such as long cycle time and cost increases as well as 

deficiencies in the acquisition workforce. This committee just last week 

heard testimony regarding several of them.6

 Among these recent studies, 

there is a consensus that DOD needs to instill much stronger discipline 

into the requirements setting process, prioritize its investments, seek 

additional experienced and capable managers, control costs, strengthen 

accountability, and enhance the basis for enterprise-wide decision making. 

In response to past studies and recommendations, including our own, 

DOD has taken a number of acquisition reforms. Specifically, DOD has 

restructured its acquisition policy to incorporate best practices as the 

suggested way of doing business. For example, policies embrace the 

 6

House Armed Services Committee, “Hearing on Department of Defense Acquisition 

Reform,” (Washington, D.C.: Mar. 29, 2006)

Page 8 GAO-06-585T
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concept of closing gaps between requirements and resources before 

launching new programs. DOD is also reviewing changes to requirements 

setting. DOD has also strengthened training for program managers, 

required the use of independent cost estimating, reemphasized the 

discipline of systems engineering, and tried extracting better performance 

from contractors—by alternately increasing and relaxing oversight. 

While all of these steps are well-intentioned, recent policy statements, 

such as the Quadrennial Defense Review (QDR), and decisions on 

individual programs have fallen far short of the needed fundamental 

review reassessment, repriortization and reengineering efforts. For 

example, the Office of the Secretary of Defense (OSD) does not seem to be 

pushing for dramatic and fundamental reforms in its acquisition process. 

In fact, it has either disagreed with recommendations we have made over

the past year or claimed that it was already addressing them. These 

include reports on specific systems such as JSF, the Missile Defense 

program, FCS, and Global Hawk as well as reports on cross-cutting issues, 

such as DOD’s rebaselining practices, acquisition policy, and support for 

program managers. We believe DOD’s recently issued QDR did not lay out 

a long term, resource constrained, investment strategy. In fact, the gap 

between wants, needs, affordability and sustainability seems to be greater 

than ever. 

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 tradeoff decisions as to which programs should be 

pursued, and more importantly, not pursued, making sure programs are 

executable, locking in requirements before programs are ever started, and

making it clear who is responsible for what and holding people 

accountable when these responsibilities are not fulfilled. These changes 

will not be easy to make. They require DOD to reexamine the entirety of 

its acquisition process—what we think of as the “Big A”. This includes 

making deep-seated changes to program requirements setting, funding,

and execution. It also involves changing how DOD views success, and 

what is necessary to achieve success. 

Solutions 

Page 9 GAO-06-585T
The first, and most important, step is implementing a revised DOD-wide 

investment strategy for weapons systems. In a recent study on program 

management best practices,7

 we recommended that DOD determine the 

priority order of needed capabilities based on assessments of the 

resources—that is dollars, technologies, time, and people needed to 

achieve these capabilities. We also recommended that capabilities not 

designated as a priority should be set out separately as desirable but not 

funded unless resources were both available and sustainable.

DOD’s Under Secretary of Defense for Acquisition Technology and 

Logistics—DOD’s corporate leader for acquisition—should develop this 

strategy in concert with other senior leaders, for example, combatant 

commanders who would provide input on user needs; DOD’s comptroller; 

science and technology leaders, who would provide input on available 

resources; and acquisition executives from the military services, who 

could propose solutions. Finally, once priority decisions are made, 

Congress will need to enforce discipline through various authorization and 

appropriation decisions.

Table 1: Steps That Can Be Taken for Developing an Investment Strategy for 

Acquiring New Systems 

Who 

Under Secretary of Defense for Acquisition, Technology and Logistics in

concert with other senior officials 

Action • Analyze customer needs vs. wants based on available technology and 

available resources

• Compare analysis to DOD’s long-term vision 

• Determine priorities for acquisitions based on this comparison

• Separate other programs as “desirable,” resources permitting 

• Enforce funding for priorities annually; measure success against the plan 

Buy the Right Thing: 

Develop and Implement an 

Investment Strategy 

Buy the Right Way: Ensure 

Individual Programs Are 

Executable 

Once DOD has prioritized capabilities, it should work vigorously to make 

sure each new program is executable before the acquisition begins. This is

the “little a.” More specifically, this means assuring requirements are 

clearly defined and achievable given available resources and that all 

alternatives have been considered. System requirements should be agreed

 7

GAO, Best Practices: Better Support of Weapon System Program Managers Needed to

Improve Outcomes, GAO-06-110 (Washington, D.C.: Nov. 30, 2005). 

Page 10 GAO-06-585T Defense Acquisitions
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to by Service Acquisition Executives as well as Combatant Commanders. 

Once programs begin, requirements should not change without assessing 

their potential disruption to the program and assuring that they can be

accommodated within time and funding constraints. In addition, DOD 

should prove that technologies can work as intended before including 

them in acquisition programs. This generally requires a prototype to be 

tested in an operational environment. More ambitious technology 

development efforts should be assigned to the science and technology 

community until they are ready to be added to future generations of the 

product. DOD should also require the use of independent cost estimates as 

a basis for budgeting funds. Our work over the past 10 years has 

consistently shown when these basic steps are taken, programs are better 

positioned to be executed within cost and schedule. 

To further ensure that programs are executable, DOD should pursue an 

evolutionary path toward meeting user needs rather than attempting to 

satisfy all needs in a single step. This approach has been consistently used 

by successful commercial companies we have visited over the past decade 

because it provides program managers with more achievable

requirements, which, in turn, would facilitate shorter cycle times. With 

shorter cycle times, the companies we have studied have also been able to 

assure that program managers and senior leaders stay with programs 

throughout the duration of a program. DOD has policies that encourage 

evolutionary development, but programs often favor pursuing more exotic

solutions that will attract funds and support. 

Lastly, to keep programs executable, DOD should demand that all go/nogo decisions be based on quantifiable data and demonstrable knowledge. 

These data should cover critical program facets such as cost, schedule, 

technology readiness, design readiness, production readiness, and 

relationships with suppliers. Development should not be allowed to 

proceed until certain thresholds are met, for example, a high percentage of 

engineering drawings completed at critical design review. DOD’s current 

policies encourage these sorts of metrics to be used as a basis for decision 

making, but they do not demand it. DOD should also place boundaries on 

time allowed for specific phases of development and production. 

Page 11 GAO-06-585T
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Table 2: Steps That Can Be Taken for Making Sure Programs are Executable 

Who Military services and joint developers with support from USD AT&L 

Action • Keep technology discovery/invention out of acquisition programs

• Follow an incremental path toward meeting user needs; assure all 

alternatives are considered

• Ensure system requirements are agreed to by service acquisition executives

and warfighters and that no additional requirements are added during 

execution unless they are fully resourced 

• Use systems engineering to close gaps between requirements and 

resources prior to launching the development process

• Require the use of independent cost estimates as a basis for budgeting 

funds; update cost estimates annually and track against the original baseline 

estimate 

• Use earned value data at each systems engineering technical review in order 

to track program progress against original baseline estimates

• Use quantifiable data and demonstrable knowledge to make decisions to 

move to next phases

• Employ additional management reviews when deviations of cost or schedule

exceed a certain level (e.g. 10 percent) against baseline estimates. 

• Place boundaries on time allowed for specific phases of development 

Hold People Accountable To strengthen accountability, DOD will need to clearly delineate 

responsibilities among those who have a role in deciding what to buy as 

well as those who have role in executing, revising, and terminating 

programs. Within this context, rewards and incentives will need to be 

altered so that success can be viewed as delivering needed capability at 

the right price and the right time, rather than attracting and retaining 

support for numerous new and ongoing programs. After all, given our 

current and projected fiscal imbalances, every dollar spent on a want 

today may not be available for an important need tomorrow. To enable

accountability to be exercised at the program level, DOD will also 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 for run 

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 

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oversight as well as to reduce the time required to prepare status 

information. 

DOD also should hold contractors accountable for results. As we have 

recently recommended, this means structuring contracts so that incentives 

actually motivate contractors to achieve desired acquisition outcomes and 

withholding award fees when those goals are not met. In addition, DOD 

should collect data that will enable it to continually assess its progress in 

this regard. 

Table 3: Steps That Can Be Taken to Instill Accountability 

Who The Secretary of Defense and military service secretaries 

Actions • Make it clear who is accountable on a program for what, including program 

managers, their leaders, stakeholders, and contractors

• Hold people accountable when these responsibilities are not met 

• Require program managers and others, as appropriate, to stay with 

programs until a product is delivered or for system design and

demonstration

• Empower program managers to execute their programs so that they can be 

accountable; strengthen training and career paths as needed to ensure that 

qualified program managers are being assigned 

• Improve the use of award fees in order to hold contractors accountable

In closing, the past year has seen several defense reviews that include new 

proposed approaches to improve the way DOD buys weapons. These 

reviews contain many constructive ideas. If they are to produce better 

results, however, they must heed the lessons taught—but perhaps not 

learned—by acquisition history. Specifically, DOD must separate needs 

from wants in the context of the nation’s greater fiscal challenges. Policy

must also be manifested in decisions on individual programs or reform will 

be blunted. DOD’s current acquisition policy is a case in point. The policy 

supports a knowledge-based, evolutionary approach to acquiring new 

weapons. The practice—decisions made on individual programs—

sacrifices knowledge and executability in favor of revolutionary solutions. 

It’s time to challenge such solutions. Reform will not be real unless each 

weapons system is shown to be both a worthwhile investment and an 

executable program. Otherwise, we will continue to start more programs 

than we can finish, produce less capability for more money, and create the 

next set of case studies for future defense reform reviews. 

Mr. Chairman and Members of the Committee, this concludes my 

statement. I will be happy to take any questions. 

Page 13 GAO-06-585T
In preparing for this testimony, we relied on previously issued GAO 

reports and analyzed recent acquisition reform studies from various 

organizations. We conducted our review between March 20 and 

April 5, 2006, in accordance with generally accepted government 

auditing standards. 

Scope and 

Methodology 

120542 

Page 14 GAO-06-585T Defense Acquisitions
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