a

GAO

United States Government Accountability Office

Report to the Chairman, Subcommittee 

on Tactical Air and Land Forces, 

Committee on Armed Services, House of 

Representatives

March 2005 DEFENSE 

ACQUISITIONS

Changes in E-10A 

Acquisition Strategy 

Needed before 

Development Starts

GAO-05-273
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-273.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Michael 

Sullivan at (202) 512-4841 or 

sullivanm@gao.gov. 

Highlights of GAO-05-273, a report to the 

Chairman, Subcommittee on Tactical Air 

and Land Forces, Committee on Armed 

Services, House of Representatives 

March 2005

DEFENSE ACQUISITIONS 

Changes in E-10A Acquisition Strategy 

Needed before Development Starts 

As the E-10A Multi-sensor Command and Control Aircraft program nears its 

official starting point, questions remain regarding critical elements of its 

business case, including the need for the aircraft, the maturity level of its 

technology, and its funding. Plans call for the E-10A to couple a new radar 

system with a sophisticated and software intensive battle management 

command and control system aboard a Boeing 767. E-10A is planned to fill a 

current gap in U.S. capabilities and provide a defense against weapons such 

as cruise missiles. The Office of the Secretary of Defense is still working on a

study to determine whether the E-10A program is the most cost-effective 

way to fill that gap. E-10A program funding plans changed dramatically in 

December 2004 when the DOD proposed reducing the total program budget 

by about 45 percent for the next 2 fiscal years. The business case for starting 

a development program requires demonstrated evidence that (1) the 

warfighter need exists and that it can best be met with the chosen concept 

and (2) the concept can be developed and produced within existing 

resources--including design knowledge, demonstrated technologies, 

adequate funding, and adequate time to deliver the product. E-10A 

requirements and resources are still in flux. 

GAO found risks associated with the current E-10A acquisition strategy that 

could lead to costly changes later in the program. The program is set to 

move into production before critical knowledge is acquired. For example, 

the first fully assembled E-10A, outfitted with its radar and battle 

management command and control systems, would not be delivered in time 

to complete testing before the decision is made to begin production. Testing 

and production are scheduled to start at the same time in 2010. Furthermore, 

four of six E-10As are scheduled to begin production before the results of 

testing are available. By not demonstrating that the system can perform as 

expected before entering production, the program increases the risk of 

changes and delays later in the program. This strategy requires significant 

concurrency among the technology development, product development, and 

production phases. 

E-10A Acquisition Strategy 

Production

Product development

Technology development

Program

Start

Integration Demonstration

Critical

design review

Production

decision

First fully integrated E-10A

ready to begin reliability testing

Source: GAO analysis of Air Force data.

The Air Force is on the verge of 

making a major commitment to the 

multi-billion dollar E-10A Multisensor Command and Control 

Aircraft program. Due to the 

substantial investment needed and 

technological challenges in 

developing the aircraft, the 

Subcommittee on Tactical Air and 

Land Forces asked GAO to 

examine the soundness of the 

E-10A business case as well as the 

risks associated with the current 

acquisition strategy. 

What GAO Recommends

GAO recommends that the 

Secretary of Defense ensure that 

open questions about the E-10A 

business case are answered before 

the program advances into the 

development and demonstration 

phase and officially begins. GAO 

also recommends that if the E-10A 

program goes forward adequate 

time be allotted to test a prototype 

before moving into production. 

DOD concurred with the first 

recommendation, but noted that 

the questions may not be resolved 

until the Milestone B decision, 

which could now be delayed until 

2010. DOD partially concurred 

with the second recommendation, 

stating that DOD policy did not 

require demonstration of a design 

at that point in the acquisition 

process. GAO disagrees with this 

interpretation. 
Page i GAO-05-273 E-10A Acquisition Strategy 

Letter 1

Results in Brief 2 

Background 3 

Uncertainties Exist in E-10A Business Case as It Approaches Its 

Decision Point 5 

E-10A Acquisition Strategy Does Not Capture Critical Knowledge 

before Program Decision Points 10 

Conclusions 13 

Recommendations for Executive Action 14 

Agency Comments and Our Evaluation 14 

Appendix I Scope and Methodology 17 

Appendix II Comments from the Department of Defense 19 

Figures 

Figure 1: Comparison of E-10A Strategy and Best Practices Model 11 

Figure 2: E-10A Test and Production Schedule 12 

Abbreviations 

DOD Department of Defense 

OSD Office of the Secretary of Defense 

Contents 

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Page 1 GAO-05-273 E-10A Acquisition Strategy 

March 15, 2005 

The Honorable Curt Weldon 

Chairman 

Subcommittee on Tactical Air and Land Forces 

Committee on Armed Services 

House of Representatives 

Dear Mr. Chairman: 

In April 2005, the Air Force plans to make a major commitment to the 

E-10A Multi-sensor Command and Control Aircraft (E-10A) program and 

officially begin its development and demonstration phase. The program, 

estimated to cost over $7.3 billion through fiscal year 2013, is being 

designed to fill a gap in U. S. capabilities and provide a defense against 

weapons such as cruise missiles. It is also being designed to be an airborne 

battle management platform capable of directing forces to respond to 

moving targets in the air and on the ground. Given the technical challenges 

and significant investment associated with this aircraft, you requested that 

we review the E-10A program to determine whether its business case is 

clearly defined and its acquisition process is well executed. This report 

examines (1) the soundness of the Air Force’s business case1

 including 

E-10A requirements, technologies, and cost; and (2) the risks associated 

with the planned acquisition strategy. 

Because the E-10A is not officially a weapons system acquisition program 

until the Milestone B2

 decision has been approved, the Air Force 

considered key elements of the business case as pre-decisional and subject 

to change. Therefore, we did not have the opportunity to review all 

 1

 The business case is defined as demonstrated evidence that (1) the warfighter need exists 

and that it can best be met with the chosen concept, and (2) the concept can be developed 

and produced within existing resources—including design knowledge, demonstrated 

technologies, adequate funding, and adequate time to deliver the product. 

2

Milestone B is the entrance point for the system development and demonstration phase, 

which is considered the initiation of a major defense systems acquisition program. It 

requires authorization by the Milestone Decision Authority based on advice from seniorlevel advisors on the Defense Acquisition Board. The Defense Acquisition Board meeting to 

discuss the E-10A Milestone B is scheduled for April 12, 2005. Department of Defense 

Instruction 5000.2, Operation of the Defense Acquisition System, Paragraph 3.7, System 

Development and Demonstration, Subparagraphs 3.7.1.2 and 3.7.2.3. 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-273 E-10A Acquisition Strategy 

elements related to the critical E-10A technology assessments, the cost 

estimate, or the funding profile. The Air Force did provide, however, a 

technology readiness assessment of the radar subsystem, the planned 

overall acquisition strategy, and the analysis of alternatives supporting the 

selection of the specific E-10A aircraft platform. Despite these limitations, 

we were able to assess the relative state of the E-10A business case as 

compared to the expectations of best practices. We did this by drawing on 

other information available that indicated the current instability of 

estimated cost and funding and that questioned the maturity of the 

technology associated with a key subsystem. We conducted this review 

from January 2004 to January 2005 in accordance with generally accepted 

government auditing standards. More details about our methodology are in 

appendix I. 

Questions remain in the E-10A business case over it being the most 

cost-effective solution as well as its technology maturity, cost, and 

funding. Officials in the Office of the Secretary of Defense (OSD) are still 

studying E-10A alternatives to determine if it is the most cost-effective way 

to satisfy the planned mission to identify, track, and target time-sensitive 

threats like cruise missiles.3

 The study is also assessing on board 

command and control needs. Current plans are for 25 crew to carry out 

mission requirements and 2 crew to fly the aircraft. The OSD expects to 

present the results of the study by March 2005. We found that radar 

technologies are ready for system development, but because the readiness 

assessment of the battle management technologies was not finalized, there 

was no evidence that these technologies were sufficiently mature. Review 

organizations within the Air Force and OSD are examining Air Force 

assessments of technology maturity and costs as well as the annual 

allocation of funds needed to develop and produce the E-10A. We were not 

able to review these assessments because they were not yet complete. 

Program officials also stated that the December 2004 reduction of $600 

million in E-10A funding proposed by OSD will require significant changes 

to the business case because it would reduce planned funding for the total 

program by about 45 percent in fiscal years 2006 and 2007. The Air Force 

is determining how this will impact the program schedule and costs as it 

will likely cause them to truncate key activities in these years. An OSD 

 3

 A time-sensitive target is a target of such high priority that it requires an immediate 

response, either because it poses a danger to friendly forces or it is a highly lucrative, 

fleeting target of opportunity. 

Results in Brief 
Page 3 GAO-05-273 E-10A Acquisition Strategy 

official said the reduction will likely slow development of the E-10A 

airframe activities because the available funds will need to be applied to 

the radar improvement program that is also supporting the Global Hawk 

program. 

The Air Force acquisition strategy for acquiring the E-10A calls for moving 

through development and into production before critical knowledge is 

captured about design, manufacturing, and reliability. For example, the 

strategy does not allow for adequate product integration and prototype 

demonstration to ensure the design is stable at the critical design review 

stage. Additionally, a fully integrated prototype—a working model of the 

E-10A with the radar system and command and control computer system 

working together—will not be delivered in time to allow testing prior to 

the production decision. Both testing and production are scheduled to 

concurrently start in 2010. By not demonstrating the system can perform 

as expected before entering production, the program risks costly design 

changes and delays later in the program. Furthermore, four of six E-10As 

are scheduled to begin production before testing is completed. We have 

found this to be consistently a high-risk acquisition approach in our past 

reviews of Department of Defense (DOD) acquisitions. 

We are making recommendations to the Secretary of Defense to ensure 

that the open business case questions are answered before starting the 

E-10A program. We also recommend that the Secretary direct the Air 

Force to revise the acquisition strategy to ensure sufficient time to 

integrate and demonstrate the design in flight testing of an E-10A 

prototype before moving the program into production. DOD concurred 

with our first recommendation, but noted that the open questions will not 

be fully resolved until the Milestone B decision, which could be delayed 

until 2010 due to recent budget reductions. DOD partially concurred with 

our second recommendation. It stated that DOD policy did not require 

integration and demonstration of a design prior to critical design review. 

We disagree with this interpretation because DOD policy requires a 

demonstration of the integrated prototype prior to entering demonstration. 

Nevertheless, DOD acknowledged that it is restructuring the program to 

demonstrate the key technologies in a prototype prior to starting system 

development and demonstration. 

The E-10A program comprises three primary elements: the aircraft, radar, 

and battle management command and control subsystem. The aircraft is a 

Boeing 767-400ER, the largest 767 variant Boeing makes. The Air Force 

has only contracted for one aircraft to date, because a final decision on the 

Background 
Page 4 GAO-05-273 E-10A Acquisition Strategy 

operational platform has not been made. This aircraft is a commercial 

product that will be modified for military use and used as a testbed. At this 

time there is only 1 unfilled order for the 400 model in the Boeing 

assembly line and 25 other unfilled orders for other smaller 767 models.4

 If 

the Boeing production line were to close down before the Air Force is 

positioned to make a production decision on the E-10A it would have to 

find an alternative. Alternatives could include a different aircraft type or 

model or the purchase of 767-400ER aircraft from commercial airline 

companies. 

The radar planned for the E-10A began development in 1997 as a response 

to the growing concern about cruise missile proliferation. Initially, it was 

intended to upgrade the radar on the Joint Surveillance Target Attack 

Radar System (Joint STARS). The upgraded radar was to have advanced 

sensor technology, providing air-to-air capability for cruise missile defense 

and significant increases in ground surveillance capability. Shortly after 

the program began development, the Air Force restructured the program 

to develop a modular, scalable radar suitable for use on a variety of 

airborne platforms. OSD approved the development of the multiple 

platform radar in 2003. It is being designed for inclusion on the Global 

Hawk and E-10A programs. 

The Air Force began evaluating the need to improve its airborne battle 

management command and control capabilities in 2002. The planned 

E-10A battle management command and control subsystem is software 

intensive and intended to enable the E-10A to process and display sensor 

data from the radar and eventually from off board sensors so that the 

onboard crew can take actions against time sensitive targets. The Air 

Force issued a contract in September 2004 to begin preliminary design 

efforts for this subsystem. 

We have a body of work focused on best practices in product development 

and weapon systems acquisition.5

 This work has found that key to success 

is formulation of a business case that matches product requirements to 

 4

 Source: Boeing Website, http://www.boeing.com. 

5

 GAO, Defense Acquisitions: DOD’s Assessments of Major Weapon Programs, 

GAO-04-248 (Washington, D.C.: Mar. 31, 2004). Other recent reports discussing best

practices include GAO, Best Practices: Capturing Design and Manufacturing Knowledge 

Early Improves Acquisition Outcomes, GAO-02-701 (Washington, D.C.: July 15, 2002) and 

Defense Acquisitions: DOD Faces Challenges in Implementing Best Practices, 

GAO-02-469T (Washington, D.C.: Feb. 27, 2002). 
Page 5 GAO-05-273 E-10A Acquisition Strategy 

available resources—proven technologies, sufficient engineering 

capabilities, time, and funding. Several basic factors are critical to 

establishing a sound business case for undertaking a new product 

development. First, the needs of the party seeking the new product, the 

user, must be accurately defined, alternative approaches to satisfying 

these needs properly analyzed, and quantities needed for the chosen 

system must be well understood. The developed product must be 

producible at a cost that matches the users’ expectations and budgetary 

resources. Finally, the developer must have the resources to design and 

deliver the product with the features that the customer wants when it is 

needed. If the financial, material and intellectual resources to develop the 

product properly are not available, development does not go forward. 

Additionally, an evolutionary and knowledge-based acquisition strategy 

that captures critical knowledge before key decision points in the program 

is needed to execute the business plan. This calls for a realistic assessment 

of risks and costs; doing otherwise undermines the intent of the business 

case and invites failure. Ultimately, preserving the business case and 

attaining critical knowledge in time for decisions strengthens the ability of 

managers to say “no” to pressures to accept high risks or unknowns. 

If best practices are not followed, we have found a cascade of negative 

effects becomes magnified in the product development and production 

phases of an acquisition program. These have led to acquisition outcomes 

that included significant cost increases and schedule delays, poor product 

quality and reliability, and delays in getting the new capability to the 

warfigher. These outcomes have been demonstrated in other programs 

such as the F/A-22 fighter, C-17 airlifter, V-22 tiltrotor aircraft, PAC-3 

missile, and others. 

Questions remain as the Air Force develops the E-10A program’s business 

case to support the decision to begin development in April 2005. The DOD 

has identified a need for a cruise missile defense capability and the Air 

Force has selected the E-10A to meet this need. There are, however, 

unanswered questions in both the requirement and resource elements of 

the E-10A business case. OSD is still studying whether the E-10A is the 

most cost-effective alternative for the cruise missile requirement and the 

extent of battle management command and control needed on board to 

satisfy the intended need. Finally, assessments of the technology maturity, 

estimated costs, and funding availability are still in process. 

Uncertainties Exist in 

E-10A Business Case 

as It Approaches Its 

Decision Point 
Page 6 GAO-05-273 E-10A Acquisition Strategy 

OSD officials from the Program Analysis and Evaluation Directorate are 

not satisfied that the studies done by the Air Force to select the E-10A 

sufficiently analyzed alternative systems.6

 As a result, they are reviewing 

alternative systems and attempting to determine the most cost-effective 

solution to satisfy the warfighter’s needs. OSD officials agree that the E10A could provide an increased capability in identifying and tracking 

ground moving and time-sensitive targets. However, they believe that if 

there are less costly systems that can provide similar capabilities, it could 

be more cost-effective to buy those systems. The Air Force began efforts 

in 1997 to develop a radar sensor that would detect cruise missiles as part 

of the Joint STARS program. The Air Force examined different size and 

power combinations for the radar and which platforms had the capacity to 

carry the radar and still perform multiple missions. These analyses 

assumed that only manned airborne platforms could meet these 

requirements. The Air Force completed a formal analysis of alternatives in 

February 2002 of different possible host platforms for the radar. The study 

indicated that other aircraft could meet many of the requirements but 

were based on older commercial technology that was less efficient to 

operate. The Air Force analysis concluded that the Boeing 767-400ER was 

the optimal choice given the future multi-mission purpose of the system, 

and the size, weight, and performance requirements of the radar. 

OSD officials are also uncertain about the degree of battle management 

command and control capability needed onboard the E-10A versus 

transmitting the information gathered by the E-10A to other command and 

control centers. According to the Air Force, the need for an onboard 

capability is driven by the large amounts of data that would be collected 

and analyzed, the limited bandwidth to transmit the data, and the need to 

have line-of-sight communications for time-sensitive targeting, particularly 

against cruise missiles. OSD officials said they are looking at whether the 

battle management subsystem has to be part of the E-10A platform to meet 

the timelines identified by the Air Force. They expect to present their 

results by March 2005. Air Force officials told us that some of the battle 

management functions are currently performed by ground units, but these 

ground units cannot adequately respond to real-time events involving 

 6

 Both the Air Force and the Joint Theater Air and Missile Defense Organization conducted 

analyses to assess future mixtures of systems, including the E-10A. Both studies 

determined that if the E-10A performs as expected it could significantly increase the 

capability of the warfighters. However, the Air Force study focused only on ground-moving 

target indication and the Joint Theater Air and Missile Defense Organization focused 

primarily on cruise missile defense. 

OSD Is Still Studying the 

Need for the E-10A 
Page 7 GAO-05-273 E-10A Acquisition Strategy 

moving targets like cruise missiles. The E-10A’s primary function will be 

battle management command and control of cruise missile detection and 

time-sensitive targeting activities. As a result, its battle management 

capabilities will be tailored to support those functions. These capabilities 

were validated in October 2004 by the Joint Requirements Oversight 

Council in preparation for the program’s upcoming Milestone B decision. 

To provide these capabilities, an onboard crew will be required. The 

current E-10A crew size is estimated at 27 staff—2 flight crew, 21 mission 

operators, and 4 technicians. According to the Air Force, the crew size 

could change depending on the mission and the degree of automation on 

the system. However, the Air Force has not performed any incremental 

analysis to show crew size for individual specific missions, such as doing 

cruise missile defense only. 

To date, the Air Force has not identified sufficient or available resources 

to meet the warfighter’s requirements and to start the development 

program. The Air Force program office has completed its assessments of 

E-10A critical technologies, cost estimates, and funding needs but these 

assessments are being reviewed by OSD. While some resources will meet 

the requirements, others are either unproven or in a state of flux. Radar 

development started under a separate program, the Radar Technology 

Insertion Program, and most radar technologies were reported as mature. 

Because the Air Force did not provide GAO its technical assessment of the 

battle management command and control system critical technologies, we 

consider the maturity levels unproven, even though program officials told 

us these technologies meet minimum maturity standards. In addition to 

technologies, the financial resources for the program are in a state of flux. 

The E-10A cost estimate for development and production is still a work in 

process and funding was recently reduced by $600 million for fiscal years 

2006 and 2007, which according to DOD officials will substantially impact 

the program. 

Most radar technologies are at a high level of maturity, but evidence was 

not provided to support stated maturity levels of the battle management 

command and control subsystem. The Air Force assessed radar 

technologies prior to the October 2003 start of the Radar Technology 

Insertion Program. The critical technologies identified in the radar 

improvement program included the radar architecture, modes, 

receiver/exciter, and signal processor among others. Of the nine 

technologies identified, six were assessed as mature to our best practice 

standard; the remaining three were one level below the best practice 

Assessments of Needed 

Resources to Develop and 

Produce the E-10A Are 

Incomplete 

Status of Technologies 
Page 8 GAO-05-273 E-10A Acquisition Strategy 

requirement for mature technologies, a level DOD policy states is 

sufficient to begin development. These three technologies are the pulse 

compression unit, the structure, and the modes. Since the 2003 radar 

technology assessment, the radar improvement program completed its 

final design review in June 2004. Numerous tests have been conducted on 

small-scale radar prototypes to mitigate program risks. These tests 

electronically drove a signal through the radar, demonstrating the basic 

functionality of the design. However, the radar subsystem being designed 

for the E-10A has demonstrated neither form nor fit, nor has it been 

integrated on the aircraft platform. Although the integration process is an 

inherently high-risk endeavor, Air Force officials stated they have a 

process in place to manage these risks. The actual size of the E-10A’s radar 

will be significantly larger than the tested prototype and will require the 

E-10A testbed aircraft in order to complete the demonstration currently 

scheduled to occur in 2010. The process of scaling the radar to the 

appropriate size and ensuring that all the individual modules work 

together has yet to be accomplished. Recognizing this, program officials 

have identified the integration of the radar as a critical technology for the 

E-10A weapon system. The level of this technology’s maturity has not yet 

been finalized. OSD officials accepted the Air Force’s assessment of the 

radar technologies but expect more detailed information on the 

technologies when the E-10A weapon system undergoes its Milestone B 

review in April 2005. 

An assessment of the battle management command and control subsystem 

technologies was not provided for our review. This subsystem is complex 

and software intensive. E-10A program officials told us these technologies 

would meet the minimum DOD standard for starting a program. However, 

the Air Force only recently directed the contractor to begin systems 

engineering efforts to determine a preliminary design for this subsystem. 

Development of critical software needed to demonstrate the technologies 

has not started. The first increment of software is not scheduled to be 

delivered until January 2008. On other major weapon system development 

programs, we have found software development to be a substantial cause 

for delays in technology development, system deliveries, and increased 

costs. Therefore, even though program officials have stated technologies 

are sufficiently mature, we think stronger evidence will be needed to 

demonstrate their claim. 

The Air Force has completed its cost estimate for the total E-10A program 

and released it to OSD for review. The cost estimates for each of the three 

major program elements contain risk. The biggest area of cost uncertainty 

is the battle management command and control subsystem. It is a highly 

Status of Cost Estimate and 

Funding Needs 
Page 9 GAO-05-273 E-10A Acquisition Strategy 

complex software-intensive system. A contract was issued in September 

2004 for about $71 million to begin early design and engineering efforts to 

support a preliminary design review in late 2005. Until this initial design 

and engineering effort is completed, the program will not be able to 

establish high confidence in its estimated costs. In addition, the aircraft 

contract only calls for the delivery of one commercial 767-400ER for 

testing. To convert this aircraft to military use, there will be additional 

costs for installing communication antennas, a refueling receptacle, hull 

hardening, and FAA airworthiness certification. According to the Air 

Force, these costs have been factored into its latest program estimate. The 

initial cost estimate for the radar program, managed separately from the 

E-10A program, has grown. Prior to entering system development, OSD 

determined that projected costs were understated and directed the Air 

Force to increase its funding by $154 million. 

The Air Force acknowledges that funding for the E-10A program is also a 

major concern. Funding cuts have delayed its start. It has undergone two 

congressional budget reductions; the first cut in fiscal year 2003 ($343 

million) required a significant program replanning effort. The second cut 

in fiscal year 2005 ($115 million) resulted in schedule delays for the 

planned test program, system integration lab, testbed aircraft delivery, and 

the E-10A’s first flight. The Air Force states these cuts have caused the 

planned initial operating capability date to slip 3 years to 2015. A third cut, 

recently proposed by OSD in December 2004, reduces the program’s 

budget request by $300 million in both fiscal year 2006 and 2007—a total 

reduction of $600 million. The program office is in the process of 

evaluating the impact of these reductions and officials indicated that 

because these represent a reduction of about 45 percent in each year, they 

will have a significant impact on the program if they are sustained. OSD 

officials indicated that efforts related to aircraft development and the 

delivery of the test aircraft will likely bear the bulk of the reductions. This 

will have an impact on planned program milestones. They said it was 

important to keep the radar program funded because it is developing the 

radar planned for the new Global Hawk unmanned aerial vehicle in 

addition to the E-10A. 
Page 10 GAO-05-273 E-10A Acquisition Strategy 

The E-10A acquisition strategy raises concern as key decisions are planned 

before critical product knowledge is available. For example, the strategy 

for developing the first E-10A increment does not allow for adequate 

integration or prototype demonstration to ensure the design is stable at 

the system critical design review. System integration allows program 

officials to measure the stability of a product’s design and its ability to 

meet established requirements. Both commercial companies and DOD 

recognize the attainment of this knowledge as being demonstrated by the 

completion of most engineering drawings and some demonstration of the 

system level capabilities in a prototype. A stable design that meets 

requirements should be achieved by critical design review, before system 

demonstration and initial manufacturing of production representative 

products begins. However, the Air Force does not expect to deliver the 

battle management command and control and radar subsystems to the 

integration laboratory until 2008 and 2009, after critical design review, 

scheduled in 2007. The transition of the battle management command and 

control and radar subsystems from the integration lab to the 767-400ER 

test airframe is not scheduled to begin until late-2009, nearly 2 years after 

the critical design review and only a few months prior to the program’s 

production commitment decision. As a result, critical knowledge about the 

basic performance of key subsystems integrated into an actual E-10A 

prototype will not occur until 2010 (see fig. 1). 

E-10A Acquisition 

Strategy Does Not 

Capture Critical 

Knowledge before 

Program Decision 

Points 
Page 11 GAO-05-273 E-10A Acquisition Strategy 

Figure 1: Comparison of E-10A Strategy and Best Practices Model 

Note: In the above figure, technology development is extended into production because there are 

several technologies that cannot be assessed as mature until they are actually integrated and flight 

tested. 

Additionally, the fully integrated E-10A prototype will not be available for 

testing prior to the scheduled decision to begin production. This strategy 

requires significant concurrency among the technology development, 

product development, and production phases and places decision makers 

at a disadvantage by not knowing if the E-10A can demonstrate it meets 

system performance and reliability requirements before transitioning into 

production. In fact, the results of operational testing are not scheduled to 

be available until four of the six planned E-10As are already in production 

in 2011, greatly increasing the risks of costly design changes and schedule 

Production

Production

Product development

Product development

Technology development

Technology 

development

Knowledge-based approach

E-10A acquisition strategy

Program

start

Integration

Integration

Demonstration

Demonstration

Critical

design review

Production

decision

Integrated product has 

demonstrated reliability

First fully integrated E-10A

ready to begin reliability testing

Program

start

Critical

design review

Production

decision

Source: GAO analysis of Air Force data.
Page 12 GAO-05-273 E-10A Acquisition Strategy 

delays later in the program (see fig. 2). Our past reviews have found this to 

be a high-risk acquisition approach.7

Figure 2: E-10A Test and Production Schedule 

Note: The schedule depicted above is based on the program plan in effect at the time of our review. 

Since that time, the program’s budget has been reduced, necessitating revisions to this schedule. We 

have not had the opportunity to review the new program plan. 

The Air Force is planning to use an incremental approach to achieve the 

E-10A’s full capability with each subsequent increment adding capability. 

Although an incremental approach can reduce risks, the failure to capture 

critical knowledge while developing the first increment will likely reduce 

the benefits of such an approach. As currently planned there will be four 

distinct E-10A increments. Program officials are planning to conduct 

major program decision reviews prior to beginning development and 

demonstration of each increment. This approach, if implemented as 

planned, will provide decision makers with an opportunity to review the 

program’s progress and risk before making further investment decisions 

thus reducing risk in the program. The first increment is expected to 

 7

GAO, Best Practices: Capturing Design and Manufacturing Knowledge Early Improves 

Acquisition Outcomes, GAO-02-701 (Washington, D.C.; July 15, 2002). 

Test aircraft 

first flight

End of 

operational

 Testing

Final aircraft 

delivery

Production aircraft #6

2009 2010 2011 2012 2013 2014 2015

Production aircraft #5

Production aircraft #4

Production aircraft #3

Production aircraft #2

Production aircraft #1

Product 

decision

Source: U.S. Air Force.
Page 13 GAO-05-273 E-10A Acquisition Strategy 

provide the users with many of the system’s basic required capabilities.8

Those capabilities include cruise missile defense and on-board command 

and control capability for processing, displaying, and communicating the 

data needed to address time-sensitive targets. Subsequent increments will 

enhance the system’s capabilities, moving them closer to objective levels 

by increasing the amount of data processing and analysis done by 

computers and decreasing the amount done by human analysts with 

computer assistance, thus shortening the time it takes to make decisions. 

However, if the first increment falters, the Air Force will likely spend 

increasing amounts of time and money to achieve this initial capability, 

thereby delaying subsequent increments. 

The current conditions surrounding the development of the E-10A 

business case portend the potential for poor outcomes if requirement, 

resource, and acquisition strategy deficiencies are not resolved before 

system development and demonstration begins. The decision to start a 

major weapon systems acquisition program for the E-10A requires an 

executable business case that demonstrates the E-10A is the best way to 

satisfy the gap in warfighter’s capability and that the concept can be 

developed and produced within existing resources. An evolutionary and 

knowledge-based acquisition strategy is needed to ensure this business 

case can be executed within planned goals. The Air Force and OSD are 

still determining if a sound business case exists. Questions still 

surrounding the business case include: 

• Is the E-10A the most cost-effective alternative? 

• How extensive of a battle management command and control capability is 

needed? 

• Are technologies at a high level of maturity? 

• Is there sufficient funding to develop and deliver the capability in time? 

 8

 The E-10A Capabilities Development Document lists 157 separate capabilities/ 

requirements to be achieved by increment 1.3. Of those requirements, 50 will be upgraded 

or changed as subsequent increments are developed. Thus the remaining 107 (68 percent) 

will be met by increment 1.0. The individual capabilities/requirements were not weighted in 

this analysis. 

Conclusions 
Page 14 GAO-05-273 E-10A Acquisition Strategy 

The acquisition strategy also fails to capture critical design, 

manufacturing, and reliability data in time to make investment decisions 

for moving the program through the development program into 

production. The gaps in knowledge increase the likelihood that the Air 

Force will not be able to deliver on the cost, schedule, and performance 

goals in its business case. 

Because gaps exist in the information needed to make a sound business 

case to start a major acquisition program, we recommend that the 

Secretary of Defense ensure that the open business case questions are 

answered before a decision is made to start the E-10A program. 

Additionally, to ensure a greater likelihood of success, if the E-10A 

program is approved to begin, we recommend the Secretary direct the Air 

Force to revise the acquisition strategy to ensure sufficient time is 

included in the schedule to (1) integrate and demonstrate the design 

before moving past the critical design review and (2) test a production 

representative E-10A prototype before starting production. 

DOD provided us with written comments on a draft of this report. The 

comments appear in appendix II. 

DOD concurred with our recommendation that the Secretary ensure that 

the open business case questions are answered before a decision is made 

to start the E-10A program. DOD provided some information on the 

current status of these questions and implies that some of the business 

case questions had been answered. We believe that until the OSD/Program 

Analysis and Evaluation study is completed and final results are provided 

to OSD acquisition decision makers, the business case questions remain 

open. 

DOD partially concurred with our recommendation that the Secretary 

direct the Secretary of the Air Force to revise the E-10A acquisition 

strategy to ensure sufficient time is available to (1) integrate and 

demonstrate the design before moving past the critical design review and 

(2) test a production representative E-10A before starting production. 

Regarding (1), DOD stated that OSD policy does not require the integration 

and demonstration of a design before critical design review. We disagree. 

Section E1.1.14 of Department of Defense Directive 5000.1, The Defense 

Acquisition System, states that “PMs...shall reduce integration risk and 

demonstrate product design prior to the design readiness review.” DOD’s 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 15 GAO-05-273 E-10A Acquisition Strategy 

design readiness review is required to end the system integration phase of 

system development and demonstration. Additionally, DOD’s entrance 

criterion for the demonstration phase requires a demonstration of the 

integrated product in a prototype. Nonetheless, DOD stated that it is 

restructuring the program with the goal of demonstrating the radar and 

battle management technologies in a prototype before starting systems 

development and demonstration. This approach incorporates the 

knowledge-based approach inherent in commercial best practices and 

endorsed by DOD policy. In its comments, DOD acknowledges that this 

approach will increase confidence in the program’s cost estimate and 

allow time to evaluate the aircraft platform. 

Regarding (2), DOD stated that the Milestone C production decision for 

low rate initial production decision will be based on the initial test results 

from a representation E-10A aircraft system. While the program schedule 

in effect at the time of our review did not indicate this, we believe this 

approach is more consistent with a knowledge-based acquisition strategy. 

By testing a production representative aircraft prior to committing to 

production, DOD will be able to reduce program risks and make informed 

decisions based on actual system capabilities and performance 

information. 

DOD also provided technical comments to our report. We made changes 

where appropriate but many of these comments were based on a new 

acquisition strategy that plans to delay the E-10A program Milestone B 

decision until 2010. We did not make DOD’s recommended changes to the 

report that reflected this new schedule because it has not been approved 

and we have not had the opportunity to review it. 

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

Secretaries of the Air Force, the Army, and the Navy. We will also provide 

copies to others on request. In addition, the report will be available at no 

charge on the GAO Website at http://www.gao.gov. 
Page 16 GAO-05-273 E-10A Acquisition Strategy 

Please contact me at (202) 512-4841 if you have any questions concerning 

this report. Other key contributors to this report were Martin Campbell, 

Michael Hazard, Travis Masters, Rae Ann Sapp, David Schilling and John 

Krump. 

Sincerely yours, 

Michael J. Sullivan 

Director 

Acquisition and Sourcing Management 
Appendix I: Scope and Methodology 

Page 17 GAO-05-273 E-10A Acquisition Strategy 

During our review we discussed the E-10A program with officials from the 

following organizations in the Office of the Secretary of Defense, 

Undersecretary of Defense for Acquisition Technology and Logistics; the 

Director, Defense Systems/Developmental Test and Evaluation; the 

Director, Operational Test and Evaluation; the Director, Defense Research 

and Engineering; and the Director, Program Analysis and Evaluation. We 

also discussed the E-10A with the technical director of the Joint Theater 

Air Missile Defense Organization. In addition, we discussed the program 

with officials from several organizations in the Air Force. These officials 

included representatives from the Information Dominance Directorate 

with the Office of the Assistant Secretary for Acquisition; the Directorate 

of Operational Requirements; the Command Control Communications 

Intelligence and Reconnaissance Center at Langley Air Force Base; the 

Electronic Systems Center at Hanscom Air Force Base; and the 

Aeronautical Systems Center at Wright Patterson Air Force Base. 

To determine the progress the Air Force had made in developing the 

business case for the E-10A, we obtained available information on the 

system’s requirements and resources. However, the information we 

received on resources such as technology maturity, cost, funding, 

quantities, and schedule was limited. We discussed this information with 

knowledgeable program office and oversight officials. We also contacted 

officials studying force structure issues that could impact the 

requirements for the E-10A program. To assess the validity of the proposed 

business case, we compared the E-10A information with best commercial 

practices and DOD policy guidance for new development programs. 

Because the E-10A program has not yet been approved to enter system 

development and demonstration, specific information on the system’s 

technology readiness assessment and total program cost and funding were 

not available. As a result, we could not conduct a detailed assessment of 

these elements of the business case. However, because of other related 

information, such as the status of the software intensive battle 

management command and control subsystem, the significant reduction in 

funding for fiscal years 2006 and 2007, and the ongoing studies to answer 

OSD concerns, we were able to conclude that at the time of our review key 

business case elements were still not mature enough to begin product 

development. For example, complex and software intensive subsystems in 

other programs have caused major problems that have delayed achieving 

technology maturity and the Air Force has only recently directed the 

contractor to begin early systems engineering effort to determine a 

preliminary design for the E-10A battle management subsystem. 

Additionally, the $600 million reduction in funding planned for the first 

2 years will almost certainly require the program to extend its planned 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 18 GAO-05-273 E-10A Acquisition Strategy 

schedule resulting in additional costs and funding requirements not yet 

estimated. These are business case elements that need to be firmly 

established before entering the upcoming Milestone B decision point. 

To determine the soundness of the E-10A’s acquisition strategy, we 

obtained available information on the program’s original and revised 

acquisition plans from the program office and discussed it with functional 

oversight and program officials. In addition, we compared the E-10A’s 

planned strategy to best commercial practices and DOD’s knowledgebased acquisition policy. However, since our analysis, the program’s 

budget request was reduced by a total of $600 million in fiscal years 2006 

and 2007. 

We conducted our review from January 2004 to January 2005 in 

accordance with generally accepted government auditing standards. 
Appendix II: Comments from the Department 

of Defense 

Page 19 GAO-05-273 E-10A Acquisition Strategy 

Appendix II: Comments from the Department 

of Defense 
Appendix II: Comments from the Department 

of Defense 

Page 20 GAO-05-273 E-10A Acquisition Strategy 
Appendix II: Comments from the Department 

of Defense 

Page 21 GAO-05-273 E-10A Acquisition Strategy (120314) 
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