Report to the Secretary of the Navy

United States General Accounting Office

GAO

August 2001 DEFENSE

ACQUISITIONS

Actions to Improve

Navy SPAWAR

Low-Rate Initial

Production Decisions

GAO-01-735
Page 1 GAO-01-735 Defense Acquisitions

August 7, 2001

The Honorable Gordon R. England

The Secretary of the Navy

Dear Mr. Secretary:

During our review of the Navy’s Space and Naval Warfare (SPAWAR)

Systems Command’s fiscal year 2001 budget request, we found that many

information technology systems were being procured and fielded in

relatively large quantities—sometimes exceeding 50 percent of the total—

during low-rate initial production and before completing operational

testing. The primary purpose of low-rate initial production is to produce

enough units for operational testing and evaluation and to establish

production capabilities to prepare for full-rate production. Limiting initial

production affords the opportunity to confirm the stability and soundness

of a new system before producing larger quantities. Commercial and

Department of Defense (DOD) best practices have shown that completing

a system’s testing prior to producing significant quantities will

substantially lower the risk of costly fixes and retrofits. For major

weapons systems, there are statutory1

 provisions that limit the quantities

of systems produced during low-rate initial production to the minimum

quantity necessary and require justification for quantities exceeding

10 percent of total production. Although these provisions do not apply to

non-major systems, DOD and Navy acquisition regulations encourage

these programs to make use of the low-rate initial production concept

where appropriate.

Given the risks associated with acquiring high percentages of production

quantities before completing operational testing, we reviewed the

acquisitions of information systems at SPAWAR to determine (1) why

information systems were being procured and fielded in large numbers

before operational testing, (2) what effects this practice was having on

SPAWAR and the fleet, and (3) what the Navy is doing to mitigate the risks

associated with this practice.

 1

 10 U.S.C. 2400.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-735 Defense Acquisitions

According to SPAWAR officials, the main reason for the high percentage

of low-rate initial production quantities is to more quickly respond to fleet

demands for information systems improvements. The SPAWAR

commander noted that the high percentage reflects the desire to quickly

field information systems to keep up with rapid advances in technology.

He further noted that the high percentage of low-rate initial production

buys is generally considered low risk when they involve proven

commercial technology and are low-cost items—compared to ships and

aircraft. Officials in the Office of the Chief of Naval Operations said the

fleet would rather have an information system with 75 to 80 percent

capability than to wait until SPAWAR completes all necessary testing to

ensure a system will meet all of its capability.

Many information technology systems purchased and fielded during lowrate initial production and prior to completing operational testing

experienced problems that negatively impacted fleet operations and

capabilities. We analyzed 8 of the 21 fielded SPAWAR programs with a

high percentage of low-rate initial production quantities and found that all

had performance problems, all had interoperability problems, and 6 had

suitability problems. A limited analysis of the remaining 13 systems found

that several also experienced operational problems. The SPAWAR

commander said most of the problems we found were, in part, the result of

an acquisition process that needed more discipline and has recently

improved. He further noted that some operational problems with new

systems are inevitable and are part of the cost of doing business and are

worth the risk in order to provide systems to the fleet quickly.

Nevertheless, the DOD Director of Operational Test and Evaluation said

that low-rate initial items can be used in an operational environment to

learn about problems and fix them, but procuring high percentages of a

system before completing operational test and evaluation is a risky

strategy.

SPAWAR has taken a number of steps to mitigate the risks of high

percentage low-rate initial production procurements. To add more

discipline and rigor to the low-rate initial production decision process, the

Command now requires program managers to use a standardized checklist

and report template as part of reviewing and approving low-rate initial

production purchase requests. SPAWAR has also established an

Acquisition Reform Office to serve as a focal point and command-wide

disseminator of lessons learned and process improvements. The reform

office is currently developing a “Rules of the Road” Acquisition Guidebook

for SPAWAR program managers. Further, in discussions of our findings

and observations during this review, the Navy and SPAWAR agreed to

Results in Brief
Page 3 GAO-01-735 Defense Acquisitions

provide better risk management guidance for information systems. They

also agreed to our suggested improvements in documenting, justifying, and

reporting low-rate initial production decisions.

In commenting on our draft report, the Navy agreed and stated that the

actions taken and planned by it and the SPAWAR Command are expected

to improve the Navy’s low-rate initial production decision process. The

Navy’s comments appear in appendix I.

SPAWAR is one of the Navy’s three major acquisition commands.

SPAWAR provides information technology systems to naval forces on

land, at sea, and in space and integrates all information products,

including those developed by other systems commands and agencies

outside the Navy. The SPAWAR workforce is over 7,300 personnel, and the

fiscal year 2000 budget was $3.7 billion—about $2.7 billion to develop and

procure systems and about $1.0 billion to operate and maintain them.

Specifically, SPAWAR develops, acquires, and manages

• battle management systems (for example, software applications and

computers);

• undersea, terrestrial, and space sensors (for example, underwater

sensors, navigation and weather systems, and satellites);

• information transfer systems (for example, communications systems,

radios, antennas, and switches); and

• information management systems (for example, local area networks

and routers).

As of October 2000, SPAWAR was managing 21 programs that involved

low-rate initial production. These programs had cumulative low-rate initial

procurements ranging from 5 to 100 percent of the total inventory

objective—7 systems were above 50 percent. The estimated total

production costs for the eight systems we analyzed in detail ranged from

$31 million to $525 million.

As weapon system programs move through the phases of the acquisition

process, they are subject to review at major decision points called

milestones. Major defense acquisition programs, known as acquisition

Background
Page 4 GAO-01-735 Defense Acquisitions

category I, and major systems programs, known as acquisition category II,2

as well as non-major systems programs, known as acquisition category III

and IV,3

 follow the same general process. DOD and Navy acquisition

policies state that program risks shall be assessed at each milestone

decision point before approval is granted for the next phase. The policies

add that test and evaluation shall be used to determine system maturity

and identify areas of technical risk.

Major milestones in DOD’s systems acquisition process include

• Milestone 0, when the determination is made about whether an

identified mission need warrants a study of alternative concepts to

satisfy the need. If warranted, the program is approved to begin the

concept exploration and definition phase.

• Milestone I, when the determination is made about whether a new

acquisition program is warranted. If so, initial cost, schedule, and

performance goals are established for the program, and authorization is

given to start the demonstration and validation phase.

• Milestone II, when the determination is made about whether

continuation of development, testing, and preparation for production is

warranted. If so, authorization is given to start the engineering and

manufacturing development phase. Approval of this phase will often

involve a commitment to low-rate initial production, which is defined

as the minimum quantity needed to (1) provide productionrepresentative articles for operational testing and evaluation,

(2) establish an initial production base, and (3) permit orderly ramp-up

to full-rate production upon completion of operational testing and

evaluation. Operational test and evaluation is a key internal control to

ensure that decisionmakers have objective information available on a

 2

 The Navy defines acquisition category I as a major defense acquisition program that is

estimated to cost more than $355 million (fiscal year 1996 dollars) for research,

development, testing, and evaluation or more than $2.1 billion (fiscal year 1996 dollars) for

procurement. The Navy defines acquisition category II as a major system program that is

estimated to cost more than $140 million (fiscal year 1996 dollars) for research,

development, testing, and evaluation or more than $645 million (fiscal year 1996 dollars)

for procurement.

3

 The Navy defines acquisition category III as a weapon system program not designated

acquisition category I or II and which affects the military characteristics of ships or aircraft

or involves combat capability. The Navy defines acquisition category IV as those not

designated as acquisition category I, II, or III.
Page 5 GAO-01-735 Defense Acquisitions

weapon system’s performance to minimize risks of procuring costly

and ineffective systems. Operational testing and evaluation uses field

tests under realistic conditions to determine the operational

effectiveness4 and suitability5 of a system for use in combat. DOD

acquisition regulations generally provide that programs successfully

complete these tests before starting full-rate production.

• Milestone III, when operational test and evaluation has been

completed, a determination is made about whether to proceed to fullrate production and field the system.

Over the years, we have found instances in which DOD used the low-rate

initial production decision phase to purchase significant numbers of major

and non-major systems without successfully completing operational

testing and evaluation. Often, these systems later experienced significant

effectiveness and/or suitability problems. In 1994, we reported that DOD

had made large buys of weapon systems during the low-rate initial

production phase and prior to completion of operational test and

evaluation, which resulted in operational problems.6

 For example, we

reported that the Navy procured 100 percent of a system’s inventory

objective during low-rate initial production and later found that the system

lacked critical hardware and software capabilities. In another case, the

Navy procured 100 percent of a system’s inventory objective during lowrate initial production and later terminated the program when it failed

operational testing and evaluation. A recent Defense Science Board report

found that weapons systems are still being fielded without adequate

testing to assure their effectiveness and utility to operating units.7

 We

conducted this review because buying systems before completing

operational testing has inherent risks, and SPAWAR’s practice of buying

 4

 DOD defines operational effectiveness as a system’s overall degree of mission

accomplishment when representative personnel use the system in its planned or expected

operational environment considering organization, doctrine, tactics, survivability,

vulnerability, and threat.

5

 DOD defines operational suitability as the degree to which a system can be satisfactorily

placed in field use considering such factors as availability, compatibility, transportability,

interoperability, reliability, wartime usage rates, maintainability, safety, and supportability.

6 Weapons Acquisition: Low-Rate Initial Production Used to Buy Weapon Systems

Prematurely (GAO/NSIAD-95-18, Nov. 24, 1994).

7

 Report of the Defense Science Board Task Force on Test and Evaluation Capabilities,

Office of the Under Secretary of Defense for Acquisition and Technology, Dec. 2000.
Page 6 GAO-01-735 Defense Acquisitions

high percentages of a system’s total inventory objective during low-rate

initial production raised these risk concerns.

SPAWAR officials cited three primary reasons for high-percentage buys

during low-rate initial production. First, to meet Navy initiatives, SPAWAR

must provide the fleet with large quantities of information technology

systems as quickly as possible. Second, many information systems consist

of evolving technology that quickly becomes obsolete. Third, additional

low-rate initial production buys are approved due to delays in conducting

the operational test and evaluation.

The main reason that SPAWAR officials cited for high-percentage buys

during low-rate initial production is the need to provide as many

information technology systems to the fleet as quickly as possible to meet

several Navy initiatives. The Navy’s current vision for the 21st century,

Forward From The Sea, involves innovations in technology to rapidly

transform the Navy into a 21st century force. SPAWAR provides or

contributes to many of the operational capabilities that support the vision.

Officials in the Chief of Naval Operations’ Fleet and Allied Requirements

Division stated that the fleets put pressure on SPAWAR to provide

information systems faster. These officials, as well as SPAWAR officials,

contend that if SPAWAR does not provide systems to the fleet quickly,

then the fleet will bypass the Chief of Naval Operations and SPAWAR and

procure some systems with fleet funding. If the fleet buys the systems,

SPAWAR cannot control the configuration of these systems, which can

eventually result in interoperability problems with systems that SPAWAR

procures. An official in the Office of the Deputy Assistant Secretary of the

Navy responsible for communications and space systems also agreed that

there is pressure on SPAWAR to meet fleet demands. He said that the

Under Secretary of Defense for Acquisition, Technology, and Logistics

stated about 3 years ago that the pace of developing systems was too slow

and called for shortening the development cycle by incorporating

evolutionary development and acquisition. Through evolutionary

development and acquisition, systems are continuously improved, as new

technology becomes available.

According to the SPAWAR commander, another reason for quickly

providing systems to the fleet is that information systems consist of

rapidly advancing technology, which can become obsolete within

18 months. He said that procuring and fielding a large percentage of a

system’s inventory objective while still in low-rate initial production

quickly provide the fleet with better information systems and provide

important operational data so that any system performance problems can

Fleet Demands and

Rapidly Advancing

Technology Cited for

the High Percentage

of Low-Rate Initial

Production Purchases
Page 7 GAO-01-735 Defense Acquisitions

be quickly fixed. Officials in the Navy Fleet and Allied Requirements

Division said that the 18-month obsolescence cycle is the main reason that

the fleet would rather have a system now with 75 to 80 percent of its full

capability as opposed to waiting until the system has all of its capability.

However, officials in the Chief of Naval Operations’ Office of Test,

Evaluation, and Technology Requirements disputed that rapidly advancing

technology is a legitimate reason for making high-percentage buys during

low-rate initial production and before completing operational testing.

These officials concluded that making high-percentage buys during lowrate initial production circumvents the operational testing and evaluation

process and increases the risk that systems will not work as intended

when fielded.

High-percentage buys during low-rate initial production also were the

result of delays in conducting the operational test and evaluation.

According to the SPAWAR commander, the pass or fail nature of

operational testing contributed to delays. Rather than fail a test and risk

program reduction or termination, operational tests were delayed until

there was a good probability that the system would pass the tests. As tests

were delayed, additional low-rate initial production buys were approved.

Six of the eight systems we analyzed had additions to the original low-rate

initial production quantities.

The SPAWAR commander said that making high-percentage buys of a

system while still in low-rate initial production is low risk when proven

commercial technology items are being procured and they are relatively

low-cost items—when compared to the cost of ships and aircraft. Further,

if problems arise after the low-rate initial production systems are fielded,

the cost to fix them is not significant. However, SPAWAR officials agreed

that none of the eight systems we analyzed are entirely commercial and

that all of them have military requirements that must be tested in a

realistic operational environment.

The DOD Director of Operational Test and Evaluation agreed that low-rate

initial production items can be used in an operational environment to learn

about problems and fix them, but he said that procuring large quantities of

a system before operational test and evaluation is a risky strategy.
Page 8 GAO-01-735 Defense Acquisitions

We analyzed eight SPAWAR systems and found seven of them had a

combination of problems that adversely affected fleet operations—all had

performance problems, all had interoperability problems, and six had

suitability problems. A performance problem is the inability of a system to

effectively and efficiently perform its assigned mission. An interoperability

problem is the inability of systems to work together effectively to provide

services to and accept services from other systems. A suitability problem

involves a system not satisfactorily meeting one or more requirements,

including reliability, maintainability, logistics support, or training. These

problems may delay progress in achieving the Navy’s vision for using

information technology to attain and maintain network-centric warfighting

knowledge and decision-making superiority. The last of the eight systems

had not been installed when we analyzed the eight systems. Table 1

illustrates the types of problems identified for seven of the eight systems.

Table 1: Types of Problems for High-Percentage Low-rate Initial Production Systems

System Types of problems

Name Description

Current

inventory

objective

Percent

low-rate

production Performance

Interoperability Suitability

Automated Digital Network

System/ Sensitive

Compartmented

Information Automated

Digital Network System

Provides communications

network and selects best

path for transmissions

513 51 X X X

Combat Direction Finding

System

Detects, identifies, and

provides long-range

hostile target data

36 22 X X

Command and Control

Processor

Provides interface for

communications and

shipboard processors

105 41 X X X

Commercial Wideband

Satellite Program

(Terminals)

Provides super-high

frequency ship satellite

communications

37 78 X X X

Digital Wideband

Transmission System

Provides ultra-high

frequency voice, video,

and data communications

45 100 X X X

Miniaturized Demand

Assigned Multiple Access

Provides capability to

share multiple signals on

a satellite broadcast

142 72 X X X

Navy Modular Automated

Communications System II

Provides automatic

processing and storage of

messages

305 21 X X X

Submarine High Data Rate Provides high capacity

communications in

extremely and super high

frequencies

60 37 aaa

a

 The first low-rate initial production unit had not been installed as of September 2000; therefore, no

information existed about its operational effectiveness and suitability in the fleet.

Problems

Experienced When

Procuring High

Percentages of Units

In Low-Rate Initial

Production
Page 9 GAO-01-735 Defense Acquisitions

Two of the systems—the Digital Wideband Transmission System and the

Command and Control Processor—illustrate how interoperability,

performance, and suitability problems impact fleet operations. The Digital

Wideband Transmission System is a radio transmission system supporting

voice, video, and data communications. It is required on all aircraft

carriers and amphibious ships and at training facilities. SPAWAR approved

100 percent of the total inventory objective to be bought under low-rate

initial production; however, the system does not work due to a number of

problems with the antenna, power amplifier, and radio frequency control.

The system also created, and was affected by, electromagnetic

interference, which caused severe interoperability problems. For example,

the interference caused a complete loss of Global Positioning System

navigation capability. Furthermore, in order for the digital system to work,

an air-search radar had to be shut down. Consequently, the Navy turned

off the system the first time it was used during an amphibious ready group

deployment in the Pacific, replaced it with a legacy system, and placed the

digital system in an inoperative status for 9 months. By November 2000,

SPAWAR had installed 78 percent of the systems in the fleet, but it will

cost $4.3 million to fix the problems for this $40-million program—

$1.2 million for engineering work and $3.1 million for retrofit costs.

SPAWAR is currently developing and testing improvements to system

performance.

The Command and Control Processor acquires information from other

communications systems, stores the information, and reformats it for use

by the Aegis combat system on aircraft carriers and naval combat surface

ships. Although SPAWAR originally approved a small purchase of the

processor during the low-rate initial production, three subsequent low-rate

initial production increases bought the total to 41 percent of the inventory

objective. From 1995 to 2000, there were 263 problems noted with the

system, mostly involving software, during battle group system integration

tests. The processor has severe suitability problems because it breaks

down unpredictably up to 12 hours at a time (due to software problems)

and freezes up, which eliminates the system’s capability to provide current

situational awareness. Also, on an aircraft carrier that we visited,

operators said that the processor would not integrate with other systems,

even though it is designed to do so. To prevent the breakdowns, SPAWAR

developed a workaround procedure, which involves resetting the system

every 2 hours instead of every 24 hours. In addition, the breakdowns and

workarounds put more pressure on operators and maintainers during

combat or hostile situations.
Page 10 GAO-01-735 Defense Acquisitions

Some of SPAWAR’s 13 other systems with a high percentage of low-rate

initial production buys also had operational effectiveness and suitability

problems. The Pacific Fleet experienced 46 problems with the Navy

Extremely High Frequency Satellite Communications System from 1995 to

2000. The problems involved hardware and software, interoperability, and

training. For example, in February 2000, system performance was

degraded due to a part failure. In April 2000, SPAWAR reported that the

problem had been solved. However, about a month later, the system had

problems again, resulting in no response from the satellite and timetracking errors being returned. The system was again placed in a degraded

status and, as of August 2000, the problem was still unresolved. The

Pacific Fleet also experienced problems with the High Frequency Radio

Group, mainly due to system performance problems and training

shortfalls. For example, on a ship visit in October 2000, ship

communications personnel said that the system had broken down several

times for a duration of 1 week to 1 month at a time. They said that, when it

breaks down, the operators must tune in the radio frequency manually, but

ship operators have not been trained to do this because they were used to

relying on the system to tune into a particular frequency automatically.

The Pacific Fleet also identified several other problems with the radio

group, including a ship that experienced 15 failures of a system switch

within 11 months.

The SPAWAR commander said that the Command did not have adequate

controls and oversight, at the time of most of these low-rate initial

production decisions, to either mitigate or manage risks associated with

procuring and fielding large percentages of systems during low-rate initial

production. He said the need for more discipline in the acquisition process

contributed to the interoperability, performance, and suitability

deficiencies we identified. He further noted, however, that some problems

are part of the cost of doing business with new systems and are worth the

risk to provide systems to the fleet quickly. According to the SPAWAR

commander, the most meaningful measure of success is whether the

systems are meeting their operational requirements, and he said that

SPAWAR’s systems are meeting theirs based on a performance parameter

called operational availability.8

 However, according to the DOD Director of

 8

 Operational availability is calculated in two ways. For continuously operating systems, it

is calculated by dividing the amount of time that the system is up and running by the

cumulative amount of time that the system is up and running plus the down time. For ondemand systems, operational availability is calculated by dividing the number of times the

system was available by the number of times the system was required to be available.
Page 11 GAO-01-735 Defense Acquisitions

Operational Test and Evaluation and the Chief of Naval Operations’ Office

of Test, Evaluation, and Technology Requirements, operational availability

is only one of a number of key performance measures, and an overall

assessment of system performance should not be based solely on that

parameter.

The Navy and SPAWAR have taken or plan to take a number steps to

mitigate the risks of large low-rate initial production procurements. To add

more discipline and rigor to the low-rate initial production decision

process, the Command now requires program managers to use a

standardized checklist and report template as part of reviewing and

approving low-rate initial production purchase requests. SPAWAR has also

established an Acquisition Reform Office to serve as a focal point and

command-wide disseminator of lessons learned and process

improvements. The reform office is currently developing a “Rules of the

Road” Acquisition Guidebook for SPAWAR program managers. Further, in

discussions of our findings and observations during this review, the

commander called for the development of risk management guidance for

information systems and agreed to suggested improvements in

documenting and justifying low-rate initial production decisions.

The SPAWAR commander said better risk management guidance would

improve low-rate initial production decisions on information systems,

especially when milestone decision authorities and program managers

rotate in and out over time. The commander stated that he and the

program managers primarily use their acquisition knowledge, wisdom, and

experience when making risk management decisions.

In discussions with Navy and SPAWAR officials, we noted that the

Acquisition Decision Memorandums,9

 used to document and support

milestone decisions, did not always include the low-rate initial production

quantity being approved, the cumulative number of low-rate initial

production items that had been approved, or the cumulative low-rate

initial production percentage. We also noted that, at SPAWAR, the

justification for approving low-rate initial production purchases was not

always documented. The Navy and SPAWAR officials agreed to document

 9

 The Acquisition Decision Memorandum is a memorandum signed by the milestone

decision authority that documents decisions made as a result of a milestone decision

review or an in-process review. DOD Instruction 5000.2 and Navy Instruction 5000.2B

require a decision memorandum for all acquisition milestones for major and non-major

programs but do not specify format or content.

Navy and SPAWAR

Take Steps to Reduce

Low-Rate Initial

Production Risks
Page 12 GAO-01-735 Defense Acquisitions

in the Acquisition Decision Memorandum the justification for all low-rate

initial production approvals, as well as the current inventory objective and

the cumulative number of units bought under low-rate initial production.

SPAWAR also agreed to include in its quarterly program status report

when cumulative low-rate initial production approvals reach 50 percent or

more of the current inventory objective. Recognizing that other Navy

activities can benefit from the low-rate initial production decision

checklist and report template, we recommended that this guidance be

distributed throughout the Navy. The Navy subsequently distributed the

guidance DOD-wide. Finally, the Navy and SPAWAR agreed to supplement

acquisition training for program managers and staff by incorporating risk

management tools into existing courses.

In seeking to provide new information systems to the fleet as quickly as

possible, SPAWAR officials procured and fielded relatively large quantities

of systems during low-rate initial production and before completing

operational testing. Our subsequent review of seven of these systems

found that six had experienced operational problems that negatively

impacted the fleet. The SPAWAR commander noted that controls and

oversight, at the time of most of these decisions, were not adequate to

either mitigate or manage risks associated with procuring and fielding

large percentages of systems during low-rate initial production. He said

the need for more discipline in the acquisition process contributed to

deficiencies we identified. Since that time, Navy and SPAWAR officials

have taken or have plans to take a number steps to mitigate the risks of

large low-rate initial production procurements. In addition, they have

agreed to implement, and in one case have already implemented, process

improvements we suggested during the course of this review. Given these

actions, we are not making any recommendations in this report.

In commenting on our draft report, the Navy agreed and stated that the

actions taken and planned by it and the SPAWAR Command are expected

to improve the Navy’s low-rate initial production decision process. The

Navy’s comments appear in appendix I.

To acquire information about the number and status of SPAWAR low-rate

initial production programs, we interviewed officials and obtained

documentation from the SPAWAR Acquisition Reform Office; selected

SPAWAR program offices; the Office of the Assistant Secretary of the Navy

(Research, Development, and Acquisition); the Office of the Deputy

Assistant Secretary of the Navy (Command, Control, Communications,

Computers, and Information/Electronic Warfare/Space); the Office of the

Deputy Director Defense Procurement Strategies; the Office of the Under

Conclusions

Agency Comments

Scope and

Methodology
Page 13 GAO-01-735 Defense Acquisitions

Secretary of Defense (Acquisition and Technology); and the Office of the

Chief of Naval Operations.

To obtain detailed information about the impact of the high percentage of

SPAWAR low-rate initial production procurements, we selected and

reviewed 14 programs, representing 70 percent of all SPAWAR low-rate

initial production programs. Of these 14 programs, we examined 8

programs in detail looking at operational, logistic, interoperability, and

training issues to determine how well these programs were performing.

To obtain information about the operational testing, evaluation,

interoperability, and fielding of low-rate initial production systems, we

interviewed officials and obtained documentation from the Office of the

Director of Navy Test, Evaluation, and Technology Requirements; the

Office of the Navy Commander Operational Testing and Evaluation Force;

the Office of the Program Manager for Battle Group Systems Integration

Testing; and the Office of the Director of Operational Test and Evaluation,

Office of the Assistant Secretary of Defense.

To obtain information about the operation, performance, interoperability,

maintenance, repair, retrofit, suitability, and training regarding low-rate

initial production systems in the fleet, we visited the Naval Surface Force

Command, Pacific; the Naval Air Command, Pacific; and the Naval

Submarine Command, Pacific, Squadron Eleven. We also visited specific

ships in each command, including the U.S.S. Benfold (DDG-65), the U.S.S.

Pearl Harbor (LSD-52), the U.S.S. John C. Stennis (CVN-74), and the U.S.S.

Salt Lake City (SSN-716). In addition, we held discussions with SPAWAR

program officials and officials from SPAWAR’s In-Service Engineering

Activity, Fleet Support Engineering Team, and Installations and Logistics

Directorate.

To obtain information about the laws, regulations, procedures, and

guidance governing the procurement of information technology systems in

low-rate initial production, we interviewed officials and obtained

documentation from the Office of the Commander, Space and Naval

Warfare Systems Command; the Office of the Chairman Deskbook

Working Group (DOD 5000 Rewrite); the Assistant Secretary of the Navy

(Research, Development and Acquisition); and the Office of the Assistant

Deputy Under Secretary of Defense (Systems Acquisition). We also

reviewed selected laws and regulations governing low-rate initial

production, including title 10 of the U.S. Code, the DOD 5000 series

acquisition regulations (the1996 and revised 2000 version), and Secretary
Page 14 GAO-01-735 Defense Acquisitions

of the Navy Instruction 5000-2B governing acquisition and procurement of

low-rate initial production and commercial-off-the-shelf technology.

We conducted our review from June 2000 through May 2001 in accordance

with generally accepted government auditing standards.

We are sending copies of this report to interested congressional

committees; the Honorable Donald H. Rumsfeld, Secretary of Defense; and

the Honorable Mitchell E. Daniels Jr., Director of the Office of

Management and Budget. Copies will be made available to others upon

request.

Please contact me at (202) 512-4821 if you have any questions regarding

this report. Key contributors to this report were Cristina Chaplain, Joe

Dewechter, Dorian Dunbar, Stephanie May, Gary Middleton, Sarah

Prehoda, Richard Price, and William Woods.

Sincerely yours,

James F. Wiggins

Director

Acquisition and Sourcing Management
Appendix I: Comments From the Department

of the Navy

Page 15 GAO-01-735 Defense Acquisitions

Appendix I: Comments From the Department

of the Navy
Appendix I: Comments From the Department

of the Navy

Page 16 GAO-01-735 Defense Acquisitions
Appendix I: Comments From the Department

of the Navy

Page 17 GAO-01-735 Defense Acquisitions (707533)

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