United States General Accounting Office

GAO Report to the Secretary of Defense

October 1997 ACQUISITION

REFORM

Effect On Weapon

System Funding

GAO/NSIAD-98-31

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272651 

October 29, 1997

The Honorable William Cohen

The Secretary of Defense

Dear Mr. Secretary:

Over the last several years, the Department of Defense (DOD) has placed

priority attention on reforming its acquisition processes and has

emphasized that savings resulting from acquisition reforms are needed to

help fund weapons modernization. Responding to a request by the Under

Secretary of Defense for Acquisition and Technology, the military services

estimated acquisition reform cost reductions on 63 major weapon

programs. We have reviewed the services’ estimates to determine the

extent to which the reported cost reductions from acquisition reform will

provide funds from approved budgets to support modernization.

Background In March 1996, the Under Secretary of Defense for Acquisition and

Technology directed DOD service acquisition executives and the Director,

Defense Logistics Agency, to provide consistent data supporting their

acquisition reform cost reduction estimates. According to DOD, the services

generally used the 1995 President’s budget as the baseline for estimating

cost reductions because it reflected the financial and program content of

weapon programs in mid-1994, before DOD’s current acquisition reform

efforts were implemented. The services compared the 1995 President’s

budget to the 1997 President’s budget to estimate cost reductions from

acquisition reform. They also estimated the cost reductions relating to

current acquisition reform initiatives beyond fiscal year 2002.

As we discussed in our recent high-risk report1

 on defense weapon

systems acquisition, the ultimate effectiveness of DOD’s current initiatives

to reduce the cost and improve the outcomes of its acquisition processes

cannot yet be fully assessed because they are in various stages of

implementation. DOD is pursuing a number of positive initiatives that

could, over time, improve the effectiveness of its acquisition processes.

However, it may take several years of continued implementation before

tangible results can be documented and sustained.

1

High-Risk Series: Defense Weapon Systems Acquisition (GAO/HR-97-6, Feb. 1997).

Page 1 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

Results in Brief While we continue to support DOD’s effort to reform its acquisition

processes, our review raises concerns about the extent to which cost

reductions from acquisition reform that the services have reported will be

available to fund DOD’s modernization program in the near term.

Of the $29 billion in estimated cost reductions reported by the services,

our analysis shows that only $7.2 billion, or 25 percent of the reductions,

are expected to occur between 1995-2002 from an approved budget. Most

of the remaining $21.8 billion reported by the services are reductions that

either occurred before 1995 or are anticipated to occur beyond fiscal 

year 2002. A significant portion of the $7.2 billion had been used to meet

needs within the program generating the reduction.

Our review also indicates that acquisition reform cost reductions may be

offset by cost increases elsewhere in the programs. Our analysis of 33 of

the 63 programs reporting acquisition reform cost reductions shows that

after taking into account these reductions and after adjusting for inflation

and quantities of systems being bought, total acquisition costs for these

programs increased an average of 2 percent. This suggests that the

estimated cost reductions from acquisition reform are being offset by cost

increases elsewhere in the programs or reinvested within the programs.

Consequently, few funds will be available for other DOD acquisition

programs. We excluded classified programs and others that could not be

fairly compared to the baseline from our analysis.

One Quarter of DOD’s

Estimated Cost

Reductions Reflect

Reductions From

Approved Budgets

The services estimated that acquisition reform reduced the cost of

acquiring major weapon systems by about $29 billion. However, our

review indicated that only about one quarter of that amount ($7.2 billion)

represents reductions from approved budgets and is expected to occur

between fiscal year 1995 and 2002. About $5.6 billion represents

unbudgeted cost reductions based on actions occurring in years before the

baseline 1995 President’s budget and about $13.9 billion is expected to

occur after fiscal year 2002—the last year covered by the President’s 1997

budget. The remaining $2.3 billion of the $9.5 billion in cost reductions of

the services’ estimates occurring between fiscal year 1995 and 2002 were

unbudgeted cost reductions. (See fig. 1.)

Page 2 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

Figure 1: DOD’s Estimated Cost

Reductions From Acquisition Reform

1995 

Baseline

Reductions from approved budgets

Unbudgeted reductions

$5.6

$9.5

$7.2 $2.3

$13.9

2002

Dollars in billions

DOD reported cost reductions from acquisition reform for 63 of its major

weapon programs. Ten of these programs account for about 65 percent of

the estimated $29-billion reduction in the cost of developing and procuring

these programs. One program, the Air Force’s C-17 program, accounts for

$5.4 billion, or about 19 percent of the $29 billion. In February 1997, we

reported that C-17 program costs had only decreased by $174 million.2

Although the C-17 program production costs decreased, these savings

were offset by increases for research and development, aircraft

modifications, military construction, and field support. Figure 2 shows

DOD’s estimated cost reductions due to acquisition reform for the 10

programs claiming the largest reductions. (See app. I for a description of

2

Military Airlift: Options Exist for Meeting Requirements While Acquiring Fewer C-17s

(GAO/NSIAD-97-38, Feb. 19, 1997).

Page 3 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

each of these 10 weapon programs and the types of acquisition reform

initiatives DOD says it is implementing to achieve the cost reductions.)

Figure 2: Weapon Programs Claiming the Largest Acquisition Reform Cost Reductions

C-17

F/A-18E/F

JDAM

Javelin

DDG-51

F-22

NAVSTAR GPS

Longbow Apache

LPD-17

JTIDS

0123456

5.4

3

2.9

1.4

1.2

1.1

1

1

1

0.7

Dollars in billions

Reductions from a budget Unbudgeted reductions

Page 4 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

Among the services, the Air Force is claiming the largest amount of total

acquisition reform cost reductions, estimated at $14.9 billion, or 

51.6 percent. The Navy follows with about $8.9 billion (30.6 percent), and

the Army with about $5.2 billion (17.8 percent).

Estimated Cost of

Major Weapon

Programs Increased

Despite Acquisition

Reform

Using estimates contained in the December 1993 and December 1995

Selected Acquisition Reports (SAR), we analyzed the costs for 33 of 63

weapon programs reporting acquisition cost reductions to determine the

effect of acquisition reform on program cost estimates. The 33 programs

account for about $17.7 billion of the $29 billion in acquisition reform cost

reductions reported by the services (see app. III). Our analysis shows that

the cost of the programs increased, on average, by about 2 percent, after

adjusting for quantity changes and inflation. Among the services, the Army

showed a 0.5-percent decrease, the Navy an increase of 1.4 percent, and

the Air Force showed an increase of 3.2 percent.

Twenty-three of the 33 programs experienced an average cost increase of

3.1 percent, with the increase ranging from 0.5 to 66 percent. Cost

increases for these programs ranged from $19.9 million to $2.2 billion and

averaged about $478 million (fiscal year 1997 dollars). These increases

suggest that acquisition reform cost reductions for these programs have

been offset by cost increases or by reinvestments within the programs.

Ten of the programs we analyzed experienced cost decreases ranging from

0.3 to 19 percent, with an average cost decrease of 4 percent. The cost

reductions for these programs ranged from $15.3 million to $716.1 million

with an average decrease of $293.4 million (fiscal year 1997 dollars).

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD generally concurred with the

comments and views presented in the report and stated that DOD shares

our concern about the extent to which acquisition reform cost reductions

would be available to fund modernization. DOD’s comments are presented

in their entirety in appendix IV.

Scope and

Methodology

We analyzed the services’ estimates of cost reductions attributed to

acquisition reform for development and procurement of their major

weapon programs.3

 To determine if acquisition reform initiatives

3

For the purposes of this report, we define cost reductions as reductions to the costs of developing and

procuring weapon systems. We exclude reductions claimed in operations and maintenance (O&M)

costs since most programs did not report O&M cost reductions. Of the total of about $16 billion in

O&M cost reductions that was reported, about $14 billion was claimed by the LPD-17 program, which

estimated that the reductions would occur after fiscal year 2002.

Page 5 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

generated additional funds for modernization, we compared the cost

estimates of 33 of the 63 programs reporting acquisition reform cost

reductions to determine whether the costs had increased or decreased.

Initially, we included all major weapon systems that reported acquisition

reform cost reductions. However, we then eliminated 30 programs that

(1) had classified cost information, (2) did not have a SAR that we could

use as a baseline, (3) experienced a significant program restructuring,

and/or (4) did not report production costs for the system.

Our methodology was adapted from one previously used by our office and

the Rand Corporation to evaluate the effect of acquisition reform on

weapon system costs.4

 For the 33 programs selected for analysis, we used

current program estimates from the December 1993 SAR as a baseline and

compared them to the current estimate of the December 1995 SAR. These

two periods were selected because they coincided with the time periods

DOD used to estimate cost reductions from acquisition reform. The

programs were adjusted for quantity changes and the effects of inflation

because such changes are often caused by forces outside the program. We

normalized the quantity differences between the 1993 and 1995 SARs by

adjusting the total costs reported in the December 1995 SAR to reflect the

1993 SAR baseline quantity. To normalize the quantity, we subtracted the

cost changes attributed to variances in program quantities. This is one of

three common techniques used to normalize quantity.5

To determine any cost differences between the December 1993 and 1995

SAR, we calculated the cost variance for each system by comparing the

adjusted current estimate of the December 1995 SAR total program cost to

the current estimate of the December 1993 SAR. All of the calculations were

performed using base year dollars. In some cases, the base year dollar

from the December 1993 SAR differed from the December 1995 SAR. In

those cases, we used the same inflator the program used to inflate the

December 1993 SAR information. If the SAR did not contain information on

the inflation factor that was used, we used the DOD deflators published by

the Office of the Under Secretary of Defense (Comptroller).

4

Acquisition: DOD’s Defense Acquisition Improvement Program: A Status Report (GAO/NSIAD-86-148,

July 23, 1986) and Edmund Dews and Giles K. Smith, Acquisition Policy Effectiveness: Department of

Defense Experience in the 1970s, Rand Corp. (R2516-DR&E, Oct. 1979).

5

Paul G. Hough, Pitfalls in Calculating Cost Growth from Selected Acquisition Reports Rand

(N-3136-AF, 1992).

Page 6 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

The results using this methodology have three important limitations:

• First, the results of our analysis cannot be exclusively linked to the

acquisition reform initiatives because of the effect of other factors such as

prior improvement programs, program stretch-outs, and other unknown

factors.

• Second, the acquisition reform initiatives have only been in use for a few

years. The full cost impact of acquisition reform will likely not be known

for several years until programs developed and produced under the new

acquisition process are delivered.

• Third, the effect of reinvesting the cost reductions in programs cannot be

separated from other program cost changes.

The National Defense Authorization Act for Fiscal Year 1997 required DOD

to conduct a Quadrennial Defense Review. As part of the review, DOD

assessed a wide range of issues, including the defense strategy of the

United States and the force structure required to support that strategy. As

a result, DOD may reduce the quantities being bought of some weapon

programs. Our analysis does not take into account the effect of any

restructuring resulting from the Quadrennial Defense Review.

We reviewed reports from the Congressional Research Service and DOD, as

well as our own prior reports. We also interviewed Office of the Secretary

of Defense, Navy, Army, and Air Force officials responsible for developing

and implementing acquisition reform.

This review was conducted in accordance with generally accepted

government auditing standards.

We are sending copies of this report to appropriate congressional

committees; the Secretaries of the Army, the Navy, and the Air Force; and

the Director of the Office of Management and Budget. Copies will be made

available to others upon request.

Page 7 GAO/NSIAD-98-31 Acquisition Reform
B-272651 

If you or your staff have any questions concerning this report, please

contact me on (202) 512-4841. Major contributors to this report were

Charles W. Thompson, Assistant Director; Jose A. Ramos,

Evaluator-in-Charge; and Mary Offerdahl, Senior Evaluator.

Sincerely yours,

David E. Cooper

Associate Director

Defense Acquisitions Issues

Page 8 GAO/NSIAD-98-31 Acquisition Reform
Page 9 GAO/NSIAD-98-31 Acquisition Reform
Contents

Letter 1

Appendix I 

Weapon Programs

Claiming the Largest

Acquisition Reform

Cost Reductions

12

C-17 Globemaster III 12

F/A-18 E/F Naval Strike Fighter 12

Joint Direct Attack Munition 13

Javelin Advanced Antitank Weapon System-Medium 14

DDG-51 Guided Missile Destroyer 14

F-22 Advanced Tactical Fighter 15

NAVSTAR GPS 15

Longbow Apache 16

LPD-17 Amphibious Transport Dock Ship 16

Joint Tactical Information Distribution System 17

Appendix II 

Department of

Defense Estimates of

Acquisition Reform

Cost Reductions by

Program

18

Appendix III 

List of Weapon

Systems We Reviewed

21

Appendix IV 

Comments From the

Department of

Defense

23

Figures Figure 1: DOD’s Estimated Cost Reductions From Acquisition

Reform

3

Figure 2: Weapon Programs Claiming the Largest Acquisition

Reform Cost Reductions

4

Page 10 GAO/NSIAD-98-31 Acquisition Reform
Contents

Abbreviations

DOD Department of Defense

GPS Global Positioning System

JTIDS Joint Tactical Information Distribution System

JDAM Joint Direct Attack Munition

O&M operations and maintenance

SAR Selected Acquisition Reports

Page 11 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

C-17 Globemaster III The C-17 is a wide body, air refuelable, four engine, turbofan aircraft that

is the replacement for the C-141 transport, and it will complement the

larger, but less maneuverable, C-5 aircraft. The Air Force’s C-17 program

estimated cost reductions of about $5.4 billion due to acquisition reform

cost reductions. This amount was arrived at by adding the $2.7 billion in

savings resulting from a Should Cost review, $1.7 billion in savings

projected from accelerating the production schedule, and $1 billion in

savings due to using a multiyear procurement strategy.1

 The Air Force

attributed these reductions to the use of acquisition streamlining, best

practices, and cost reduction initiatives. Specifically, according to the Air

Force, it used integrated product teams and reduced specifications,

standards, and contract data requirements. Also, the team identified

reductions in direct labor, overhead, and work to offload from the prime

contractor to suppliers.

In February 1997, we reported that despite the cost reduction initiatives

taken by the government and the contractor, the total estimated program

cost for the C-17 had only decreased by about $174 million from the

$43 billion January 1994 Air Force cost estimate.2

 C-17 production cost

savings were offset by increased cost estimates for research and

development, aircraft modifications, military construction, and field

support. The contract prices for the last 50 aircraft could increase by an

additional $1 billion because of the ceiling prices contained in the

multiyear production contract.

F/A-18 E/F Naval

Strike Fighter

The Navy’s F/A-18 E/F program follows prior unsuccessful attempts to

modernize the Navy’s tactical aviation fleet. The program originated from

the 1988 Hornet 2000 study conducted by the Naval Air Systems Command

and McDonnell Douglas Aerospace Corporation and was approved as a

major modification program in 1992. This aircraft is a high-performance

twin-engine, multimission aircraft that provides flight escort, interdiction,

fleet air defense, close-air support, and tactical reconnaissance. According

to the Navy, the estimated total program cost will be $89.2 billion,

$5.8 billion in development costs and $83.4 billion in procurement costs

for 1,000 aircraft.3

1

In 1994, the Air Force performed a should cost review to promote economies and efficiencies that

would make the C-17 program more affordable. This review covered the remaining 88 aircraft buy.

2

For additional information on the C-17 program, see Military Airlift: Options Exist for Meeting

Requirements While Acquiring Fewer C-17s (GAO/NSIAD-97-38, Feb. 19, 1997).

3

For additional information on the F/A-18 E/F program, see Navy Aviation: F/A-18E/F Will Provide

Marginal Operational Improvement At High Cost (GAO/NSIAD-96-98, June 18, 1996).

Page 12 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

According to the Navy, the program avoided about $3 billion in costs prior

to fiscal year 1995. It attributes these cost avoidances to innovations and

changes in the relationship with the contractors that led to a design that

could affordably meet operational mission and inventory requirements. A

multidisciplinary government-industry integrated product team was used

throughout the engineering and manufacturing design process. Concurrent

design and manufacturing implementation efforts, according to the Navy,

eliminated serial work and multiple design iterations. In addition,

investment in high speed machining, laser alignment tools, and use of

modern tooling techniques contributed to achieving the affordability goal,

according to the Navy.

Joint Direct Attack

Munition

The Joint Direct Attack Munition program (JDAM) is a joint Air Force and

Navy program to provide current fighter and bomber aircraft the capability

to accurately and precisely attack fixed, or relocatable, land and maritime

targets under adverse weather conditions from medium and high altitudes.

JDAM is a tail guidance kit, consisting of an inertial navigation system aided

by the Global Positioning System (GPS), that is used to upgrade existing

general purpose bombs. Through controlled tail fin movements, the kit

directs the bomb to the target.4

The Air Force estimates that the JDAM program cost reductions will be

about $3 billion. Research, development, test, and evaluation cost savings

accounted for $49.8 million of the $78.1 million reported as cost reductions

from an approved budget. These cost reductions were attributed to

efficient use of wind tunnel testing, which resulted in reducing or

eliminating some tests, reduced the cost of test instrumentation, and

streamlined the B-1/JDAM test program. The Air Force attributed the

remainder ($28.3 million) to reducing the unit costs from $42,000 to

$14,000. The balance of the cost reduction is comprised of a $2.9-billion

cost avoidance, which the Air Force attributes to the reduction in the unit

price of the system. The Under Secretary of Defense (Acquisition and

Technology) designated JDAM as one of the Defense Acquisition Pilot

Programs.5

4

For additional information, see Joint Direct Attack Munition: Low-Rate Initial Production Decision

(GAO/NSIAD-97-116R, Mar. 17, 1997).

5

Defense Acquisition Pilot Programs are given regulatory and statutory relief to explore new

approaches to doing business.

Page 13 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

Javelin Advanced

Antitank Weapon

System-Medium

The Javelin program is a joint Army and Marine Corps program expected

to increase the infantry’s lethality against advanced armor threats. Javelin

is a man portable, fire-and-forget, antitank weapon system that is

composed of two major components—a command launch unit and a

round, which is a missile sealed in a disposable launcher container. For

operation of the system, the round is mated with the launch unit, but the

launch unit may also be used in a stand-alone mode for battlefield

surveillance and target detection. The Army expects Javelin to defeat

armored targets out to distances of 2,000 meters, during the day or night

and in adverse weather.6

The Army estimates that Javelin cost reductions will be about $1.4 billion.

According to the Army, cost reduction efforts, accelerated procurement,

multiyear contracting, and a productivity improvement program will result

in these savings. The procurement savings were used to accelerate

production and finance producibility and operation and support cost

reduction initiatives, and a portion was returned.

DDG-51 Guided

Missile Destroyer

The DDG-51 is a multimission guided missile destroyer that can operate

independently or as a unit of Carrier Battle Groups and Surface Action

Groups, in support of Underway Replenishment Groups and Marine

Amphibious Task Forces. These ships operate in multithreat environments

that include air, surface, and subsurface threats. Further, the DDG-51 can

respond to low intensity conflict/coastal and littoral offshore warfare in

addition to open ocean conflict providing or augmenting power projection

and forward presence requirements. The ship features an all steel hull and

deckhouse and a gas turbine engine propulsion system.

The DDG-51 program estimates that it will save over $1.2 billion in

program costs. Part of the savings was attributed to an affordability

initiative started by the program manager who voluntarily offered to

reduce the program’s budget by $30 million per ship, beginning with the

Flight IIA ships in fiscal year 1994. The program office maintains a

database to track the initiatives and estimates that the program will

achieve about $20 million of the $30 million. According to program

officials, the savings were achievable due to adherence to acquisition

reform principles.

6

For additional information on this program, see Army Acquisition: Javelin Is Not Ready for Multiyear

Procurement (GAO/NSIAD-96-199, Sept. 26, 1996).

Page 14 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

F-22 Advanced

Tactical Fighter

The F-22, the Air Force’s next-generation air superiority fighter, is

expected to be a low-observable, highly maneuverable aircraft and is to be

used to penetrate enemy airspace and achieve a first-look, first-kill

capability by using air-to-air weapons against enemy aircraft. The F-22 is

characterized by its low observable highly maneuverable airframe, a new

engine capable of supersonic cruise without having to use an afterburner,

and advanced integrated avionics.

According to the Air Force, the F-22 achieved cost savings of $5 million by

reducing contract data requirements and staffing. In addition, the F-22

achieved a cost avoidance of $1.1 billion by employing lean logistics,

according to the Air Force. These savings may be offset by the

recommendations of the F-22 Joint Cost Estimating Team, which

recommended extending the engineering and manufacturing development

phase to reduce program risk. As a result, an additional $2.2 billion will be

required, which, the Air Force says, will be funded by eliminating

$706 million budgeted for preproduction verification aircraft and infusion

of $1,453 million, which is funded by extending the production ramp up

and decreasing the number of aircraft procured during production ramp

up. In addition, the Joint Cost Estimating Team expects to contain the

$13.1 billion in production cost growth through the use of multiyear

contracts, producibility enhancements, business and human resource

consolidations, outsourcing, and aggressive material management. Our

review of the Air Force’s F-22 restructuring plan found that the projected

costs are optimistic.7

 The Air Force’s planned reductions are greater than

those achieved on prior fighter programs.

NAVSTAR GPS NAVSTAR GPS is a space-based radio positioning, navigation, and time

distribution system. GPS provides precise, continuous, all-weather,

common-grid positioning, velocity, navigation, and time reference

capability to multiple users worldwide. The GPS Block IIF program is

expected to develop, produce, verify, and field and support space and

ground systems to sustain GPS in the next century. The Air Force

anticipates procuring 33 Block IIF satellites.

The Air Force estimates that GPS cost reductions exceeded $1 billion.

According to the Air Force, the GPS Block IIF program saved $181 million

by implementing acquisition reform and competing the satellite buy. In

addition, the program reduced the number of military specifications and

7

For additional information, see Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program

(GAO/NSIAD-97-156, June 4, 1997).

Page 15 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

military standards from 100 to 2 and reduced the number of contract data

requirements from 300 to 3. Further savings were achieved by using a

multiyear procurement to purchase the Block IIF satellites, as well as the

use of commercial off-the-shelf hardware and software for the satellite

production and the control system development. In addition, the program

estimated an additional $821 million in unbudgeted cost reductions that

were attributed to the same efforts used to achieve the savings reductions.

Longbow Apache This program reported cost reductions of $1 billion. All helicopters in the

Apache fleet are to be modernized with new avionics and be capable of

firing both the laser-guided Hellfire missile and a radar-aided Longbow

Hellfire “fire-and-forget” missile. These improvements are designed to,

among other things, allow the Apache to conduct precision attacks in

adverse weather, automatically engage multiple targets, and operate on

the digital battlefield of the future. Additionally, 227 of the 758 upgraded

Apaches will be equipped with a new mast-mounted, millimeter-wave fire

control radar and more powerful engines. The Longbow Apache weapon

system is composed of three components—a modernized Apache

helicopter, a fire control radar, and a Longbow Hellfire missile.

The Army plans to upgrade 227 of its AH-64A Apache attack helicopters

into a new version known as the AH-64D Longbow Apache. The $1 billion

cost reduction is attributed to continuous use of a multiyear procurement

strategy and increasing the yearly quantities to an economic order quantity

of 72 aircraft per year. Additionally, the Longbow Apache has incorporated

a number of acquisition reform initiatives, according to the Army. For

example, in the request for proposals, the Army said performance

specifications replaced 18 military specifications, military standards were

reduced from 29 to 1, and the statement of work was reduced from 113 to

25 pages. Further, the contract data requirements were reduced from 117

to 14, and the DOD Cost/Schedule Control System Criteria were replaced

with the contractors’ management systems. These cost savings for aircraft

procurement, according to the Army, were applied within the program to

increase the procurement quantities in the first multiyear contract and the

outyear savings were given back to the service.

LPD-17 Amphibious

Transport Dock Ship

The Navy estimates that the LPD-17 program, a functional replacement for

the LPD-4, LSD-36, LKA-113, and LST-1179 classes of amphibious ships

used for embarking, transporting, and landing elements of the Marine

landing force, will avoid $1 billion in procurement costs. According to the

Page 16 GAO/NSIAD-98-31 Acquisition Reform
Appendix I 

Weapon Programs Claiming the Largest

Acquisition Reform Cost Reductions

Navy, acquisition reform reduced costs due to a reduction of

specifications, equipment, and the application of advanced computerized

modeling and simulation. Procurement cost avoidances of $1 billion were

achieved, according to the Navy, by eliminating the need for a dual-source

arrangement for the program. The Navy expects to improve the ship’s

quality and reduce ownership costs by selecting higher quality systems and

components during ship design and construction. Also, they expect to

avoid costs by using more commercial design and construction methods

and the use of commercial off-the-shelf equipment.

Joint Tactical

Information

Distribution System

The Joint Tactical Information Distribution System (JTIDS) is a family of

terminals to provide improved combat capability in fighter aircraft,

command and control centers, and surface air defense units by providing

real-time, netted, jam-resistant, secure data, and voice communications.

JTIDS is a joint service program with the Air Force as the lead service.

The Air Force estimates that JTIDS cost reductions exceeded $745 million.

According to the Air Force, the JTIDS program office incorporated various

acquisition reform initiatives that contributed to reducing the cost of the

terminals. The Air Force estimated a $143-million cost reduction in

terminal production costs from acquisition reform initiatives such as

eliminating contract data and testing requirements. In addition,

Multifunction Information Distribution System terminal costs were

reduced by $486 million by implementing the cost savings initiatives

developed by the Air Force’s Affordability Manufacturing Technology

Demonstration program.

Page 17 GAO/NSIAD-98-31 Acquisition Reform
Appendix II 

Department of Defense Estimates of

Acquisition Reform Cost Reductions by

Program

Dollars in millions

Acquisition reform

cost reduction

Total cost from

12/93 SAR

Total cost from

12/95 SAR

Air Force programs

Advanced Medium Range Air-to-Air Missile $701.0 $12,917.2 $11,388.0

E-3 Airborne Warning and Control System

Radar

211.7 893.4 903.4

B-1 Conventional Mission Upgrade Program 8.2 No SAR 1,089.1

B-2 Advanced Technology Bomber 60.0 No SAR No SAR

C-130J 300.5 No SAR No SAR

C-17A Globemaster III 5,366.0 21,368.1 41,750.6

Cheyenne Mountain Update/Cheyenne

Mountain Complex C/ITWAA

15.0 1,652.0 1,761.4

Common Missile Warning System 207.7 See Army See Army

Defense Meteorological Satellite

Program/NPOESS

0.0 2,042.2 2,343.4

F-22 Air Superiority Fighter Program 1,129.7 71,590.9 70,093.1

NAVSTAR GPS 1,002.0 11,538.1 16,840.1

JDAM 2,960.3 681.5 2,470.6

Joint Primary Aircraft Training System 300.0 302.8 3,663.8

Joint Service Imagery Processing System 18.9 666.6 646.2

Joint Surveillance Target Attack Radar System 42.7 9,043.9 9,351.6

JTIDS 745.5 2,005.3 2,089.8

MILSTAR 578.6 Classified Classified

Space Based Infrared System 644.0 No SAR 2,576.8

Titan IV Expendable Launch Vehicle 661.8 37,708.5 23,562.2

Army programs

Advanced Field Artillery Tactical Data System 0.1 949.7 1,161.6

Advance Threat Infrared

Countermeasures/Common Missile Warning

System

27.2 No SAR 3,378.2

Abrams Upgrade 744.0 6,397.8 6,694.2

Longbow Apache 1,001.5 8,211.8 8,275.2

Brilliant Anti-Armor Submunitions 50.2 3,254.0 3,042.1

Blackhawk UH-60L 133.2 9,970.2 4,778.6

Bradley Fighting Vehicle System Upgrade 296.6 4,185.3 4,125.9

Chemical Demilitarization 6.6 No SAR 13,612.6

Crusader 29.0 No SAR 2,641.1

Family of Medium Tactical Vehicles 0.1 15,875.3 16,376.0

(continued)

Page 18 GAO/NSIAD-98-31 Acquisition Reform
Appendix II 

Department of Defense Estimates of

Acquisition Reform Cost Reductions by

Program

Dollars in millions

Acquisition reform

cost reduction

Total cost from

12/93 SAR

Total cost from

12/95 SAR

Joint Surveillance Target Attack Radar

System Ground Service Module

$15.8 $1,585.7 $1,387.1

Javelin 1,425.5 5,096.6 3,826.2

Longbow Hellfire 0.0 3,498.1 2,606.9

Multiple Launch Rocket System 12.5 6,281.5 6,802.8

Palletized Load System 8.6 1,042.2 1,237.2

Patriot (PAC-3, DOD) 158.0 1,772.0 5,899.3

Sense and Destroy Armor (SADARM ) 12.9 4,785.0 2,703.6

Single Channel Ground and Airborne Radio

System

264.6 4,366.3 3,806.2

Secure Mobile Anti-Jam Reliable Tactical

Terminal

540.0 944.8 978.5

Army Tactical Missile System 340.4 2,590.5 4,409.1

Theater High Altitude Air Defense 101.5 4,819.0 4,947.2

Navy programs

Sidewinder AIM-9X 134.4 No SAR 682.3

AN/SQQ-89 Surface Ship Undersea Warfare

Combat System

48.0 3,820.0 3,996.1

AV-8B Remanufacture 21.8 No SAR 2,318.3

Cooperative Engagement Capability 367.8 No SAR 2,587.8

DDG-51 Destroyer 1,195.0 56,799.9 57,095.2

E-2C Hawkeye Carrier Based Airborne Early

Warning Command and Control System

590.6 No SAR 3,331.1

EHF SATCOM 47.1 2,334.0 2,150.2

F/A-18C/D 24.0 38,921.3 0.0

F/A-18E/F 3,000.0 89,128.1 80,958.7

Joint Standoff Weapon System 143.0 2,878.0 10,564.9

LHD-1 55.0 8,514.4 7,907.9

LPD-17 Amphibious Transport Dock Ship 1,000.0 59.1 72.9

Multifunction Information Distribution SystemLow-Volume Terminal12.0 1,092.1 1,129.9

New Attack Submarine Program 555.3 No SAR 64,891.4

Standard Missile-2 Block I, II, III, A, B 1.0 8,263.8 8,759.5

Standard Missile-2 IV 0.3 4,915.5 864.7

SSN-21 Seawolf- AN/BSY-2 62.8 12,908.2 13,124.3

Naval Undergraduate Jet Flight Training

System (T-45TS)

41.8 5,980.9 5,417.0

Tomahawk 566.2 12,649.8 13,847.1

Trident II Missile 190.0 25,513.5 27,702.5

(continued)

Page 19 GAO/NSIAD-98-31 Acquisition Reform
Appendix II 

Department of Defense Estimates of

Acquisition Reform Cost Reductions by

Program

Dollars in millions

Acquisition reform

cost reduction

Total cost from

12/93 SAR

Total cost from

12/95 SAR

UHF Follow-on Communication Satellite $185.0 $1,720.5 $1,868.5

V-22 639.9 6,636.4 46,599.7

Page 20 GAO/NSIAD-98-31 Acquisition Reform
Appendix III 

List of Weapon Systems We Reviewed

Dollars in millions

Service Program Base year

12/95 SAR

Program cost

normalized for

quantity

changes

12/93 SAR

Program cost

Program cost

Increase or

(decrease)

Percent of

program cost

Increase or

(decrease)

Army Advanced Field Artillery Tactical

Data System

1996 $1,133.6 $919.9 $213.7 23

Brilliant Anti-Armor Submunitions 1991 2,508.0 2,578.1 (70.1) (3)

Blackhawk UH-60L Utility

Helicopter

1971 1,858.7 1,917.5 (58.8) (3)

Bradley Fighting Vehicle System

Upgrade

1994 3,455.4 3,065.6 389.8 13

Joint Surveillance Target Attack

Radar System Ground Service

Module

1989 1,064.4 1,272.9 (208.5) (16)

Javelin Advanced Anti-Tank

Weapon System-Medium

1990 3,382.6 3,728.8 (346.2) (9)

Longbow Apache 1996 7,366.6 7,010.6 356.0 5

Longbow Hellfire Missile System 1996 2,402.9 2,968.0 (565.0) (19)

Multiple Launch Rocket System 1978 3,118.3 3,052.8 65.5 2

Palletized Load System 1993 896.3 997.6 (101.3) (10)

Sense and Destroy Armor 1989 1,502.9 906.7 596.2 66

Single-Channel Ground and

Airborne Radio System

1984 2,597.5 3,090.6 (493.1) (16)

Secure Mobile Anti-Jam Reliable

Tactical Terminal

1992 811.0 754.3 56.7 8

Average Cost Increase or

(Decrease)

(0.5)

Navy AN/SQQ-89 Surface Ship

Antisubmarine Warfare System

1985 3,418.9 3,429.8 (10.9) (<1)

DDG-51 Guided Missile

Destroyer

1987 41,948.2 41,023.5 924.7 2

F/A-18 E/F Naval Strike Fighter 1990 54,687.6 53,858.8 828.8 2

LHD-1 Amphibious Assault Ship 1982 6,042.2 6,288.8 (246.6) (4)

Navy EHF SATCOM Program 1990 1,891.7 1,875.0 16.7 1

SSN-21/AN/BSY-2 Attack

Submarine-Combat System

1990 12,201.2 12,039.9 161.3 1

Standard Missile-2 Block IV

Surface-to-Air Missile

1984 2,565.4 2,619.3 (53.9) (2)

Standard Missile-2 Block I, II, III

A, B Surface-to-Air Missile

1984 7,061.6 6,975.0 86.6 1

Trident II Sea Launched Ballistic

Missile

1983 19,776.8 19,563.5 213.3 1

(continued)

Page 21 GAO/NSIAD-98-31 Acquisition Reform
Appendix III 

List of Weapon Systems We Reviewed

Dollars in millions

Service Program Base year

12/95 SAR

Program cost

normalized for

quantity

changes

12/93 SAR

Program cost

Program cost

Increase or

(decrease)

Percent of

program cost

Increase or

(decrease)

Ultra High Frequency Follow-on

Communications Satellite

1988 $1,558.7 $1,433.6 $125.1 9

Average Cost Increase or

(Decrease)

1.4

Air Force Advanced Medium Range

Air-to-Air Missile

1992 12,003.3 11,923.4 79.9 1

E-3 Airborne Warning and

Control System Radar

1989 730.3 696.2 34.1 5

C-17A Globemaster III 1996 23,174.6 23,053.6 121.0 1

Cheyenne Mountain Update 1989 1,665.0 1,570.8 94.2 6

Defense Meteorological Satellite

Program

1975 875.2 778.9 96.3 12

F-22 Advanced Tactical Fighter 1990 50,885.9 49,074.3 1,811.6 4

Joint Surveillance Target Attack

Radar System

1983 6,119.2 5,813.4 305.8 5

NAVSTAR Global Positioning

System Satellite

1979 3,364.1 2,593.7 770.4 30

NAVSTAR Global Positioning

System User Equipment

1979 3,133.0 3,089.3 43.7 1

Titan IV Space Booster 1985 23,653.3 23,160.5 492.8 2

Average Cost Increase or

(Decrease)

3.2

Page 22 GAO/NSIAD-98-31 Acquisition Reform
Appendix IV 

Comments From the Department of Defense

See comment 1.

Page 23 GAO/NSIAD-98-31 Acquisition Reform
Appendix IV 

Comments From the Department of Defense

The following are GAO’s comments on the Department of Defense’s letter

dated October 3, 1997.

GAO Comments 1. DOD’s technical comments were considered and changes were made

where appropriate.

(707155) Page 24 GAO/NSIAD-98-31 Acquisition Reform
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

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

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

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

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (202) 512-6061, or TDD (202) 512-2537.

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

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

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

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

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

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

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100