Defense Acquisitions: DOD Could Achieve Greater Commonality and Efficiencies among Its Unmanned Aircraft Systems
Published: 2010-03-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: For the last several years, the Department of Defense (DOD) has planned to invest billions of dollars in development and procurement of unmanned aircraft systems. In its fiscal year 2011 budget request the department indicated a significant increase in these investments, expecting to need more than $24 billion from 2010 through 2015. DOD recognizes that to leverage its resources more effectively, it must achieve greater commonality among the military services' unmanned aircraft system acquisition programs. This testimony is based primarily on GAO's July 2009 report (GAO-09-520) which examined 10 unmanned aircraft acquisition programs: eight unmanned aircraft systems--Global Hawk, Reaper, Shadow, Predator, Sky Warrior, Fire Scout, Broad Area Maritime Surveillance, and Unmanned Combat Aircraft System-Demonstration; and two payload development programs--Multi-Platform Radar Technology Insertion Program, and Airborne Signals Intelligence Payload. The testimony focuses on: 1) the cost, schedule, and performance progress of the 10 programs as of July 2009; 2) the extent to which the military services collaborated and identified commonality among the programs; 3) factors influencing the effectiveness of the collaboration; and, 4) recent DOD investment decisions related to these acquisitions.
section_title: What GAO Found
paragraphs: Most of the 10 programs reviewed had experienced cost increases, schedule delays, performance shortfalls, or some combination of these problems. The programs' development cost estimates increased by more than $3 billion collectively, or 37 percent, from initial estimates. Procurement funding requirements for most programs also increased, primarily because of increases in numbers of aircraft being procured, changes in system requirements, and upgrades and retrofits to fielded systems. Procurement unit costs increased by an average of 12 percent, with three aircraft programs experiencing unit cost increases of 25 percent or more. Four programs reported delays of 1 year or more in delivering capability to the warfighter. Global Hawk, Predator, Reaper, and Shadow had been used in combat operations with success and lessons learned, but had been rushed into service in some cases, leading to performance issues and delays in development and operational testing and verification. Programs collaborated and identified areas of commonality to varying degrees. The Marine Corps was able to avoid the cost of initial system development and quickly deliver useful capability to the warfighter by choosing to procure existing Army Shadow systems. The Navy expected to save time and money on Broad Area Maritime Surveillance (BAMS) by using Air Force's Global Hawk airframe, and payloads and subsystems from other programs. However, Army and Air Force had not collaborated on their Sky Warrior and Predator programs, and might have achieved greater savings if they had, given that Sky Warrior is a variant of Predator and being developed by the same contractor. DOD encouraged more commonality between these programs. Although several programs achieved airframe commonality, service-driven acquisition processes and ineffective collaboration were key factors that inhibited commonality among subsystems, payloads, and ground control stations, raising concerns about potential inefficiencies and duplication. Despite DOD's efforts to emphasize a joint approach to identifying needs and commonality among systems, most of the programs assessed continued to pursue service-unique requirements. The services also made independent resource allocation decisions to support their unique requirements. DOD had not quantified the costs and benefits associated with pursuing commonality among these programs, and efforts to collaborate had produced mixed results. However, in order to maximize acquisition resources and meet increased demand, Congress and DOD have continued to push for more commonality. Since July 2009, DOD has made several investment decisions regarding unmanned aircraft systems, which in general, reflect increased emphasis on developing advanced capabilities and acquiring larger numbers of specific systems. However, the decisions do not appear to focus on increasing collaboration or commonality among the programs.

section_title: Letter
paragraphs: Thank you for this opportunity to discuss GAO’s recently issued report on  the Department of Defense’s (DOD) unmanned aircraft systems (UAS)  acquisition efforts. From 2002 through 2008, the number of unmanned  aircraft in the DOD’s inventory increased from 167 to more than 6,000 as a  result of the department’s efforts to meet the growing demand from the  warfighters for these capabilities. DOD has noted that meeting this  demand has been difficult because of the dynamic nature of supporting  ongoing combat operations in Iraq and Afghanistan, while at the same time  developing new and emerging capabilities. At the time of our report in July  2009, the department was planning to invest more than $16 billion from  2008 through 2013 to develop and procure additional unmanned aircraft  systems. More recently, the fiscal year 2011 defense budget request  indicates a significant increase in DOD’s unmanned aircraft investment  plans. However, the growing number of national priorities competing for  federal dollars will continue to challenge DOD’s efforts to meet escalating  demands for unmanned systems.
DOD recognizes that to more effectively leverage its acquisition resources,  it must achieve greater commonality and efficiency among the military  services’ various unmanned system acquisition programs. In fact, DOD  states in its Unmanned Systems Roadmap, that there is the potential for an  unprecedented level of collaboration to meet capability needs and reduce  acquisition costs by requiring greater commonality among the military  services’ unmanned systems. Although achieving commonality can be  difficult, we have reported in the past that taking an open systems  approach and designing systems with common subsystems and  components can reduce both production and life cycle costs as well as  improve interoperability among systems. For maximum benefit,  commonality should be incorporated into the design of a system when  requirements are being established. Unmanned aircraft systems can  potentially achieve commonality in design and development, ranging from  a complete system, including the ground control segment, to a subsystem  or component, as well as commonality in production facilities, tooling, and  personnel.
My statement today focuses on (1) the cost, schedule, and performance  progress of selected unmanned aircraft acquisition programs as of July  2009; (2) the extent to which the military services had collaborated and  identified commonality among those programs; (3) the key factors  influencing the effectiveness of their collaboration; and (4) recent DOD  investment decisions related to unmanned aircraft acquisitions. It is  primarily drawn from our July 2009 report that examined 10 acquisition  programs: eight unmanned aircraft programs and two payload programs.  We conducted this performance audit from August 2008 to July 2009 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: Unmanned aircraft systems generally consist of (1) multiple aircraft,  which can be expendable or recoverable and can carry lethal or non-lethal  payloads; (2) a flight control station; (3) information and retrieval or  processing stations; and (4) in some cases, wheeled land vehicles that  carry launch and recovery platforms. DOD categorizes these systems  based on key characteristics including weight and operating altitude.  While there were many small, less expensive unmanned aircraft in DOD’s  portfolio, our review focused on the larger, more costly programs. At that  time, these programs accounted for more than 80 percent of DOD’s total  investment in unmanned aircraft from fiscal year 2008 through fiscal year  2013. DOD’s 2011 budget request indicates that the department plans to  invest nearly $25 billion from 2010 through 2015 in development and  procurement of the unmanned aircraft systems we reviewed.  Table 1  details many of the key characteristics and funding requirements of those  systems. See appendix I for additional program data.
section_title: Unmanned Aircraft Acquisitions Have Experienced Cost Growth, Schedule Delays, and Performance Problems
paragraphs: Despite the proven success of unmanned aircraft on the battlefield and the  growing demand for the aircraft, these acquisitions continued to incur cost  and schedule growth. The cumulative development cost for the 10  programs we reviewed increased by over $3 billion, or 37 percent, from  initial estimates. While 3 of the 10 programs had little or no development  cost growth and one had a cost reduction, six experienced substantial  growth ranging from 60 to 264 percent. This cost growth was in large part  the result of changes in program requirements and system designs after  initiating development. Many of the programs began system development  with unclear or poorly defined requirements, immature technologies, and  unstable designs—problems we have frequently found in other major  acquisition programs. For example, in 2001, the Air Force began the  Global Hawk program based on knowledge gained from a demonstration  program, and planned to incrementally integrate more advanced  technologies over time. Within a year, however, the Air Force  fundamentally restructured and accelerated the program to pursue a  larger, unproven airframe with a multimission capability that relied on  immature technologies. The final design of the new airframe required  more substantial changes than expected. These changes ultimately drove  development costs up nearly threefold.
Procurement costs also increased for 6 of the 7 systems that reported  procurement cost data. Although in large part the cost increases were due  to the planned procurement of additional aircraft, many programs had also  experienced unit cost increases independent of quantity. As detailed in  table 2, overall procurement unit costs increased by 12 percent on average,  with three programs experiencing unit cost growth of 25 percent of more.  The Reaper and Shadow had unit cost growth despite increased quantities.  Reaper’s unit costs increased in part because requirements for missiles  and a digital electronic engine control were added—resulting in design  changes and increased production costs. Unit cost increases in the  Shadow program were largely the result of upgrades to the airframe that  were needed to accommodate the size, weight, and power requirements  for integrating a congressionally mandated data link onto the aircraft.  Furthermore, the Army is retrofitting fielded systems with capabilities that  it had initially deferred, such as a heavy fuel engine.
A number of programs had experienced problems in both testing and  performance, requiring additional development that contributed to the  cost growth noted above. Four programs had experienced delays of 1 to  nearly 4 years in achieving initial operational capability. Some of these  delays resulted from expediting limited capability to the warfighter, while  others were the result of system development and testing problems. For  example, early demonstration and production Global Hawks were rushed  into operational service. Program officials noted that as a result, the  availability of test resources and time for testing were limited, which  delayed the operational assessment of the original aircraft model by 3  years. Similarly, in February 2009, the Air Force reported that initial  operational testing for the larger, more capable Global Hawk aircraft and  the program’s production readiness review had schedule breaches. Air  Force officials cite the high level of concurrency between development,  production, and testing; poor contractor performance; developmental and  technical problems; system failures; and bad weather as key reasons for  the most recent schedule breach.
section_title: Efforts to Collaborate and Identify Commonality Were Successful in Some Cases, While Not in Others
paragraphs: Consistent with DOD’s framework for acquiring unmanned systems, some  of the tactical and theater-level unmanned aircraft acquisition programs  we reviewed had identified areas of commonality to leverage resources  and gain efficiencies. For example, the Army and Marine Corps achieved  full commonality in the Shadow program. In assessing options for  replacing an aging tactical unmanned aircraft system, the Marine Corps  determined that the Army’s Shadow system could meet its requirements  for reconnaissance, surveillance, and target acquisition capabilities  without any service-unique modifications. An official from DOD’s Office of  Unmanned Warfare emphasized that the Marine Corps believed that  Shadow represented a “100 percent” solution. The Marine Corps also  found that it could use the Army’s ground control station to pilot the  Shadow aircraft as well as other Marine Corps unmanned aircraft. A  memorandum of agreement was established in July 2007 to articulate how  the Marine Corps and the Army would coordinate to acquire Shadow  systems.
By forgoing any service-unique modifications in order to achieve a high  level of commonality, the Marine Corps avoided the costs of developing  the Shadow. Additionally, the Marine Corps and Army are likely to realize  some benefits in supporting and maintaining the systems because the  components are interchangeable. The Army’s Shadow program office  agreed that commonality has allowed the two services to realize  economies of scale while meeting each service’s needs. According to an  official at the Navy, the Marine Corps has been able to realize savings or  cost avoidance in other areas such as administration, contracting, and  testing, although quantitative data on these savings were not available.
In some cases, the services had collaborated to identify common  configuration, performance, and support requirements, but ultimately  were not maximizing efficiencies. For example, the Army and Navy had  different data link requirements for their respective variants of Fire Scout,  primarily because of the Army’s requirement for its variant to operate  within the Future Combat Systems network. According to the Fire Scout  contractor, the Army’s system could have been equipped with the same  data link as the Navy Fire Scout, as well as the Army’s Shadow and Sky  Warrior systems, and placed into service sooner. Though the services had  not agreed on a common data link, the Army and Navy had settled on  common Fire Scout requirements for the air vehicle, engine, radar,  navigation, and some core avionics subsystems requirements. The services  had also agreed to use one contract to procure the airframe. However, in  an information letter sent to members of Congress on January 11, 2010, the  Army noted that it had terminated the Fire Scout portion of its FCS  contract—following a decision by the Office of the Secretary of Defense  (OSD) to cancel the FCS program—because analysis indicated that an  improved Shadow system could meet future Army requirements, and the  Fire Scout was no longer needed.  Cancellation of the Army Fire Scout  could lead to increased unit cost for the Navy variant.
Although the Navy BAMS and Air Force Global Hawk programs had  identified commonalities between their airframes, the two programs had  established different payload, subsystem, and ground station  requirements. The Navy anticipated spending more than $3 billion to  modify the Global Hawk airframe and ground stations, and to integrate  Navy-specific payloads, including the radar. In addition, we found that the  Navy had an opportunity to achieve greater efficiency in BAMS  production. While production of the first two BAMS aircraft was planned  to occur at the same California facility that produces Global Hawk, the  remaining aircraft were expected to be produced at a facility in Florida.  We pointed out that this approach might create duplication in production  by staffing and equipping two facilities to conduct essentially the same  work. At the time of our review the Navy had not assessed the costs or  benefits of establishing a second production facility, and according to  contractor officials, the official business case analysis would not be  conducted for several years. Therefore, it was unclear whether any  benefits of a second production facility would outweigh costs, such as  additional tooling and personnel.
In contrast to the examples of the Shadow, Fire Scout, and BAMS / Global  Hawk programs above, the Army and Air Force missed opportunities to  achieve commonality and efficiencies between their Sky Warrior and  Predator programs. In 2001, the Army began defining requirements for a  replacement to the aging Hunter unmanned aircraft system, and decided to  pursue the development of Sky Warrior. Both the Air Force and the Joint  Staff responsible for reviewing Sky Warrior’s requirements and acquisition  documentation raised concerns about duplicating existing capability— specifically, capability provided by Predator. Nevertheless, the Army  program received approval to forgo an analysis of alternatives that could  have determined whether or not existing capabilities met its requirements.  The Army noted that such an analysis was not needed and not worth the  cost and effort. Instead, it conducted a source selection competition and  began the Sky Warrior development program in 2005, citing battlefield  commanders’ urgent need for the capability. The development contract  was awarded to the same contractor working with the Air Force to  develop and produce Predators and Reapers. Since the Sky Warrior is a  variant of the Predator, the two aircraft are assembled in the same  production facility. Despite the establishment of a memorandum of  understanding in 2006, direction from the Deputy Secretary of Defense in  2007 to combine their programs, and a subsequent memorandum of  agreement, the Army and Air Force maintained separate programs and at  the time of our review, had achieved little commonality.
section_title: Service-Centric Acquisition Processes and Ineffective Collaboration Have Reduced Opportunities for Commonality
paragraphs: While several of the unmanned aircraft programs we examined had  achieved commonality at the airframe level, service-centric acquisition  processes and ineffective collaboration resulted in service-unique  subsystems, payloads, and ground control stations. Despite DOD’s efforts  to encourage a joint approach to identifying and prioritizing warfighting  needs and to emphasize the need for commonality among the programs,  we noted that the individual services continued to drive requirements and  make independent resource allocation decisions. In many cases, the  services had established requirements so specific that they demanded  service-unique solutions, thereby precluding opportunities for  commonality. Within DOD’s funding system, each service has the  responsibility and authority to prioritize its own budget, allowing it to  make independent funding decisions to support unique requirements.  Therefore, once a service concludes that a unique solution is warranted,  the service has the authority to budget for that unique solution, to the  exclusion of other solutions that might achieve greater commonality and  efficiencies. While we recognized that service-unique requirements  appeared to be necessary in some cases, one OSD official we spoke with  emphasized concerns that some of the services’ distinctions in  requirements could lead to duplication and inefficiencies. However, OSD  had not quantified the potential costs or benefits of pursuing various  alternatives, including commonality.
In 2007, OSD established the Unmanned Aircraft Systems Task Force and  the Office of Unmanned Warfare primarily to facilitate collaboration and  encourage greater commonality among unmanned aircraft programs.  While the two groups act as advisors and have implemented OSD’s  recommendations regarding areas where further commonality might be  achieved key officials from these groups emphasized to us that they do not  have direct decision-making or resource allocation authority. OSD  repeatedly directed the Army and Air Force to collaborate on their Sky  Warrior and Predator programs, but the services continued to pursue  unique systems. In response to OSD direction to merge their unique signals  intelligence payload efforts into a single acquisition program, the Army  and Air Force concluded that continuing their separate programs was  warranted, and recommended that OSD direct an objective, independent  organization—such as a federally funded research and development  center—to conduct a business case analysis to assess the impact of  merging the two programs. Table 3 summarizes OSD’s directions and the  services’ responses over the past few years.
Congress and OSD took additional action in 2009 aimed at increasing  collaboration and commonality among unmanned aircraft programs. In  section 144 of the Duncan Hunter National Defense Authorization Act for  Fiscal Year 2009, Congress directed “he Secretary of Defense, in  consultation with the Chairman of the Joint Chiefs of Staff,  establish a  policy and an acquisition strategy for intelligence, surveillance, and  reconnaissance payloads and ground stations for manned and unmanned  aerial vehicle systems. The policy and acquisition strategy shall be  applicable throughout the Department of Defense and shall achieve  integrated research, development, test, and evaluation, and procurement  commonality.”  In an acquisition decision memorandum issued on  February 11, 2009, the Under Secretary of Defense for Acquisition,  Technology and Logistics identified the opportunity to adopt a common  unmanned aircraft ground control station architecture that supports future  capability upgrades through an open system and modular design. Similar  to OSD’s approach to ground control stations, the Air Force Unmanned  Aircraft Systems Task Force expected future unmanned aircraft to be  developed as open, modular systems to which new capabilities could be  added instead of developing entirely new systems each time a new  capability is needed.
section_title: DOD Continues to Increase Its Emphasis on and Funding For Unmanned Aircraft Systems
paragraphs: Since July 2009 when our report was issued, DOD has made several key  investment decisions regarding unmanned aircraft systems that will likely  impact those estimates. In general, these decisions reflect increased  emphasis on developing more advanced unmanned aircraft capabilities  and acquiring larger numbers of specific systems, but they do not appear  to focus on increasing collaboration or commonality among systems.
The 2010 Quadrennial Defense Review (QDR) reported that “U.S. forces  would be able to perform their missions more effectively—both in the  near-term and against future adversaries—if they had more and better key  enabling capabilities at their disposal.” The QDR report included  unmanned aircraft systems among these key enablers, and emphasized the  importance of rapidly increasing the number and quality of unmanned  aircraft systems—among other enablers—to prevail in today’s wars, and to  deter and defeat aggression in anti-access environments. The report also  noted that: the Air Force is going to increase the total number of  Predator/Reaper aircraft it plans to buy; the Army will accelerate the  production of its Predator-class Sky Warrior system; and the Navy will  conduct field experiments with prototype versions of its Unmanned  Combat Aircraft System, which, the QDR points out, offers the potential to  greatly increase the range of strike, and intelligence, surveillance, and  reconnaissance (ISR) operations from the Navy’s carrier fleet.
As part of DOD’s fiscal year 2011 budget development process, OSD made  several unmanned aircraft-related adjustments to the services’ budget  submissions. As part of those adjustments, OSD:    Directed the Army to stop development and initial fielding of its Fire    Provided the Air Force an additional $344 million from FY2011 to  FY2015 to develop, procure, and integrate counter-communication and  counter-improvised explosive device jamming pods onto 33 MQ-9  Reaper aircraft, and directed the Air Force to present its assessment of  platforms for this capability by June 1, 2010;    Provided an additional $1.8 billion from FY2011 through FY2015 to  purchase an additional 74 MQ-9 Reaper aircraft;    Added $2 billion to the Navy budget from FY2013 to FY2015 to define  requirements and develop unmanned carrier based capability, and  directed the Navy to develop an execution plan by March 30, 2010;    Added $201.6 million to the Global Hawk procurement budget to  procure 19 Block 40 aircraft by 2015, and 22 total;    Added $270.5 million for development and procurement of Global  Hawk satellite communication terminals;    Added $2.4 billion over the Future Years Defense Program to the  Army’s Extended Range Multi-Purpose (Sky Warrior) Aircraft budget to  procure an additional 12 aircraft and 5 ground stations (one company)  per year from 2011 through 2015.
In concert with the QDR and the fiscal year 2011 budget, DOD also  published its first submission of a long-range, fixed-wing aviation  procurement plan. Among other things, the plan addresses DOD’s strategy  for meeting the demand for persistent, unmanned, multi-role ISR  capabilities by:    Emphasizing “long-endurance, unmanned ISR assets—many with strike  capabilities—to meet warfighter demands;    Projecting an increase in the number of platforms in this category from  approximately 300 in 2011 to more than 800 in 2020, nearly 200 percent  increase;    Noting the “replacement of Air Force Predators with more capable    Establishing a specific category for Unmanned Multi-role Surveillance  and Strike systems, that distinguishes those systems from other types  of aircraft, such as fighters and bombers;     Noting that the department will continue to adapt the mix of unmanned  and manned systems as security needs evolve; and    Noting that unmanned systems are being considered as future long- range strike platforms and future fighter / attack aircraft.
section_title: Concluding Observations
paragraphs: In closing, recent experience in Iraq and Afghanistan has proven that  unmanned aircraft are extremely valuable to the warfighter, and it is clear  that more are needed. However, DOD will continue to be challenged to  meet this increasing demand within available resources. Many of DOD’s  larger unmanned aircraft acquisition programs have experienced cost  growth, schedule delays, and performance shortfalls, while not enough  have achieved the efficiencies one might expect from commonality. DOD  recognizes that to more effectively leverage its acquisition resources, it  must achieve greater commonality among the military services’ various  unmanned system programs. However, in many cases the services have  preferred to pursue unique solutions. In general, the military services  continue to establish unique requirements and prioritize resources while  foregoing opportunities to achieve greater efficiencies. As a result,  commonality has largely been limited to system airframes, and in most  cases, has not been achieved among payloads, subsystems, or ground  control stations.
Opportunities for identifying commonality are greatest when requirements  are being established. Therefore, as the department continues to develop  and procure unmanned aircraft systems, it must take more care in setting  requirements for those systems. Rather than looking for unique solutions  to common problems, DOD must increasingly find common solutions to  those problems. However, we recognize that commonality is not a  panacea, and in some cases, given legitimate differences in operating  environments or mission needs, may not make sense. We also recognize  that achieving commonality is not always easy, especially given the strong  service-driven acquisition processes and culture within the department.  Therefore, in our July 2009 report we recommended that DOD (1) direct  an objective, independent examination of unmanned aircraft requirements  and report a strategy to Congress for achieving greater commonality  among systems and subsystems, and (2) require future unmanned aircraft  programs to take an open systems approach to product development and  to clearly demonstrate that potential areas of commonality have been  analyzed and identified. We believe that these steps could help overcome  these barriers and could go a long way to ensuring that DOD maximizes  efficiency as it continues to greatly increase emphasis on developing and  acquiring more capable and larger quantities of unmanned aircraft.
section_title: Contacts and Staff Acknowledgments
paragraphs: For further questions about this statement please contact Michael J.  Sullivan at (202) 512-4841. Individuals making key contributions to this  statement include Bruce Fairbairn, Assistant Director; Travis Masters; Rae  Ann Sapp; Leigh Ann Nally; Laura Jezewski; and Susan Neill.
section_title: Appendix I: Additional Unmanned Aircraft Program Data and Information
paragraphs: This appendix contains 3 tables that provide additional information about  the 8 unmanned aircraft systems assessed in our July 2009 report. Table 4  contains the combined total development and procurement funding DOD  has requested in its fiscal year 2011 budget submission for each of the  programs. The budget data is presented in then year dollars and may not  add precisely due to rounding.  Tables 5 and 6 detail many of the key  characteristics and compare the capabilities of the systems discussed in  this statement.