Defense Acquisitions: DOD Needs to Reassess Joint Cruise Missile Costs before Starting New Production Phase
Published: 2010-10-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the past two and a half decades, the Department of Defense (DOD) has invested heavily to acquire a cruise missile capable of attacking ground targets stealthily, reliably, and affordably. After abandoning an earlier, more expensive missile and a joint service effort, the Air Force began producing the Joint Air-to-Surface Standoff Missile (JASSM) in 2001. After that, the program (1) encountered many flight test failures, (2) decided to develop an extended range version, and (3) recognized significant cost growth. The production decision for the JASSM-ER is planned for November 2010. Also, the Secretary of Defense has recently announced a major initiative to restore affordability and productivity in defense spending. This initiative is expected to, among other things, identify savings by conducting needed programs more efficiently. As DOD faces the initial production decision on JASSM-ER, GAO was asked to assess (1) most recent test results, correction of causes of previous flight test failures, and efforts to improve JASSM's reliability; and (2) JASSM cost changes, efforts to control costs, and additional cost risks for the program.
section_title: What GAO Found
paragraphs: Since 2007, design changes and other corrective actions by the Air Force have improved the baseline JASSM's test results significantly--the missile has now demonstrated 85 percent success versus 58 percent achieved previously and before the corrections. The JASSM-ER variant has done well thus far, with no failures during the first seven flight tests. These results reflect the Air Force's enhanced oversight of the program and significant investments made to improve reliability. These efforts also identified many of the root causes for flight test failures. While baseline JASSM missile reliability has improved, it is not expected to achieve the Under Secretary of Defense for Acquisition, Technology and Logistics' required level of 90 percent until 2013. Tests conducted thus far of the improved baseline JASSM and the JASSM-ER variants have been developmental--or controlled--in nature. Neither the improved JASSM baseline missile nor the JASSM-ER has been demonstrated in operationally realistic testing or in a combat operation. JASSM costs have increased by over seven percent since the program was restructured in 2008. As the table shows, since 1998, JASSM quantities have more than doubled and estimated program costs have grown from $2.2 billion to a $7.1 billion. The Air Force has taken several steps to control JASSM costs, but options to reduce costs at this point appear limited. In fact, several factors suggest additional cost growth is likely. First, the Air Force has not been able to provide enough funding to produce the missiles at planned rates. That has led to a less efficient production process, a longer production period, and higher costs that have not yet been reflected in the $7.1 billion estimate. Second, the Air Force's potential plans to retrofit existing missiles with the reliability improvements may not be feasible, given the missile's sensitivity to being reopened. If retrofits prove infeasible, new replacements may have to be purchased; if they are feasible, the Air Force may have to provide additional funding to retrofit all existing missiles. Finally, since the Air Force last compared JASSM to possible alternatives, the unit cost was assumed to be about 40 percent less than currently expected and that now could make alternatives more competitive in terms of cost and/or capabilities. A reevaluation of the JASSM program, given that most of its costs have yet to be incurred, is warranted before the decision to produce the JASSM-ER is made.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Defense reevaluate the JASSM program's affordability and cost-effectiveness before making the decision to produce the JASSM-ER. DOD partially concurred with GAO's assessment, but believes the JASSM-ER should begin production in November 2010. GAO believes that it is incumbent upon the department to reexamine JASSM before making the production decision to ensure that the program is structured as efficiently as possible and is still a good investment given the other demands DOD faces.

section_title: Letter
paragraphs: Over the past two and a half decades, the Department of Defense (DOD)  has invested heavily to acquire an Air Force air-to-ground cruise missile  capable of stealthy flight and reliable performance at affordable costs. The  Air Force invested in the Tri-Service Standoff Attack Missile (TSSAM)  from 1986 through 1994 but ended the program once the unit costs  exceeded $2 million per missile and as testing issues surfaced. The Air  Force is currently in production for the Joint Air-to-Surface Standoff  Missile (JASSM). This program is intended to provide a next-generation  cruise missile capable of striking high-value, highly defended targets from  outside the enemy’s air defenses launched from a variety of aircraft,  including the B-1, B-2, B-52, and F-16. Over the first several years of the  program, the Air Force (1) encountered many flight test failures, (2)  decided to develop an extended range version, and (3) recognized  significant cost growth which led to a critical Nunn-McCurdy unit cost  breach in 2006. The Air Force is about to begin producing the extended  range version (JASSM-ER) that will more than double the range of the  baseline missile. The two variants of JASSM are approximately 70 percent  common in hardware and 95 percent common in software.
As DOD approaches the production decision on JASSM-ER, you asked us  (1) to assess the results of testing, whether the causes of previous flight  test failures have been corrected, and Air Force initiatives to improve  JASSM’s reliability; and (2) to identify the extent JASSM costs have  changed over time, the steps the Air Force is taking to control costs, and  additional cost risks, if any, for the program. We note that the production  decision on JASSM-ER is being made shortly after the Secretary of  Defense announced a major initiative to improve the cost efficiency of  weapon systems acquisition.
To determine JASSM’s current costs and the extent they have changed, we  analyzed JASSM’s contracts, budgets, and selected acquisition reports. We  compared the cost estimating practices of Office of Secretary of Defense  (OSD) cost analysts in the development of the life-cycle cost estimates for  JASSM and JASSM-ER to our Cost Estimating and Assessment Guide. To  assess the results of the most recent tests and to determine if corrective  actions have been implemented, we analyzed JASSM flight test results and  the results of the failure review boards to determine scoring criteria and  results and what corrective actions were implemented. We interviewed  officials with the JASSM joint program office, Lockheed Martin—the  prime contractor, the Air Force, and Office of Secretary of Defense. We  interviewed a former Air Force official who was an early JASSM program  manager to better understand the program’s objectives and original  acquisition strategy. We also reviewed our prior work on best acquisition  practices which established a set of evaluation criteria for a knowledge- based acquisition approach. We conducted this performance audit from  November 2009 through October 2010 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: The JASSM program began in 1995 and was to be an affordable, joint  program between the Air Force and the Navy to meet an urgent need with  a streamlined acquisition strategy. JASSM predecessor TSSAM was also  planned to be a low-cost cruise missile able to deliver several different  munitions. However, after several unsuccessful flight tests, the lead  contractor for TSSAM initiated a reliability improvement program to  address higher reliability requirements, but demonstration of whether  problems had been resolved would have taken several years and cost more  than $300 million. As costs for TSSAM increased, the Army ended its  participation in the program and after a period of declining budgets and  changes to threat scenarios, a cost and operational effectiveness analysis  was completed, which showed that other options might be adequate to  meet national security requirements. In 2004, the Navy left the JASSM  program citing it as a redundant capability to other systems in its  inventory. JASSM was expected to require minimal maintenance while in  storage and life-cycle cost was to be controlled through improved  reliability and supportability achieved during development.
To execute the acquisition strategy and meet cost and schedule goals, the  Air Force used Total System Performance Responsibility (TSPR). TSPR  generally gives the contractor total responsibility for the entire weapon  system and for meeting DOD requirements, with minimum government  oversight. The Air Force made initial JASSM requirements flexible to allow  Lockheed Martin to have clear control of the design and product baseline.  Program officials stated this strategy was based on other successful  programs, such as the Joint Direct Attack Munition program, and would  allow the contractor flexibility to make changes to meet cost and schedule  deadlines without having to consult with the government. An example of  this flexibility was the mission missile effectiveness requirement. The  effectiveness requirement is the minimum number of missiles required to  kill specified targets and was named as a key performance parameter,  allowing trades between reliability, survivability, and lethality. In other  words, if the program was successful at achieving high levels of  survivability and lethality, reliability could remain low, even fluctuate, and  still meet the stated parameters. Quantities for JASSM were established by  reviewing the threshold targets and determining the number of missiles  necessary to meet operational damage criteria, based on missile  performance using the effectiveness requirement. Therefore, changes to  reliability would affect the quantities necessary to meet requirements.
As part of the program’s 1995 acquisition strategy, the Air Force received  five proposals for JASSM and in 1996 selected Lockheed Martin and  McDonnell Douglas to begin a 24-month risk-reduction phase. Following  the risk-reduction phase, the Air Force planned 32 months for  development and a total of 56 months from program start to full-rate  production in 2001. The program planned for concurrent developmental  and operational testing and evaluation with four flight tests planned before  initial production. The Air Force planned to have nine fixed-price  production lots from 2001 through 2009 totaling 2,400 baseline missiles  with an initial program cost estimate of $2.2 billion (fiscal year 2010  dollars).
A former Air Force official who was an early JASSM program manager  stated the Air Force accepted Lockheed Martin’s proposal, which included  favorable fixed-price contract prices for production lots 1 through 5 with  the understanding that the prices would increase after Lot 5. JASSM’s  acquisition strategy planned for a 74 percent unit cost increase between  Lots 5 and 6. The cost increase between Lots 5 and 6 was to occur at a  time when quantities were increasing. Despite this planned cost increase,  the production unit costs would have remained within the Air Force’s  acceptable range established before the competition and at much less cost  than TSSAM. Further, the prices offered by Lockheed Martin for the first  five production lots were below the Air Force’s desired cost range for the  system. Air Force officials said the low costs contributed to Lockheed  Martin’s selection. However, to maintain the benefits of this pricing, the  quantities purchased by the Air Force had to remain within a certain range  for each of the first 5 years.
While the Air Force planned for some cost growth in the original  acquisition strategy, the program’s cost grew much more than expected.  For the first four production lots, the Air Force benefited from the  favorable prices in the original contract. However, because of funding  limitations, it was not able to procure the minimum missile purchase in  Lot 5 and had to renegotiate this lot with Lockheed Martin. In doing so,  Lockheed Martin was able to renegotiate Lot 5 prices based on its actual  production costs—at over $1 million per missile. Air Force documentation  indicates that previously negotiated unit prices for Lot 1 through Lot 5  were as much as 45 percent less than Lockheed Martin’s actual costs.  Subsequent lots that had not been negotiated under the original contract  similarly reflected an increase in price.
Most of this cost growth took place prior to 2006, culminating in a critical  Nunn-McCurdy unit cost breach late in 2006. According to program  documents, several causes have been cited for the critical Nunn-McCurdy  unit cost breach: an unrealistic cost estimate resulting from a flawed  acquisition strategy; the addition of 2,500 more expensive JASSM-ER  variants; the costly efforts to overcome reliability problems; and reduced  annual production rates for a longer period. Following the critical Nunn- McCurdy unit cost breach, the Air Force halted production of the missiles  until DOD certified that the program should continue. The Under  Secretary of Defense for Acquisition, Technology, and Logistics  (USD/ATL) found no lower cost alternatives and certified the program in  2008, despite the missile’s higher than projected production costs.
Since operational testing began in 2001, the reliability of the JASSM  missile has been inconsistent. The Air Force flight-tested 62 baseline  missiles from January 2001 through May 2007, resulting in 25 failures and 3  “no tests,” which was a 58 percent reliability success rate. However,  because the program’s strategy allowed for the contractor to manage to  mission effectiveness by combining reliability with other factors, the 58  percent reliability rate was sufficient to meet mission effectiveness  criteria. The Air Force tracked reasons for flight test failures, but was not  part of the failure review boards until production Lot 5, 5 years after the  start of operational testing. Air Force officials stated that until 2006,  Lockheed Martin handled all flight test failure review determinations and  made corrective actions internally and the government was not heavily  involved. During the Nunn-McCurdy certification process, USD/ATL  directed the JASSM program to develop a reliability growth plan that  would achieve 90 percent reliability for the baseline missile. The program  set a goal of achieving this reliability rate by Lot 11, or fiscal year 2013. In  addition, the JASSM-ER program set a reliability goal of 85 percent by Lot  4, or fiscal year 2014.
In our 2000 report on JASSM, we recommended the Secretary of Defense  revise its acquisition strategy for the JASSM program to be more closely  linked to demonstrating that the missile design is stable and can meet  performance requirements before making the production decision. DOD  partially concurred with our recommendation stating that its acquisition  strategy is directly linked to knowledge points, that it is linked to specific  criteria established for making the low-rate initial production decision,  and that the contractor is required to meet these criteria. We concluded  that, while the Air Force had taken steps to link production decisions for  JASSM to knowledge, we did not believe that the specific criteria  established to support a production decision were sufficient to minimize  cost and schedule risk.
In June 2010, the Secretary of Defense announced an initiative to restore  affordability and productivity in defense spending. He stated that there is a  need to abandon inefficient practices accumulated in a period of budget  growth and learn to manage defense dollars in a manner that is “respectful  of the American taxpayer at a time of economic and fiscal stress.” He set a  goal to save $100 billion over the course of the 5 year defense planning  period. Subsequently, USD/ATL has issued guidance on delivering better  value to the taxpayer and improving the way DOD does business. That  guidance indicated that budget savings could be found by eliminating  unneeded and costly programs and activities as well as by conducting  needed programs and activities more efficiently, such as by stabilizing  production rates. Subsequently, in a September 14, 2010, memorandum,  USD/ATL provided specific guidance to acquisition professionals to  achieve this mandate. That guidance included 23 principle actions to  improve efficiency, including “Mandate affordability as a requirement” and  “Drive productivity growth through Will Cost/Should Cost management.”
section_title: Corrective Actions Have Led to Improved JASSM Test Results but Operational Effectiveness Is Still to Be Demonstrated
paragraphs: Since 2007, the Air Force has enhanced its oversight of the JASSM  program and made significant investments to improve its reliability as  directed by USD/ATL. As a result of increased reliability testing and  investments in reliability initiatives, the Air Force has identified many of  the root causes for flight test failures. Since then, design changes and  other corrective actions have improved JASSM baseline’s test results  significantly—now demonstrating 85 percent success. The JASSM-ER  variant has done well thus far, with no scored failures during the first  seven flight tests. However, while JASSM baseline missile reliability has  improved, it is not expected to achieve the USD/ATL-required level of 90  percent until 2013, and its operational effectiveness has not yet been  demonstrated either through operational testing or use in a combat  operation.
subsections: section_title: Enhanced Oversight and Increased Investments Have Led to Corrective Actions and Improved JASSM Reliability
paragraphs: In 2004, after two back-to-back flight test failures, the Air Force formed a  reliability enhancement team to address what it considered the loss of  confidence in JASSM’s performance, OSD’s concerns about the program,  and budget reductions. The team’s report stated that while JASSM’s  development and reliability were within acceptable ranges when  compared to other cruise missiles, the JASSM program should increase  testing to discover additional weaknesses in design or production as well  as increase confidence in the level of reliability achieved and tie those  results to contractor incentives. In 2007, after direction from USD/ATL and  the Air Force during the Nunn-McCurdy certification process, the program  office updated the Joint Reliability and Maintainability Evaluation Team  and Test Data Scoring Board charters to significantly expand their role in  management of system development, manufacturing, configuration  changes, and testing. Since 2007, as a result of the Air Force’s increased  attention to reliability testing and investments in reliability initiatives, the  program has identified many of the root causes for reliability failures.  While there is no single cause behind JASSM flight test failures, common  failures occurred across JASSM subsystems including navigation, flight  control, and propulsion.
Most of the corrective actions to address the causes of the flight test  failures affect missile hardware and many have been implemented in the  current configuration for new production missiles. However, some flight  test failure investigations are still ongoing. Those investigations are often  difficult because of the lack of physical evidence after the flight test  missile detonates on the White Sands missile range. As a result, identifying  the root causes for failures were based on very extensive component  testing at supplier facilities. Additionally, the root causes for several test  failures were never conclusively determined as the failures may have  resulted from aircraft or user malfunctions. Efforts to address significant  reliability problems found during testing have contributed greatly to  JASSM’s cost growth and schedule delays since the beginning of  development. The Air Force has estimated that it may ultimately spend  about $400 million through fiscal year 2025 on its reliability improvement  initiatives.
The Air Force has also increased lot acceptance testing of the fuses and  implemented high-speed photography and screening improvements. In  addition to forensic evaluation of the missile impact area, the Air Force  also employs visual inspections and a built-in-test. The Air Force has also  taken a variety of actions, in addition to flight testing, to improve JASSM’s  reliability, including the following initiatives.
Increased Oversight: The Air Force and Lockheed Martin have begun  a process verification program to ensure suppliers follow prime  contractor specifications. According to Air Force officials, the process  verification program has allowed the Air Force to avoid unforeseen  costs as some missile parts have become obsolete. Further, officials  stated that it allows the JASSM program to catch problems earlier and  plan on how to replace parts sooner. According to a program official,  one process verification program team caught an obsolescence issue  with a global positioning satellite receiver and was able to minimize the  cost and production effect on the program.
Missile Redesign: Program officials state that while wholesale missile  redesign is not considered a cost-effective option, they are considering  design changes and improvements at the component level.
Increased Personnel: The program office has increased the number  of government personnel supporting the process verification program  and corrective action efforts. During Lot 1, the program had two staff  members with production and manufacturing engineering expertise— by Lot 7, 22 staff members had such expertise.
Improved Quality Assurance: In August 2006, the Air Force and  Lockheed Martin implemented a quality assurance program. Lockheed  Martin has implemented tests and improvement programs to increase  user confidence in reliability and control costs. For example, Lockheed  Martin officials stated that, to improve reliability, they have begun  using a test that exposes electrical connections to higher voltages than  they usually encounter during flight to make sure the wiring can handle  a surge. Additionally, Lockheed Martin has increased the sample sizes  of certain components they inspect and test.
section_title: Recent JASSM Testing Has Shown Improved Results
paragraphs: Recent tests of JASSM have demonstrated increased reliability. Since the  Air Force’s reliability initiatives began in fiscal year 2007, the JASSM  program has conducted 48 missile flight tests and 39 have been successful  (2 were characterized as “no-test”) for a reliability rate of 85 percent.
The current focus of JASSM baseline testing has been on improving the  reliability of the missile. In the most recent tests of the JASSM baseline  missiles produced in 2008, 15 of 16 flight tests were considered successful.  In the one failure, the warhead did not detonate and the program is  awaiting fuse recovery to make a determination of the root cause. The  JASSM-ER is in developmental testing. Developmental testing of JASSM- ER is primarily addressing the differences of JASSM-ER from the baseline  system (i.e., larger engine and fuel tanks) and will verify integration on the  B-1 aircraft. All seven test flights of JASSM-ER have been successful. The  program office is planning three additional integrated JASSM-ER tests to  be flown before a production decision is made.
section_title: Uncertain If Improved Missile Reliability Will Result in Improved JASSM Operational Effectiveness
paragraphs: In 2007, after USD/ATL’s decision to enhance JASSM reliability, the Air  Force and Lockheed Martin agreed to focus on the inherent reliability of  the missile and not take into account user error or platform malfunctions  (i.e., carrier aircraft, aircrew instrumentation, range safety, etc.). Whereas  operational testing is designed to evaluate the ability of JASSM to execute  a mission, reliability testing is more narrowly focused on evaluating the  missile’s performance during the mission. While mission failures were  counted against the program during initial testing, more recent mission  test failures have been declared “no tests.” For example, in early testing  when a B-52 software issue resulted in an aborted mission and it was  scored a test failure, this event would have been declared a no test under  current missile reliability definitions.
While recent flight testing of the baseline missile has shown improved  missile reliability, the Air Force has not yet evaluated the operational  effectiveness and suitability of the baseline JASSM with all corrective  actions implemented. The JASSM program assesses operational  effectiveness through operational testing, follow-on testing, and the  weapon system evaluation program (routine tests of inventory assets).  These flight test scenarios assess operational effectiveness in realistic  combat scenarios against targets by determining reliability, evaluating  capability and limitations by identifying deficiencies, and recommending  corrective actions. In operational testing, the JASSM baseline program  flight tested 38 missiles from June 2002 through May 2007 resulting in 19  failures and two no tests. While these tests identified issues with missile  reliability, they also identified issues related to the B-52 aircraft, aircraft  software, and fuse issues which negatively affected the operational  effectiveness of the missile. This led to a 9-month suspension of testing in  2004 to address these issues. The improved JASSM baseline missile’s  suitability was assessed by Air Force testers in 2008 and it was  characterized as suitable and likely to meet reliability goals; however,  operational testing of the effectiveness of the improved missile has not yet  been scheduled.
section_title: Several Areas of Potential Cost Risk Could Further Increase JASSM Program Costs
paragraphs: Current projections of JASSM costs have increased by over 7 percent since  the Nunn-McCurdy certification in 2008. When taking into consideration  the pre-2008 cost growth, which included the cost of adding the JASSM-ER  variant, JASSM has grown from a $2.2 billion to a $7.1 billion program. In  addition, while it has initiated several cost control measures, the Air Force  appears to have limited options to reduce JASSM costs. Moreover, several  areas of risk could add to those costs. First, the Air Force has not been  able to provide enough annual funding to support the annual procurement  levels used as the basis for its 2008 program cost estimate. That has led to  a less efficient production process and a longer production period (most  recently extended 5 years to 2025). Second, until the Air Force evaluates  the effectiveness of the inventory JASSM baseline missiles with corrective  actions for previously identified hardware and software issues, their  viability and military utility is in question. If inventory missiles are found  not to have utility, they may need to be replaced. If retrofitted missiles are  found to be effective, the Air Force may still have to find additional  funding to complete the retrofit process. Third, the Air Force plans to  conduct many more flight tests to improve JASSM reliability from 85 to 90  percent. Finally, in comparing the capabilities and cost of JASSM to  several domestic and international missile systems in 2008, the Air Force  assumed that JASSM would cost about $1 million per unit, which is about  40 percent less than currently expected.
subsections: section_title: JASSM Costs Are Much Higher Than Originally Anticipated
paragraphs: Compared to original program estimates, JASSM’s currently projected  costs are much higher because of (1) higher than anticipated production  costs, (2) longer production period, (3) the addition of the JASSM-ER  variant, and (4) reliability improvement efforts. Through fiscal year 2010,  about 75 percent of the planned JASSM quantities have yet to be procured  and, as a result, most of the program costs have yet to be incurred.
Following the critical Nunn-McCurdy unit cost breach, the Air Force  halted production of the missiles until USD/ATL certified that the program  should continue. USD/ATL found no lower cost alternatives and certified  the program in 2008, despite the missile’s higher than projected production  costs. As a part of our review, we examined the cost estimates used by  OSD to certify the program following the critical Nunn-McCurdy unit cost  breach. This estimate used the actual costs of the missile since JASSM was  well into the production phase at the time. Overall, the Air Force’s cost  estimate substantially met our best practice standards in our Cost Guide.
For a more in-depth discussion of our review of this JASSM cost estimate,  see appendix III.
Since the Nunn-McCurdy certification in 2008, the growth in JASSM’s  projected program cost has moderated, rising about $500 million (from  $6.6 billion to $7.1 billion) through 2025. Reliability enhancements to the  JASSM missile instituted in 2007 and additional reliability testing have  added the majority of the increase in program costs. These enhancements  were implemented to meet USD/ATL’s 90 percent reliability goal which  was set during the Nunn-McCurdy certification. Also, the Air Force  decided to lengthen the program’s procurement schedule by another 5  years, buying the same number of missiles over a longer time period. That  reduces the efficiency of the production processes and adds inflation to  the cost estimate. Currently, on a per unit basis, the average procurement  unit cost of a JASSM missile is projected to be about $1.2 million. JASSM- ER is expected to cost about $200,000 more than the average, about $1.4  million per unit.
Since 2008, the Air Force has added several measures to control costs in  the JASSM program, but the effect of these measures is not yet clear.  Examples of these measures include the following.
Contract Incentives: The Air Force has begun using fixed-price  incentive (firm target) contracts for each lot to produce the missiles for  less than projected.
Greater Insight into Actual Costs: Air Force officials have  increased insight into Lockheed Martin’s actual costs, which may make  them more informed when negotiating new contracts. Program officials  stated that, for example, they now know how many engineers are  needed to perform a certain task and the number of hours it takes to  assemble a missile. The Air Force can directly verify the costs charged  by subcontractors.
Increased Authority over Design: In recent contract negotiations,  the Air Force gained approval authority over certain design changes  that may affect current and future lots, including those that may  increase cost, require retrofit, or affect safety. Previously, Lockheed  Martin had full authority over most design changes.
While the effectiveness of the cost control measures is not yet known, the  Air Force appears to have limited options to actually reduce those costs.  For example, annual production rates are expected to remain well below  the levels projected at the start of the program. The 2008 Air Force cost  estimate was based on an annual production rate of 280 missiles per year.  However, that cost estimate may now be understated because the program  has not produced that many missiles in a single year since 2005. For  example, the Air Force’s procurement quantities for production Lot 7 and  Lot 8 were 111 and 80 units, respectively, well below the economic order  quantity of 175 missiles per year. Program officials stated that annual  quantities below the economic order quantity will result in an increasingly  inefficient production process and some key suppliers may shift from  continuous to limited production. Further, Lockheed Martin officials  stated that low production rates could cause skilled labor to look  elsewhere for work and JASSM reliability could be adversely affected. The  contractor has been able to maintain some level of production efficiency  because of foreign military sales that make up for the reduced Air Force  procurements. However, lower than projected annual procurement levels  will increase production costs. A further challenge is the fact that JASSM’s  design is mostly complete and there may be few opportunities to reduce  production costs through redesign. As a result, average JASSM unit costs  may remain in excess of $1.2 million indefinitely.
section_title: Effectiveness of Retrofitting Corrective Actions into JASSM Inventory Is Uncertain
paragraphs: The Air Force has plans to address the low reliability of missiles in its  inventory by retrofitting some of its 942 missiles with hardware and  software corrective actions. Program officials state the retrofit costs will  be shared between Lockheed Martin and the Air Force, but the total cost  to retrofit the missiles in inventory has not been calculated. However,  previous efforts to retrofit JASSM missiles have proven to be problematic.  An example of challenges associated with retrofitting missiles is adding  telemetry instrumentation kits after the missiles have been produced and  are in the inventory. Those kits are added to all missiles to be flight  tested. This requires opening up the missile to insert telemetry after the  stealth coating has been applied and increasing the number of electrical  connections as compared to a production missile. Air Force officials  stated the kit could add some reliability concerns when it is added to test  missiles because the missiles were not designed to be opened after they  were completed. Air Force officials also stated that workers have to  reroute wires and remove the engine so that the self-destruct mechanism  can be installed and all of this rework inside the missile has the potential  to lead to more errors and cause additional reliability issues.
The impact of retrofitting missiles has become evident in the weapon  system evaluation program, which is operationally representative flight  testing run by users of the system and focuses on the performance of  missiles in the inventory. JASSM’s performance in this evaluation program  has not been good, with 7 failures in 12 tests from 2006 through 2007, and  with at least some of the failures attributable to the retrofit process. The  addition of telemetry kits has also contributed to 3 no tests during other  JASSM flight testing. The Air Force has not yet flight tested any of the  JASSM inventory missiles that have been retrofitted with all of the  corrective actions to address reliability issues. This type of test would be  important in determining the viability of the current inventory of JASSM  missiles and would be a key input in the Air Force deciding whether or not  to retrofit the entire inventory of missiles.
section_title: Additional Flight Testing to Further Improve Reliability Will Be Costly
paragraphs: The Air Force plans more flight tests in the next few years of new  production missiles to meet missile reliability goals. For the JASSM  baseline missile to meet its reliability requirement, the Air Force is  planning to conduct up to 48 additional flight tests, at a cost of about $120  million. In addition, most reliability issues with the baseline variant will  directly affect the progress of the JASSM-ER variant as the missiles are at  least 70 percent common in hardware and 95 percent common in software.  Anything learned during these flight tests about the baseline applies to  JASSM-ER. According to the Air Force, as many as 20 additional flight  tests may be needed to fully demonstrate JASSM-ER’s reliability goal of 85  percent.
The $190 million cost to achieve the final percentages of missile reliability  reflects the fact that problems or weaknesses become harder to find and  correct as the more obvious issues are corrected. Program officials are  considering alternative means to meet user needs for a more reliable  missile while reducing the cost of JASSM flight testing.
section_title: Previous Analysis of Alternatives Assumed Much Lower Costs of JASSM Missile
paragraphs: As part of the Nunn-McCurdy certification process in fiscal years 2007  through 2008, DOD assessed whether there were readily available  alternatives that provided as much or more capability as JASSM at lower  cost. DOD assessed programs ranging from direct attack munitions to  intercontinental range missiles. For the JASSM baseline missile, all of  DOD’s existing programs were found to be less effective in terms of  lethality, survivability, or capacity. The Navy’s Tomahawk missile was the  closest alternative to meeting JASSM’s capability but it is not as lethal as  JASSM. Also, the Tomahawk is launched from ships and not from aircraft,  as the Air Force plans to use the capability.
DOD also evaluated new or modified programs as possible alternatives to  JASSM and JASSM-ER. The Air Force evaluated 12 domestic and  international missile systems with projected unit production costs ranging  from $600,000 to $2.8 million. JASSM-ER, estimated at the time of this  evaluation to cost $1 million per unit, was more expensive than 5  alternative systems under consideration. In terms of performance, some  alternatives were more capable than JASSM and some were not. All of the  alternative systems were expected to require some up-front investment.  Based on this analysis, no other alternative was found to provide greater  or equal military capability at less cost than JASSM-ER.
Later in the Nunn-McCurdy process, however, OSD cost analysts found  that the costs of JASSM-ER would likely be at least $1.4 million per  missile. That continues to be the projected unit cost of JASSM-ER and, as  we discussed earlier in this report, there are cost risks that may drive that  unit cost higher. Despite the higher production unit costs for JASSM-ER,  the Air Force has not revisited the results of its assessment of alternatives.  In light of the current cost projections, which are 40 percent higher than  assumed in the previous assessment, JASSM-ER would be equal to the cost  of an additional alternative. Further, the unit cost differential between  JASSM-ER and the lower-priced alternatives may now be large enough to  make those alternatives more competitive in terms of cost or capabilities.
section_title: Conclusions
paragraphs: DOD’s 25-year history to acquire and field an affordable air-to-ground  cruise missile has been a difficult one. After abandoning the expensive  TSSAM program, the Air Force conceived the JASSM program using an  acquisition strategy that minimized government oversight. After  restructuring the program in 2008 and after considerable effort to improve  reliability, the JASSM program as it exists today is much different than  originally envisioned. A $2.2 billion, 11-year program to produce 2,400  missiles has become a $7.1 billion, 28-year program to produce 4,900  missiles. From a technical and capability standpoint, the program offers  more now than the baseline missile did before 2008. Yet, the effectiveness  of the new missiles remains to be demonstrated in operational testing, and  low production rates, retrofit costs, and additional reliability testing could  drive program costs higher.
At this point, about 70 percent of the projected JASSM costs have not yet  been incurred. In November 2011, DOD will decide whether to approve the  Air Force’s request to start low-rate initial production of the JASSM-ER  variant. Low-rate initial production is normally the last major milestone  decision for an acquisition program. With the JASSM program now  expected to extend through 2025 and about $5 billion yet to be spent, a  reevaluation of its cost-effectiveness is warranted before such a  commitment is made. This is particularly true given the Secretary of  Defense’s recent initiative to improve the cost-efficiency of defense  acquisition programs. At this juncture, the JASSM program would seem to  be an excellent opportunity for DOD and Air Force leadership to take a  hard look at the cost-effectiveness and efficiency of this important but  costly defense program.
section_title: Recommendation for Executive Action
paragraphs: We recommend that the Secretary of Defense defer the production  decision for JASSM-ER until (1) the program’s likely costs and  affordability are reassessed to take into account the feasibility and cost of  retrofitting JASSM baseline missiles or replacing them, the cost of  additional reliability testing against the likely improvement, and the effect  of sustained low production rates; and (2) the results of the previous  analysis of alternatives are reassessed in light of the likely costs of the  JASSM program.
section_title: Agency Comments and Our Evaluation
paragraphs: In its comments on our draft report, DOD partially concurred with our  recommendation. DOD stated that JASSM-ER is on track for a Milestone C  low-rate initial production decision in November 2010. DOD also agreed  that the rate of JASSM production has not been optimum and that it plans  to address efficient production rates as part of the JASSM-ER Milestone C  decision. DOD also stated that (1) there are no additional plans (nor is  there a need) to retrofit fielded JASSMs above what has already been  accomplished or is under way; (2) it has revisited various alternatives and  reaffirms the continued validity of its 2008 conclusion that none of the  alternative concepts provide comparable operational utility at or near a  similar cost or schedule to JASSM; and (3) in the absence of viable  alternatives, delaying the program further will increase costs and further  postpone delivering a vital capability to the warfighter. DOD’s response is  reprinted in appendix II.
In concluding that retrofits to the inventory missiles may not be necessary,  DOD does not address the viability of the current inventory of JASSM  baseline missiles or the need to replace some or all of them. Until the Air  Force evaluates the effectiveness of the inventory of JASSM baseline  missiles with corrective actions for previously identified hardware and  software issues, their viability and military utility will still be in question.  In addition, DOD states that the Air Force has revisited its earlier  assessment of alternatives to JASSM and again found that there are none  with comparable utility, cost, or schedule. This is new information and  DOD did not provide details for us to assess, including whether the Air  Force factored in the higher current projections of JASSM costs. Finally,  DOD did not address the part of our recommendation dealing with the  cost of additional reliability testing against the likely improvement.
To the extent DOD has made decisions on retrofits and reconsideration of  alternatives, these are positive signs, as is its agreement to address the  efficiency of production rates. At this point, it is not clear whether the  reliability of the existing baseline inventory missiles is acceptable or  whether additional reliability testing is warranted. These determinations  are necessary to establish the full value and cost of the JASSM program.
Beyond these steps, it is incumbent upon the department to reexamine  JASSM before making the production decision to ensure that the program  is structured as efficiently as possible and is still a good investment given  the other demands DOD faces. DOD’s agreement to address the efficiency  of JASSM production rates is a positive step. This is particularly important  given the Secretary’s current efficiency and affordability initiative. DOD  needs to ensure that it has the information available to fully assess the  JASSM investment before making the production decision. If DOD needs  more time, then we believe the decision could be delayed.
We also received several technical comments from DOD and the Air Force  and have made other changes to our report.
We are sending copies of this report to the Secretary of Defense and  interested congressional committees. In addition, this report will be made  available at no charge on the GAO Web site at http://www.gao.gov. If you   or your staff have any questions about this report or need additional  information, please contact me at (202) 512-4841 or sullivanm@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. GAO staff who made  major contributions to this report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To determine Joint Air-to-Surface Standoff Missile’s (JASSM) current  production unit costs and the extent they have grown, we analyzed  JASSM’s contracts, budgets, and compared the program’s selected  acquisition reports. We analyzed Nunn-McCurdy documentation and  certification criteria as well as Air Force and Lockheed Martin data to  determine the causes for the cost growth and critical breaches. We  interviewed officials with the JASSM joint program office; Lockheed  Martin; the Office of Secretary of Defense Cost Assessment and Program  Evaluation; and a former program official.
To determine the extent to which Department of Defense’s (DOD) cost  estimating policies and guidance support the development of high-quality  cost estimates, we analyzed the cost estimating practices of the Cost  Analysis Improvement Group (CAIG), now known as the Cost Analysis  and Process Evaluation (CAPE), in the development of life-cycle cost  estimates for the Air Force’s Joint Air-to-Surface Standoff Missile Program  (baseline and JASSM-ER variants), against the 12 best practices of a high- quality cost estimate as defined in our Cost Estimating and Assessment  Guide.
We assessed each cost estimate, used in support of the critical Nunn- McCurdy unit cost breach, against these 12 key practices associated with  four characteristics of a reliable estimate. As defined in the guide, these  four characteristics are comprehensive, well-documented, accurate, and  credible, and the practices address, for example, the methodologies,  assumptions, and source data used. We also interviewed program officials  responsible for the cost estimate about the estimate’s derivation. We then  characterized the extent to which each of the four characteristics was met;  that is, we rated each characteristic as being either Not Met, Minimally  Met, Partially Met, Substantially Met, or Fully Met. To do so, we scored  each of the 12 individual key practices associated with the four  characteristics on a scale of 1-5 (Not Met = 1, Minimally Met = 2, Partially  Met = 3, Substantially Met = 4, and Fully Met = 5), and then averaged the  individual practice scores associated with a given characteristic to  determine the score for that characteristic.
To determine the results of the most recent tests and if corrective actions  have been implemented for previous test failures, we analyzed JASSM  flight test results and failure review board findings to determine scoring  criteria and results to determine what corrective actions were  implemented. We determined whether recent flight test results are  representative of the entire fleet by comparing and evaluating the lot-by- lot missile configuration changes and retrofit activities. We interviewed  officials with the JASSM joint program office; Lockheed Martin; Office of  Under Secretary of Defense for Acquisition, Technology, and Logistics;  Director, Operational Test and Evaluation; Air Combat Command;  Secretary of the Air Force for Acquisition; Office of Secretary of Defense  Cost Assessment and Program Evaluation; Joint Staff; Air Force  Directorate of Test and Evaluation; and a former Air Force official who  was an early JASSM program manager to better understand the program’s  objectives and original acquisition strategy. We discussed recent DOD  reliability initiatives with Office of the Director, Operational Test and  Evaluation officials.
To determine what the Air Force has done to control and reduce  production costs while improving reliability, we examined JASSM’s  contracts to see what provisions have been added as well as Air Force and  Lockheed Martin data. We interviewed officials with the JASSM joint  program office; Lockheed Martin; and Office of Secretary of Defense  (OSD) test organizations to determine if testing reflects the current  effectiveness of the missile. We reviewed our prior work on best practices  for a knowledge-based approach for acquisition programs in determining if  the Air Force’s approach to beginning the JASSM-ER program meets best  practices. We compared requirements and other documents to see if the  JASSM-ER missile reflects lessons learned from the baseline variant as  well as increased knowledge and oversight from the government. We  compared the baseline design with JASSM-ER to determine commonality.  We interviewed officials with the JASSM joint program office; Lockheed  Martin; Office of Under Secretary of Defense for Acquisition, Technology,  and Logistics; Office of Secretary of Defense Cost Assessment and  Program Evaluation; Director of Operational Test and Evaluation; Air  Combat Command; Secretary of the Air Force for Acquisition; Joint Staff;  and a former program official to the determine acquisition planning  leading up to JASSM-ER’s production decision and what initiatives have  been taken to control costs.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: JASSM Baseline and JASSM-ER Cost Estimates Met Most Best Practices, but the Risk Analyses Did Not Consider Reliability or Extending the Production Schedule
paragraphs: After reviewing documentation submitted by the JASSM program office,  conducting interviews, and reviewing relevant sources, we determined the  CAIG’s life-cycle cost estimate’s totaling $7.1 billion for both programs— the JASSM baseline cost estimate was $3.4 million while the JASSM-ER  variant cost estimate of $3.7 million—Fully Met one and Substantially Met  the other three characteristics of a reliable cost estimate, as shown in  Table 3 below. We assessed 12 measures consistently applied by cost  estimating organizations throughout the federal government and industry  and considered best practices for the development of reliable cost  estimates. We analyzed the cost estimating practices used by CAIG in  developing the life-cycle cost estimates for both programs against these 12  best practices and the findings are documented in table 3 below.
The following explains the definitions we used in assessing CAIG’s cost  estimating methods used in support of the critical Nunn-McCurdy unit cost  breach:    Fully Met—JASSM program office provided complete evidence that  satisfies the entire criterion;   Substantially Met—JASSM program office provided evidence that  satisfies a large portion of the criterion;   Partially Met—JASSM program office provided evidence that satisfies  about half of the criterion;   Minimally Met—JASSM program office provided evidence that  satisfies a small portion of the criterion; and   Not Met—JASSM program office provided no evidence that satisfies  any of the criterion.
The sections that follow highlight the key findings of our assessment.
subsections: section_title: JASSM Baseline and JASSM-ER Estimates Substantially Met Characteristics for Comprehensiveness
paragraphs: Though the cost estimates accounted for all possible costs and were  structured in such a manner that would ensure that cost elements were  omitted or double-counted, neither the JASSM baseline nor JASSM-ER had  a Work Break Down Structure (WBS) dictionary that defined each  element.  In addition, the JASSM baseline variant provided no evidence  that risks associated with the ground rules and assumptions were traced  back to specific cost elements.
All applicable costs including government and contractor costs  were included in the estimates—The cost estimates included sunk  costs such as contractor program management, overhead, system  design, and development and testing. In addition, the program office  outlined the cost estimating methodology, basis of the costs, as well as  development costs for JASSM-ER and other government costs.
The cost estimates’ level of detail ensure that no costs were  omitted or double-counted—The cost estimates are based on a  product-oriented WBS which is in line with best practices. For  example, the cost estimate is broken down into various components  such as the propulsion, payload, airframe, and guidance and control  and also includes supporting cost elements such as systems  engineering, program management, and system test and evaluation. As  a result, all of the system products are visible at lower levels of WBS  providing us with confidence that no costs were omitted or double- counted. WBS has been updated as the JASSM baseline and JASSM-ER  programs have evolved; however, there is not an accompanying  dictionary that defines each element and how it relates to others in the  hierarchy.
Ground rules and assumptions were largely identified and  documented—The JASSM baseline cost estimate documentation  included a list of risk model inputs based on WBS elements. Although  WBS elements such as engineering support, subcontractor, and  warranty were identified, there was no discussion of risk upon  assumptions that drive costs such as product reliability, sustainability  of subcontractors, or schedule variability. Like the JASSM baseline cost  estimate documentation, the JASSM-ER cost estimate documentation  also included a list of ground rules and assumptions; however, there  was evidence that risk associated with the fuel tank assumption was  traceable to a specific WBS element. In separate documentation, we  were able to identify where the program office considered risks for the  JASSM baseline estimate.
section_title: JASSM Baseline and JASSM-ER Estimates Fully Met Characteristics for Being Well Documented
paragraphs: Both cost estimates were documented in enough detail that would allow  an analyst unfamiliar with the program to recreate the estimate and get the  same result. In addition, the briefing to management was detailed enough  to show that the estimates were credible and well documented.
The cost estimate is fully documented—For the JASSM baseline  and JASSM-ER, the cost estimate documentation included a report  documentation page identifying the report date, title, contract number,  report authors, and other information. The documentation also  included a table of contents, introduction, purpose, and structure of the  document as well as the scope of the estimate, a list of team members,  the cost methodology, and a system description. The documentation  discussed a risk and sensitivity analysis, costs broken out by WBS  elements including data sources and estimating method and rationale,  and provided evidence that the estimates were updated using actual  costs. In a separate briefing, the program office outlined the cost  estimating methodology, basis of the costs, as well as development  costs for JASSM-ER and other government costs. The program office  also provided a copy of the cost sufficiency review of the estimate,  which included the estimate’s purpose and scope, technical description  and schedule, ground rules and assumptions, data sources and analysis,  and methodology. For both programs, the estimate documentation and  the cost analysis requirements document (CARD) addressed best  practices and the 12 steps of a high-quality estimate. Contingency  reserves and the associated level of confidence for the risk-adjusted  cost estimate were also documented. Electronic versions of the cost  estimates were also provided.
The estimate documentation describes how the estimate was  derived—The point estimate was developed primarily using actual  costs, with a few cost elements estimated based on learning curves  method. Actual sunk costs for prior years were presented and  remaining production lot costs were based on a labor staffing  assessment and the latest contractor labor rates. Cross-checks were  performed and no instances of double-counting were visible. A  separate document was provided that showed in detail how the cost  estimate was developed, what data were used to create the cost  estimate, and how risks were quantified to determine a level of  confidence in the cost estimate.
The estimates were reviewed and approved by management— The estimates were presented by OSD CAIG to the OSD overarching  integrated product team for consideration as the new acquisition  program baseline. In November 2009, the team provided a detailed  overview of the JASSM program which addressed the major cost  growth factors, such as the addition of the JASSM-ER variant,  reliability enhancements, and the reduction in missile purchases.
section_title: JASSM Baseline and JASSM-ER Variant Estimates Substantially Met Characteristics for Accuracy
paragraphs: Both cost estimates were unbiased and represented most likely costs. For  example, the estimates were adjusted to reflect risks and the program  office also included requirements in the new Lot 8 contract that would  allow them to update the cost estimates with actual data.
The cost estimates were adjusted for inflation—The JASSM  program office used the February 2009 version of the OSD inflation  rates provided by the Secretary of the Air Force/Financial Management  Cost and Economics. The estimates were developed and documented  in base year 1995 dollars and inflated using the weighted rates  applicable to the appropriations in the estimate. Base year 1995 is the  program’s designated base year.
The cost estimates included most likely costs—Per the Nunn- McCurdy certification process, the CAIG developed independent cost  estimates for the JASSM baseline and JASSM-ER development and  procurement costs as well as future-year resource requirements for the  baseline and JASSM-ER variants. Operating and support costs as well  as software costs were also included in the estimates. The JASSM  baseline life-cycle cost estimate of $3.4 billion, which spans a period of  time from 2001 through 2015, was estimated at the 77 percent  confidence level, while the JASSM-ER life-cycle cost estimate of $3.7  billion spans the period from 2011 through 2025 and was estimated at  the 73 percent confidence level.
The cost estimates have not been updated to reflect current  costs—Though the JASSM baseline estimate dated April 2008 was  updated to reflect new program changes, the CARD has not been  updated since May 2003. Examples of JASSM baseline changes include  additional reliability enhancement team improvements and additional  testing, which are not reflected in the 2003 CARD. However, when  comparing the JASSM WBS dated January 1999 and the Lot 8 contract  dated January 2010, it is evident that WBS has been updated as changes  have occurred. On the other hand, the CARD for the JASSM-ER was  updated as of August 2009. Updates to the JASSM-ER CARD include a  new, more powerful engine than the baseline variant. As part of the  Milestone C process, work is currently under way by CAPE to update  the JASSM-ER cost estimate. The program office said that the JASSM- ER cost model will include updated costs based on the Lot 8 proposal  data, updated quantity profiles, and January 2010 revised inflation  rates. The program office is in the process of updating labor rates and  overhead rates and is reexamining all component prices.
section_title: JASSM Baseline and JASSM-ER Estimates Substantially Met Criteria for Credibility
paragraphs: While the cost estimates addressed risk and uncertainty as well as  sensitivity, the estimates failed to address the risks regarding reliability  and changes to the production schedule. By not doing so, the program  office may not have a full understanding of the future effects to the overall  cost position of these two programs.
The estimates were assessed for risk and uncertainty—Both  programs identified engineering and test support, subcontractors, and  warranty as major risk elements. However, the analysis did not identify  reliability or an increase in the production schedule as possible risk  factors. During the Nunn-McCurdy certification process, the DOD’s  analyses found that the cost breach was driven by four primary factors,  two of which focused on reliability. As a result, the program office  instituted a reliability enhancement program directed to address  reliability concerns. An indirect effect of the enhancement program  was an increase in the overall missile costs. The December 2009  selected acquisition report identified increases to the missile hardware  cost due to reduced annual quantities, missile production breaks, and  increased test requirements and reliability programs. The combined  cost estimate, for the JASSM baseline and JASSM-ER variants, has  grown significantly over time. By not including reliability and the  extension of the production schedule as possible risk factors, cost  growth could continue to occur in future production lots. As a result,  the programs’ calculated point estimate confidence level of 77 percent  for baseline and 73 percent for the JASSM and JASSM-ER variants may  be overstated.
The estimates were assessed for sensitivity—For both the JASSM  baseline and JASSM-ER estimates, key cost drivers were identified. The  cost estimators examined eight cost factors for the JASSM baseline  estimate and 13 cost factors for the JASSM-ER estimate. For the JASSM  analysis, engineering support, testing support, other subcontractors,  and Teledyne propulsion had the greatest impact on the total variance  in the estimate. Engineering support showed a 14 percent impact,  followed by test support with a 13 percent impact, other  subcontractors with a 12 percent impact, and Teledyne propulsion with  a 9 percent impact. These four elements account for 68 percent of the  total cost before risk was applied. For the JASSM-ER analysis, the  Williams propulsion, other subcontractors, engineering support, and  testing support showed the greatest impact on the total cost variance in  the estimate. The Williams propulsion had a 15 percent impact,  followed by a 15 percent impact for other subcontractors, an 11  percent impact for engineering support, and a 9 percent impact for test  support. These four elements account for 76 percent of the total cost  before risk was applied.
The cost estimates were checked for errors—Cross-checks were  performed and no instances of double-counting were visible. The Lot 5 and  Lot 6 estimates were compared back to Lot 1 through Lot 4 for consistency  and reasonableness. Also, multiple row and column summation cross- checks were performed to avoid duplication and omission errors. Upon  review of the electronic cost model, GAO found no instances of double- counting and the spreadsheet calculations are accurate given the input  parameters and assumptions.
The cost estimates were validated against an independent cost  estimate—The CAIG estimate is the independent cost estimate. As part of  the Nunn-McCurdy certification process, the CAIG developed an  independent cost estimate for the development and procurement costs as  well as future-year resource requirements for the baseline and JASSM-ER  variants. This new independent estimate was a joint effort by the OSD  CAIG, the program office, and the Financial Management Center of  Expertise, so there was no other estimate for comparison. Per the Nunn- McCurdy JASSM certification package dated April 30, 2008, the CAIG  estimate of the acquisition costs for the restructured JASSM program is  $7.1 billion, which is directly comparable to the $6 billion estimate  reported in the quarterly selected acquisition report dated December 2007.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
paragraphs: Michael J. Sullivan, (202) 512-4841 or sullivanm@gao.gov.
In addition to the contact name above, the following individuals made key  contributions to this report: William Graveline (Assistant Director), John  Crawford, Morgan DelaneyRamaker, Tisha Derricotte, Michael J. Hesse,  Karen Richey, Hai Tran, and Alyssa Weir.