The CH-53K helicopter mission is to provide combat assault transport of heavy weapons, equipment, and supplies from sea to support Marine Corps operations ashore. The CH-53K is a new-build design evolution of the existing CH-53E and is expected to maintain the same shipboard footprint, while providing significant lift, reliability, maintainability, and cost-of-ownership improvements. Its major improvements include upgraded engines, redesigned gearboxes, composite rotor blades and rotor system improvements, fly-by-wire flight controls, a fully integrated glass cockpit, improved cargo handling and capacity, and survivability and force protection enhancements. It is expected to be able to transport external loads totaling 27,000 pounds over a range of 110 nautical miles under high- hot conditions without refueling and to fulfill land- and sea-based heavy- lift requirements. Sikorsky was awarded a sole-source contract to develop the CH-53K helicopter because, according to the program office, as the developer of the CH-53E, it is the only known qualified source with the ability to design, develop, and produce the required CH-53 variant. The program entered the system development and demonstration phase of the acquisition process in December 2005 and a $3 billion development contract was awarded to Sikorsky in April 2006. Beginning in 2006, the program experienced schedule delays that resulted in cost increases to the development contract. As a result of the schedule delays and cost growth, in 2009 the program office reported a cost and schedule deviation to its original cost and acquisition program baselines to OSD. However, these increases were not significant enough to incur what is commonly referred to as a Nunn- McCurdy breach. In July 2010, the CH-53K program completed what it deemed a successful critical design review (CDR), signaling that it had a stable design and could begin building developmental test aircraft. The program began building the first of five developmental test aircraft in early 2011, plans to make a decision to enter low-rate initial production (LRIP) in 2015, and plans to achieve an initial operational capability (IOC) in 2018. Primarily because of decisions to increase the number of aircraft and other issues, the CH-53K program has experienced approximately $6.8 billion in cost growth and a nearly 3-year delay from original schedule estimates for delivery of IOC. The program started development before determining how to achieve requirements within program constraints, which led to cost growth and schedule delays and resulted in the program delaying its preliminary design review to September 2008, nearly 3 years after development start. In addition, the program received permission to defer three performance capabilities and relax two technical metrics associated with operating and support costs—which we believe are sound acquisition decisions—and will deliver the initial capability to the warfighter in 2018, almost 3 years later than originally planned. In the end, delayed delivery will require the Marine Corps to rely longer on legacy aircraft that are more costly to operate and maintain, less reliable, and less capable of performing the same mission. The CH-53K program’s estimates of cost, schedule, and quantity have significantly grown since development started in December 2005. The Marine Corps now plans to buy a total of 200 CH-53K helicopters for an estimated $25.5 billion, a 36 percent increase over its original estimates. The majority of this increase is due to added quantities. The program’s schedule delays have increased the development cost estimate by over $1.7 billion, or more than 39 percent. In 2008, the Marine Corps directed the program to increase its total quantity estimate from 156 to 200 aircraft to support an increase in strength from 174,000 to 202,000 Marines. In February 2011, the Secretary of Defense testified that the number of Marine Corps troops may decrease by up to 20,000 Marines beginning in fiscal year 2015. The Marine Corps has assessed the required quantity of aircraft and determined that the requirement for 200 aircraft remains valid despite the proposed manpower decrease. Primarily as a result of the aircraft quantity increase, the program’s procurement cost estimate has also increased by over $5 billion, or 35 percent, from nearly $14.4 billion to over $19.4 billion. The program’s average procurement unit cost has increased 4.8 percent. In addition, the program’s schedule delays have delayed its ability to achieve IOC until 2018, nearly 3 years later than originally planned. Table 1 compares the program’s original baseline estimates of cost, quantity, and major schedule events to current program estimates. The program started development before determining how to achieve requirements within program constraints, which led to cost growth and schedule delays. The CH-53K program originally scheduled its preliminary design review for June 2007, a year and a half after the program began development, and later delayed it to September 2008, nearly 3 years after development start. We have reported that performing systems engineering reviews—including a system requirements review, system functional review, and preliminary design review—before a program is initiated and a business case is set is critical to ensuring that a program’s requirements are defined and feasible and that the design can meet those requirements within cost, schedule, and other system constraints. Problems with systems engineering began immediately within the program because the program and Sikorsky disagreed on what systems engineering tasks needed to be accomplished. As a result, the bulk of the program’s systems engineering problems related to derived requirements. According to an OSD official, the contractor did not account for total design workload, technical reviews, and development efforts. For example, the program experienced problems defining software specifications for its Avionics Management System. While Marine Corps officials commented that requirements are often difficult to define early in the engineering process and changes are expected during design maturation, they noted that in this case the use of a firm fixed-price contract with the subcontractor made it difficult to facilitate changes. As a result, completing this task took longer than the program had estimated and the program’s CDR was delayed. In another example, the program has a requirement that the CH-53K be transportable by C-5 aircraft. As with the CH-53E, because of its size, the CH-53K’s rotor and main gearbox will be removed from the aircraft’s body in order to fit within the height requirements of a C-5. The program office interpreted this as requiring that each CH-53K be shipped in its entirety on a single C-5 aircraft, including the removed rotor and gearbox. However, the contractor interpreted the requirement differently and proposed shipping all rotors and main gearboxes in another C-5 separate from the CH-53K body. Program officials did not accept this interpretation of the requirement and required the contractor to propose a solution in which each CH-53K aircraft would be shipped and arrive in its entirety in a single C-5 aircraft. Marine Corps officials commented that even though this requirement was interpreted differently, it was identified early in the systems engineering process and addressed. The program office and contractor underestimated the time it would take to hire its workforce, and delays in awarding subcontracts made it difficult for the program to complete design tasks and maintain its schedule. According to an OSD official, while the program officially began development in December 2005, the development contract was not awarded until 4 months later—in April 2006—delaying development start. According to program officials, budget-driven hiring restrictions for government personnel, which included ceilings on the number of government personnel who could be assigned to the program management office, affected the program’s ability to hire its workforce at the time the program was initiated. Similarly, program officials told us that the contractor underestimated the amount of time required to locate, recruit, train, and assign qualified personnel to the program. The contractor was also late in awarding contracts to its major subcontractors. To mitigate the risk of production cost growth, the contractor established long-term production agreements with its subcontractors. According to program officials, in these agreements subcontractors committed in advance to pricing arrangements for the production of parts and spares. While the contractor used this strategy to reduce program risk, it resulted in a delay and the major subcontracts were awarded later than needed to maintain the program’s initially planned schedule. In 2010, the CH-53K program received approval from the Joint Requirements Oversight Council (JROC) to defer three performance capabilities that make up a portion of the Net-Ready key performance parameter, and from the Marine Corps to relax two maintenance-based technical performance metrics—both of which we believe are sound acquisition decisions. The Department of Defense’s (DOD) decision to defer three performance capabilities was based on consultation among JROC, Headquarters U.S. Marine Corps, Chief of Naval Operations staff, and the program office in 2008, which prompted the CH-53K program office to review the program’s requirements and identify potential areas in which to decrease costs. As part of that review, the program office identified several areas where costs could be deferred without decreasing capability, including three communications-related performance capabilities—Link-16, Variable Message Format, and Mode V software— that constituted part of the Net-Ready key performance parameter. Program officials estimated that this will result in over $100 million in cost deferral. Program officials explained that these software capabilities were not removed from the program’s road map, but rather have been deferred until after IOC. Originally, the program’s Operational Requirements Document called for all three capabilities to be fully integrated in fiscal year 2015. However, one of the capabilities must now be fully integrated no later than 6 months after IOC, which is currently scheduled to occur in 2018, and the other two capabilities must be fully integrated within 2 years of IOC. Program officials stated that deferment of these capabilities will not affect aircraft interoperability.