Arms Programs Way Over Budget, GAO Report Finds

By Ellen Nakashima and Dana Hedgpeth
Washington Post Staff Writers
Tuesday, March 31, 2009

Development costs for the Pentagon's major weapons systems soared last year, helping drive overruns that are "staggering," the Government Accountability Office said in a report released yesterday.

The costs to research and develop fighter jets and other programs have been rising steadily. Last year, they were 42 percent over initial estimates. That compares with 27 percent in 2000, when the cost of the portfolio of programs was half of what it is today.

Overall, the cost overruns associated with the military's major weapons systems have decreased slightly compared with a year ago. But they still total near $300 billion, and the average program delay has stretched from 21 to 22 months, Gene L. Dodaro, acting comptroller general at the GAO, said in a report.

The figures reflect a weapons development and procurement system that is woefully broken, analysts say, and one that President Obama has vowed to begin to correct.

Too often, the report said, development begins before the technologies needed to build the systems are mature and have been demonstrated to work, and before designs can meet cost and schedule requirements.

"Pentagon planners don't do a good enough job of analyzing those requirements to understand whether they have the technologies and designs to build to them," GAO analyst Michael J. Sullivan said. "So they begin with an unrealistic baseline."

In addition, he said, because most major weapons systems involve costly advanced technologies and investments in factories and workers, and have no commercial market, contractors typically demand that the government cover their risk by reimbursing them for unanticipated costs in "cost-plus" contracts, he said.

Taken together, he said, these factors reduce the incentive to control costs.

In comments included in the report, John J. Young Jr., undersecretary of defense for acquisition, technology and logistics, noted that in December the Defense Department revised acquisition policies in an effort to carry out some of GAO's recommendations. They include completing systems engineering work before development begins, requiring early prototype testing and drafting agreements that make program managers accountable for overruns.

Young also noted that "a significant portion" of the cost growth is due to increases in the number of weapons purchased over the original program baseline, and thus should not be viewed as overruns and do not "reflect poor acquisition management."

He said that delays for several programs were the result of Pentagon budget decisions "completely beyond the control" of program managers.

"Make no mistake," he said, "there is clearly a need for greater discipline in program planning and execution, but the GAO analysis overstates the problem directly attributable to acquisition."

The report said that the cost estimates for 10 of the Pentagon's 96 largest weapons programs have grown by 32 percent, rising to $177 billion. That was a primary factor behind decisions by the military to reduce weapons purchases last year by almost a third, the GAO said.

Some large programs had such cost overruns that they could not afford the original quantities contemplated, the report said. A prime example is the Air Force's F-22A Raptor, built by Lockheed, on which costs skyrocketed 195 percent, the GAO said. The Air Force cut its order from 648 planes to 184.

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