A five-member House panel, troubled by huge cost overruns on major weapons programs--especially the $5.4-billion overrun on the Army's Black Hawk helicopter--has recommended a permanent law requiring the Pentagon to notify Congress if production or development costs exceed 15 percent of their original estimates.
The panel based its case largely on a study of the Black Hawk, which had a 237 percent cost overrun, one of the largest in history. The estimated cost of 1,107 Black Hawks increased from $2.3 billion to $7.7 billion in one decade, according to the panel's report.
During 18 days of hearings, including six sessions at defense plants, the Special Panel on Defense Procurement Procedures heard more than 100 government and private witnesses testify about problems in weapons-buying that Congress often learns about after the money has been spent.
The unanimous report issued last week identified what the panel considers controllable causes of cost overruns: "unrealistic inflation estimates, poor cost estimates, program stretch-outs, changes in weapons systems specifications, inadequate budgeting and lack of competition among defense contractors . . .high-risk system design and poor management."
Rep. Dave McCurdy (D-Okla.), chairman of the panel, said that by the time legislators learn of a big overrun, "It's too late."
The report said the Defense Department has violated the current law requiring the submission to Congress of quarterly selected acquisition reports (SARs), which summarize the status and cost of all weapons with budgets of more than $75 million for research, development, testing and evaluation, or $300 million for procurement.
The corrective legislation sought by the panel would replace the current disclosure requirement, known as the Nunn Amendment, which expires Sept. 30. That law requires Defense to tell Congress the reasons and the names of the responsible officials if the cost of any of nearly 50 major weapons tops a March, 1981, baseline by more than 15 percent during development or 10 percent during acquisition.
On the Senate floor last May, the amendment's sponsor, Sen. Sam Nunn (D-Ga.), criticized SARs as nearly useless. "I show my colleagues a copy of the current SAR in case anyone wants to read it before they go to sleep tonight," he said. He said that much of it is classified, "and almost all of it is unintelligible."
Pentagon officials have interpreted the law to mean they must file SARs only for those weapons rated "major" by the secretary of defense. Such a rating may be withheld for as long as 10 years, until full-scale development begins, the report said.
McCurdy said that the rating technicality explains why Congress has yet to get SARs on "the two most critical" prospective weapons, the B1 bomber, which will cost an estimated $39.8 billion, and the MX missile. The new law would also abolish the Pentagon's discretionary power to exclude such weapons from the SARs.
The panel report focused on three case histories--the Black Hawk helicopter; the Army's Patriot missile, which has exceeded its estimated production cost by $2.5 billion since 1979; and the air-launched cruise missile, jointly sponsored by the Navy and Air Force, which has had a relatively modest cost increase of $474 million since 1977