US Department of Defense, The Department of Defense (DoD) has released details on major defense acquisition program cost, schedule, and performance changes since the September 2006 reporting period. This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the December 2006 reporting period.
SARs summarize the latest estimates of cost, schedule, and performance status. These reports are prepared annually in conjunction with the President's budget. Subsequent quarterly exception reports are required only for those programs experiencing unit cost increases of at least 15 percent or schedule delays of at least six months. Quarterly SARs are also submitted for initial reports, final reports, and for programs that are rebaselined at major milestone decisions.
The total program cost estimates provided in the SARs include research and development, procurement, military construction, and acquisition-related operation and maintenance (except for pre-Milestone B programs which are limited to development costs pursuant to 10 USC §2432). Total program costs reflect actual costs to date as well as future anticipated costs. All estimates include anticipated inflation allowances.
The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (September 2006) was $1,617,710.1million. After adding the costs for two new programs, Longbow Apache Block III and the Light Utility Helicopter (LUH) from the September 2006 reporting period, the adjusted current estimate of program acquisition costs was $1,627,687.0 million.
For the December 2006 reporting period, there was a net cost increase of $56,286.8 million or +3.5 percent, excluding costs for the aforementioned programs submitting initial SARs.
The net cost increase was due to a net stretch-out of development and procurement schedules (+$22,644.8 million), higher program cost estimates (+$18,888.6 million), an increase in support requirements (+$14,381.7 million), the application of higher escalation rates (+$6,957.0 million), additional engineering changes (hardware/software) (+$3,188.4 million), and the impacts on LPD 17 from Hurricane Katrina (+$1,075.6 million).
These increases were partially offset by a net decrease of planned quantities to be purchased (-$7,454.6 million) and the termination of the Land Warrior program (-$3,394.7 million). Further details of the most significant changes are summarized below by program.
There are eight programs with Nunn-McCurdy unit cost breaches to their “current” or “original” acquisition program baselines (APBs): C-130 Avionics Modernization Program (AMP), Expeditionary Fighting Vehicle (EFV), Force XXI Battle Command Brigade and Below Program (FBCB2), Guided Multiple Launch Rocket System (GMLRS), Joint Air-to-Surface Standoff Missile (JASSM), Joint Primary Aircraft Training System (JPATS), Land Warrior, and Warfighter Information Network–Tactical (WIN-T).
That is, the program acquisition or average procurement unit costs for these programs have increased by 15 percent or more to their “current” APB or by 30 percent or more to their “original” APB. For those programs that have increased by 25 percent or more to their “current” APB or by 50 percent or more to their “original” APB (i.e., C-130 AMP, EFV, GMLRS, JASSM, JPATS, Land Warrior, and WIN-T), a determination of whether to certify the program will be made no later than June 5, 2007, except Land Warrior, which will not require certification because the program was terminated.
New SARs (As of December 2006)
The Department of Defense has submitted initial SARs for the following programs for the December 2006 reporting period. These reports do not represent cost growth. Baselines established on these programs will be the point from which future changes will be measured.
Program Current Estimate ($ in Millions)
DIMHRS (Defense Integrated Military Human Resources System) $ 805.1
ERM (Extended Range Munition): $1,478.0
FAB-T (Family of Beyond Line-of-Sight Terminals) $3,167.4
NMT (Navy Multiband Terminal) $2,133.8
RMS (Remote Minehunting System) $1,411.7
VTUAV (Vertical Takeoff and Landing Tactical Unmanned Aerial Vehicle) $2,100.6
TOTAL: $11,096.6
Summary Explanations of Significant SAR Cost Changes
As of Dec. 31, 2006
ARMY:
ARH (Armed Reconnaissance Helicopter)
Program costs increased $1,787.4 million (+49.6 percent) from $3,602.8 million to $5,390.2 million, due primarily to a quantity increase of 144 aircraft from 368 to 512 aircraft to support the Air National Guard combat aviation brigades (+$901.6 million). There were estimating allocations* (+$85.0 million) as well as increased spares and support (+$570.3 million) associated with the quantity increase. Costs also increased due to higher estimates for production (+$295.7 million) and the application of revised escalation indices (+$41.0 million).
FCS (Future Combat System)
Program costs decreased $2,698.2 million (-1.6 percent) from $164,628.3 million to $161,930.1 million, due primarily to the program adjustments that deferred the Class II and Class III Unmanned Aerial Vehicles (UAVs), Armed Robotic Vehicles-Assault (ARV-A), Armed Robotic Vehicles-Reconnaissance (ARV-R), and Intelligent Munition Systems (IMS) (-$17,557.9 million). These decreases were partially offset by revised cost estimates based on a more detailed design (+$1,364.9 million), and a procurement stretchout from 1.5 brigade combat teams (BCTs) to 1.0 BCTs per year (+$10,573.7 million) and associated increases in support costs (+$3,260.7 million).
FMTV (Family of Medium Tactical Vehicles)
Program costs increased $3,351.9 million (+19.2 percent) from $17,450.1 million to $20,802.0 million, due primarily to the addition of Long Term Armor Strategy (LTAS) A-Cab (+$1,257.1 million) and associated LTAS installation kits (+$1,319.1 million). There were also increased recurring costs for planned model mix changes (+$672.8 million) and the application of revised escalation rates (+$64.6 million). These decreases were partially offset by an acceleration of the annual procurement buy profile (-$149.7 million).
GMLRS (Guided Multiple Launch Rocket System)
Program costs decreased $9,262.2 million (-57.8 percent) from $16,034.7 million to $6,772.5 million, due primarily to a quantity reduction of 96,444 rockets from 140,004 to 43,560 rockets (-$8,922.7 million) and associated schedule and estimating allocations* (-$1,645.2 million). These decreases were partially offset by a stretchout in the annual procurement buy profile (+$292.7 million) and increased unit costs of the lower annual buys (+$936.3 million).
HIMARS (High Mobility Artillery Rocket System)
Program costs decreased $1,249.4 million (-37.4 percent) from $3,338.1 million to $2,088.7 million, due primarily to a quantity reduction of 210 launchers from 591 to 381 (-$924.1 million) and associated schedule and estimating allocations* (-$448.1 million). These decreases were partially offset by higher estimates based on actuals (+$96.7 million) and the application of revised escalation rates (+$29.6 million).
Land Warrior
Program costs decreased $3,382.8 million (-83.4 percent) from $4,054.2 million to $671.4 million, due to termination of the program by the Army Acquisition Executive.
Longbow Apache
Program costs increased $1,629.6 million (+17.3 percent) from $9,405.2 million to $11,034.8 million, due primarily to a quantity increase of 29 war replacement aircraft (+$850.0 million) and 24 Extended Block II aircraft (+$309.5 million). As a result, the total quantity increased 53 aircraft from 613 to 666 aircraft. There were also programmatic changes in Longbow Apache requirements, such as the Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor (MTADS/PNVS), which increased the estimated costs (+$412.6 million).
Longbow Apache Block III
Program costs increased $896.5 million (+11.1 percent) from $8,093.9 million to $8,990.4 million, due primarily to a quantity increase of 37 aircraft from 602 to 639 aircraft (+$395.5 million). There were also increases in software maintenance and system engineering/program management costs due to the increase in aircraft quantity and a stretchout of procurement profile (+$353.0 million).
Stryker
Program costs increased by $1,770.1 million (+15.6 percent) from $11,360.8 million to $13,130.9 million, due primarily to a quantity increase of 256 vehicles from 2,641 to 2,897 vehicles (+$1,058.9 million) and associated spares and support (+$254.2 million). There were also increases from an extension of the procurement schedule from fiscal year 2011 to fisal year 2012 (+$213.8 million), and the addition of development effort for the mast-mounted sensor, active protection systems, and mobile gun system environmental control (+$236.9 million). These increases were partially offset by a change in the mix of models to be procured (-$357.1 million).
WIN-T (Warfighter Information Network-Tactical)
Program costs increased by $2,190.9 million (+15.5 percent) from $14,170.5 million to $16,361.4 million, due primarily to an increase in communications equipment to procure for the Total Army (+$1,517.9 million). Costs also increased due to a refinement of the estimate for recurring engineering (+$559.4 million), an increase in flyaway cost to account for technology changes during the procurement schedule (+$417.5 million), and an increase in fielding and initial spares (+$386.6 million). These increases were partially offset by a decrease due to the removal of Joint Tactical Radio System (JTRS) equipment (-$482.0 million) and a reduction in technical refresh and post deployment sustainment and support (-$483.1 million).
NAVY:
ADS (Advanced Deployable System)
Program costs decreased $883.8 million (-62.6 percent) from $1,412.6 million to $528.8 million, due to termination of the program by the Navy Acquisition Executive in October 2006.
E-2D AHE (Advanced Hawkeye)
Program costs increased by $1,765.5 million (+11.2 percent) from $15,721.5 million to $17,487.0 million, due primarily to higher Mission Electronics, general procurement, and mission systems pricing (+$653.7 million), a stretchout of the annual buy profile in fiscal year 2009-2020 (+$374.8 million), and additional pilot production funding (+$169.0 million). There were also increases for the addition of the automatic identification system, dual transit satellite communication, and in-flight refueling requirements (+$137.1 million), a revised estimate to reflect new pricing for the system development and demonstration contract (+$234.3 million), and increases in initial spares, peculiar support equipment and training, and other production support costs (+$159.1 million).
F/A-18E/F
Program costs increased by $2,358.3 million (+5.4 percent) from $44,030.5 million to $46,388.8 million, due primarily to the increase of 32 aircraft from 462 to 494 aircraft (+$1,716.0 million) and associated schedule, engineering, and estimating allocations* (+$334.1 million). There were also increases in support costs related to the higher quantity (+$446.5 million).
LCS (Littoral Combat Ship)
Program costs increased $237.0 million (+13.9 percent) from $1,701.9 million to $1,938.9 million, due primarily to longer than expected development time for Flight 0 and the postponement of Flight 1 (+$162.2 million). There was also additional scope for Mission Module development and Flight 0 training and testing (+$73.0 million) and sea frame pricing increases (+$25.9 million).
LPD 17
Program costs increased by $1,107.4 million (+8.9 percent) from $12,486.6 million to $13,594.0 million, due primarily to the addition of Hurricane Katrina Supplemental funding (+$1,155.4 million).
SSN 774 (Virginia Class)
Program costs decreased by $2,813.5 million (-2.9 percent) from $95,821.7 million to $93,008.2 million, due primarily to a lower estimate for labor, materials, rates, and profit (-$1,971.1 million). Cost estimates also decreased for the technology insertion of the advanced sail program (-$541.8 million) and a reduced estimate of plans, change orders, hull, and mechanical/electrical changes (-$549.2 million).
V-22
Program costs increased $4,139.7 million (+8.2 percent) from $50,497.1 million to $54,636.8 million, due primarily to revised airframe and engine costing methodologies (+$3,147.9 million), and a stretchout of the annual buy profile (+$218.8 million). There was also additional schedule variance for manufacturing inefficiencies, outyear labor rates, and sustaining work impacts from delaying 22 MV-22 aircraft beyond fiscal year 2013 (+$538.4 million) and the application of revised escalation rates (+$283.6 million).
AIR FORCE:
AMRAAM (Advanced Medium Range Air-to-Air Missile)
Program costs increased $1,603.2 million (+12.2 percent) from $13,188.7 million to $14,791.9 million, due primarily to lower-than-expected Foreign Military Sales (FMS) projections (+$557.9 million) and an acquisition strategy pricing change (+$859.2 million). There were also increases related to a stretchout of the annual procurement buy profile (+$93.7 million), additional special tooling and test equipment (+$54.8 million), and an overrun in the AIM-120D (Phase 4) system development and demonstration contract (+$32.7 million).
C-5 AMP (Avionics Modernization Program)
Program costs increased $551.2 million (+64.1 percent) from $859.3 million to $1,410.5 million, due primarily to a quantity increase of 51 kits from 59 to 110 (+$291.4 million), and associated increases in initial spares, peculiar support equipment, and other weapon system costs (+229.1 million).
C-17A
Program costs increased by $2,909.9 million (+4.9 percent) from $59,552.7 million to $62,462.6 million, due primarily to an increase of 10 aircraft from 180 to 190 aircraft (+$2,093.9 million) and revised peculiar support estimates (+$618.5 million). There were also Congressional adds in support of the Global War on Terrorism (GWOT) (+$227.5 million), higher estimates for continuing development (+$126.0 million), and an extension of the development program out to fiscal year 2012-2013 (+$450.1 million). These increases were partially offset by revised project estimates and Air Mobility Command priorities (-$364.0 million) and a revised production shutdown estimate (-$271.2 million).
C-130 AMP (Avionics Modernization Program)
Program costs increased $1,047.8 million (+21.2 percent) from $4,933.2 million to $5,981.0 million, due primarily to increases in labor rates and install hours (+$691.4 million) and increases in mission support equipment, simulator/trainers, depot costs, and other weapon system costs (data, peculiar support equipment, interim contractor support and training (+810.5 million). These increases were partially offset by a quantity decrease of 166 aircraft from 434 to 268 aircraft (-$560.6 million).
EELV (Evolved Expendable Launch Vehicle)
Program costs increased $3,825.9 million (+12.0 percent) from $31,903.0 million to $35,728.9 million, due primarily to increased costs for Buy 3 Launch Services (+$3,943.5 million) and Launch Capabilities contracts (+$298.4 million). There were also increases for the application of revised escalation rates (+$214.5 million) and an adjustment to the annual mission procurement buy profile (+$55.0 million). These net increases were partially offset by budget reductions (-$365.4 million) and estimating adjustments (-$319.7 million).
F-22A
Program costs increased $2,692.7 million (+4.3 percent) from $62,600.0 million to $65,292.7 million, due primarily to a revised estimate for the replan of Increments 3.1 and 3.2 (+$1,987.1 million), the additional of funding for the first year of multiyear procurement (+$1,416.5 million), an increase in peculiar support for two operating locations (+$311.1 million), and the application of revised escalation indices (+$197.1 million). These increases were partially offset by reductions in development funding for the modernization program (-$110.0 million), revised estimates for the second and third years of multiyear procurement (-$980.6 million), and an acceleration of the annual procurement buy profile from a 4-year to a 3-year schedule (-$161.1 million).
GBS (Global Broadcast Service)
Program costs increased $111.3 million (+15.0 percent) from $744.0 million to $855.3 million, due primarily to a new GBS Simplified Robust Architecture (SRA) that will address broadcast shortfalls. The SRA upgrade is scheduled for implementation in fiscal year 2008-2010. Beginning in fiscal year 2008, the SRA upgrade will develop custom software, procure commercial hardware/software, integrate into the Defense Enterprise Computing Centers (DECCs), integrate joint internet protocol modem (JIPM) hubs into two ultra-high frequency follow-oOn (UFO) uplink sites, establish JIPM upgrade kits for receive suites, transition to DoD teleports as required for wideband gapfiller satellite (WGS) broadcasts, and perform developmental/operational tests leading to follow-on operational test and evaluation events.
JASSM (Joint Air-to-Surface Standoff Missile)
Program costs increased by $882.3 million (+18.0 percent) from $4,914.0 million to $5,796.3 million, due primarily to engineering increases for JASSM extended range, weapon data link, and maritime interdiction (+$133.9 million), implementation of a robust reliability improvement program (+$599.8 million), and stretchout of the annual buy profile (+$79.7 million).
MP-RTIP (Multi-Platform Radar Technology Insertion Program)
Program costs decreased by $321.7 million (-20.6 percent) from $1,559.7 million to $1,238.0 million, due primarily to the termination of MP-RTIP Wide Area Surveillance (WAS) radar development efforts associated with the E-10A technology development program (-$351.0 million).
NPOESS (National Polar-Orbiting Operational Environmental Satellite System)
Program costs decreased by $2,649.6 million (-19.2 percent) from $13,810.2 million to $11,160.6 million, due primarily to the decisions made as a result of a Nunn-McCurdy certification process that concluded in June 2006. The findings and recommendations coming out of the Nunn-McCurdy certification resulted in significant changes to the satellite procurement quantity, launch dates, sensor payloads, and funding. The Conical Scanning Microwave Imager/Sounder (CMIS) and seven other sensors were demanifested from the program (-$570.6 million), the development baseline program was restructured (-$506.2 million), the quantity of procurement satellites was reduced from 4 to 2 (-$594.5 million), the procurement baseline program was restructured (-$772.2 million), and the procurement costs were reduced due to the de-manifestation of the sensors (-$292.1 million).
DEPARTMENT OF DEFENSE
BMDS (Ballistic Missile Defense System)
Program costs increased by $17,377.4 million (+20.2 percent) from $85,910.7 million to $103,288.1 million, due primarily to the addition of fiscal year 2012 and fiscal year 2013 funding (+$19,350.1 million), increases in Terminal High Altitude Area Defense program content (+$1,036.0 million), restructure of the Sea-Based Terminal program (+$860.4 million), additional sensors to support a proposed European site (+$2,489.3 million), and revised escalation indices (+$727.6 million). These increases were partially offset by delaying the Space Tracking and Surveillance System beyond fiscal year 2013 (-$1,472.3 million), restructuring the Kinetic Energy Interceptor program (-$3,396.5 million), and program-wide reductions (-$2,304.4 million).
F-35 (Joint Strike Fighter)
Program costs increased by $23,365.2 million (+8.5 percent) from $276,458.9 million to $299,824.1 million, due primarily to a decrease in the annual procurement quantities and a stretch-out of the production buy schedule from fiscal year 2027 to fiscal year 2034 (+$11,207.8 million), revised estimate for airframe materials due to commodity market increases (+$5,472.8 million), increase due to revised assumptions based on contractor LRIP I proposals and methodology (+$8,307.1 million), and support increase due to aircraft configuration update, revised procurement profile, and methodology changes (+$6,423.2 million). These increases were partially offset by revised assumptions for prime and subcontractor labor rates (-$3,576.3 million) and revised assumptions for subcontractor costs (-$5,201.4 million).
JTRS (Joint Tactical Radio System) Waveform
Program costs increased $317.5 million (+17.8 percent) from $1,786.6 million to $2,104.1 million, due primarily to revised estimate for Network Engineering Services (NES) (+$241.0 million) and fiscal year 2008 President’s Budget updates (+$65.7 million).
