From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Annual "Quick Look" Assessment of Weapon Programs

Audio interview by GAO staff with Michael Sullivan, Director,
Acquisitions and Sourcing Management

Related GAO Work: GAO-12-400SP: Defense Acquisitions: Assessment of
Selected Weapon Programs

Released: March 2012

[ Background Music ]

[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the U.S. Government Accountability Office. It's March
2012. This year, GAO conducted its 10th annual assessment of the
Department of Defense's weapon system acquisitions, an area that is on
GAO's high-risk list. A group led by Mike Sullivan, a director in GAO's
Acquisition and Sourcing Management team, prepared this year's review.
GAO's Jeremy Cluchey sat down with Mike to learn more.

[ Jeremy Cluchey: ] Can you talk about what GAO reviews in this annual
report?

[ Mike Sullivan: ] Yeah, the annual report as you know has been around
for about 10 years now, and we proposed to Congress that we do this
quick look, which really looks at all of the major weapon system
acquisition programs, gives a quick assessment—a two-page assessment—of
each one of those in terms of three types of risk that we look at:
there's technology risk, there's design risk, and there's … then there's
production risk, as a program moves through.

[ Jeremy Cluchey: ] You mentioned the portfolio of programs, and based
on what your team looked at this year, can you describe the current
state of DOD's portfolio of major defense acquisition programs?

[ Mike Sullivan: ] There's 96 currently in the portfolio, and so if you
think of this portfolio as you would maybe a stock portfolio, a mutual
fund, or something like, there's 96 different assets in this portfolio.
They're all different ages; some of them are very old. F-22, for
example, I think is actually leaving the portfolio this year. It's one
of the older ones. C-17 is an older … is a tanker program that's through
production now and is leaving the portfolio. And as those older programs
leave the portfolio, they take a lot of their cost growth and schedule
delays with them. And on the other side, they have new programs coming
in that are pretty fresh and clean and have not been through … you know,
their cost estimates are still pretty new, their schedule estimates are
new, there's a lot of optimism on the programs, so that change over,
just like anything else, I guess, just like a stock portfolio—you can
get rid of toxic assets, if you will, and you can try to do better next
time. So for the 96 on cost and schedule, the state of the portfolio is
that cost went up by about $75 billion across the 96 programs. That's
about 5 percent when you're thinking about a portfolio that's worth $1.6
trillion. That's the total amount of money that will be invested in all
of these programs over their lifetimes, which can be as long as, you
know, 20 or 30 years. About half of that money that's been spent, some
programs are done, but there's still another $800 billion left to invest
in these programs. So it's very important to get these things right as
they come in.

[ Jeremy Cluchey: ] You mentioned the cost growth that took place
between last year and this year. Can you talk about some of the areas
where DOD saw significant cost growth here?

[ Mike Sullivan: ] Yeah. Well, the most significant cost growth and I
think the most visible to most people that follow defense acquisitions
would be the Joint Strike Fighter, which has had its share of cost
growth over the last couple of years, and it's been well publicized.
But, as I said earlier, the cost of the portfolio now is around 1.6
trillion. It increased about 75 billion from last year. And about 39
billion of that—75 or 52 percent of that cost growth—was all from the
Joint Strike Fighter. So, this one program, which is by far the biggest
program in the portfolio, it dwarfs all other programs in comparison.
It's the biggest program acquisition in the history of our nation
really. So more than half of all the cost growth in the portfolio can be
attributed to that program.

[ Jeremy Cluchey: ] For taxpayers focused on the federal budget and
interested in how defense dollars are being spent, what's the bottom
line of this report?

[ Mike Sullivan: ] Well, I think the bottom line of this report
continues to be that as anyone who reads the report will see, we have an
enormous amount of national asset, taxpayer's dollars, invested in major
weapon systems. A lot of times, that money isn't spent as efficiently as
it could be. You know, that's the big takeaway. I think when you're
talking about $1.6 trillion over 96 programs, it really is incumbent
upon the Department of Defense, the Congress, the GAO, everyone to take
stewardship over those tax dollars, oversee those very carefully, and
get more bang for the buck than we're getting today.

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