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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Subcommittee on Defense, Committee on 
Appropriations, House of Representatives: 

April 2011: 

Defense Acquisitions: 

CH-53K Helicopter Program Has Addressed Early Difficulties and Adopted 
Strategies to Address Future Risks: 

GAO-11-332: 

GAO Highlights: 

Highlights of GAO-11-332, a report to the Ranking Member, Subcommittee 
on Defense, Committee on Appropriations, House of Representatives. 

Why GAO Did This Study: 

The United States Marine Corps is facing a critical shortage of heavy-
lift aircraft. In addition, current weapon systems are heavier than 
their predecessors, further challenging the Marine Corps’s current CH-
53E heavy-lift helicopters. To address the emerging heavy-lift 
requirements, the Marine Corps initiated the CH-53K Heavy Lift 
Replacement program, which has experienced significant cost increase 
and schedule delays since entering development in 2005. 

This report (1) determines how the CH-53K’s estimates of cost, 
schedule, and quantity have changed since the program began 
development and the impact of these changes and (2) determines how the 
CH-53K’s current acquisition strategy will meet current program 
targets as well as the warfighter’s needs. To address these 
objectives, GAO analyzed the program’s budget, schedules, acquisition 
reports, and other documents and interviewed officials from the 
program office, the prime contractor’s office, the Marine Corps, the 
Defense Contract Management Agency, and the Office of the Secretary of 
Defense. 

What GAO Found: 

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. Since the program began development in 
December 2005, its total cost estimate has grown by almost $6.8 
billion, from nearly $18.8 billion to over $25.5 billion as a result 
of a Marine Corps-directed quantity increase from 156 to 200 aircraft 
and schedule delays. The majority of the program’s total cost growth 
is due to added quantities. Development cost growth and schedule 
delays resulted from beginning development before determining how to 
achieve requirements within program constraints, with miscommunication 
between the program office and prime contractor about systems 
engineering tasks and with late staffing by both the program office 
and the contractor. The program has also deferred three performance 
capabilities and relaxed two maintenance-based technical performance 
metrics in an effort to defer cost. Delivery of the CH-53K to the 
warfighter is currently scheduled for 2018-—a delay of almost 3 years. 

The CH-53K program has made progress addressing the difficulties it 
faced early in system development. It held a successful critical 
design review in July 2010 and has adopted mitigation strategies to 
address future program risk. The program’s new strategy, as outlined 
in the President’s fiscal year 2012 budget, lengthens the development 
schedule, increases development funding, and delays the production 
decision. However, adjustments made to the budget submitted to 
Congress reduce the program’s fiscal year 2012 development funding by 
$30.5 million (and by a total of $94.6 million between fiscal years 
2010 and 2015). According to information contained in the budget, this 
reduction would result in additional schedule delays to the program of 
approximately 7 months and a net increase of $69 million to the total 
development cost estimate. The CH-53K program’s new acquisition 
strategy addresses previous programmatic issues that led to early 
development cost growth and schedule delays. 

Figure: Comparison of the CH-53K’s Original and New Schedules: 

[Refer to PDF for image: time line] 

Original schedule: 

FY06: Milestone B; 
FY07: Preliminary design review; 
FY09: Critical design review; 
FY09-FY12: Test articles production and delivery; 
FY11-FY16: Testing; 
FY12: Milestone C; 
FY13-14: LRIP Lot 1 (6); 
FY14-16: LRIP Lot 2 (9); 
FY14-17: LRIP Lot 3 (14); 
FY16: Initial operational capacity; 
FY16-FY20 and beyond: Full rate production (FRP) Lots 4-9 (127). 

New schedule: 

FY06: Milestone B; 
FY09: Preliminary design review; 
FY10: Critical design review; 
FY11-FY14: Test articles production and delivery; 
FY13: First flight; 
FY13-FY19: Testing; 
FY15: Milestone C; 
FY16-19: LRIP Lot 1 (6); 
FY18-19: LRIP Lot 2 (9); 
FY19-20: LRIP Lot 3 (14); 
FY19: Initial operational capacity; 
FY16-FY20 and beyond: Full rate production (FRP) Lots 4-9 (171). 

Source: GAO analysis of United States Marine Corps data. 

[End of figure] 

View [hyperlink, http://www.gao.gov/products/GAO-11-332] or key 
components. For more information, contact Michael J. Sullivan at (202) 
512-4841 or sullivanm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

CH-53K Cost Growth, Schedule Delays, and Deferred Capabilities Will 
Affect Delivery to the Warfighter: 

CH-53K Program Has Made Progress and Adopted Strategies to Address 
Future Risk: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Changes in Estimated Costs, Quantities, and Major Events: 

Figures: 

Figure 1: Comparison of CH-53E and CH-53K Capabilities and 
Characteristics: 

Figure 2: Marine Corps Heavy-Lift Helicopter Force Structure: 

Figure 3: Comparison of the CH-53K's Original and New Schedules: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 4, 2011: 

The Honorable Norman D. Dicks: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

Dear Mr. Dicks: 

The United States Marine Corps is facing a critical shortage in the 
number of Marine expeditionary heavy-lift aircraft, currently its CH-
53E helicopters. Although all available decommissioned CH-53E 
helicopters have been overhauled for use, according to program 
officials, currently deployed CH-53E aircraft are flying at three 
times their planned utilization rate. In addition, current weapon 
systems are heavier than their predecessors, further challenging the 
Marine Corps’s current CH-53E heavy-lift helicopters. To address the 
emerging heavy-lift requirements, the Marine Corps initiated the CH-
53K Heavy Lift Replacement program. The total program is expected to 
cost significantly more than originally planned and deployment has 
been significantly delayed. As a result, you asked GAO to (1) 
determine how the CH-53K’s estimates of cost, schedule, and quantity 
changed since the program began development and the overall impact of 
these changes and (2) determine how the CH-53K’s current acquisition 
strategy will meet current program targets as well as the warfighter’s 
needs. 

To determine how the CH-53K’s estimates of cost, schedule, and 
quantity have changed since the program began development, we received 
briefings from program and contractor officials and reviewed budget 
documents, annual Selected Acquisition Reports, monthly status 
reports, performance indicators, and other data. To identify the CH-53K’
s current acquisition strategy and determine how this strategy will 
meet current program targets as well as the warfighter’s needs, we 
reviewed the program’s original and current acquisition schedules and 
test plans. We analyzed the current retirement schedules of the legacy 
CH-53E fleet and discussed the impact of these retirements on the 
Marine Corps’s heavy-lift requirement with appropriate officials. We 
interviewed officials with the CH-53K program office; Sikorsky 
Aircraft Corporation (Sikorsky), the prime contractor; the United 
States Marine Corps; the Defense Contract Management Agency; and the 
Office of the Secretary of Defense (OSD). We conducted this 
performance audit from February 2010 through March 2011 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. A more detailed description 
of our scope and methodology is included in appendix I. 

Background: 

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.[Footnote 1] 

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. 

CH-53K Cost Growth, Schedule Delays, and Deferred Capabilities Will 
Affect Delivery to the Warfighter: 

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.[Footnote 2] 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. 

Table 1: Changes in Estimated Costs, Quantities, and Major Events: 

Development quantities: 
Development start: 4; 
Current status: 4; 
Increase since initial estimate: [Empty]. 

Procurement quantities: 
Development start: 152; 
Current status: 196; 
Increase since initial estimate: [Empty]. 

Total quantities: 
Development start: 156; 
Current status: 200; 
Increase since initial estimate: 28.2 percent. 

Cost estimates (then year dollars in millions): 

Development; 
Development start: $4,366.4; 
Current status: $6,082.9; 
Increase since initial estimate: 39.3 percent. 

Procurement: 
Development start: $14,399.9; 
Current status: $19,443.2; 
Increase since initial estimate: 35.0 percent. 

Total program: 
Development start: $18,766.3; 
Current status: $25,526.1; 
Increase since initial estimate: 36.0 percent. 

Unit cost estimates (then year dollars in millions): 

Program acquisition: 
Development start: $120.3; 
Current status: $127.6; 
Increase since initial estimate: 6.1 percent. 

Average procurement: 
Development start: $94.7; 
Current status: $99.2; 
Increase since initial estimate: 4.8 percent. 

Major events: 

Preliminary design review: 
Development start: June 2007; 
Current status: September 2008; 
Increase since initial estimate: 15 months. 

Critical design review: 
Development start: March 2009; 
Current status: July 2010; 
Increase since initial estimate: 16 months. 

Initial operational capability: 
Development start: September 2015; 
Current status: June 2018; 
Increase since initial estimate: 33 months. 

Source: GAO analysis of Department of Defense data. 

Note: Table does not reflect program changes based on the President's 
fiscal year 2012 budget. 

[End of table] 

CH-53K Program Started Development Before Determining How to Achieve 
Requirements and with Late Staffing: 

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.[Footnote 3] 

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.[Footnote 
4] 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. 

CH-53K Program Has Deferred Performance Capabilities and Relaxed 
Technical Metrics Associated with Operating and Support Costs: 

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.[Footnote 5] 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. 

Two technical performance metrics were changed because, according to 
program officials, meeting the original maintenance-based technical 
performance requirements for Mean Time To Repair[Footnote 6] and Mean 
Corrective Maintenance Time for Operational Mission Failures[Footnote 
7] was not cost effective. For example, the CH-53K's rotor blades are 
designed to have a two-piece design featuring a removable tip. 
However, the curing time to adhere the blade tip to the blade was 
driving up the time it would take to remove and replace the blade tip. 
The contractor proposed meeting the original requirement by moving to 
a one-piece blade; however, this would increase the program's 
operating and support costs[Footnote 8] by approximately $99 per 
flight hour and increase the logistical footprint of the helicopter. 
As a result, the program sought and received approval to relax the 
performance metric associated with replacing the blade tip instead of 
investing the financial resources necessary to obtain the original 
metrics or moving to a one-piece blade. 

Delayed Delivery of the CH-53K Requires Longer Reliance on Costly and 
Less Reliable Legacy Aircraft: 

Because of a nearly 3-year delay in initial delivery of the CH-53K, 
program officials estimated that it will cost approximately $927 
million more to continue to maintain the CH-53E legacy system. Initial 
delivery of the CH-53K to the warfighter is currently scheduled for 
2018, a delay of almost 3 years that will require the Marine Corps to 
rely on legacy aircraft that are less reliable, more costly to operate 
and maintain, and less capable of performing the same mission. This 
delay, coupled with an increased demand for the CH-53E in foreign 
theaters, led the Marine Corps to pull all available assets from 
retirement for either reentry into service or to be used for spare 
parts. Continued reliance on the CH-53E will be costly, as it is one 
of the most expensive helicopters to maintain in the Marine Corps's 
fleet. For example, the drive train of the CH-53E costs approximately 
$3,000 per flight hour to maintain. In contrast, the program estimates 
that the drive train for the CH-53K--its largest dynamic system--will 
cost only $1,000 per flight hour to maintain. In addition, the CH-53K 
is expected to have improved reliability and maintainability over the 
CH-53E legacy system. For example, the CH-53K's engine has 60 percent 
fewer parts than that of the CH-53E, which the program office believes 
will result in a more reliable engine that is easier and less costly 
to maintain. In addition, the CH-53K incorporates an aluminum gearbox 
casing, which will decrease the need for replacement resulting from 
corrosion. 

Delayed delivery of the CH-53K will also affect the ability of the 
Marine Corps to carry out future missions that cannot be performed by 
the CH-53E. For example, the CH-53E can carry 15,000 pounds internally 
compared to 30,000 pounds for the CH-53K. While the CH-53K is expected 
to carry up to 27,000 pounds externally for 110 nautical miles at 
91.5°F at an altitude of 3,000 feet--a Navy operational requirement 
for high-hot conditions--the CH-53E can only carry just over 8,000 
pounds under the same conditions. The increased lift capability of the 
CH-53K during these conditions may enable it to carry the current and 
incoming inventory of up-armored vehicles, which are much heavier than 
their less-armored predecessors. For example, the up-armoring of 
wheeled military vehicles, such as the High Mobility Multi-purpose 
Wheeled Vehicle, and the introduction of the Joint Light Tactical 
Vehicle have resulted in a military inventory with weights that are 
beyond the weight limits of the CH-53E. According to program 
officials, without the addition of the CH-53K, the Marine Corps will 
soon no longer be able to carry and deliver the military's new 
inventory of wheeled vehicles in high-hot conditions. Figure 1 
compares the capabilities and characteristics of the CH-53E and CH-53K. 

Figure 1: Comparison of CH-53E and CH-53K Capabilities and 
Characteristics: 

[Refer to PDF for image: illustrated table] 

Average annual operating and maintenance cost per helicopter (FY 2011): 
$8 million $5 million. 

Internal width: 
CH-53E: 8 feet; 
CH-53K: 9 feet. 

Empty weight: 
CH-53E: 37,500 pounds; 
CH-53K: 43,750 pounds. 

Maximum distance: 
CH-53E: 580 nautical miles; 
CH-53K: 507 nautical miles. 

Maximum speed: 
CH-53E: 172.5 miles per hour; 
CH-53K: 195.6 miles per hour. 

Maximum internal weight: 
CH-53E: 15,000 pounds: 
CH-53K: 30,000 pounds. 

Maximum external weight (high-hot): 
CH-53E: 8,265 pounds; 
CH-53K: 27,000 pounds. 

Maximum gross weight: 
CH-53E: 73,500 pounds; 
CH-53K: 88,000 pounds. 

Source: GAO analysis of Department of Defense data; Marine Aviation 
data (CH-53E photo); 2008 Sikorsky Aircraft Corporation data (CH-53K 
photo). 

[End of figure] 

The combination of the increase in the quantity of heavy-lift 
helicopters required to support Marine troop levels and the delayed 
delivery of the CH-53K to the warfighter has created a requirement gap 
for heavy-lift helicopters of nearly 50 helicopters (nearly 25 
percent) over the next 7 years and represents an operational risk to 
the warfighter. However, the Marine Corps stated that it is accepting 
significant risk with the heavy-lift shortfall and will continue to 
operate under this gap until the CH-53K becomes available. Figure 2, 
which shows the required aircraft quantities, the current CH-53 series 
helicopter force structure, and planned CH-53K production, illustrates 
the operational risk. 

Figure 2: Marine Corps Heavy-Lift Helicopter Force Structure: 

[Refer to PDF for image: layer graph] 

The graph depicts Aircraft quantity for fiscal years 2009 through 
2030. The difference between supplied quantity and the required 
quantity of 200 is depicted as Operational Risk. CH-53E quantities 
from 2009 through 2020 are at 150 per year, with Operational Risk at 
50 until 2016, when quantities of CH-53K begin to decrease the risk. 
From 2020 through 2030, quantities of CH-53E steadily decrease as 
quantities of CH-53K steadily increase until the Operational Risk in 
2030 is zero. 

Source: Department of Defense. 

[End of figure] 

CH-53K Program Has Made Progress and Adopted Strategies to Address 
Future Risk: 

The CH-53K program has made progress addressing the difficulties it 
faced early in system development. The program held CDR in July 2010, 
demonstrating that it has the potential to move forward successfully. 
The program has also adopted mitigation strategies to address future 
program risk. The program's new strategy, as outlined in the 
President's fiscal year 2012 budget, lengthens the development 
schedule, increases development funding, and delays the production 
decision by 1 year. However, while the program's new acquisition 
strategy increases development time to mitigate risk, some testing and 
production activities remain concurrent, which could result in costly 
retrofits if problems are discovered during testing. 

CH-53K Program Has Made Progress Addressing Earlier Difficulties: 

The CH-53K program has taken several steps to address some of the 
shortfalls that the program experienced early in development. For 
example, the program has addressed its cost growth by revising its 
cost estimate to align with the current schedule. The program's 2011 
budget request fully funded the development program to its revised 
estimate. The program addressed its early staffing issues by 
increasing staffing levels beginning in January 2009 and maintained 
those levels through completion of CDR. In addition, the program 
delayed technical reviews until it was prepared to move forward, 
thereby becoming more of an event-driven rather than a schedule-driven 
program. An event-driven approach enables developers to be reasonably 
certain that their products are more likely to meet established cost, 
schedule, and performance baselines. For instance, the program delayed 
CDR--a vehicle for making the determination that a product's design is 
stable and capable of meeting its performance requirements--until all 
subsystem design reviews were held and more than 90 percent of 
engineering designs had been released. 

In July 2010, the program completed system integration--a period when 
individual components of a system are brought together--culminating 
with the program's CDR. With completion of CDR, the program has 
demonstrated that the CH-53K design is stable--an indication that it 
is appropriate to proceed into fabrication, demonstration, and testing 
and that it is expected that the program can meet stated performance 
requirements within cost and schedule. At the time CDR was held, the 
program had released 93 percent of its engineering drawings, exceeding 
the best practice standard for the completion of system integration. 
According to best practices, a high percentage of design drawings--at 
least 90 percent--should be completed and released to manufacturing at 
CDR. Additionally, the program office stated that all 29 major 
subsystem design reviews were held prior to the start of CDR, and that 
coded software delivery was ahead of schedule. In the end, the 
Technical Review Board, the approving authority for CDR, determined 
that the program was ready to transition to system demonstration--a 
period when the system as a whole demonstrates its reliability as well 
as its ability to work in the intended environment--and identified 
seven action items, none of which were determined by the program 
office to be critical. 

CH-53K Program Has Taken Steps to Address Future Risk: 

The program has also adopted several mitigation strategies to address 
future program risk. The program has established weight improvement 
plans to address risks associated with any potential weight increases 
and has been able to locate areas where weight reductions can be made. 
For example, the program worked with the subcontractor responsible for 
designing and manufacturing the floor of the CH-53K to find areas to 
reduce weight. The program has also created several working groups to 
reduce risk to the overall capabilities of the CH-53K. For example, 
the Capabilities Integrated Product Team, which meets on a monthly 
basis, was developed to focus on risk relating to the program's 
requirements. This team comprises officials from the program office; 
Headquarters U.S. Marine Corps; Marine Corps Combat Development 
Command; Chief of Naval Operations staff; the Navy's Commander, 
Operational Test and Evaluation Force, staff; the operational testing 
squadron; and the developmental testing squadron. Its members work 
with the program office to identify, clarify, and resolve mission-
related issues and program requirements. In addition, the program 
holds integrating design reviews every 6 months, freezing the working 
design in order to hold a system-level review and manage design risk. 

Future CH-53K Program Risk Remains: 

The CH-53K program's schedule contains overlap, or concurrency, 
between testing and production. The stated rationale for concurrency 
is to introduce systems in a timelier manner or to fulfill an urgent 
need, to avoid technology obsolescence, to maintain an efficient 
industrial development/production workforce, or a combination of 
these. While some concurrency may be beneficial to efficiently 
transition from development to production, there is also risk in 
concurrency. Any changes in design and manufacturing that require 
modifications to delivered aircraft or to tooling and manufacturing 
processes would result in increased costs and delays in getting 
capabilities to the warfighter. In the past, we have reported a number 
of examples of the adverse consequences of concurrent testing and 
delivery of systems and how concurrency can place significant 
investment at risk and increases the chances that costly design 
changes will surface during later testing. 

The CH-53K program's original schedule contained concurrency between 
testing and aircraft production. In 2009, reflecting the early 
difficulties experienced in development, the CH-53K program revised 
its cost and schedule estimates. This revised schedule would have 
reduced the program's level of concurrency. For example, while the 
original program schedule called for developmental testing to be 
ongoing during the production of all three lots of LRIP, the schedule 
resulting from the 2009 adjustments called for developmental testing 
to be ongoing during the first two lots of LRIP. However, the program 
had concerns that this schedule's allowance of approximately 2 years 
between final delivery of developmental test aircraft and the 
beginning of LRIP would create a production gap that could be costly. 
As a result, the program office was considering accelerating 
procurement funds in an effort to begin production 1 year earlier than 
planned and minimize breaks in production. This consideration was 
negated, however, as a result of a funding cut that the program 
sustained in the process of formulating the President's fiscal year 
2012 budget. 

In February 2011, the President's fiscal year 2012 budget was released 
and outlined changes to the program's budget and schedule. According 
to a program official, the program's requested budget was reduced by 
approximately $30.5 million in fiscal year 2012 (and a total of $94.6 
million between fiscal year 2010 and fiscal year 2015)--funds to be 
applied to other DOD priorities. The President's budget reports that 
while the CH-53K program was fully funded to the OSD Cost Assessment 
and Program Evaluation Office estimate in the President's fiscal year 
2011 budget, the funding adjustments made to the program in the 
President's fiscal year 2012 budget would result in a net increase of 
$69 million to the development cost estimate and a schedule delay of 
approximately 7 months. The new schedule results in later delivery of 
developmental test aircraft and delays some testing. As a result, 
according to program officials, the production gap issue has been 
addressed. Another result, though, is that the program's new schedule 
maintains a level of concurrency similar to that of the original 
schedule. Program officials have conceded that concurrency exists 
within their program, but state that this concurrency will reduce the 
operational risk of further delaying IOC. In commenting on the risks 
of concurrency, Marine Corps officials noted that the time allotted 
prior to the start of production and the small quantity of LRIP 
planned reduces the risks of costly retrofits resulting from issues 
identified during developmental test. Figure 3 compares the CH-53K 
program's original and new schedules. 

Figure 3: Comparison of the CH-53K's Original and New Schedules: 

[Refer to PDF for image: time line] 

Original schedule: 

FY06: Milestone B; 
FY07: Preliminary design review; 
FY09: Critical design review; 
FY09-FY12: Test articles production and delivery; 
FY11-FY16: Testing; 
FY12: Milestone C; 
FY13-14: LRIP Lot 1 (6); 
FY14-16: LRIP Lot 2 (9); 
FY14-17: LRIP Lot 3 (14); 
FY16: Initial operational capacity; 
FY16-FY20 and beyond: Full rate production (FRP) Lots 4-9 (127). 

New schedule: 

FY06: Milestone B; 
FY09: Preliminary design review; 
FY10: Critical design review; 
FY11-FY14: Test articles production and delivery; 
FY13: First flight; 
FY13-FY19: Testing; 
FY15: Milestone C; 
FY16-19: LRIP Lot 1 (6); 
FY18-19: LRIP Lot 2 (9); 
FY19-20: LRIP Lot 3 (14); 
FY19: Initial operational capacity; 
FY16-FY20 and beyond: Full rate production (FRP) Lots 4-9 (171). 

Source: GAO analysis of United States Marine Corps data. 

[End of figure] 

As the CH-53K program moves forward, it is important that further cost 
growth and schedule delays are mitigated. The CH-53K program's new 
acquisition strategy addresses previous programmatic issues that led 
to early development cost growth and schedule delays. 

Agency Comments: 

DOD provided technical comments on the information in this report, 
which GAO incorporated as appropriate, but declined to provide 
additional comments. 

We are sending copies of this report to the Secretary of Defense; the 
Under Secretary of Defense for Acquisition, Technology and Logistics; 
the Secretary of the Navy; the Commandant of the Marine Corps; and the 
Director of the Office of Management and Budget. The report also is 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions concerning this report, please 
contact me at (202) 512-4841 or sullivanm@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Staff members who made key 
contributions to this report are listed in appendix II. 

Sincerely yours, 

Signed by: 

Michael J. Sullivan: 
Director Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine how the CH-53K's estimates of cost, schedule, and 
quantity have changed since the program began development, we received 
briefings by program and contractor officials and reviewed budget 
documents, annual Selected Acquisition Reports, monthly status 
reports, performance indicators, and other data. We compared reported 
progress with the program of record and previous years' data, 
identified changes in cost and schedule, and obtained officials' 
reasons for these changes. We interviewed officials from the CH-53K 
program and the Department of Defense (DOD) to obtain their views on 
progress, ongoing concerns, and actions taken to address them. 

To identify the CH-53K's current acquisition strategy and determine 
how this strategy will meet current program targets as well as the 
warfighter's needs, we reviewed the program's acquisition schedule and 
other program documents, such as Selected Acquisition Reports and test 
plans. We analyzed the retirement schedule of the legacy CH-53E fleet 
and discussed the impact of these retirements on the Marine Corps's 
heavy-lift requirement with appropriate officials. To identify the CH- 
53K program's current acquisition strategy and to determine how the 
program plans to meet its new targets and still meet the needs of the 
warfighter, we obtained from the program--through program documents-- 
the program's revised acquisition plans. 

In performing our work, we obtained documents, data, and other 
information and met with CH-53K program officials at Patuxent River, 
Maryland, and the prime contractor, Sikorsky Aircraft Corporation, at 
Stratford, Connecticut. We met with officials from Headquarters Marine 
Corps, the Office of the Chief of Naval Operations, and the Office of 
the Secretary of Defense's Cost Assessment and Program Evaluation 
Office at the Pentagon, Arlington, Virginia. We interviewed officials 
from the Office of Director of Defense Research and Engineering and 
the Office of the Under Secretary of Defense for Acquisition, 
Technology and Logistics, Office of Developmental Testing and 
Evaluation, in Arlington, Virginia. We also met with officials from 
the Defense Contract Management Agency who were responsible for the CH-
53K program at Stratford, Connecticut. We drew on prior GAO work 
related to acquisition best practices and reviewed analyses and 
assessments done by DOD. 

To assess the reliability of DOD's cost, schedule, and performance 
data for the CH-53K program, we talked with knowledgeable agency 
officials about the processes and practices used to generate the data. 
We determined that the data we used were sufficiently reliable for the 
purpose of this report. 

We conducted this performance audit from February 2010 through March 
2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Michael Sullivan (202) 512-4841 or sullivanm@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, the following staff members 
made key contributions to this report: Bruce Thomas, Assistant 
Director; Noah Bleicher; Marvin Bonner; Laura Greifner; Laura 
Jezewski; and Robert Miller. 

[End of section] 

Footnotes: 

[1] Section 2433 of title 10, U.S. Code, requires the Department of 
Defense (DOD) to perform unit cost reports on major defense 
acquisition programs or designated major defense subprograms. Two 
measures are tracked: "procurement unit cost" (total funds programmed 
for procurement divided by the total number of fully configured items 
to be procured) and "program acquisition unit cost" (total cost of 
development, procurement, and system-specific military construction 
divided by the number of fully configured end items to be procured). 
To eliminate the effects of inflation, costs are expressed in constant 
base year dollars. If a program exceeds specified cost growth 
thresholds specified in the law, commonly referred to as a Nunn-
McCurdy breach, DOD is required to report to Congress. In certain 
circumstances, DOD is required to reassess the program and submit a 
certification to Congress in order to continue the program, in 
accordance with 10 U.S.C. § 2433a. 

[2] The CH-53K program was initiated under the laws and regulations in 
existence in 2005. DOD's acquisition policy at that time did not 
require a preliminary design review prior to the start of development. 
DOD's current acquisition policy (Department of Defense Instruction 
5000.02, Operation of the Defense Acquisition System (Dec. 8, 2008)) 
now encourages the completion of a preliminary design review prior to 
the start of development (during the technology development phase of 
DOD's acquisition process). 

[3] GAO, Defense Acquisitions: Assessments of Selected Weapon 
Programs, [hyperlink, http://www.gao.gov/products/GAO-09-326SP] 
(Washington, D.C.: Mar. 30, 2009). 

[4] The Avionics Management System includes the cockpit and mission 
management system with integrated flight and navigation displays and 
provides the crew with communication, navigation, surveillance, and 
air traffic management. 

[5] Key performance parameters are those capabilities or 
characteristics considered most essential for successful mission 
accomplishment. Failure to meet an Operational Requirements Document 
key performance parameter threshold can be cause for the concept or 
system selection to be reevaluated or the program to be reassessed or 
terminated. 

[6] Mean Time To Repair is the average elapsed corrective maintenance 
time needed to repair all chargeable failures and is measured from the 
time that the maintenance event begins until the item is ready for 
operational use. 

[7] Mean Corrective Maintenance Time for Operational Mission Failures 
is the average elapsed corrective maintenance time needed to repair 
all operational mission hardware failures and is measured from the 
time that the maintenance event begins until the item is ready for 
operational use. 

[8] Operating and support costs are those program costs necessary to 
operate and maintain the capability. These costs include military 
personnel and operations and maintenance costs. 

[End of section] 

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