Defense Acquisitions:

Information for Congress on Performance of Major Programs Can Be More Complete, Timely, and Accessible

GAO-05-182: Published: Mar 28, 2005. Publicly Released: Mar 28, 2005.

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DOD has more than $1 trillion worth of major defense acquisition programs, on which it must report to Congress, including a comparison of a current program's costs to a baseline containing its cost, quantity, schedule, and performance goals. When these goals are changed, the program is "rebaselined" to reflect current status. However, measuring current estimates against the most recent baseline without additional perspectives may obscure for Congress how programs are performing over time. Concerned over this, you asked GAO to examine how DOD's use of rebaselining has affected the adequacy of data provided to Congress on major defense acquisition programs.

DOD could be reporting more complete information beyond what is required by law on the unit cost performance of major defense acquisition programs to Congress for its authorization and appropriations deliberations. DOD does present Congress with valuable information about a program's performance by comparing the latest unit cost estimate against the most recent approved baseline. However, this provides only one perspective on performance because rebaselining shortens the period of performance reported and resets the measurement of cost growth to zero. Other meaningful perspectives are not reported. First, DOD does not report the cumulative unit cost growth, in constant dollars, that a program has experienced since the first full baseline was established. For example, DOD reported in the 2003 Selected Acquisition Report (SAR), the most recent available, that the F/A-22 Raptor program's unit cost decreased by 0.33 percent in the previous 4 months--since the latest rebaselining. DOD did not report that the program's unit cost had cumulatively increased by 72 percent in the last 143 months. Second, the change in unit cost between one budget request to Congress and the next is not measured or reported. For example, DOD reported in the 2003 SAR that unit cost for the Stryker program increased by 1.34 percent in the 2 months since the latest rebaselining; it did not report that unit cost had grown by 21 percent in the previous 12 months. DOD could be more timely in reporting to Congress that it has rebaselined individual programs. A key factor is that DOD is not required by statute or its own policies to report a program's rebaseline to Congress. Although DOD includes the latest rebaselining actions in the April SARs, a rebaseline approved after early April may not be reported to Congress before it enacts the authorization and appropriations legislation. For example, the DD(X) Destroyer program established a new baseline on April 23, 2002, but did not report this new baseline to Congress in a SAR until April 2003. As a result, between April 2002 and the passage of the fiscal year 2003 defense budget, the SAR provided Congress did not reflect the approved baseline for the DD(X) program. Congressional oversight of DOD's adherence to established cost and schedule baselines is unnecessarily constrained because DOD classifies about 50 percent of the SARs it submits to Congress, despite the fact that only a small amount of data in each of these SARs is actually classified. This reporting practice restricts access to the unclassified cost, quantity, and schedule data for congressional staff without security clearances and requires special handling procedures of that unclassified data by those with clearances.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In our March 2005 report (GAO-05-182), we provided Matters for Congressional Consideration regarding DOD's policy of excluding the effects of quantity reductions or capability increases in determining unit cost breaches of Nunn-McCurdy thresholds. We noted that this practice may not provide Congress the information it sought on program buying power in requiring unit cost reporting. Therefore, we believed that Congress may wish to consider the appropriateness of DOD's use of these programmatic adjustments. To address the issues that we reported, Congress, in the National Defense Authorization Act for fiscal year 2006, revised Title 10 U.S.C. sections 2432 and 2433, requiring the Secretary of Defense to: (1) include in its reports on unit cost any adjustments or revisions, together with the reason for such adjustments or revisions and (2) report unit cost increases of at least 30 percent or more than 50 percent against the first full baseline estimate approved at System Development and Demonstration--Milestone B. The existing requirement of 15 and 25 percent unit cost thresholds was retained for reporting against the current baseline estimate.

    Matter: DOD's policy of excluding the effects of quantity reductions or capability increases in determining unit cost breaches of Nunn-McCurdy thresholds may not provide Congress the information it sought on program buying power in requiring unit cost reporting. Therefore, Congress may wish to consider whether DOD's use of these programmatic adjustments is appropriate.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD implemented this recommendation with the electronic submission of the unclassified information from the December 2005 Selected Acquisition Reports (SAR) to Congress via the Defense Acquisition Management Information Retrieval (DAMIR) website. The classified information in the December 2005 SARs was extracted from the electronic submission and provided separately in a hardcopy, classified annex for each program containing classified information. DOD plans to continue to transmit unclassified information from the SARs to Congress via the DAMIR.

    Recommendation: To provide Congress with more complete, timely, and accessible information, the Secretary of Defense should separately report classified and unclassified SAR information. This should be implemented in the departments' reporting of data on major defense acquisition program baselines and performance.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In order to comply with this recommendation, DOD now includes with each new Selected Acquisition Report (SAR) submission a summary of new rebaselines that have occurred since the prior SAR submission. The summary will include the date of the acquisition program baseline (APB) approval and the reason for the rebaseline for each program that had a new APB approved since the prior SAR submission.

    Recommendation: To provide Congress with more complete, timely, and accessible information, the Secretare of Defense should notify Congress when rebaselining actions are approved. This should be implemented in the departments' reporting of data on major defense acquisition program baselines and performance.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: This recommendation has been implemented in the Unit Cost Section of the December 2005 Selected Acquisition Reports. There were no programmatic adjustments in the December 2005 reports.

    Recommendation: To provide Congress with more complete, timely, and accessible information, the Secretary of Defense should fully disclose to Congress the nature and extent of programmatic adjustments affecting Nunn-McCurdy threshold determinations, pending any congressional direction on this issue. This should be implemented in the departments' reporting of data on major defense acquisition program baselines and performance.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD implemented this recommendation by modifying its Consolidated Acquisition Reporting System by adding a new subsection to the Unit Cost Section of the Selected Acquisition Report. The new subsection contains the program acquisition unit cost and average procurement cost in base-year and then-year dollars for all acquisition baseline estimates.

    Recommendation: To provide Congress with more complete, timely, and accessible information, the Secretary of Defense should measure and report a full history of unit cost performance in constant dollars by comparing the latest cost and quantity estimates with (1) the first full estimate (typically the original acquisition program baseline established at Milestone B); (2) the current approved baseline or, if the program rebaselines, the prior approved program baseline; and (3) the estimate established with the previous year's budget request. These should be implemented in the department's reporting of data on major defense acquisition program baselines and performance.

    Agency Affected: Department of Defense

 

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