Canceled DOD Programs: DOD Needs to Better Use Available Guidance and Manage Reusable Assets
Highlights
What GAO Found
Cancellation of a major Department of Defense (DOD) weapon program can have broad effects. Cancellation of one program can affect the schedules or budgets for related programs as well as the industrial base and local economies. For example, the cancellation of one program has impacted the schedule for the Army's network modernization efforts. DOD stakeholders can provide input to program officials on the potential effects of a cancellation.
DOD has developed an online resource, Smart Shutdown, to offer tools for program managers related to program cancellations. In 2013, a guidebook was added that addresses the spectrum of cancellation effects. However, current efforts to publicize this online resource may not be sufficient and program officials may lack the knowledge necessary to leverage investments as effectively as possible. Furthermore, while this resource is designed to allow officials to share lessons learned about program cancellation, there have been few contributions to date. Without increased sharing of lessons learned, DOD will miss opportunities to build and share knowledge on program shutdown.
GAO could not determine the extent to which DOD leveraged the assets in its case studies because DOD does not have a way to track all types of assets from canceled programs.
Examples of Weapon Program Assets
DOD relies on a government-wide process for tracking disposal of government property, such as computer hardware and equipment, but this process is not tailored to weapon systems and was not designed to track other types of assets such as rights to technical data and software, or partially-developed technologies. Because there is no department-wide process for disseminating information about all assets available for reuse, DOD cannot ensure that technologies go to parties who can best use or develop them further.
Estimates of contract termination costs are sometimes perceived as a useful tool in managing a portfolio of investments and informing contract termination and budgeting decisions. However, the usefulness of these estimates is limited by, among other factors, inherent uncertainties about costs that cannot be addressed until a program is actually terminated.
Why GAO Did This Study
In the face of increasing budgetary pressures, it is important that DOD continue to find ways to manage its portfolio of major defense acquisition programs (MDAP) more efficiently. In 2008, GAO concluded that program cancellations can be a valuable portfolio management tool, and found that DOD can take various steps to retain value from the work completed. The Senate report accompanying the National Defense Authorization Act for 2013 mandated GAO to review issues associated with cancellations of MDAPs. This report assesses (1) the effects of program cancellation, (2) the adequacy of DOD guidance on program cancellations, (3) the extent to which DOD leveraged or transferred to other programs various types of assets from canceled programs, and (4) the usefulness of contract termination cost estimates. To do this work, GAO reviewed the cancellation of five major DOD programs from across the military services; interviewed officials at the Office of the Secretary of Defense, the military services, and others; and reviewed current guidance related to program cancellation.
Recommendations
GAO recommends that DOD direct program officials to refer to Smart Shutdown guidance and to provide lessons learned, and that DOD develop department-wide processes to improve tracking and dissemination of information about assets available. DOD partially concurred with these recommendations, but stated use of and contribution to Smart Shutdown should be encouraged rather than directed. GAO maintains direction would be more effective.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve DOD's ability to ensure it is fully leveraging investments made in canceled programs, the Secretary of Defense should direct the Office of Acquisition, Technology, and Logistics to direct program officials to refer to the Defense Acquisition University's (DAU) Smart Shutdown guidance throughout the process of shutting down the program. This could be done, for example, through acquisition decision memorandums. |
In October 2014, the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics issued a memorandum for the defense acquisition workforce encouraging program management to use the Smart Shutdown Guidebook. In addition, the Guide guidebook was highlighted in DAU's eNewsletter in March 2014, and was featured on Federal News Radio in April 2014.
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| Department of Defense | To improve DOD's ability to ensure it is fully leveraging investments made in canceled programs, the Secretary of Defense should direct the Office of Acquisition, Technology, and Logistics to direct program officials to provide lessons learned, if applicable, related to program cancellation and shut down to DAU to enhance its Smart Shutdown toolkit. |
In October 2014, the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics issued a memorandum to the defense acquisition workforce encouraging program management to use the Smart Shutdown Guidebook, which directs users to resources to where they can contribute or obtain information about lessons learned from program cancellations.
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| Department of Defense | To improve DOD's ability to ensure it is fully leveraging investments made in canceled programs, the Secretary of Defense should direct the Office of Acquisition, Technology, and Logistics to develop department-wide processes to improve tracking of assets, including technical data and software, and dissemination of information about assets available for reuse after programs are canceled. |
DOD agreed with this recommendation and in its comments to the draft report acknowledged the need to address technical data, software, and other intangible property in a methodical fashion to ensure the fullest utilization of all available assets. In 2018, DOD cited a number of efforts that addressed the recommendation, including (1) new guidance for program officials to identify non-tangible assets during program cancelation of a program for the possibility of transferring them to another program (2) an existing repository of engineering data, and (3) that the current program executive office structure for developing DOD weapons programs is conducive to transferring intellectual property. DOD believes that these efforts have implemented GAO's recommendation. However, while we acknowledge these efforts, we do not believe that they constitute the development of a department-wide system for tracking and disseminating information about intangible assets identified in our recommendation. DOD has not provided information about additional efforts to address this recommendation. As a result, we closed this recommendation as not implemented.
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