Department of Defense's Waiver of Competitive Prototyping Requirement for the Air Force's B-2 Defensive Management System Modernization Program

What GAO Found

The Department of Defense's (DOD) rationale for waiving the competitive prototyping requirement in the Weapon Systems Acquisition Reform Act of 2009, as amended (WSARA), for the Air Force's B-2 Defensive Management System Modernization (DMS-M) program addresses one of the two bases provided in the statute; namely that the cost of producing competitive prototypes exceeds the expected life-cycle benefits (in constant dollars) of producing the prototypes. The Air Force's B-2 bomber is a low-observable, long-range strike aircraft capable of delivering both conventional and nuclear weapons. Its defensive management system detects, identifies, and locates enemy radar systems and provides real-time threat avoidance, threat warning, and threat situational awareness information to the aircrew. The Air Force's B-2 DMS-M program is well into technology development and according to the cost-benefit analysis supporting the waiver, there is little opportunity to gain significant cost savings by prototyping. According to the Air Force, the prime contractor has already held competitions and selected suppliers that will leverage existing, technically mature subsystems for two of three DMS-M critical subsystems. The prime contractor has also conducted competitive prototyping for antennas, which are not yet technically mature, to reduce technical, cost, and schedule risk. In its cost-benefit analysis, the Air Force concluded that it will achieve significant operations and support cost reductions through its strategy of leveraging existing subsystems for the DMS-M and any additional improvements from prototyping would be on the margins.

In the waiver, DOD concluded that the Air Force's prototyping cost-benefit analysis was reasonable. GAO found that the Air Force's cost-benefit analysis was consistent with key principles in DOD's policy on economic analysis, which states that each feasible alternative for meeting an objective must be considered and its life-cycle costs and benefits evaluated. The Air Force analysis examined four different scenarios including the system- and subsystem-level prototyping options outlined in WSARA and DOD's implementing guidance. The Air Force concluded these strategies would increase the program's development costs by between $28.2 million and $524.8 million (in base year 2011 dollars) depending on the type and number of prototypes. The Air Force also estimated that the system-level prototyping strategies could achieve an estimated $1.3 million to $6.3 million (in base year 2011 dollars) in life-cycle benefits by improving the reliability of the system or key subsystems.

Why GAO Did This Study

WSARA required the Secretary of Defense to modify guidance to ensure that the acquisition strategy for each major defense acquisition program provides for competitive prototypes before Milestone B approval--which authorizes entry into system development--unless the Milestone Decision Authority waives the requirement. Competitive prototyping, which involves commercial, government, or academic sources producing early prototypes of weapon systems or critical subsystems, can help DOD programs reduce technical risk, refine requirements, validate designs and cost estimates, and evaluate manufacturing processes prior to making major commitments of resources. It can also help reduce the time it takes to field a system, and as a result, reduce its acquisition cost. WSARA also provides that whenever a Milestone Decision Authority authorizes a waiver of the competitive prototyping requirement on the basis of what WSARA describes as "excessive cost," the Milestone Decision Authority is required to submit notification of the waiver, together with the rationale, to the Comptroller General of the United States. WSARA further provides that no later than 60 days after receipt of a notification of a waiver, GAO is to review the rationale for the waiver and submit a written assessment of that rationale to the congressional defense committees.

On December 3, 2013, GAO received notice from DOD that it had waived the competitive prototyping requirement for the Air Force's B-2 DMS-M program. In this report, GAO assesses DOD's rationale for waiving the competitive prototyping requirement for the B-2 DMS-M program and the analysis used to support it.

For more information, contact Michael J. Sullivan at (202) 512-4841 or sullivanm@gao.gov.