Budgetary Pressures Created by the Army's Plan To Procure New Major Weapon Systems Are Just Beginning

GAO reviewed new weapon system acquisition programs to determine the likely effect on the budget for the next several years of financing the procurement, operation, and support of the Army's new major weapon systems and identifying ways for relieving the pressure which characterized the preparation of the Army's 1982-1986 5-Year Defense Program.

The 1970's marked the Army's most intensive peacetime effort to modernize its forces with new weapon systems. Most of the procurement of these systems became a reality in preparing the fiscal year 1982 budget. With less funds available than were needed to procure the weapons in the quantities desired, together with substantial cost increases, the Army proposed to stretch out the production schedules of nearly all of the systems which would have resulted in higher prices and program delays. Additional funds in the revised fiscal year 1982 budget alleviated this problem. The systems production has been characterized by substantial cost growth, stemming mainly from the actual production processes being more complex than anticipated and requiring more labor hours and machine time. Much of the cost growth was due to inflation. The use of optimistic inflation rates in developing cost estimates also accounts for some of the cost growth. Operating and supporting the new weapon systems once they are fielded will require very large amounts of resources. Since the budgetary effect of operations and support will not be felt until after the weapons are deployed, these costs are not receiving as much attention as procurement costs. Fielding all of the systems will seriously strain the Army's resources. Most of the systems will require more skilled personnel, more fuel and ammunition, a greater expenditure for spare parts, and will impose a logistics burden on the Army.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Henry W. Connor Team: General Accounting Office: Mission Analysis and Systems Acquisition Division Phone: (202) 275-4141