Financial Status of Major Federal Acquisitions September 30, 1980

The financial status of major U.S. Government acquisitions were determined. These include acquisitions financed solely with Federal funds and those financed jointy with Federal, State, and other funds. Cost estimates were obtained for each of the 1,040 civil and military acquisitions currently in development, test, production, or construction phases.

Estimated costs for DOD projects increased $111.7 billion over last year. The largest increases were for Air Force Projects which experienced an increase of $51.2 billion, followed by a Navy increase of $44.7 billion and an Army increase of $15.7 billion. Estimated costs for civil agencies' projects increased $58.1 billion over last year. Significant increases in cost estimates were reported by the Tennessee Valley Authority, the Army Corps of Engineers, and the Department of Energy. Increases were attributed to: (1) quantity, or changes in scope; (2) changes altering a system's established physical or functional characteristics; (3) changes involving spare parts, ancillary equipment, warranty provisions, and Government-furnished property or equipment; (4) schedule changes; (5) economic changes influenced by one or more factors in the economy; (6) corrections or other changes occurring since the initial or other baseline estimates for program or project costs; and (7) sundry other changes, such as environmental costs and relocation assistance for water and highway projects. Economic changes, primarily inflation, account for 54 percent of the total cost growth on the civil acquisitions and are the principal causes of increased project costs.