Evaluation of Unit Cost Reports Submitted Under Public Law 97-86, Section 917

GAO reviewed 19 unit cost reports submitted to Congress by the Department of Defense (DOD) to determine the completeness, currentness, and accuracy of the data presented. GAO also inquired into problems which precluded the accurate and timely reporting of the data and suggested possible improvements.

Overall, DOD has made a reasonably successful effort to comply with the requirements of Public Law 97-86 with respect to submitting unit cost reports. However, some reports were lacking in completeness and accuracy. In some cases, program estimates did not include all costs, were not consistent with independent estimates, and will soon be outdated because of changes and uncertainties in the program. In the Pershing II missile and the AH-64 helicopter programs, the current program cost estimates did not include all program costs. With the exceptions of the Patriot Air Defense System and the Defense Satellite Communications System, the unit costs reported were in line with estimates prepared independently by several cost estimating sources in the services and the Office of the Secretary of Defense. GAO also found that changes underway in the Maverick program, the HELLFIRE missile system, and the acquisition program for the F-15 and F-16 aircraft could soon outdate the reports, or there were uncertainties which made certain information in the reports questionable. The time constraints imposed on program managers and service Secretaries when verifying and deciding before reporting on whether a unit cost breach has occurred could interfere with accurate reporting. DOD and the committee should negotiate some deadline which meets both parties' needs to confirm the occurrence of a cost breach. In the interest of improving the efficiency of reporting, consideration should be given to combining cost reports with a modified selected acquisition reporting system.