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

GAO reviewed unit cost reports for the HARM Missile and Ground Launched Cruise Missile weapon system programs.

GAO stated that the information contained in the Air Force's unit cost exception report for the AGM-88A HARM appears to be reasonable and consistent with the Selected Acquisition Report (SAR). According to project officials, the primary reason for the Air Force breach in the unit cost was the change in the service's assumption about the production buildup. The Air Force had assumed a high production buildup in a previous SAR, but had to reduce it in the service's production buildup assumption. Although HARM is a joint Navy/Air Force program, the procurement profiles reported by the two services in a previous SAR were inconsistent. Project officials stated that this inconsistency resulted from a number of reasons, including: (1) timing of the Air Force's previous SAR; (2) separate reporting channels; and (3) assumptions of a very aggressive buildup rate by the Air Force as opposed to very conservative buildup by the Navy. The potential for cost growth appears high. The information provided in the unit cost exception report for the Ground Launched Cruise Missile appears to reflect the position of the project office. Project office officials stated that an independent cost group had prepared the estimate. Project officials also stated that reviews are continuing in an effort to reduce cost.