Underestimation of Funding Requirements in Five Year Procurement Plans

GAO assessed the underfunding problem in the Department of Defense's Five Year Defense Plans, focusing on the weapons procurement process. GAO noted that the current process is almost always characterized by programs which are extended, exceed original cost estimates, and encompass fewer units than originally planned. This is reflected by the constant congressional need to provide substantially greater appropriations than anticipated for weapons systems. Undercosting of weapons systems accounts for approximately two-thirds of the variation in percentage underestimation in the procurement process. Defense has instituted reform and efficiency programs to address the problem, but GAO believes that such programs often reflect unrealistic optimism.