Need for Improved Cost Estimating on Major Weapon Systems and Credible Reporting of Planned and Actual Costs

GAO testified on weapons systems' cost growth and the Department of Defense's (DOD) cost estimating and reporting. GAO found that weapons systems' cost growth is a continuing recognized problem which remains stubbornly resistant to control despite much attention within DOD and Congress. On balance, the military systems acquisition process is almost always characterized by programs which are extended, exceed original cost estimates, and encompass fewer units than originally planned. Factors contributing to poor cost estimates include vague or conflicting cost estimating guidance, inconsistent definitions of weapons programs, inadequate documentation of cost estimates, and the use of inaccurate data and optimistic assumptions. Although the Office of the Secretary of Defense and the military services have established independent cost estimating groups, their estimates are not always fully considered and their recommendations are sometimes not accepted. Serious concern has been expressed by Congress over the accuracy, timeliness, and completeness of the reporting of DOD program cost estimates, and GAO found major differences between the officially approved program acquisition costs reported to Congress and the currently anticipated program acquisition costs projected by the program offices. GAO made specific recommendations to resolve weaknesses in the guidance, assumptions, and methodologies used to develop cost estimates, concluding that better cost assessment is the key to making the right tradeoff decisions that will shape long-term defense policy.