The Reliability and Availability of Agency Information and the Accuracy of DOD Weapon System Cost Estimates

GAO discussed the Department of Defense's (DOD) cost estimating and reporting, the underestimation of funding requirements in the Five-Year Defense Programs (FYDP's), and motivations for overly optimistic weapon system cost estimates. GAO found that, in general, the military weapon systems acquisition process is characterized by programs which are extended, exceed cost estimates, and encompass fewer units than planned. Congress has expressed concern regarding the accuracy, timeliness, completeness, and impact of reporting by DOD. GAO suggested that DOD: (1) improve guidance and basic data for cost estimates; (2) ensure stricter implementation of the guidance; (3) introduce more realism into its assumptions and methodologies; and (4) make greater use of the recommendations of its independent estimating groups. GAO found that historical data show that FYDP's are consistently underestimated and that the gap between projected and actual costs has been growing. GAO noted that a contributing factor to optimistic cost estimates is the organizational motivation by contractors to advocate less costly new weapon systems.