Weapons Acquisition

GAO reviewed the Pentagon's implementation of a new full funding policy for programs being reviewed by the Defense Acquisition Board. Under the policy, acquisition programs identified as having higher costs than reflected in the Future Years Defense Plan will not be given the go-ahead to the next acquisition phase until the sponsoring military service identifies suitable offsets, such as budget cuts to other programs, to cover the higher costs. This report examines all major Defense Acquisition Board decisions since the policy went into effect and discusses (1) the policy's impact and effectiveness; (2) which programs had shortfalls and the basis for estimating these shortfalls; and (3) whether offsets to these shortfalls had been identified, approved, and duly incorporated into the relevant database.

GAO found that: (1) DOD has placed an increased emphasis on ensuring that funding shortfalls are remediated at the earliest possible point in the budget process; (2) DOD never implemented a formal mechanism to obtain early approval of outyear funding changes and regular FYDP updates reflecting agreements reached on DAB reviewed programs because DOD deemed it impractical; (3) as of June 1992, 3 of 16 programs had unresolved budget shortfalls; (4) DOD estimated shortfalls after considering program cost estimates which were based on management determinations and judgments; and (5) DOD identified and approved shortfall offsets over a period of time.