Aircraft Acquisition

The Pentagon's strategy for acquiring nearly 8,500 fighter planes, attack helicopters, and other aircraft at a total cost of $335 billion through 2020--a level of spending not seen since the peak defense budgets of the 1980s--is neither realistic nor justified given current budgetary constraints and the end of the Cold War. The Defense Department's (DOD) acquisition strategy assumes that overall defense spending will begin to increase in real terms after fiscal year 2002 and that it will realize large savings from infrastructure downsizing and acquisition reform. However, GAO believes that overall defense spending will be stable, at best, for the foreseeable future and the savings from infrastructure reductions and acquisition reform are unclear. In GAO's view, DOD's aircraft acquisition strategy is a "business-as-usual" approach--adding billions of dollars to defense acquisition costs and delaying delivery of weapon systems to U.S. forces. DOD has typically made long-term commitments to acquire weapon systems on the basis of optimistic procurement assumptions and then made significant changes because of insufficient funding. The upshot is that large numbers of weapons are not procured at planned rates, leading to schedule stretchouts and billions of dollars in higher program costs. In other words, DOD often buys less and pays more than expected. GAO urges DOD to bring its aircraft investment strategy into line with more realistic, long-term projections of overall defense spending.

GAO noted that: (1) to meet its future aircraft inventory and modernization needs, DOD's current aircraft investment strategy involves the purchase or significant modification of at least 8,499 aircraft in 17 aircraft programs, at a total procurement cost of $334.8 billion (fiscal year 1997 dollars) through their planned completions; (2) DOD has maintained that its investment plans for aircraft modernization are affordable within expected future defense budgets; (3) DOD had stated earlier that sufficient funds would be available for its aircraft programs based on its assumptions that: (a) overall defense funding would begin to increase in real terms after fiscal year (FY) 2002; and (b) large savings would be generated from initiatives to downsize defense infrastructure and reform the acquisition process; (4) DOD's aircraft investment strategy may be unrealistic in view of current and projected budget constraints; (5) recent statements by DOD officials, as well as congressional projections, suggest that overall defense funding will be stable, at best, for the foreseeable future; (6) DOD's planned funding for the 17 aircraft programs in all but one year between FY 2000 and 2015 exceeds the long-term historical average percentage of the budget devoted to aircraft purchases and, for several of those years, approaches the percentages of the defense budget reached during the peak Cold War spending era of the early-to-mid-1980s; (7) the amount and availability of savings from infrastructure reductions and acquisition reform, two main claimed sources for increasing procurement funding, are not clearly evident today; (8) GAO's recent reviews of these initiatives indicate there are unlikely to be sufficient savings available to offset projected procurement increases; (9) to deal with a potential imbalance between procurement funding requirements and the available resources, DOD may need to: (a) reduce planned aircraft funding and procurement rates; (b) reduce funding for other procurement programs; (c) implement changes in force structure, operations, or other areas; or (d) increase total defense funding; (10) DOD has historically made long-term commitments to acquire weapon systems based on optimistic procurement profiles and then significantly altered those profiles because of insufficient funding; and (11) to avoid or minimize affordability problems, DOD needs to bring its aircraft investment strategy into line with more realistic, long-term projections of overall defense funding, as well as the amount of procurement funding expected to be available for aircraft purchases.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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