Best Practices

The Pentagon, which wants to modernize its weapons systems at a faster pace within relatively level funds, had a budget of just over $40 billion in fiscal year 1998 with which to acquire and upgrade weapon systems, and it seems unlikely that it will receive much more than that in the future. As a result, the Defense Department (DOD) needs to find ways to modernize more economically. The practices employed by some commercial firms to reduce the time and money spent to develop new products--by as much as 50 percent--can suggest ways for DOD to make similar improvements. This report (1) compares DOD's practices for preparing a weapon system for production with best commercial practices, (2) determines how differences in commercial and DOD environments for developing new products affect practices, and (3) discusses the environmental changes that are key to the success of DOD initiatives for improving the transition of weapons from development to production.

GAO noted that: (1) commercial firms gained more knowledge about a product's technology, performance, and producibility much earlier in the product development process than DOD; (2) product development in commercial ventures was a clearly defined undertaking for which firms insisted on having the technology in hand to meet customer requirements before starting; (3) once underway, these firms demanded--and got--specific knowledge about a new product before production began; (4) the process of discovery--the accumulation of knowledge and the elements of unknowns--was completed for the best commercial programs well ahead of production; (5) in contrast, DOD programs allowed more technology development to continue into product development; (6) consequently, the programs proceeded with much less knowledge--and thus more risk--about required technologies, design capability, and producibility; (7) although DOD accepted more unknowns on its programs than commercial firms, it understated the risks present; (8) the commercial and defense environments created different incentives and elicited different behaviors from the people managing the programs; (9) specific practices took root and were sustained because they helped a program succeed in its environment--not because they were textbook solutions; (10) the success of commercial product developments was determined when production items were sold; (11) DOD programs began without needed technology in hand; rather, they were encouraged to include undeveloped technology; (12) because these programs ran much longer, production concerns did not play as big a role and were not as critical to success in the early stages; (13) the definition of success was more complicated in DOD; (14) during most of product development, success was defined as getting DOD and Congress as the customer, rather than the firm, to fund the development annually; (15) commercial practices for gaining knowledge and assessing risks can help produce better outcomes on DOD acquisitions; (16) indeed, DOD has several commercial-like initiatives under way; (17) at least two factors are critical to fostering an environment conducive to such practices: (a) program launch decisions must be relieved of the need to overpromise on technical performance and resource estimates; and (b) once a program is under way, it must become acceptable for program managers to identify unknowns as high risks so that they can be aggressively worked on earlier in development; and (18) currently, identifying a high risk on a DOD program is perceived as inviting criticism and the loss of funding.

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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