Defense Acquisition

In its hundreds of reviews of weapons systems during the last 20 years, GAO has cited the same problems time and time again: cost overruns, schedule delays, and performance shortcomings. In GAO's view, the military's acquisition process has built-in incentives that encourage the premature commencement of weapons programs; the exaggeration of performance capabilities; and the understatement of expected costs, schedules, and risks. Leading firms in the private sector--from Chrysler to Caterpillar--have developed increasingly sophisticated products in less time and at lower costs. Behind their success is a knowledge-based approach that demands realism and candor at every stage of product development. At the end of product development, at which point key technologies are "matured," or proven to work, these firms know that they will be able to deliver a product that meets cost, quality, and schedule targets. The Defense Department, on the other hand, often rushes its weapons system prototypes into production only to discover later that they cost more than expected, take longer to produce, and deliver less than expected. A knowledge-based approach could help to reshape DOD's acquisition process. Programs managed using best practices are more likely to avoid cost and schedule overruns, which would alleviate the need for DOD to offset unexpected cost increases by disrupting funding for other modernization efforts.

GAO noted that: (1) the pressures of competing for the funds to launch and sustain a weapon system program create incentives for starting programs too early; overpromising performance capabilities; and understating expected costs, schedules, and risks associated with developing and producing the weapon; (2) leading commercial firms have adopted a knowledge-based approach to developing new products that embodies incentives that encourage realism, candor, and meeting product expectations; (3) making sure that new technology is mature--that is, demonstrated that it works--is the foundation for this approach; (4) DOD's variances from best commercial practices result in higher costs, compromised performance, and questionable cost benefit approaches; (5) a knowledge-based approach can be used to reshape DOD's acquisition process; (6) by itself, such a process will not produce better program outcomes unless it influences the decisions made on individual weapon systems; (7) if a knowledge-based acquisition process is put in place and used, there are potential benefits that transcend individual program outcomes; and (8) specifically, the ability to execute a program more predictably within cost and schedule estimates would lessen the need to offset cost increases by disrupting other modernization programs.