Defense Acquisitions

Leading commercial firms have adopted a knowledge-based approach to developing new products, one that uses incentives to encourage realism and candor. Making sure that new technology is mature--that is, showing that it works--before moving into product development is the foundation of this approach. Defense Department (DOD) programs, with some exceptions, proceed with lower levels of knowledge about key factors of product development and allow technology development to take place during product development. DOD has designated the Joint Strike Fighter as a flagship program for acquisition reform. GAO found that, by best practices standards, none of the plane's critical technologies are expected to be at an acceptable level of readiness before starting engineering and manufacturing development. Delaying this phase of the program until these technologies are mature would improve the chances that the Joint Strike Fighter will be fielded as planned. However, despite lacking the requisite knowledge for the plane's critical technologies, DOD has deemed the risks manageable and plans to move ahead with the program as planned. Such a decision reinforces traditional incentives and increases the likelihood that the program will experience cost, schedule, and performance problems.

GAO noted that: (1) leading commercial firms have adopted a knowledge-based approach to developing new products, underwritten by incentives that encourage realism, candor, and meeting product expectations; (2) making sure that new technology is mature--that is, demonstrating that it works--before a product development starts is the foundation for this approach; (3) leading commercial firms discipline the product development phase by adhering to: (a) time limits for completing development; and (b) high standards for demonstrating design and production knowledge; (4) these practices have put commercial managers in an excellent position to succeed in developing better products in less time and producing them within estimated costs; (5) DOD programs, with some exceptions, proceed with lower levels of knowledge about key factors of product development and allow technology development to take place during product development; (6) DOD's variances from best practices stem from strong incentives for starting programs too early, overpromising performance capabilities, and understating expected costs, schedules, and technical risks; (7) while these incentives evolved over time to help build support for programs, they put program managers in a very difficult position to deliver better weapons on time and within budget; (8) DOD accepts the need to get better outcomes from its weapon system programs and accepts best commercial practices as a way to get those outcomes; (9) in fact, it is incorporating such practices in a major revision of its acquisition policy; (10) DOD has designated the Joint Strike Fighter as a flagship program for acquisition reform; (11) by best practices standards, none of the fighter's critical technology areas identified by the program office are expected to be at readiness levels considered an acceptable risk for entry into engineering and manufacturing development; (12) delaying this phase of the program until these technologies are mature would improve the chances that the Joint Strike Fighter will be fielded as planned; (13) however, despite not having the requisite knowledge for the eight technologies, DOD has deemed the risks manageable and proposes to proceed with the program as planned; (14) such a decision reinforces traditional incentives and increases the likelihood for future cost, schedule, and performance problems; and (15) DOD's plans to move the Joint Strike Fighter into engineering and manufacturing development with immature technology illustrates a lack of commitment to following best commercial practices as part of its acquisition reform efforts.