Defense Acquisitions

The high cost to operate and support the Army's weapon systems is absorbing an increasing share of the Army's budget and is reducing funds available for buying new systems. This, according to Department of Defense (DOD) officials, results in older weapons being kept in the inventory longer, further increasing their costs and reducing funds available for modernization. DOD directed the services to designate 10 pilot programs to test innovative approaches to reduce operating and support costs. It set a broad goal that by fiscal year 2000 the projected life-cycle costs--the system from acquisition through disposal--be from 20 to 50 percent less than the actual costs of the replaced systems. This report addresses the effectiveness of the Army's efforts to reduce the operating and support costs for: (1) weapons systems under development; and (2) fielded weapon systems. GAO found that the Army is unlikely to significantly reduce projected operating and support costs of weapons systems under development, in part, because it has not established needed mechanisms to achieve the reductions. Furthermore, the Army's cost reduction efforts for fielded systems lack the priority needed to meet DOD's goals.

GAO noted that: (1) the Army is unlikely to be effective in significantly reducing the projected operating and support costs of its weapon systems under development because it has not established a sufficiently high priority for operating and support costs and has not put the needed mechanisms in place to achieve such reductions; (2) specifically, the Army: (a) has not assigned accountability for operating and support cost reductions nor established a requirement that each weapon system achieve a specific level of cost reductions; and (b) lacks complete and reliable data on the actual operating and support costs of the weapon systems that are being replaced; (3) without a requirement to achieve a specific level of operating and support cost reductions, program managers have little incentive or priority to trade off acquisition cost, schedule, and performance requirements during development to achieve long-term operating and support cost savings; (4) for the two developmental systems in GAO's review--the Comanche Helicopter and the Crusader Self-Propelled Howitzer--efforts are underway to improve the systems' supportability, reliability, and maintainability; (5) while these efforts should have an impact on the systems' operating and support costs, GAO was unable to link any actions or tradeoffs to specific reductions in operating and support costs; (6) further, the Army does not have complete and reliable data on the operating and support costs for systems that are being replaced; as a result, program managers lack the data needed to accurately project operating and support costs and to determine whether they can achieve DOD's goal of reducing new systems' life-cycle costs by 20 to 50 percent over those of the systems they are replacing; (7) in addition, because the Army has not historically budgeted or managed in this way, it has not collected and maintained data on all elements of each weapon system's operating and support costs; and (8) although the Army has identified some potential reductions, its operating and support cost reduction efforts for fielded systems lack the priority they need to be effective in meeting DOD's goals.

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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