Defense Acquisition
Advanced SEAL Delivery System Program Needs Increased Oversight Gao ID: GAO-03-442 March 31, 2003The Advanced SEAL Delivery System (ASDS) is a mini-submarine that is one of the U.S. Special Operations Command's largest investments. The program is approaching the end of a difficult development and must undergo key testing before decisions are made to proceed beyond the first boat. Over the past several years, the Congress has raised concerns about technical difficulties, schedule delays, cost growth, and management oversight. The Senate Armed Services Committee requested that GAO review the status and problems facing the program. Specifically, this report examines the ASDS program's (1) progress towards meeting requirements and technical challenges, (2) ability to meet schedule and cost projections, and (3) underlying factors contributing to program problems.
While progress has been made in addressing technical difficulties with the first boat, some problems must yet be solved and other capabilities demonstrated before the ASDS can meet all of its key performance requirements. For example, the Navy has not yet been able to develop an adequate propulsion battery. In addition, the ASDS' final design will remain uncertain until technical problems are solved and testing is completed. The degree of uncertainty will be important as the U.S. Special Operations Command could decide that the ASDS is ready to conduct missions and commit to buying more boats after the operational evaluation scheduled for April 2003. The ability of the ASDS to meet cost and schedule projections is problematic. The program has experienced major schedule delays and cost increases. The program is 6 years behind its original schedule, and, by GAO's estimates, costs have more than tripled. Cost and schedule estimates were being formally revised at the time of this report, but even their accuracy will be uncertain because of unresolved, known problems; the potential for discovering new problems in upcoming testing; and the difficulty of estimating costs for future boats based on the first boat's aging data. Several underlying factors have contributed to the ASDS' difficult development. In retrospect, the capabilities required of the boat outstripped the developer's resources in terms of technical knowledge, time, and money. Key problems, such as the battery and the propeller, were discovered late--in testing on the first boat--rather than in component or subsystem level testing. Finally, the program suffered from insufficient management attention on the part of both the government and the contractor, which led to missed opportunities for righting the program as it proceeded. Moreover, the management attention that was exercised has been hampered by outdated information.
RecommendationsOur 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.
Director: Team: Phone:GAO-03-442, Defense Acquisition: Advanced SEAL Delivery System Program Needs Increased Oversight
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Report to the Committee on Armed Services, U.S. Senate:
United States General Accounting Office:
GAO:
March 2003:
Defense Acquisitions:
Advanced SEAL Delivery System Program Needs Increased Oversight:
Defense Acquisitions:
GAO-03-442:
GAO Highlights:
Highlights of GAO-03-442, a report to the Committee on Armed Services,
U.S. Senate
Why GAO Did This Study:
The Advanced SEAL Delivery System (ASDS) is a mini-submarine that is
one of the U.S. Special Operations Command‘s largest investments. The
program is approaching the end of a difficult development and must
undergo key testing before decisions are made to proceed beyond the
first boat. Over the past several years, the Congress has raised
concerns about technical difficulties, schedule delays, cost growth,
and management oversight. The Senate Armed Services Committee requested
that GAO review the status and problems facing the program.
Specifically, this report examines the ASDS program‘s (1) progress
towards meeting requirements and technical challenges, (2) ability to
meet schedule and cost projections, and (3) underlying factors
contributing to program problems.
What GAO Found:
While progress has been made in addressing technical difficulties with
the first boat, some problems must yet be solved and other capabilities
demonstrated before the ASDS can meet all of its key performance
requirements. For example, the Navy has not yet been able to develop
an adequate propulsion battery. In addition, the ASDS‘ final design
will remain uncertain until technical problems are solved and testing
is completed. The degree of uncertainty will be important as the U.S.
Special Operations Command could decide that the ASDS is ready to
conduct missions and commit to buying more boats after the operational
evaluation scheduled for April 2003.
The ability of the ASDS to meet cost and schedule projections is
problematic. The program has experienced major schedule delays and cost
increases. The program is 6 years behind its original schedule, and, by
GAO‘s estimates, costs have more than tripled. Cost and schedule
estimates were being formally revised at the time of this report, but
even their accuracy will be uncertain because of unresolved, known
problems; the potential for discovering new problems in upcoming
testing; and the difficulty of estimating costs for future boats based
on the first boat‘s aging data.
Several underlying factors have contributed to the ASDS‘ difficult
development. In retrospect, the capabilities required of the boat
outstripped the developer‘s resources in terms of technical knowledge,
time, and money. Key problems, such as the battery and the propeller,
were discovered late”in testing on the first boat”rather than in
component or subsystem level testing. Finally, the program suffered
from insufficient management attention on the part of both the
government and the contractor, which led to missed opportunities for
righting the program as it proceeded. Moreover, the management
attention that was exercised has been hampered by outdated information.
What GAO Recommends:
GAO is recommending that, before the operational evaluation is held,
DOD ensure that the overall ASDS test and evaluation master plan and
the specific test plan for the operational evaluation are both
sufficient in scope and approved. GAO is also recommending that DOD
elevate the level of management attention and hold a formal milestone
review before buying additional boats. DOD concurred with most of GAO‘s
recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-442.
To view the full report, including the scope and methodology, click on
the link above. For more information, contact Paul Francis at (202)
512-4841 or francisp@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Progress Made in Meeting System Requirements and Resolving Technical
Problems, but Difficulties Remain:
Difficulties Remain in Making Credible Schedule and Cost Projections:
Several Underlying Factors Contributed to the ASDS‘s Difficult
Development:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendix I: Comments from the Department of Defense:
Tables:
Table 1: Status of the ASDS Key Performance Parameters, Boat 1:
Table 2: ASDS Program Costs for Six Boats and Two Facilities:
Figure:
Figure 1: Estimated Delivery of the First Boat:
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United States General Accounting Office:
Washington, DC 20548:
March 31, 2003:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:
Key decisions lie ahead for the Advanced SEAL Delivery System (ASDS), a
mini-submarine that is one of the U.S. Special Operations Command‘s
largest investments. The Department of Defense (DOD) is increasingly
relying on special operations forces to accomplish its missions,
especially in the current national security environment of the fight
against terrorism. The ASDS, with a potential cost on the order of $2
billion, is a major development effort to enhance the capabilities of
the U.S. Special Operations Command‘s naval special forces. The mini-
submarine is designed for clandestine delivery and extraction of Navy
SEAL teams and equipment performing operational missions in high-threat
environments. The program, which is being managed by the Navy, is
approaching the end of a difficult development and the first boat must
undergo key testing before a decision is made to proceed with
additional boats.
During the past several years, the Congress has raised concerns about
the technical difficulties, schedule delays, cost growth, and
management oversight of the ASDS program. Senate Report 107-62, which
accompanied the National Defense Authorization Act for Fiscal Year
2002, called for us to review the status and problems facing the
program. We briefed the defense committees in April and May 2002 on the
results of our review. At that time, you asked us to continue reviewing
the program‘s progress. Accordingly, this report examines the ASDS
program‘s (1) progress towards meeting requirements and technical
challenges, (2) ability to meet schedule and cost projections, and (3)
underlying factors that have contributed to program problems.
Results in Brief:
While progress has been made in addressing technical difficulties with
the first boat, some problems must yet be solved and other capabilities
demonstrated before the ASDS can meet all of its key performance
requirements. For example, the Navy has not yet been able to develop an
adequate propulsion battery and the first boat is not quiet enough to
meet acoustic stealth requirements. In addition to solving known
technical problems, the potential for discovering new ones is
significant because the first boat is slated to begin operational
evaluation in April 2003. The ASDS‘s final design will remain uncertain
until technical problems are solved and testing is completed. The
degree of uncertainty will be important because the U.S. Special
Operations Command could, following the operational evaluation, decide
that the ASDS is ready to conduct missions and commit to buying more
boats.
The ability of the ASDS to meet schedule and cost projections is
problematic. The program has experienced major schedule and cost
increases since it was started, and these increases have continued
since our April 2002 briefing. The program is 6 years behind its
original schedule, and, by our estimates, costs have more than tripled.
Current schedule and cost estimates have not been updated since 1999.
These estimates were being formally revised at the time of this report,
but they will be subject to change because of unresolved, known
problems; the potential for discovering new problems in upcoming
testing; and the difficulty of estimating costs for future boats based
on the first boat‘s aging data.
Several underlying factors have contributed to the ASDS‘s difficult
development. In retrospect, the capabilities required of the boat
outstripped the developer‘s resources in terms of technical knowledge,
time, and money. Key technical problems, such as the battery and the
propeller, were discovered late--during testing on the first boat--
rather than in component or subsystem level testing. Finally, the
program suffered from insufficient management attention on the part of
both the government and the contractor, which led to missed
opportunities for righting the program as it proceeded. Moreover, the
management attention that was given has been hampered by outdated
information.
We are making recommendations aimed at improving the quality of
information available and enhancing DOD‘s oversight of the ASDS
program. In its comments on a draft of this report, DOD concurred with
two of our recommendations and partially concurred with our
recommendation to elevate the level of management attention.
Specifically, DOD concurred with all but a part of one of the
particulars of this recommendation concerning the development of an
independent cost estimate.
Background:
The ASDS is a battery-powered mini-submarine about 65 feet long and 8
feet in diameter with a dry interior. It is operated by a two-person
crew and can carry equipment and SEAL personnel. The vehicle has a
hyperbaric recompression chamber with a lower hatch that can be opened
and closed underwater to allow divers to exit and reenter the vehicle
(referred to as lock in/lock out) at various depths.[Footnote 1] The
ASDS is expected to have increased range, speed, and capacity over the
current underwater SEAL delivery vehicle, which is an open, wet
submersible that transports SEALs wearing scuba gear and thus exposes
them to ocean water temperatures. The ASDS‘s main advantage over
existing SEAL delivery systems is its ability to transport forces in a
dry environment, which reduces the SEALs‘ exposure to cold-water as
well as their physical and mental fatigue. Use of the ASDS is not
limited to delivery of Navy SEALs. It can be used for intelligence
collection, surveillance and reconnaissance, combat search and rescue,
sabotage and diversionary attacks, forward observation for fire
direction, underwater ship attack, and offensive mine operations.
Several organizations are involved with the ASDS program. The U.S.
Special Operations Command is funding the program, and its Naval
Special Warfare Command set the requirements and will be the user of
the system. The Assistant Secretary of the Navy for Research,
Development, and Acquisition is responsible for approving each phase of
the ASDS acquisition process. The Naval Sea Systems Command is the
acquisition program manager and is responsible for overseeing the prime
contractor, Northrop Grumman.
The program‘s last official baseline--from 1999--calls for building six
boats and two facilities. The plans also include the ability to
transport the ASDS boat using a variety of methods, including undersea
(’piggy-back“ on a 688-class attack submarine), by air (aboard C-5
aircraft), and by road (on a large flat-bed trailer). The Naval Sea
Systems Command awarded a contract to Northrop Grumman for detailed
design and manufacturing development in September 1994.[Footnote 2] In
August 2001, the Navy program office took what it calls ’conditional“
preliminary acceptance of the first boat from Northrop Grumman under an
agreement that all contractual requirements needed for final government
acceptance would be completed within 1 year. However, Navy officials
told us that the contractor has not satisfactorily completed the
contract requirements within this period, and the first boat is still
not ready for final government acceptance.
The first ASDS boat is scheduled to undergo an operational evaluation
in April 2003. An operational evaluation is a field test conducted by
the war fighter under realistic conditions for the purpose of
determining the effectiveness and suitability of the boat for use in
combat. The operational evaluation will be a major factor in deciding
whether or not to declare an initial operating capability--the point at
which the first boat can be used to conduct missions.
Progress Made in Meeting System Requirements and Resolving Technical
Problems, but Difficulties Remain:
During the past year, the ASDS program has made considerable progress
in addressing technical difficulties. However, the first boat has not
yet demonstrated that it can meet all key requirements. Several
technical challenges still need to be addressed, and further technical
and operational testing is required before all key performance
requirements can be demonstrated and the first boat can be considered
fully operational.
The ASDS Has Not Met All Requirements:
The first boat produced has not demonstrated the ability to meet all of
the program‘s key performance parameters. Key performance parameters
represent those critical performance parameters so significant that a
failure to meet a minimum value of performance can call into question a
system‘s ability to perform missions. Each key performance parameter is
made up of individual subordinate requirements that must be met to
demonstrate the parameter.[Footnote 3] At the time of our review, Naval
Sea Systems Command officials judged that 11 of the first boat‘s 16 key
performance parameters had been met, 4 were still in process, and 1
required action. However, the status of the subordinate requirements,
as shown in table 1, makes the assessment of the key performance
parameters less clear.
Table 1: Status of the ASDS Key Performance Parameters, Boat 1:
Key performance parameter number: 1; Key performance parameter: Maximum
combat range; Status: Demonstrated, all subordinate requirements met:
[Empty]; Status: Demonstrated, some subordinate requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 2; Key performance parameter: Maximum
cruise speed; Status: Demonstrated, all subordinate requirements met:
[Empty]; Status: Demonstrated, some subordinate requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 3; Key performance parameter:
Transport depth (submarine host); Status: Demonstrated, all subordinate
requirements met: [Empty]; Status: Demonstrated, some subordinate
requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 4; Key performance parameter:
Transport speed (submarine host); Status: Demonstrated, all subordinate
requirements met: [Empty]; Status: Demonstrated, some subordinate
requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 5; Key performance parameter:
Concurrent lock in/lock out; Status: Demonstrated, all subordinate
requirements met: [Empty]; Status: Demonstrated, some subordinate
requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 6; Key performance parameter:
Operating temperature; Status: Demonstrated, all subordinate
requirements met: [Empty]; Status: Demonstrated, some subordinate
requirements
not met: [Empty]; Status: In process: Yes; Status: Action required:
[Empty].
Key performance parameter number: 7; Key performance parameter: Storage
temperature; Status: Demonstrated, all subordinate requirements met:
Yes; Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 8; Key performance parameter:
Survivability; Status: Demonstrated, all subordinate requirements met:
[Empty]; Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: Yes; Status: Action required:
[Empty].
Key performance parameter number: 9; Key performance parameter:
Vibration; Status: Demonstrated, all subordinate requirements met:
[Empty]; Status: Demonstrated, some subordinate requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 10; Key performance parameter: Crew;
Status: Demonstrated, all subordinate requirements met: Yes; Status:
Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 11; Key performance parameter:
Passengers; Status: Demonstrated, all subordinate requirements met:
Yes;
Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 12; Key performance parameter:
Endurance; Status: Demonstrated, all subordinate requirements met:
[Empty]; Status: Demonstrated, some subordinate requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 13; Key performance parameter:
External payload; Status: Demonstrated, all subordinate requirements
met: [Empty]; Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: Yes; Status: Action required:
[Empty].
Key performance parameter number: 14; Key performance parameter:
Transportability; Status: Demonstrated, all subordinate requirements
met: [Empty]; Status: Demonstrated, some subordinate requirements
not met: Yes; Status: In process: [Empty]; Status: Action required:
[Empty].
Key performance parameter number: 15; Key performance parameter:
Vehicle signatures; Status: Demonstrated, all subordinate requirements
met: [Empty]; Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: [Empty]; Status: Action required:
Yes.
Key performance parameter number: 16; Key performance parameter:
Interoperability; Status: Demonstrated, all subordinate requirements
met: [Empty]; Status: Demonstrated, some subordinate requirements
not met: [Empty]; Status: In process: Yes; Status: Action required:
[Empty].
Key performance parameter number: Total; Key performance parameter:
[Empty]; Status: Demonstrated, all subordinate requirements met: 3;
Status: Demonstrated, some subordinate requirements
not met: 8; Status: In process: 4; Status: Action required: 1.
Source: U.S. Navy.
Note: Naval Sea Systems Command, ASDS Top Level Requirement
Verification Matrix, January 2003.
[End of table]
As indicated in table 1, all subordinate requirements for the first
boat have not been met for eight key performance parameters that were
judged as demonstrated. For example, the third parameter--transport
depth (attached to the submarine host)--has three subordinate
requirements. One has been demonstrated, but two are still in process.
Similarly, the fifth parameter--concurrent lock in/lock out--has 12
subordinate requirements. Four have been demonstrated, but five are
still in process and three require action.
Some requirements have also been delayed, reduced, and eliminated by
the U.S. Special Operations Command. For example, the acoustic, or
noise level, requirement, which is part of the vehicle signatures key
performance parameter, has been deferred until the second boat. The
transportability parameter--although now considered demonstrated by
the Naval Sea Systems Command--was also reduced. It no longer includes
transport by C-17 aircraft, amphibious ships, and the SSN-21 submarine.
Also, a degaussing system needed to lower the vehicle‘s magnetic
signature has been delayed and designated as a preplanned product
improvement.[Footnote 4] Although a degaussing system was originally
included in the ASDS design, the program used the funds for this system
to cover other program expenses. If the vehicle has a large magnetic
signature, it will have increased vulnerability to mines. Nonetheless,
even with these reduced requirements, Navy and U.S. Special Operations
Command officials believe that the ASDS is still a cost-effective
capability that provides an improvement over existing vehicles.
Problems in Critical Components Remain Unsolved:
In the past year, the ASDS program has made progress in resolving
technical issues. Achievements include a successful new anchor design,
improved battery design, sonar systems upgrades, improvements in
configuration management control, renewed focus on ASDS logistics
needs, completion of safety-critical software testing, and substantial
progress in developing engineering drawings. For example, the original
anchors have been redesigned and tested successfully to hold the ASDS
level enough to provide a stable dive platform during ocean swells. The
program has also succeeded in decreasing the operating temperatures of
the silver-zinc batteries, which has reduced the frequency of
electrical shorts and improved the batteries‘ performance.
Nonetheless, there are still unresolved issues that prevent the vehicle
from meeting its operational requirements. Battery reliability and
acoustics are currently the most critical issues facing the program.
The silver-zinc propulsion battery has limited the performance of the
ASDS system. The first attempts to use silver-zinc batteries in the
ASDS resulted in unexpected shorting and premature failure. One of the
key reasons for the battery shorting was because of the high-
temperature environment in which the battery operates. Through ongoing
assessment and modifications, the Navy has been able to extend the
endurance of a fully charged battery. Program officials have not
determined whether the battery‘s endurance can be extended to support
all missions. In addition, the battery‘s demonstrated life--the number
of times it can be recharged before requiring replacement--is much
shorter than expected. Currently, the battery can only be recharged two
to three times before failing, whereas 20 recharge cycles were
expected. If the battery cannot last through the expected recharge
cycles, the impact on the submarine‘s availability and operation and
support costs will be significant because replacing the battery
requires the boat to return to its base facility, be taken out of the
water, and partially dismantled.
Although the Navy continues to mature the silver-zinc battery for the
first boat, it is developing a lithium-ion battery as a replacement on
the first boat and any additional boats. Program officials expect the
lithium-ion battery to be developed by the summer of 2004. Lithium-ion
battery technology, like silver-zinc, is not new; however, the
challenge lies in adapting the technology to ASDS‘s size and
environment.
To meet the acoustics portion of the vehicle signatures key performance
parameter, the boat must be quiet enough to (1) evade detection while
performing its mission of inserting SEALs into hostile territory and
(2) not give away the location of the host submarine. However, the
first boat makes too much noise and does not meet this acoustic
requirement. The most significant noise offender at this point is the
propeller. The program manager assembled a team of government and
private experts to redesign the propeller by March 2003 in preparation
for the operational evaluation in April 2003. However, more propeller
work may be needed, and other acoustic problems may have to be
addressed in order to meet the requirement. Therefore, the U.S. Special
Operations Command deferred the acoustic requirement until delivery of
the second boat--in several years--and will accept the noise level that
the first boat achieves.
Design and Test Challenges Remain:
The final design of the boat is still evolving, pending the resolution
of existing problems and remaining testing--notably the operational
evaluation. The program has made some progress in finalizing the
drawings of the boat by catching up on engineering drawing updates. As
of January 2003, the program had completed about 76 percent of
approximately 12,000 revisions to the engineering drawings. Program
officials expect to eliminate the remaining backlog of 2,846 revisions
by August 2003.
Unresolved technical problems could have implications for the design of
the ASDS and require further revisions to the boat‘s engineering
drawings. The ASDS boat includes an outer shell, or exostructure, and
an inner, or ’pressure,“ hull. Many of the boat‘s critical systems,
such as the battery system, sonars, and anchors, are located between
the outer shell and the inner hull. Future changes to any of these
systems may require modifications to the design of the outer shell or
inner hull. For example, the battery system is mounted to the inner
hull. Replacing the silver-zinc battery system with a lithium-ion
battery system will likely require modifications to the boat‘s design.
Another factor that may affect the design of the ASDS is the statutory
requirement to conduct realistic survivability testing. A key element
of survivability is live-fire testing, which evaluates how vulnerable
the boat‘s design is to the shock of being under fire and assesses crew
safety. These tests will need to be conducted both on the first boat
alone and while the boat is attached to the host submarine. However,
the program office has requested that the Director, Operational Test
and Evaluation, waive full-up, system-level live-fire testing of the
first boat. The law allows an alternative approach to full-up, system-
level live-fire testing if it is impractical or overly costly, which is
typically the case on submarines because live-fire testing would
significantly damage or possibly destroy the boat. To date, an
alternative approach has not been approved. Until the ASDS is tested in
some manner to satisfy the live-fire requirement, the possibility of
discovering the need for design modifications and upgrades will
continue.
Difficulties Remain in Making Credible Schedule and Cost Projections:
Consistent and substantial schedule delays and cost increases have
characterized the ASDS program since its beginning. The program
originally projected that the first boat could be delivered in fewer
than 3 years; 9 years later, the first boat is still not fully
operational. A variety of technical challenges and problems have
contributed to these delays. In addition, according to the initial
approved program baseline, adjusted to reflect six boats and two
facilities, the program would cost $527 million in fiscal year 2003
dollars. Currently, we project that the program will cost over $2
billion. Continuing technical problems, obsolete estimates, and
upcoming tests and demonstrations make it difficult to assess
conclusively whether or not the ASDS program is stable or will incur
additional delays and cost increases.
Schedule Delays and Cost Increases:
Delivery of the first boat is now 6 years behind schedule, as shown in
figure 1.
Figure 1: Estimated Delivery of the First Boat:
[See PDF for image]
[End of figure]
The original program schedule called for delivery of the first boat in
July 1997. The 1999 schedule called for delivery of the first boat in
February 2000, almost 3 years late. This last program schedule has not
been revised since June 1999.[Footnote 5] Although the first boat was
conditionally accepted in August 2001, Navy officials now expect
delivery of a fully acceptable boat from the contractor in June 2003,
pending the completion of operational evaluation.
As shown in table 2, the ASDS‘s cost increases essentially parallel the
schedule delays.
Table 2: ASDS Program Costs for Six Boats and Two Facilities:
Fiscal year 2003 dollars in millions.
Research, development, test and evaluation;
Development baseline (Oct. 1994)[B]: $131.4;
First rebaseline (Sept. 1998): $244.2;
Last acquisition program rebaseline (June 1999): $310.8;
GAO projection[C] (April 2002): $437.6;
GAO projection[D] (January 2003):
$467.7.
Procurement; Development baseline (Oct. 1994)[B]: $362.7;
First rebaseline (Sept. 1998): $452.2;
Last acquisition program rebaseline (June 1999): $675.0;
GAO projection[C] (April 2002): $1,258.6;
GAO projection[D] (January 2003): $1,823.7.
Military construction;
Development baseline (Oct. 1994)[B]: $33.0;
First rebaseline (Sept. 1998): $37.4;
Last acquisition program rebaseline (June 1999): $36.8;
GAO projection[C] (April 2002): $51.7;
GAO projection[D] (January 2003): $51.7.
Total[A]; Development baseline
(Oct. 1994)[B]: $527.1; First rebaseline (Sept. 1998): $733.7;
Last acquisition program rebaseline (June 1999): $1,022.6;
GAO projection[C] (April 2002): $1,747.8;
GAO projection[D] (January 2003):
$2,343.0.
Source: U.S. Navy and U.S. Special Operations Command.
Note: GAO analysis of Navy and U.S. Special Operations Command data.
[A] Totals may not add due to rounding.
[B] The development baseline was for 3 boats and 1 facility. To put
this estimate on the same footing as the 1998 and 1999 estimates, GAO
projected what the development baseline would equal for 6 ASDS and 2
facilities.
[C] GAO projected the acquisition costs based on the U.S. Special
Operations Command‘s actual funding for ASDS through fiscal year 2001
and projections through fiscal year 2007. Our projections are straight-
line estimates and do not include any learning curve, economies of
scale, or nonrecurring cost effects.
[D] GAO projected the acquisition costs based on the U.S. Special
Operations Command‘s actual funding for ASDS through fiscal year 2002
and projections through fiscal year 2009. Our projections are straight-
line estimates and do not include any learning curve, economies of
scale, or nonrecurring cost effects.
[End of table]
By the last approved acquisition program baseline in June 1999, total
costs had almost doubled, and research, development, test and
evaluation costs had more than doubled. The June 1999 program baseline
has not been updated since, and updated cost estimates are not
available.[Footnote 6] However, at the time of our briefing in April
2002, we projected that both of these costs had more than tripled.
Several Factors Make Future Cost and Schedule Performance Uncertain:
Uncertainties about the schedule and cost of the ASDS program remain,
making it difficult to predict future performance. The program faces
additional cost and schedule risks as outlined below:
* The program has experienced continual delays in preparing and getting
estimates approved. Specifically, none of the following has been
finalized or approved: the acquisition program baseline, the test and
evaluation master plan, the test plan for the operational evaluation,
or the cost estimate.
* The solutions to several known technical problems need to be
demonstrated through testing, and the results of this testing may
reveal the need for additional changes.
* The operational evaluation could expose new problems, which may
require redesign and other solutions. Further, if the operational
evaluation is not rigorous enough, or the scope is too narrow, the
program risks missing problems. For instance, any requirements deferred
to the second boat will not be included in the operational evaluation.
Some scope reduction has already occurred with the deferral of the
propeller and the degaussing system. Moreover, we could not determine
the rigor and scope of the operational evaluation due to the lack of an
approved test plan.
* The wide, but now necessary, gap between the construction of the
first two boats makes cost projections for the second and future boats
more difficult due to loss of production base as well as obsolescence
of certain technologies and systems that have been incorporated into
the first boat.
Several Underlying Factors Contributed to the ASDS‘s Difficult
Development:
Developing the ASDS was clearly a difficult undertaking--a challenge
under any circumstances. However, several factors either made the
development effort more difficult than necessary or limited
opportunities for responding to problems early. These include discovery
of problems in system-level testing, a mismatch between requirements
and resources at program start, and insufficient management attention.
In retrospect, some of the ASDS‘s difficulties could have been foreseen
and their effect lessened.
Discovery of Key Problems in System-Level Testing:
While technical challenges, such as the battery and propeller, have
caused schedule delays and cost increases, the effect of technical
challenges and problems has been magnified because critical problems
were not discovered until tests of the full ASDS system. Ideally,
system-level testing occurs after components have successfully
completed laboratory and subsystem testing. In a 2000 report on test
and evaluation, we found that a best practice was to expose problems
early in component and subsystem level tests so that they could be
corrected for less cost.[Footnote 7] Conversely, we found that when
tests of a full system became the vehicle for discovering problems that
could have been found out earlier, additional--and unanticipated--time,
money, and effort had to be expended to overcome the problems. One firm
referred to this phenomenon as ’late cycle churn.“:
It appears that the ASDS program is experiencing late cycle churn with
the battery and acoustics problems. Early silver-zinc battery tests
were performed under very limited, unrealistic environmental
conditions. Consequently, the problems with the battery were not
discovered until shortly after the first set of batteries was installed
on the boat in December 2000. Similarly, acoustic tests of the
propeller were not performed until February 2002--again, on the first
boat. Had the battery and propeller acoustics problems been discovered
earlier in more realistic component or subsystem level testing, their
effect on schedule and costs might have been minimized.
Mismatched Requirements and Resources at Program Start:
It is now clear that when the ASDS program began, the capabilities
required of the boat outstripped the developer‘s resources in terms of
technical knowledge, time, and money. Our work on best practices has
shown that when such a mismatch occurs at the outset of product
development, a program is put in a poor position to succeed.[Footnote
8] Cost increases, schedule delays, and performance shortfalls are the
typical consequences of such a mismatch.
Before product development begins, successful programs achieve a match
between the product performance desired by the customer and the ability
of the developer to marshal the resources necessary to develop such a
product. It is essential that both parties understand the demands that
the customer is making of the product and the challenges these pose for
the developer before the parties commit to product development.
Importantly, achieving this match is a managed outcome--on successful
programs, it is done deliberately, using metrics for assessing
technology and design risks. In particular, the maturity of technology
is an important weathervane for achieving a match between requirements
and resources. On successful product development programs, developers
will not allow immature technologies--those that require further
development--to be included in the product design. Immature
technologies make it very difficult to estimate a product development‘s
schedule and cost accurately.
If the developer does not have the requisite technologies, engineering
and design knowledge, and sufficient time and money to deliver the
desired product when it is needed, tradeoffs must be made. These
include
(1) lowering product requirements to match the developer‘s resources or
(2) deferring the program until the developer can make the additional
investments to meet the customer‘s requirements. When a match between
requirements and resources is not achieved at the outset of product
development, the ensuing program is much more susceptible to
performance shortfalls, cost increases, and schedule delays. The
competition for funds often makes the situation worse by enticing
managers to be optimistic about the time and money needed to complete
development.
The ASDS‘s experience, as detailed in the preceding sections, has
followed this path. Product requirements have been lowered, dropped, or
deferred in an effort to match what the developer could deliver--
tradeoffs that could perhaps have been made before product development
began. Cost increases and schedule delays evidence the struggle of the
developer to mature key technologies, such as the battery, and solve
design problems, such as the propeller, while producing the first boat.
The experience of the ASDS underscores the need for nascent and future
weapon system programs to manage customer needs and developer resources
so that a match is achieved before product development is approved.
Management Attention Has Been Insufficient:
Weaknesses in the ASDS‘s management compounded the problems resulting
from the mismatch between user requirements and the developer‘s
resources. Management of the program on the part of both the government
and the contractor has been insufficient; consequently, early
opportunities to act on problems were missed. Moreover, direction by
the Congress to elevate the oversight of the program to include a
higher level of DOD review has not been followed fully, although the
program has received heightened managerial attention. Recent steps
taken to improve management of the program will help, but they have
come very late in the product development process.
In August 1994, before the ASDS began product development, the DOD
Inspector General reported serious problems with the program, including
noncompliance with mandatory DOD acquisition guidance, and recommended
increased senior-level DOD oversight and better coordination with the
Joint Staff, the services, and defense agencies. However, the
acquisition executive at the time disagreed, based on input from other
sources, including the Naval Sea Systems Command‘s assessment that the
program was technically sound and executable. Consequently, the Navy
began product development with the award of the engineering and
manufacturing development contract to Northrop Grumman as planned on
September 29, 1994.[Footnote 9]
In 1997 and 1999, two Navy independent review teams identified
continuing problems with the ASDS program, including cost growth,
schedule delays, and--perhaps most importantly--a lapse in effective
program management by both the government and the contractor.
Collectively, these problems necessitated developing a new baseline.
Navy reviews identified several causes for the lapse in effective
program management. These included:
* a lack of contractor experience in submarine design and construction;
* the government‘s lack of influence or visibility into problems
between the contractor and the subcontractors;
* a focus on technical rather than management aspects of the program by
both the program office and the contractor;
* ineffective oversight by the program office and little attention to
the financial performance of the contractor; and:
* frequent changes in the contractor‘s project management team.
As a result, the Navy created a management integrated product team
comprised of the Naval Sea Systems Command‘s Program Manager for the
Deep Submergence Program Office; a Northrop Grumman Senior Vice
President; the U.S. Special Operations Command‘s Program Executive
Officer, Maritime and Rotary Wing; and the Naval Special Warfare
Command‘s Assistant Chief of Staff for Resources, Requirements, and
Assessments to help deal with ASDS program problems.
In August 1999,[Footnote 10] the Congress expressed its continuing
concern over cost growth, development and testing activities, and level
of oversight. It established the ASDS as an item of special interest
that it would monitor closely. It also requested that--although ASDS
may not meet the normal dollar threshold for automatic elevation to a
major defense acquisition program (acquisition category I)--the program
be elevated to an equivalent level of DOD review because of the
’troubled history“ and ’concern that this program may not be out of
difficulty yet.“[Footnote 11] Programs designated as acquisition
category I programs must meet certain statutory and DOD requirements
applicable to such programs, including regular reporting to Congress;
establishment of a firm baseline for measuring the program; a mechanism
for addressing cost and schedule variances; establishment of cost,
schedule, and performance goals; development of an independent life-
cycle cost estimate by the Secretary of Defense‘s Cost Analysis
Improvement Group; and an independent operational test and evaluation.
Further, elevation of the program to this higher acquisition category
would result in a more disciplined program management approach under
DOD‘s acquisition system guidance, including following a prescribed
process for making major decisions, providing documentation such as
test results for those decisions, and holding formal reviews before
making those decisions. This process, while intended to facilitate the
management of major programs, also provides the mechanisms and
opportunities for exercising oversight. In early 2001, the U.S. Special
Operations Command informed the Navy that ASDS cost projections were
approaching the acquisition category I program threshold and proposed
elevating the status of the program.
In both instances, DOD declined to designate the ASDS as a major
defense acquisition program. Rather, to increase management attention,
DOD established new top-level overarching integrated product team
reviews and placed the program on the oversight list of the Director,
Operational Test and Evaluation. In fact, however, while the top-level
overarching integrated product team was slated to meet twice each year
to review the ASDS‘s progress, it has only met two times, and has not
met since May 2001. The lower-level integrating team has met more
often. In any event, the program office has not developed a new program
baseline, including an updated cost estimate, since 1999, which denied
the teams current information even if they had made a more rigorous
attempt to provide oversight.
Despite these and the earlier attempts at improving management
attention, lapses in effective program management have continued. Most
recently, Navy officials informed us that they have had to require the
contractor to redo all of the required safety-critical software testing
because the contractor did not provide documentation that this testing
had been performed. This rework has contributed to recent schedule
delays and cost increases. Program officials also informed us that in
early 2002 they had to hire another contractor to investigate and
develop solutions for the battery problems. This also has contributed
to recent schedule delays and cost increases.
In November 2002, Congress directed the Secretary of Defense to conduct
a complete review of the requirements, mission, management, and cost
structure of the ASDS program and report to the congressional defense
committees before obligating more than 50 percent of fiscal year 2003
ASDS procurement funding.[Footnote 12] This review is in progress, and
results are expected by late March 2003. Congress again intervened
during the fiscal year 2003 congressional budget review. As a result of
the review, DOD agreed that the first boat should be fully operational
and meet the user‘s requirements before it commenced with the
procurement of additional boats. Under the condition that the U.S.
Special Operations Command would agree to resolve the technical issues
with the first boat before declaring initial operational capability,
Congress approved additional funding for the program.
At the program level, several management improvements have been made
recently. While they will not necessarily address oversight, they
should facilitate solving technical problems and improve the quality of
program information. The program office and the U.S. Special Operations
Command augmented their staffs and expertise in 2002 to meet the needs
of the ASDS program. In addition, the ASDS program manager has enlisted
outside experts from Battelle and Penn State University to investigate
technical problems with the battery, sonars, and the propeller. The
program office is also revising the Acquisition Strategy, the Approved
Program Baseline, and the Test and Evaluation Master Plan. According to
program officials, the new baseline will allow for more testing and
information to be gathered before commitments are made to purchase
additional boats.
Conclusions:
After a troubled history, the ASDS program has made tangible progress,
particularly in resolving technical problems. Nevertheless, as the
program prepares to begin the April 2003 operational evaluation of the
first boat, the ASDS still has not met all key performance requirements
and must still solve significant technical problems. The challenge in
solving known problems, coupled with the possibility of discovering new
ones in upcoming tests, pose risks for achieving initial operational
capability as planned and for having sound cost and schedule estimates.
While every reasonable effort should be made to overcome the first
boat‘s shortfalls and have a successful operational evaluation,
decisions on investing in additional boats must be based on both sound
information and a sound process for decision making.
The information decision makers will need includes demonstrable
knowledge that (1) key design problems have been resolved, (2) the
resulting mission performance of the ASDS is worthwhile, and (3)
credible cost and schedule estimates for building follow-on boats,
facilities, and operations and support are developed. It is important
that the activities that will provide this information, such as
improvements to the battery and propeller and the operational
evaluation of the first boat, have sufficient scope and take place
before key decisions are made. Good information, when it becomes
available, must be used effectively. Thus, it is equally important that
a formal process be followed for evaluating this information and making
decisions. In particular, DOD decision makers should have the benefit
of a formal, informed, transparent decision meeting before proceeding
with purchases of additional boats.
Recommendations for Executive Action:
Before the operational evaluation is held, we recommend that the
Secretary of Defense ensure that the overall ASDS test and evaluation
master plan and the specific test plan for the operational evaluation
are both sufficient in scope and approved.
Before a decision to purchase additional boats is made, we recommend
that the Secretary of Defense ensure that:
* the ASDS operational evaluation is completed as planned;
* solutions to key technical and performance problems are demonstrated;
* the most likely performance of the ASDS is reassessed on the basis of
the operational evaluation and demonstrated solutions to problems;
* the ASDS program is designated a major defense acquisition program
(acquisition category I);
* a formal milestone C decision, in accordance with DOD acquisition
guidance, is held;
* the Cost Analysis Improvement Group develops an independent cost
estimate for milestone C, based on the acquisition plan and planned
product improvements;
* the program is funded to the level of the independent cost estimate;
and:
* the worthiness of proceeding with additional purchases is assessed
against both (1) the ability of the ASDS to perform missions and be
sustained and (2) the opportunity costs of investing in the ASDS versus
other special operations needs.
If a decision to proceed with the purchase of additional boats is
warranted, we recommend that the Secretary of Defense ensure that a
follow-on test and evaluation of the second boat is planned and funded
to demonstrate that remaining deficiencies have been corrected.
Agency Comments and Our Evaluation:
DOD provided us with written comments on a draft of this report. The
comments, along with our responses, appear in appendix I.
DOD concurred with our recommendation that, before an operational
evaluation is held, DOD should ensure that the overall ASDS test and
evaluation master plan and the specific test plan for the operational
evaluation are both sufficient in scope and approved. DOD also
concurred with our recommendation that, if a decision is made to
purchase additional boats, a follow-on test and evaluation of the
second boat is planned and funded to demonstrate that remaining
deficiencies have been corrected. DOD partially concurred with our
recommendation to elevate the level of management attention.
Specifically, DOD concurred with all but a part of one of the
particulars of this recommendation; that is, DOD has not yet determined
the level of Cost Analysis Improvement Group involvement necessary for
developing an independent cost estimate for milestone C.
DOD provided several comments that offered a more optimistic view of
ASDS‘s status than we reported. Specifically, DOD commented that
(1) while management attention had been lacking in the early part of
the program, it has improved in recent years; (2) program cost and
schedule performance have stabilized; and (3) 14 of 16 key performance
parameters have been achieved.
We agree that management attention on the program has improved and
noted this in the draft report. However, the difficulties the program
has continued to experience in recent years, including the
unavailability of current cost and schedule estimates, warrant
increased attention. We do not share DOD‘s view that cost and schedule
performance have stabilized. New estimates appear imminent for the
first time since 1999, but their release alone will not provide
stability--this will come from demonstrating that key requirements have
been met and problems have been overcome. Regarding the achievement of
14 requirements, it is possible that DOD has completed more test
reports since our draft report, but it has not provided such evidence.
DOD also provided technical comments, which we have incorporated as
appropriate.
Scope and Methodology:
During our review, we met with officials from the U.S. Special
Operations Command; the Naval Sea Systems Command; the Naval Special
Warfare Command, Navy SEAL Delivery Vehicle Team One; Submarine Force,
U.S. Pacific Fleet; the Assistant Secretary of the Navy‘s Office of
Research, Development, and Acquisition; the Office of the Under
Secretary of Defense, Acquisition, Technology & Logistics, Naval
Warfare; and the Office of the Director, Operational Test and
Evaluation.
To determine the progress toward meeting requirements and technical
challenges, we examined the Operational Requirements Document, the
Acquisition Program Baseline, the ASDS Acquisition Strategy, program
status documents, test results, and technical reports. We also
discussed requirements and mission needs with the former Commander,
Naval Special Warfare Command, and other key Navy and U.S. Special
Operations Command officials.
To determine the ASDS program‘s ability to meet schedule and cost
projections, we examined the U.S. Special Operations Command‘s budget
requests, ASDS funding profiles, and other ASDS cost data. We compared
the amounts that DOD requested in its budget submissions with amounts
approved by Congress. We reviewed documents from two Independent Review
Team assessments, internal Naval Sea Systems Command Reports,
legislative actions, contract documents, ASDS program status briefs,
and presentations and responses to congressional staff.
To determine the underlying factors contributing to program problems,
we reviewed numerous historical documents, including a 1994 DOD
Inspector General report, and the 1997 and 1999 Independent Review Team
assessments. We also drew upon our previous work on best practices for
developing products.
We conducted our review from May 2002 to January 2003 in accordance
with generally accepted government auditing standards.
We are sending copies of this report to the Secretary of Defense; the
Secretary of the Navy; the Commander, U.S. Special Operations Command;
the Director of the Office of Management and Budget; and interested
congressional committees. We will also make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov. Major contributors to this
report were Catherine Baltzell, Mary Quinlan, Charles Cannon, Robin
Eddington, Gary Middleton, Charles Perdue, and Adam Vodroska. If you
have any questions regarding this report, please call me at (202) 512-
4841.
Paul L. Francis
Director
Acquisition and Sourcing Management:
Signed by Paul L. Francis:
[End of section]
Appendix I: Comments from the Department of Defense:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
OFFICE OF THE UNDER SECRETARY OF DEFENSE:
3000 DEFENSE PENTAGON WASHINGTON, DC 20301-3000:
ACQUISITION, TECHNOLOGY AND LOGISTICS:
Mr. Paul Francis Director, Acquisition and Sourcing Management, U.S.
General Accounting Office Washington, D.C. 20548:
Dear Mr. Francis:
This is the Department of Defense (DoD) response to the General
Accounting Office (GAO) draft report, ’DEFENSE ACQUISITIONS: Advanced
SEAL Delivery System Program Needs Increased Oversight,“ dated February
21, 2003 (GAO Code 1201551GAO-03-442). The Department partially concurs
with the statements in the draft report and partially concurs with the
GAO recommendations.
The Department acknowledges the cost increases and schedule delays
associated with this program and the lack of management attention
during the early part of the program. Management attention has improved
in recent years; and, since the inception of increased OSD oversight in
summer 2000, Integrating Integrated Product Teams and Overarching
Integrated Product Teams have reviewed this program more often than a
majority of the Department‘s Major Defense Acquisition Programs.
Additionally, program cost and schedule performance have stabilized.
During developmental testing, the ASDS vehicle (ASDS-1) achieved
Operational Requirements Document (ORD) threshold levels for 14 of its
16 required Key Performance Parameters (KPPs). The Survivability KPP
(all systems meet Mil-S-901C shock requirements) will be met by April
2003. The Vehicle Signature KPP is required by the ORD to be met on the
second vehicle. These results will be reviewed by the Program Executive
(Submarines) at an Operational Test Readiness Review; and, if
satisfactory, he will certify the program to begin operational
evaluation in spring 2003. Given the capabilities of the vehicle with
the new propeller installed, U.S. Special Operations Command believes
that ASDS-1 provides significant operational capability. While we
acknowledge the need for design changes to address the existing
technical issues (i.e., battery reliability and vehicle radiated
noise), there are funded plans in place to accomplish these changes.
The degree of uncertainty at this point in the program is comparable to
other first-of-class systems.
The Department will designate ASDS as an Acquisition Category I program
and reinstate Milestone C as a condition for buying additional
vehicles. An independent cost estimate will be performed to support a
Milestone C decision; however, the Director, Defense Systems has not
yet determined the level of CAIG involvement necessary. The DoD will
ensure approval of a Test and Evaluation Master Plan before the start
of operational evaluation, and, if necessary, will plan and fund a
Follow-on Test and Evaluation.
The detailed comments to the report statements and recommendations are
provided in the enclosure. Suggested technical changes have been
provided separately.
The Department appreciates the opportunity to comment on the draft
report.
Sincerely,
Glenn F. Lamartin:
Director Defense Systems:
Signed by Glenn F. Lamartin:
Enclosure:
GAO DRAFT REPORT - DATED FEBRUARY 21, 2003 GAO CODE 1201551GAO-03-442:
’DEFENSE ACQUISITIONS: Advanced SEAL Delivery System Program Needs
Increased Oversight“:
DEPARTMENT OF DEFENSE COMMENTS TO THE GAO STATEMENTS AND
RECOMMENDATIONS:
GAO STATEMENTS:
GAO STATEMENT A: The Advanced SEAL Delivery System (ASDS) has not met
all requirements. (pgs. 3-5/GAO Draft Report):
DOD COMMENTS: During developmental testing, the ASDS vehicle (ASDS-1)
achieved Operational Requirements Document (ORD) threshold levels for
14 of its 16 required Key Performance Parameters (KPPs). These results
will be reviewed at an Operational Test Readiness Review; and, if
satisfactory, the program will be certified to begin operational
evaluation in spring 2003. The Survivability KPP (all systems meet Mil-
S-901C shock requirements) will be met by April 2003. The Vehicle
Signature KPP is required by the ORD to be met on the second vehicle.
The GAO concludes that requirements are not met since some subordinate
requirements have; not been demonstrated. The outstanding subordinate
requirements either exceed ORD threshold values or apply to future host
platforms. For example, the Transport Depth (submarine host) KPP has
been demonstrated to the ORD objective level for all ships currently
configured to carry ASDS. The subordinate requirements for SSN 21 Class
submarines, cited in the report, have not been demonstrated since SSN
23 (the designated SSN 21 Class host) is still under construction.
Given the capabilities of the vehicle with the new propeller installed,
U.S. Special Operation; Command believes that ASDS provides significant
operational utility.
GAO STATEMENT B: GAO stated that there are still serious unresolved
issues that prevent the vehicle from meeting its operational
requirements. Battery reliability and acoustics are currently the most
critical technology issues facing the program. (pgs. 5-6/GAG, Draft
Report):
DOD COMMENTS: The silver-zinc propulsion battery does not provide the
projected number of re-charge cycles, which limits the number of
missions before the battery must be replaced. The battery satisfies the
Maximum Combat Range and Endurance KPPs, but at an increased logistics
cost. The Department is continuing to develop improvements to the
existing silver-zinc battery. These improvements have already improved
battery performance, however, additional work is continuing. In
addition, the Department is developing a Lithium Ion battery
replacement as an alternate solution. The incorporation of this battery
is planned and will not have a significant impact on vehicle design.
Radiated noise measurements made during developmental testing revealed
that the propeller was the biggest noise contributor. A composite
propeller was designed based on an existing validated model. This model
provides engineering confidence that the new propeller will resolve the
propeller noise problems without further modifications up to a
specified speed. The new propeller will be installed and acoustically
monitored during operational evaluation. Other noise sources will be
corrected as necessary.
U.S. Special Operations Command has stated that the deficiencies noted
above do not preclude operational use of the first vehicle.
GAO STATEMENT C: Difficulties remain in making credible schedule and
cost projections. (pgs. 6-9/GAO Draft Report):
DOD COMMENTS: Program cost and schedule performance has stabilized and
has been on track during the past year. The degree of design
uncertainty at this point in the program is comparable to other first-
of-class systems; and, the Department believes credible projections are
now possible. The Navy recently completed a credible independent cost
estimate, which was provided to GAO. The cost estimate considered the
current technical challenges and projected engineering changes.
GAO STATEMENT D: Management attention has been insufficient. (pgs.10-
131GAO Draft Report):
DOD COMMENTS: Since the inception of increased OSD oversight in summer
2000, this program has been reviewed at the Integrating Integrated
Product Team and Overarching Integrated Product Team levels more often
than a majority the Department‘s ACAT I programs.
GAO RECOMMENDATIONS:
RECOMMENDATION 1: Before beginning the operational evaluation, the GAO
recommended that the Secretary of Defense ensure that the overall ASDS
test and evaluation master plan and the specific test plan for the
operational evaluation are both sufficient in scope and approved. (p.
131GAO Draft Report):
DOD RESPONSE: Concur. Departmental policy for all programs that are on
the Department of Defense Test and Evaluation oversight list requires
approval of these plans prior to operational evaluation. For ASDS, the
Director, Operational Test and Evaluation:
will approve the Test and Evaluation Master Plan and Commander
Operational Test and Evaluation Force Operational Test Plan before the
start of operational evaluation.
RECOMMENDATION 2: Before a decision to purchase additional boats is
made, the GAO recommended that the Secretary of Defense ensure that:
* the ASDS operational evaluation is completed as planned;
* solutions to key technical and performance problems are demonstrated;
* the most likely performance of the ASDS is reassessed on the basis of
the operational evaluation and demonstrated solutions to problems;
* the ASDS program is designated a category I major defense acquisition
program;
* a formal Milestone C decision, in accordance with DoD acquisition
guidance, is held;
* the Cost Analysis Improvement Group develops an independent cost
estimate for Milestone C, based on the acquisition plan and planned
product improvements;
* the program is funded to the level of the independent cost estimate;
and:
* the worthiness of proceeding with additional purchases is assessed
against both (1) the ability of the ASDS to perform missions and be
sustained and (2) the opportunity costs of investing in the ASDS versus
other special operations needs. (pgs.13-14/GAO Draft Report):
DOD RESPONSE: Partially Concur. ASDS has exceeded the Major Defense
Acquisition Program threshold for RDT&E expenditures. The Department in
turn will designate it as an Acquisition Category (ACAT) I program. A
Milestone C decision will be reinstated in the program, and will
address ASDS affordability and effectiveness. An independent cost
estimate will be performed to support a Milestone C decision; however,
the Director, Defense Systems has not yet determined the level of CAIG
involvement necessary. The other recommendations will be incorporated
as a matter of policy for ACAT I programs.
RECOMMENDATION 3: If a decision to proceed with the purchase of
additional boats is warranted, the GAO recommended that the Secretary
of Defense ensure that a follow-on test and evaluation of the second
boat is planned and funded to demonstrate correction of remaining
deficiencies. (p.14/GAO Draft Report):
DOD RESPONSE: Concur. Departmental policy for all programs on the
Department of Defense Test and Evaluation oversight list requires
assessment of the need for further testing following the completion of
operational evaluation. The operational evaluation test results will be
reviewed at Milestone C, and, if necessary, a follow-on test and
evaluation program will be planned and funded.
The following are GAO‘s comments on the Department of Defense‘s letter
dated March 10, 2003.
GAO Comments:
1. DOD did not provide any new evidence that 14 of ASDS‘s 16 key
performance parameters have been met. As we discussed in our report,
program officials had earlier judged that 11 of the first boat‘s key
performance parameters had been met, 4 were still in process, and 1
required action. We did not count those in process as being met,
because test reports were not yet completed. It is possible that some
of these reports have since been completed, but DOD has not provided
this information.
DOD also did not provide any new evidence that outstanding subordinate
requirements either exceed required values or apply only in the future.
As we discuss in our report, as of January 30, 2003, DOD documentation
showed that numerous subordinate requirements for the first boat--which
must be met to demonstrate the key performance parameters--had not yet
been fully demonstrated. We have noted that in some instances, future
requirements were actually planned for the first boat, but deferred.
2. We continue to believe that uncertainties about the schedule and
cost of the ASDS program remain and make it difficult to develop
credible projections. As we discuss in this report, progress has been
made in correcting various technical problems with the ASDS. However,
serious technical problems and significant uncertainty remain.
Operational testing has not yet begun and may reveal additional
problems, which could require redesign and other solutions. In
addition, the program has experienced continual delays in preparing and
getting schedule and cost estimates approved. While officials have told
us that the acquisition program baseline with an updated schedule is
currently being revised, the baseline has not yet been completed and
approved. The ASDS program is still operating with the June 1999
acquisition program baseline, which is now considerably out of date.
Consequently, credible criteria for measuring program cost and schedule
stability--and whether or not the program is on track--are still
lacking. Finally, the problems of loss of production base and
obsolescence of certain technologies remain for the second boat.
The Navy did recently provide GAO with several briefing slides that
were based on an independent cost estimate, but they are not the actual
estimate. Specifically, the briefing slides show some--but not all--
costs for the second boat only. They did not provide details about
estimation methodology or about what costs are included and excluded.
3. As we discuss in this report, we recognize that management attention
has increased in recent years. Nevertheless, we continue to believe
that the ASDS program needs additional management attention,
particularly at higher DOD levels. Our conclusion is based on the
current status of the ASDS program itself, including the challenges and
risks it faces, and the significant investment it now represents. DOD‘s
statement that the ASDS program has been reviewed more often than a
majority of acquisition category I programs is difficult to evaluate
without seeing evidence. Nonetheless, the number of times a program is
reviewed does not necessarily equate to the right kind of management
attention.
FOOTNOTES
[1] A chamber used to treat divers suffering from decompression
sickness, which can be caused by descending below sea level.
[2] The contract was originally awarded to Westinghouse Electric
Corporation, which was subsequently bought by Northrop Grumman in 1996.
[3] These subordinate individual requirements are specified in the
contract and the user‘s Operational Requirements Document.
[4] Degaussing cables and other elements of a degaussing system were
installed and electrical hull penetrators were added during
construction of the first ASDS vehicle to shorten the time needed to
create a functional degaussing system in the future. A power supply is
the major part of the degaussing system that needs to be created.
[5] Navy officials informed us that a revised program schedule was
recently drafted and is being reviewed by DOD officials.
[6] Navy officials informed us that the acquisition program baseline
was being revised.
[7] U.S. General Accounting Office, Best Practices: A More Constructive
Test Approach Is Key to Better Weapon System Outcomes, GAO/NSIAD-00-199
(Washington, D.C.: July 31, 2000).
[8] U.S. General Accounting Office, Best Practices: Better Matching of
Needs and Resources Will Lead to Better Weapon System Outcomes,
GAO-01-288 (Washington, D.C.: Mar. 8, 2001).
[9] The contract was originally awarded to Westinghouse Electric
Corporation, which was subsequently bought by Northrop Grumman in 1996.
[10] House of Representatives Conference Report 106-301, pages 585-586,
accompanying the National Defense Authorization Act for Fiscal Year
2000.
[11] The conferees presumably intended for DOD to designate the program
as a major defense acquisition program, known as acquisition category
I. A program is considered to be a major defense acquisition program if
its total research and development expenditures are estimated to be at
least $365 million (in constant fiscal year 2000 dollars). In addition
to the monetary threshold, programs can also be designated as category
I under the discretion of the Secretary of Defense (for example,
because of congressional interest).
[12] House of Representatives Conference Report 107-772, page 436,
accompanying the National Defense Authorization Act for Fiscal Year
2003.
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