Defense Acquisitions
DOD's Research and Development Budget Requests to Congress Do Not Provide Consistent, Complete, and Clear Information Gao ID: GAO-07-1058 September 5, 2007The Department of Defense (DOD) asked Congress for $73.2 billion in fiscal year 2007 for research, development, testing, and evaluation (RDT&E). DOD organized this request using program element (PE) codes, which are designed to convey key information about the budget request. DOD also provides documents called budget exhibits detailing the activities for which funds are being requested. The National Defense Authorization Act for Fiscal Year 2006 mandated that GAO examine the program elements and budget exhibits. GAO assessed (1) whether the RDT&E program element code structure and the associated budget exhibits provide accurate, consistent, complete, and clear information, and (2) what factors contribute to any problems found. In conducting this review GAO analyzed all of the fiscal year 2007 program element codes and 47 budget exhibits. GAO also interviewed key DOD officials.
Neither the RDT&E program element code structure nor the budget exhibits consistently provide accurate, clear, and complete information on the nature of DOD's proposed research and development efforts. First, one-third of the requested RDT&E funding is for efforts that are not identified as research and development in their program element codes. In addition, a majority of the remaining funding request misidentifies the budget activity (which is a classification of the stage of development and ranges from BA 1 for basic research to BA 6 for management support) as it is stated in program element codes. Second, some of the budget exhibits justifying the programs' funding requests do not provide consistent, complete, and clear information with suitable levels of detail needed to understand DOD's research and development efforts. GAO found that DOD budget exhibits were difficult to understand, frequently lacked information about the accomplishments and planned efforts of each project, lacked appropriate cross-references between efforts, and were frequently missing key schedule data. The RDT&E program element codes are not always accurate nor are the budget exhibits always accurate, clear, consistent and complete for two major reasons. First, DOD's regulation does not require identification of any RDT&E effort as such in its program element code if it is taking place on a weapon system that is approved for production or already fielded. This affects over a third of all RDT&E funds. Second, the regulation governing the structuring of the coding and the content of the exhibits is vague. For example, the regulation does not require the coding to be updated from one year to the next to ensure the correct stage of development has been accurately identified. The regulation also does not provide sufficiently detailed guidance to ensure consistency in the format and content of the budget exhibits. This results in budget exhibits being insufficient as decision-making tools, according to DOD officials.
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Director: Team: Phone:GAO-07-1058, Defense Acquisitions: DOD's Research and Development Budget Requests to Congress Do Not Provide Consistent, Complete, and Clear Information
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2007:
Defense Acquisitions:
DOD's Research and Development Budget Requests to Congress Do Not
Provide Consistent, Complete, and Clear Information:
Defense Acquisitions:
GAO-07-1058:
GAO Highlights:
Highlights of GAO-07-1058, a report to congressional committees.
Why GAO Did This Study:
The Department of Defense (DOD) asked Congress for $73.2 billion in
fiscal year 2007 for research, development, testing, and evaluation
(RDT&E). DOD organized this request using program element (PE) codes,
which are designed to convey key information about the budget request.
DOD also provides documents called budget exhibits detailing the
activities for which funds are being requested. The National Defense
Authorization Act for Fiscal Year 2006 mandated that GAO examine the
program elements and budget exhibits. GAO assessed (1) whether the
RDT&E program element code structure and the associated budget exhibits
provide accurate, consistent, complete, and clear information, and (2)
what factors contribute to any problems found. In conducting this
review GAO analyzed all of the fiscal year 2007 program element codes
and 47 budget exhibits. GAO also interviewed key DOD officials.
What GAO Found:
Neither the RDT&E program element code structure nor the budget
exhibits consistently provide accurate, clear, and complete information
on the nature of DOD‘s proposed research and development efforts.
First, one-third of the requested RDT&E funding is for efforts that are
not identified as research and development in their program element
codes. In addition, a majority of the remaining funding request
misidentifies the budget activity (which is a classification of the
stage of development and ranges from BA 1 for basic research to BA 6
for management support) as it is stated in program element codes.
Second, some of the budget exhibits justifying the programs‘ funding
requests do not provide consistent, complete, and clear information
with suitable levels of detail needed to understand DOD‘s research and
development efforts. GAO found that DOD budget exhibits were difficult
to understand, frequently lacked information about the accomplishments
and planned efforts of each project, lacked appropriate cross-
references between efforts, and were frequently missing key schedule
data.
Figure: Number of Program Elements that Match Their Assigned Budget
Activity:
[See PDF for image]
Source: GAO analysis of DOD program element code data.
[End of figure]
The RDT&E program element codes are not always accurate nor are the
budget exhibits always accurate, clear, consistent and complete for two
major reasons. First, DOD‘s regulation does not require identification
of any RDT&E effort as such in its program element code if it is taking
place on a weapon system that is approved for production or already
fielded. This affects over a third of all RDT&E funds. Second, the
regulation governing the structuring of the coding and the content of
the exhibits is vague. For example, the regulation does not require the
coding to be updated from one year to the next to ensure the correct
stage of development has been accurately identified. The regulation
also does not provide sufficiently detailed guidance to ensure
consistency in the format and content of the budget exhibits. This
results in budget exhibits being insufficient as decision-making tools,
according to DOD officials.
What GAO Recommends:
GAO recommends the Secretary of Defense take several actions aimed at
providing Congress with more clear and complete information on RDT&E
funding requests. In addition, Congress may wish to have the DOD
Comptroller work with relevant committees to determine how best to
revise these budget materials. DOD partially concurred with these
recommendations.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1058].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Mike Sullivan at (202)
512-4841 or sullivanm@gao.gov
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Program Element Codes and Budget Exhibits Do Not Consistently Provide
Key Information:
One-Third of the Requested RDT&E Funding Is Not Identified as RDT&E
Programs:
Program Element Codes also Misidentified the Specific Nature of R&D
Efforts:
Budget Exhibits Were Sometimes Inconsistent, Incomplete, or Unclear:
DOD Guidance and Practices Contribute to Reduced Visibility:
Conclusion:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope & Methodology:
Appendix II: Comments from the Department of Defense:
Figures:
Figure 1: Sample Research and Development PE Code Structure Based on
the FMR:
Figure 2: Fiscal Year 2007 Budget Activity 7 Programs Occur in Most
Phases of Development:
Figure 3: Number of Fiscal Year 2007 Program Elements That Match Their
Assigned Budget Activity:
Figure 4: Total Fiscal Year 2007 RDT&E Requests by Budget Activity:
Abbreviations:
AMP: Avionics Modernization Program:
BA: budget activity:
DOD: Department of Defense:
GPS: Global Positioning System:
FMR: Financial Management Regulation:
JLENS: Joint Land Attack Cruise Missiles Defense Elevated
Netted Sensor:
MFP: Major Force Program:
PE: program element:
R&D: research and development:
RDT&E: research, development, testing, and evaluation:
UAV: unmanned aerial vehicle:
United States Government Accountability Office:
Washington, DC 20548:
September 5, 2007:
Congressional Committees:
In fiscal year 2007, the Department of Defense (DOD) asked Congress for
$73.2 billion for research, development, testing, and evaluation
(RDT&E). DOD organized this request for funds for more than 1,000
projects by using the long-standing program element (PE) code
structure. This system produces a code that is structured to give
decision makers key information such as the development stage of the
project. The PE code, for example, describes whether the effort is for
basic research in a laboratory on directed energies, integration of
weapon system prototypes, or upgrades to long-fielded weapon systems
such as the B-52 bomber. PE codes are the building blocks of the
defense programming and budgeting system, and can be aggregated to
display total resources assigned to specific programs, to specific
military services, or in other ways for analytical purposes. For
example, decision makers use the reported stages of development to
assess how much is being invested in fundamental science and
technology. These efforts determine the future capabilities of U.S.
military forces.
Each development effort that is assigned a unique PE code has its
activities detailed in accompanying documents known as budget exhibits.
DOD directs that these documents include such information as a
description of the effort, an assessment of progress, and the expected
accomplishments.
Although other sources of information are also available to Congress
about some of these RDT&E programs, the decision to authorize and
appropriate funds for many programs is based primarily on budget
exhibits. Accurate classifications of programs and projects by budget
activity are needed for decision-makers to readily understand how
projects are progressing and on what money is being spent. The National
Defense Authorization Act for Fiscal Year 2006[Footnote 1] required
that we examine the program element codes and budget exhibits. We
responded with a briefing to the committees in February 2007. In this
follow-on report, which summarizes the briefing, we assess:
1. Whether the RDT&E program element code structure and the associated
budget exhibits provide accurate, consistent, complete and clear
information, and:
2. What factors contribute to any problems found.
In conducting our evaluation, we reviewed pertinent program element and
budget justification policies and guidance; analyzed all of the fiscal
year 2007 program elements and the associated budget exhibits for over
47 of these programs; and interviewed officials from the offices of the
Secretary of Defense and each of the military services. We conducted
our review from June 2006 to July 2007 in accordance with generally
accepted government auditing standards. Additional information about
our methodology is contained in appendix I.
Results in Brief:
Neither the RDT&E program element code structure nor the budget
exhibits consistently provide accurate, clear, and complete information
on the nature of DOD's proposed research and development efforts.
First, one-third of the requested RDT&E funding is for efforts that are
not identified as RDT&E in their program element codes. In addition, 65
percent of the remaining funding request misidentified the stage of
development as it is stated in program element codes. Second, the
budget exhibits justifying the programs' funding requests do not
consistently provide complete, and clear information with suitable
levels of detail needed to understand DOD's research and development
efforts. We found that DOD budget exhibits were difficult to
understand, frequently lacked information about the accomplishments and
planned efforts of each project, lacked appropriate cross-references
between efforts, and were frequently missing key schedule data.
There are two major reasons why the program element codes and budget
exhibits are not always accurate, clear, consistent, and complete.
First, once a weapon system is fielded or approved for production,
DOD's regulation does not require the identification of any RDT&E
effort as such in its program element code. This affects the visibility
of more than one-third of all RDT&E funds. Second, the regulation
governing the structuring of the coding and the content of the exhibits
is vague. For example, the regulation does not require the coding to be
updated from one year to the next to ensure the correct stage of
development has been accurately identified. The regulation also does
not provide sufficiently detailed guidance to ensure consistency in the
format and content of the budget exhibits. This results in budget
exhibits being insufficient as decision-making tools, according to DOD
officials.
Taken together, current reporting policies and practices for justifying
R&D requests to Congress could be improved to provide more useful
information to decision makers and to strengthen accountability for
performance. This report makes two recommendations to DOD. First, DOD
should adjust the current RDT&E program element code structure to
enhance the visibility that Congress has into the nature of the
proposed development. Second, DOD should revise the regulation
governing the budget exhibits to provide more specific direction and
ensure a more disciplined process is used to provide Congress with
accurate, clear, consistent, and complete information.
We have also included a matter for congressional consideration that
Congress may wish to have the DOD Comptroller work with the relevant
committees to revise the budget exhibit format and content to meet the
needs of both Congress and DOD.
In written comments on a draft of this report, DOD partially concurred
with our recommendations. However, it is unclear from DOD's response
what specific actions the department will take in response to our
recommendations other than to put additional emphasis on properly
reporting program progress and planned efforts. DOD's comments are
reproduced in their entirety in appendix II.
Background:
Under the DOD Financial Management Regulation (FMR),[Footnote 2] all
major new systems are to be identified with a unique PE code. PE codes
have 10 positions. In general, each position conveys information, as
seen in figure 1.
Figure 1: Sample Research and Development PE Code Structure Based on
the FMR:
[See PDF for image]
Source: GAO.
Note: Budget activity codes are required only if the major force
program is 06. The seventh budget activity--systems approved for
production or already fielded--is not identified in the code.
[End of figure]
The first and second positions of the PE code illustrated above define
the Major Force Program (MFP), which contain the resources necessary to
achieve a broad objective or plan. In figure 1, for example, the "06"
in the first positions indicate this is a research and development
effort. Because it is a research and development effort beginning with
"06," under the FMR, the third and fourth positions must define the
budget activity. In general, the budget activity codes that fill
positions three and four are intended to describe the current nature of
the research and development effort for each PE code. For example,
budget activities 1 through 3 cover initial development efforts and
should describe activities that take place in what is often called the
science and technology realm. Research and development efforts in these
first three budget activities may produce scientific studies and
experimentation, develop paper studies of alternative concepts, or test
integration of subsystems and components. Budget activities 4 and 5
cover efforts used to fully develop and acquire integrated weapon
systems respectively. Programs in these budget activities may perform
efforts necessary to further mature a technology or conduct engineering
and manufacturing development tasks. Budget activity 6 funds efforts to
sustain or modernize the installations or operations required for
general RDT&E. Test ranges, military construction, maintenance support
of laboratories, studies and analysis, and operations and maintenance
of test aircraft and ships are funded with this budget activity.
Budget activity 7 is used to designate R&D efforts for systems that
have already been approved for production or those that have already
been fielded. Unlike budget activities 1 through 6, budget activity 7
is not indicated in a PE code. This information is seen in the
accompanying budget exhibits. Despite the fact that these are research
and development efforts, their program element code does not contain
any indication that they are for research and development.
The FMR also requires that DOD justify the annual RDT&E budgets
requests in budget exhibit documents. These accompanying budget
exhibits are the primary information source for Congress and analysts
throughout the government. Generally, there are six sections in each
budget exhibit that are used to justify each funding request made using
an RDT&E PE code. These include a mission description and budget item
justification section; an accomplishments and planned program section;
a program change summary section showing total funding, schedule, and
technical changes to the program element that have occurred since the
previous budget submission; a performance measures section to justify
100 percent of resources requested; a section that shows connections
and dependencies among projects, which should also include information
such as the appropriation, budget activity, line item, and program
element number of the related efforts; and, a section providing a
schematic display of major program milestones that reflect engineering
milestones, acquisition approvals, test and evaluation events, and
other key milestones for the program events.
Program Element Codes and Budget Exhibits Do Not Consistently Provide
Key Information:
The program element code structure and budget exhibits do not
consistently provide accurate, clear, and complete information
regarding RDT&E budget requests. The PE codes given for many programs
do not indicate that they are for an R&D effort at all or do not
accurately reflect the reported nature of the development. Budget
exhibits sometimes omit required information about programs and their
links to other programs, and may provide only minimal information.
One-Third of the Requested RDT&E Funding Is Not Identified as RDT&E
Programs:
Programs that were requested in budget activity 7--RDT&E efforts for
fielded systems and programs approved for production--presented the
greatest visibility problem. Under DOD's current regulation, programs
in this budget activity are not required to report in the code itself
that the funds are for research and development, nor are they required
to report the nature of the development effort. This budget activity
was used to request $23.5 billion in fiscal year 2007, or about a third
of DOD's entire RDT&E funding request. Instead, the information
available about these funding requests is contained in their budget
exhibits.
Programs classified as budget activity 7 do not begin their PE code
with 06, which would identify them as RDT&E requests. Instead, budget
activity 7 RDT&E efforts use PE codes that begin with the major force
program code established for the system being modified. For example, PE
0102419A, the Joint Land Attack Cruise Missiles Defense Elevated Netted
Sensor System (JLENS) program, provides no indication that the effort
uses RDT&E funds, nor does it identify the nature of the development.
It begins with 01, indicating it is for strategic forces and ends with
A, indicating that it is an Army request.
In addition, we found that nature of the efforts funded in budget
activity 7 overlap with the nature of the efforts undertaken in other
budget activities, making it difficult to determine the amounts
requested for the different stages of development across the entire
RDT&E budget. While the definition for budget activity 7 describes
efforts that are fielded or approved for production, several defense
acquisition efforts covered under budget activity 7 are involved in
phases ranging from technology development to production, as shown in
figure 2. The JLENS program, for example, is currently developing an
aerostat for cruise missile defense, but its code does not indicate
that it is in system development and demonstration. There is a separate
code, budget activity 5, which also funds efforts in system development
and demonstration.
Figure 2: Fiscal Year 2007 Budget Activity 7 Programs Occur in Most
Phases of Development:
[See PDF for image]
Source: GAO analysis of DOD data.
Note: The programs represented above are the Aerial Common Sensor
(ACS), the Warrior Unmanned Aircraft System, Mobile User Objective
System (MUOS), Joint Land Attack Cruise Missile Defense Elevated Netted
Sensor System (JLENS), Global Hawk Unmanned Aircraft System, and
Navstar Global Positioning System II.
[End of figure]
Program Element Codes also Misidentified the Specific Nature of R&D
Efforts:
We found that 65 percent of the RDT&E PE codes for budget activities 1
through 6 misidentified the nature or stage of the development in
fiscal year 2007. While the early development efforts described by
budget activities 1 through 3 generally properly identified the nature
of the effort in their codes, budget activities 4 through 6 generally
did not, as seen in figure 3. Programs reported in budget activities 4
through 6 requested more than half of the total RDT&E funding.
Figure 3: Number of Fiscal Year 2007 Program Elements That Match Their
Assigned Budget Activity:
[See PDF for image]
Source: GAO analysis of DOD program element code data.
Note: A total of 207 program element codes funded under BA7 are
excluded from the figure because they are not required by the FMR to
identify the budget activity in the program element code.
[End of figure]
The challenge of clearly identifying the nature of the development
efforts is actually much worse when the budget activity 7 programs are
considered along with the misidentified programs in budget activities 1
through 6. As a result of these combined problems, the PE code provides
only limited visibility into 85 percent of the requested funding, as
seen in figure 4.
Figure 4: Total Fiscal Year 2007 RDT&E Requests by Budget Activity:
[See PDF for image]
Source: GAO analysis.
[End of figure]
Budget Exhibits Were Sometimes Inconsistent, Incomplete, or Unclear:
While reviewing a set of 47 RDT&E budget exhibits from fiscal years
2006 and 2007, we observed that some of the exhibits omitted key
information. While DOD presents some valuable information in these
exhibits, we found in many cases that the justification narratives were
not clear or provided little or no additional information from the
previous year's justification. In a number of cases the narratives
appeared to be "copy and paste" descriptions of activities from prior
years, making it difficult to determine recent changes or program
progress. We also observed that information on accomplishments from the
past year was provided for few programs. In addition, few programs
provided detailed narratives of planned activities for the current
budget year. For the few exhibits that did contain narratives on
planned activities, the level of detail was minimal. For example, the
Air Force Global Positioning System (GPS) Block III program requested
$315 million for fiscal year 2007 and had requested $119 million
combined in the previous 2 fiscal years. In this section, the
accomplishments were described as "Continue Program Support and
Modernization Development for GPS III," and the planned program was
described as "Begin Modernization Segment."
Furthermore, funding changes from year to year were inconsistently
reported. In some cases they were provided at the PE code level and in
other cases at the project level, when the PE code involved multiple
projects. These funding change summaries also routinely provide limited
detail on the reasons for the changes. For example, the Navy's EA-18G
and DD(X) programs had funding changes of millions of dollars to their
previous and current budgets but failed to provide details of why these
changes had occurred.
Additionally, the budget exhibits did not always identify the
connections and dependencies among related projects consistently as
required by the FMR. In general, these connections can be vital to the
successful development of some programs. In some instances, key
components to a system under development are being developed in other
programs. A delay or failure in one program can mean delay and failure
in the related program. For example:
* C-130 Avionics Modernization Program (AMP) exhibit did not identify
all of the required information for related programs in the Navy and
Special Forces nor did it identify C-130 Talon II procurement, which
included C-130 AMP upgrades.
* DDG-1000 (formerly the DD(X)) destroyer program is developing dual-
band radar that will be used on the CVN-21 aircraft carrier. No
reference is made to this link/dependency in the exhibit.
* Expeditionary Fire Support System is being developed to be
transported by the V-22 aircraft, but makes no reference to the V-22
program.
* Warrior UAV (unmanned aerial vehicle) is being developed in two PEs-
-one for the system and one to weaponize. Only one program references
the other.
Our review found the schedule profiles in the budget exhibits were
generally provided but sometimes did not provide a detailed display of
major program milestones such as engineering milestones, acquisition
approvals, or test and evaluation events. Also, we could not find the
standard program milestones in a number of the schedule profiles we
reviewed. In some cases we found it difficult to determine the
program's phase of development. For example, in two cases the
development schedule showed "continue development" across all fiscal
years displayed. In another example, a program simply reported "S/W
Development" with a bar covering all fiscal years.
DOD Guidance and Practices Contribute to Reduced Visibility:
We found the RDT&E program element code and the budget exhibits are not
always accurate, clear, consistent, and complete for two major reasons.
First, DOD's own regulation for constructing program element codes does
not require a large part of the RDT&E effort to be reflected in program
element codes. Second, the regulation governing the structuring of the
coding and the content of the exhibits is vague. For example, it does
not require the coding to be updated from one year to the next to
ensure the correct stage of development has been accurately identified.
The regulation also does not provide sufficiently detailed guidance to
ensure consistency in the format and content of the budget exhibits.
This leads to inconsistencies in how it is applied by different
organizations and officials within DOD.
The FMR requires that once a weapon system is fielded or approved for
production that it be identified not as R&D efforts in the program
element code, but rather under a different code. These PE codes are
required to carry the Major Force Program code of the fielded systems.
As a result, these PE codes, accounting for one-third of the requested
RDT&E budget, do not identify the efforts as R&D activities and do not
indicate the nature of the R&D effort.
In addition, the regulation is unclear on how or when program element
coding should change over time as the development progresses into a
different stage. As a result, even if the program element code is
accurate when a program is assigned a code, without updating the code,
the programs that successfully mature will automatically develop
inaccurate coding over time.
Several DOD officials said that one of the reasons that the budget
exhibits are insufficient as decision-making tools is the lack of clear
and consistent guidance for the budget exhibits in the FMR. For
example, while the FMR requires a "Program Schedule Profile" exhibit,
it is not standardized. The FMR provides examples of the budget
exhibits that include an "Accomplishment/Planned Program" section.
However, it is unclear whether this section has to contain specific
information about both the accomplishments achieved from previous funds
and the activities to be achieved with requested funds.
Conclusion:
Congress has the difficult task of choosing which RDT&E efforts to fund
from the many competing demands. These RDT&E efforts are critical to
the national interest. However, they must be balanced within the other
fiscal pressures facing the government, including the large and growing
structural deficit. These factors make it especially important that
Congress get the justifications for these R&D efforts in a clear,
consistent, and readily useable form.
However, the department's policies and practices are not providing this
key information to congressional decision makers. The RDT&E
justification material often obscures rather than reveals the nature of
the efforts under way and prevents a determination of the specifics
regarding why the money is needed.
A number of opportunities exist for DOD to provide Congress with
clearer justifications for the funds requested for these efforts.
Congress needs a structure that will (1) properly identify the
development status of projects for which funds are requested, (2) bring
complete visibility to all of the activities for which funds are
requested, and (3) provide consistent information about how well these
projects are progressing in order to make efficient decisions.
More specific guidance could improve the ability of the program element
codes and budget exhibits to aid Congress in focusing oversight where
it is needed, facilitate early corrective action, and improve
accountability.
Recommendations for Executive Action:
This report makes two recommendations. To provide Congress with greater
understanding of the nature of developmental activities proposed, as
well as to improve the consistency and completeness of the
justification material provided for the RDT&E funds requested, the
Secretary of Defense should ensure that the DOD Comptroller:
* Revises the Financial Management Regulation to, (1) in the case of
programs approved for production or fielded, ensure that the code or
the budget exhibit indicates which stage of development--from basic
research through system development and demonstration--the effort is
undertaking, and (2) ensure that the program element codes reflect the
stage of development--that is from basic research through system
development and demonstration--of the requested research and
development effort.
* Develops more specific guidance for budget exhibits to ensure that
they are accurate, consistent, clear, and complete, and enforce a
disciplined process for ensuring proper reporting of program progress
and planned efforts.
Matter for Congressional Consideration:
Congress may wish to have DOD's Comptroller work with relevant
committees to reach agreement on how to revise budget exhibits and the
program element code structure to meet congressional oversight needs as
well as serve the needs of DOD. In these discussions, consideration
could be given to:
* The value and cost of modifying or replacing the current PE code
structure so that it more readily informs Congress as to the nature of
the R&D effort for systems in development as well as fielded systems
and systems approved for production.
* The best means to inform Congress of the state of development of the
requested effort as it progresses toward production.
* The changes needed to the format and content of the budget exhibits
to more effectively communicate the purpose for which funding is
sought, the progress made with prior funding, and other key funding
justification information.
* The time frames and funding needed to develop and implement any
changes.
Agency Comments and Our Evaluation:
DOD partially concurred with both of our recommendations. However, it
is unclear from DOD's response what specific actions the department
will take in response to our recommendations other than to put
additional emphasis on properly reporting program progress and planned
efforts.
In partially concurring with our first recommendation, DOD commented
that in the case of systems that have been approved for production and
fielded, specifically capturing RDT&E funding would be
counterproductive to how the departmental leadership makes decisions.
We recognize the importance to the department of enabling the
department's leadership to make decisions on the full scope of a
program; however, we note that program element codes also have the
purpose of providing important oversight information to Congress and
the current practice significantly lacks the clarity of the RDT&E
funding justifications to Congress. As we reported, RDT&E funds for
programs approved for production and fielded systems currently
represents one-third of the total RDT&E budget. As a result, we believe
this level of investment warrants improved clarity. We have modified
the wording in the recommendation to focus on providing clearer
information to Congress either through the program element code
structure or the budget exhibits.
DOD fully concurred with the second part of that recommendation to
ensure that the program element codes reflect the state of development
of the requested effort as it progresses toward production. DOD noted
that the program element structure accommodates this progression.
However, our analysis found that a significant amount of funding is
misidentified in the coding. DOD has not identified any proposed
actions to correct this misidentification.
DOD partially concurred with our second recommendation and will place
greater emphasis on proper reporting of program progress and planned
efforts as reported in its budget exhibits. However, DOD took issue
with developing a template, stating that it is doubtful any single
template would be feasible or desirable given the complexity of the
RDT&E activity. We believe more specific guidance is needed to ensure
that DOD is more effectively communicating the purpose for which
funding is sought, the progress made with prior funding, as well as the
other key funding justification information. We have modified the
wording of the recommendation to remove the term "template." We still
believe that greater standardization is called for, but recognize that
templates are but one means among many to achieve that end.
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Secretaries of the Air Force,
Navy, Army, and the Commandant of the Marine Corps; and the Director,
Office of Management and Budget. We will provide copies to others on
request. This report will also be available at no charge on GAO's Web
site at [hyperlink, http://www.gao.gov].
Should you or any of your staff have any questions on matters discussed
in this report, please contact me on (202)512-4841 or by e-mail at
sullivanm@gao.gov. Contact points for our offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Principal contributors to this report were David Best
(Assistant Director), Jerry Clark, Chris Deperro, Greg Campell, Anna
Russell, Julie Hadley, and Noah Bleicher.
Michael Sullivan:
Director, Acquisition and Sourcing Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha, Jr.:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope & Methodology:
To assess whether DOD's RDT&E program element code structure provides
Congress consistent, complete and clear information, we reviewed
relevant guidance while analyzing all 696 program elements contained in
the fiscal year 2007 RDT&E budget request. We assessed program elements
by budget activity, dollar value, number of projects, and phase of
development. We also determined the number of program elements that
properly matched their assigned budget activity to determine if
guidance contained in the Financial Management Regulation was properly
followed. To determine the actual phase of development for programs
requesting funding in budget activity 07, we reviewed both their budget
exhibits and other documents, such as their Selected Acquisition
Reports. For this analysis, we reviewed the Global Hawk Unmanned
Aircraft System, Aerial Common Sensor, Warrior Unmanned Aircraft
System, Mobile User Objective System, Joint Land Attack Cruise Missile
Defense Elevated Netted Sensor System, and Navstar Global Positioning
System.
We assessed the information contained the RDT&E budget justification
documents by reviewing the content, structure, clarity, and
completeness of all components of the budget exhibits, including
sections related to the program's description and budget item
justification, schedule profile, and funding summaries. We reviewed
multiple budget justification documents from 47 program element codes
reported in February 2005 and 2006. We ensured that this review
encompassed all military services and covered multiple fiscal years.
This review focused on budget exhibits for programs in budget
activities 4, 5, and 7 to identify any differences in the consistency,
completeness and clarity of information presented. To assess
connections and dependency information, we included additional programs
that GAO has recently reported on because a more detailed understanding
of the programs involved is required to identify these connections. To
assess consistency, we compared the level of detail reported from year
to year and compared the treatment of funding changes from program to
program. To assess completeness, we compared the information in the
budget exhibits to the requirements of the FMR. To assess the clarity
of the information, we reviewed the details provided in the narrative
language in the exhibits.
To determine the factors that contribute to any problems found, we also
reviewed the Department of Defense Financial Management Regulation and
the Future Years Defense Planning Handbook policies and guidance
related to developing program elements and budget justification
documents. To better understand the processes involved with developing
program elements and budget justification documents, we interviewed
officials from the offices of the Under Secretary of Defense for
Acquisition, Technology, and Logistics Director, Defense Research and
Engineering; Under Secretary of Defense (Comptroller); Principal Deputy
Under Secretary of Defense (Comptroller); Director, Program Analysis
and Evaluation; Assistant Secretary of the Army for Financial
Management and Comptroller; Office of the Assistant Secretary of the
Navy Financial Management and Comptroller; Office of the Secretary of
the Air Force; and the Air Force Office for the Deputy Chief of Staff
for Strategic Plans and Programs.
We conducted our review from June 2006 to January 2007 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
3000 Defense Pentagon:
Washington, DC 20301-3000:
Acquisition, Technology And Logistics:
August, 31 2007:
Mr. Michael Sullivan:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
Dear Mr. Sullivan:
This is the Department of Defense (DoD) response to the GAO draft
report 07- 1058, "Defense Acquisitions: DoD's Research and Development
Budget Requests to Congress Do Not Provide Consistent, Complete, and
Clear Information," dated August 2, 2007, (GAO Code 120630). The
Department partially concurs with both recommendations. The Department
has a disciplined review process in place and will put additional
emphasis on proper reporting of program progress and planned efforts.
Sincerely,
Signed by:
Nancy L. Spruill:
Director, Acquisition Resources and Analysis:
Enclosure:
GAO Draft Report Dated August 2, 2007 GAO-07-1058 (GAO Code 120630):
"Defense Acquisitions: DOD's Research And Development Budget Requests
To Congress Do Not Provide Consistent, Complete; And Clear
Information":
Department Of Defense Comments To The Gao Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
should ensure that the DoD Comptroller revises the Financial Management
Regulation to: (1) require all programs receiving Research,
Development, Test and Evaluation funds to identify themselves as
research and development efforts in their program element codes; and
(2) ensure that the program element codes reflect the stage of
development – that is from basic research through system development
and demonstration – of the requested research and development effort.
DOD Response: Partially concurs: Since we budget by line item, tying
resources to our capabilities is an important consideration. All new
start RDT&E Programs should have a unique designation as long as we
clearly delineate the differences between new RDT&E programs from new
projects that fall under the scope and umbrella of existing RDT&E
programs. However, in the case of approved for production and fielded
weapon systems, creating programs to specifically capture RDT&E would
be counter-productive with respect to how department leadership makes
decisions about programs. Keeping all appropriations in one program for
fielded systems enables leadership to make decisions on the full scope
of a program.
As for recommendation (2), we concur with it. The program element
structure accommodates this progression.
Recommendation 2: The GAO recommends that the Secretary of Defense
should ensure that the DoD Comptroller develops a template and more
specific guidance for budget exhibits to ensure that they are accurate,
consistent, clear, and complete, and enforce a disciplined process for
ensuring proper reporting of program progress and planned efforts.
DOD Response: Partially concurs: The written guidance in the Financial
Management Regulation (FMR) for the preparation of RDTE budget exhibits
supports this recommendation. However, it is doubtful any single
"template" would be feasible or desirable for this specific
recommendation given the scope and complexity of RDT&E activity. The
Department has a disciplined review process in place and will put
additional emphasis on proper reporting of program progress and planned
efforts.
[End of section]
Footnotes:
[1] Pub. L. No. 109-163, section 251.
[2] DOD's Financial Management Regulation (FMR), DoD 7000.14-R, Volume
2B, Chapter 5, details what information is to be included in the
individual PE code budget exhibits or R-docs. This regulation is
maintained and updated by the Office of the Under Secretary of Defense
(Comptroller).
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