Thursday, November 17, 2005

The Sky is the Limit: The Rising Costs of Major Weapon Systems

The following article from Defense News (posted below) reveals an unnerving trend in major weapon programs. Increasingly, programs are incurring cost growths higher than recent years. We can only expect that this will continue as DOD most certainly wont clean up its act overnight. This is thus incredibly irresponsible to the future budget constraints facing America.

So what has DOD done about the problem? DOD revised its acquistion policy to incorporate commercial "best practices" such as an evolutionary acquisition approach. What has been the effect? Little. DOD does not strictly implement its own policy and programs continue to operate business as usual. What else has DOD done? Well, it created JCIDS and the JROC, both of which don't solve the problem of reducing flyaway costs.

So what should DOD do about the problem?
November 16, 2005

Cost Of DoD's Top 85 Programs Rise $65B

By Gopal Ratnam and Greg Grant

The estimated cost of the largest U.S. weapons programs increased by $65 billion, or 4.4 percent, between June and September, according to a Nov. 15 update to the Pentagon's Selected Acquisition Report, which covers all future development and acquisition costs for 85 programs.

Most of the rise — from $1.474 trillion to $1.539 trillion — was attributed to the restructuring of the U.S. Army's Future Combat Systems (FCS) program, an ambitious effort to create a network of manned and unmanned ground and air vehicles.

The report said FCS's estimated price tag has risen from $98.8 billion to $161 billion in nonconstant dollars, or about $120 billion in constant, inflation-adjusted dollars.

Army Secretary Francis Harvey said on Oct. 20 that FCS would cost about $122 billion in constant dollars though 2025, including $27.7 billion for research and development and $94 billion to equip 15 brigades.

Army officials declined immediate comment.

Officials with Boeing, which runs the FCS program with SAIC, also declined to comment.

The report attributes the FCS rise to a "program restructure" that will cost $54 billion and a four-year "extension of schedule" that will cost $8.2 billion. Both figures were given in nonconstant dollars. The FCS program was launched in 2003 with an estimated cost of about $92 billion.

The report also offered the first cost estimate for the Army's Armed Reconnaissance Helicopter, at $3.6 billion. The program received approval in July to enter the next phase of development.

Cost estimates for two major space programs also went up between June and September, according to the report. The average unit cost for both the National Polar-Orbiting Operational Environmental Satellite System, or NPOESS, and the Space Based Infrared System (SBIRS) High increased by 15 percent during the last six months, triggering a Nunn-McCurdy review.

The Nunn-McCurdy legislation requires the Pentagon to certify a program's importance when its unit cost increases beyond 15 percent during a reporting period.

The Selected Acquisition Reports, which are prepared for Congress by the Office of the Undersecretary of Defense for Acquisition, estimate the total acquisition cost of programs, including past and predicted expenditures on research and development, procurement, military construction, and acquisition-related operation and maintenance.

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