DOD programs face day of reckoning

Services must convince Congress that they can fix troubled military programs

Selected Acquisition Reports

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A major Defense Department information technology program faces termination because its costs grew more than 15 percent in the final quarter of fiscal 2006. DOD must decide by June 5 whether to try to persuade congressional leaders to save the Warfighter Information Network-Tactical (WIN-T) program or simply terminate it.

WIN-T is one of eight major DOD programs that could be canceled under the Nunn-McCurdy Amendment to the 1982 Defense Authorization Act. Under that amendment,

DOD must recertify or terminate any program for which costs increase more than 15 percent above the program’s current baseline or 30 percent more than the program’s original cost estimate, or which has a schedule delay of more than six months.

Defense experts say the usual consequence of violating Nunn-McCurdy is greater scrutiny from Congress, which no program manager wants.

DOD reported April 9 that eight major  programs had triggered the Nunn-McCurdy provision, the most since spring 2002. DOD’s funding commitments for major defense acquisitions programs increased more than $56 billion to $1.6 trillion from Sept. 30, 2006, to March 31.

WIN-T, the Force XXI Battle Command Brigade and Below Program (FBCB2) and Land Warrior all exceeded the cost and schedule triggers of the Nunn-McCurdy provision. However, because of a technicality, FBCB2 is exempt from having to receive congressional recertification. And Land Warrior won’t need certification because the Army terminated the program earlier this year during its initial deployment in Iraq.
 
One major DOD program had declining costs. The department reported that the cost of the Army’s Future Combat Systems decreased $2.7 billion because the Army eliminated four of 18 systems in the program. The program is now valued at $161.9 billion.

DOD said a variety of factors contributed to the cost increases in major
programs. Those included engineering changes, revised cost estimates, lengthened development and procurement schedules, and increased support requirements.
 
One DOD official, who asked not to be identified, defended the department’s major programs, saying overall program cost growth is only slightly higher than usual.  Budget experts offered various explanations for the cost overruns. One is that procurement cuts imposed by Congress raise the per-unit costs, said Steve Kosiak, vice president of budget studies at the Center for Strategic and Budgetary Assessments.
 
Other experts point to endemic problems in DOD’s acquisitions management workforce as the source of the overruns. DOD lacks the employees and resources to manage its contracts properly, said Trey Hodgkins, director of defense programs at the Information Technology Association of America. “You’ve got half the people managing twice as much money, and things begin to fall through the cracks.”
 
IT programs are especially vulnerable to cost increases because they have constantly changing requirements and technologies, Hodgkins said.

“The current acquisitions process won’t meet the needs of the future,” he said. “It barely meets the needs of today.”
Defense IT programs in an upward spiralThe Defense Department’s Selected Acquisition Reports show cost changes — mostly increases — for 89 major defense acquisition programs during the last quarter of 2006. Several information technology programs experienced significant cost changes.
  • Warfighter Information Network-Tactical  program costs jumped $2.2 billion to $16.4 billion, a 15.5 percent increase.
  • The Army decided to procure WIN-T for the Guard and Reserves, which accounted for the cost increase, DOD officials said.
  • Joint Tactical Radio System Waveform program costs increased $317.5 million, or 17.8 percent, to more than $2.1 billion because of increased expenses for engineering services.
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