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IMMEDIATE RELEASE

Release No: 138-96
March 15, 1996

DEFENSE ACQUISITION PILOT PROGRAMS FORECAST COST/SCHEDULE SAVINGS OF UP TO 50 PERCENT FROM ACQUISITION REFORM

The Under Secretary of Defense (Acquisition and Technology) recently reported significant progress by the Defense Acquisition Pilot Programs (DAPPs) in implementing regulatory and statutory acquisition reforms and in achieving significant cost and schedule benefits of up to 50 percent. The five programs, nominated as pilots by DoD in December 1994 and designated under the provisions of the Federal Acquisition Streamlining Act of 1994 (FASA `94), are the Joint Direct Attack Munitions (JDAM), Fire Support Combined Arms Tactical Trainer (FSCATT), Joint Primary Aircraft Training Systems (JPATS), Commercial Derivative Engine (CDE) and Aircraft (CDA), the Non-Developmental Airlift Aircraft (NDAA). These pilot programs serve as vanguards in implementing innovative commercial practices in DoD acquisition.

The DAPPs are assisted by the DoD Pilot Program Consulting Group (PPCG) on metrics, which is chaired by the office of the deputy under secretary of Defense (Acquisition Reform) and other representatives from DoD and the component services. The PPCG was tasked to assist the DAPPs in evaluating the benefits of approved regulatory and statutory relief, through the development of focused metrics and appropriate baselines. In its 1995 report, the PPCG reported significant gains in efficiencies as a result of an order of magnitude reductions in the use of military standards, contract data requirements, solicitation length and complexity, and source selection cycle time, that were enabled by regulatory implementation of FASA `94.

For the most part, the DAPPs report significant cost and schedule improvements due to these reform initiatives. The JDAM program, for example, projects a 34 percent reduction in development time and a unit cost savings of over 50 percent with an associated total production cost avoidance of $2.9 billion. The JDAM program office attributes these dramatic savings to the commercial-style environment created by FASA `94. The JDAM program manager capitalized on the "commercial environment" to procure proven technology with reduced oversight (an average 85 percent reduction in in-plant oversight) and streamlined procurement documentation (29 data requirements and a two-page statement of work with only interface specifications and no military standards). The Army's FSCATT also reports significant cost and schedule benefits associated with acquisition reform. FSCATT's streamlined procurement efforts completely eliminated unique military standards, while reducing data requirements from 56 to seven. This focused streamlining, enabled by FASA `94, slashed in-house source selection hours by 30 percent, reduced development time by 33 percent, trimmed development costs by 34 percent, and reduced the projected total contract price by 13.5 percent. FSCATT's innovative, commercial-style milestone billing is expected to significantly reduce contract administration costs.

The benefits of acquisition streamlining are also extending to DoD aircraft programs as evidenced by the JPATS. The JPATS will replace the Air Force T-37 and Navy T-34 aircraft for use in training entry-level student pilots. JPATS acquisition reform efforts enabled a 50 percent reduction in military standards and a 60 percent reduction in contract data requirements. These efforts resulted in a reported 12 percent reduction in development time and a 50 percent savings in program office staffing. Specific contract dollar savings are expected to be announced, following GAO protest resolution and final contract award.

The DoD also demonstrated the benefits of acquisition reform in the key mission area of airlift aircraft through two pilot programs: the CDE and CDA (the NDAA). The CDE program provides the Pratt and Whitney F-117 engine as the power plant for the C-17A. By employing a commercial engine from an ongoing program, the Air Force completely avoided the development costs typically incurred on a military-unique engine, gained access to competitive commercial production prices, and reduced support costs through commercial logistics support provisions. Furthermore, the Air Force reports a significant reduction in program office staffing and an $88 million savings due to the CDE multiyear production contract.

Similarly, the NDAA was intended to be a "commercial" alternative or supplement to the C-17. The NDAA program involved no military standards, employed commercial warranties and technical manuals, and relied upon FAA standards and certification. The NDAA program office estimates a 25 to 50 percent cost reduction in proposal costs and an 18 to 30 percent cost avoidance in contract administration costs from reducing government unique contract clauses. As such, the streamlined NDAA program served as a viable competitive alternative to the previously-troubled McDonnell Douglas C-17. McDonnell Douglas quickly responded to the NDAA competition (and DoD should-cost efforts) by aggressively attacking cost reductions, resulting in a 25 percent reduction in projected C-17 costs. The recent milestone decisions to purchase 80 additional C-17s, in lieu of the NDAA, reflects the benefits of the commercial-style NDAA competition that prompted the C-17 program improvements resulting in a combined program savings estimate of approximately $4.4 billion, of which 1.7$ billion is directly attributable to the NDAA competition. In addition, a further $896 million savings is anticipated as a result of a proposed C-17 multiyear procurement.

The DAPP efforts continue to evolve as the programs proceed through their acquisition cycles. As the DoD completes full regulatory implementation of FASA `94, the DAPPs will provide quantitative results, insights, and lessons learned that are necessary for DoD to fully capitalize on the reformed Defense acquisition process of the future.