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IMMEDIATE RELEASE

Release No: NR-196-14
April 17, 2014

Department of Defense Selected Acquisition Reports (SARs) (As of December 31, 2013)

The Department of Defense has released details on major defense acquisition program cost, schedule, and performance changes since the December 2012 reporting period.  This information is based on the Selected Acquisition Reports submitted to the Congress for the December 2013 reporting period.

SARs summarize the latest estimates of cost, schedule, and performance status.  These reports are prepared annually in conjunction with submission of the President's Budget.  Subsequent quarterly exception reports are required only for those programs experiencing unit cost increases of at least 15 percent or schedule delays of at least six months.  Quarterly SARs are also submitted for initial reports, final reports, and for programs that are rebaselined at major milestone decisions.

The total program cost estimates provided in the SARs include research and development, procurement, military construction, and acquisition-related operations and maintenance.  Total program costs reflect actual costs to date as well as future anticipated costs.  All estimates are shown in fully inflated then-year dollars.

The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (December 2012) was $1,660,983.3 million.  Final reports submitted for the annual December 2012 and for the June 2013 and September 2013 quarterly exception reporting periods were subtracted.  Initial reports for the annual December 2012 and for the June 2013 and September 2013 quarterly exception reporting periods were added.  Finally, the net cost changes for the June 2013 and September 2013 quarterly exception reporting periods were incorporated.

Click here to access the SAR Summary Tables

  

 

Current Estimate

($ in Millions)

December 2012 (78 programs)

$ 1,660,983.3

Less six final reports on F/A-18E/F Aircraft, Family of Medium Tactical Vehicles (FMTV), Light Utility Helicopter (LUH), Joint High Speed Vessel (JHSV), Joint Primary Aircraft Training System (JPATS), and NAVSTAR Global Positioning System (GPS)

 

-83,969.9

Plus five initial reports on Airborne Warning and Control System (AWACS) Block 40/45 Upgrade, B61 Modification 12 Life Extension Program (LEP) Tailkit Assembly (TKA), F-22 Increment 3.2B Modernization, Global Positioning System’s Next Generation Operational Control System (GPS OCX), and Joint Light Tactical Vehicle (JLTV)

 

+40,309.6

Net cost changes reported as of June 2013 and September 2013 quarterly exception SARs

 

-330.0

 

 

 

 

Changes Since Last Report:

 

Economic

 

$ -3,631.8

Quantity

 

-14,885.5

Schedule

 

+6,814.8

Engineering

 

+4,381.2

Estimating

 

+5,464.2

Other

 

0.0

Support

 

-2,522.6

 

Net Cost Change

$ -4,379.7

 

Plus Ballistic Missile Defense System (BMDS) development, procurement, and construction funding for Fiscal Year (FY) 2019; previous reports limited total funding through FY 2018

 

+6,824.5

 

December 2013 (77 programs)

 

$1,619,437.8

 

For the December 2013 reporting period, there is a net cost decrease of $4,379.7 million or -0.3 percent for the 77 programs that have reported in previous SARs.  This cost decrease is due primarily to a net reduction in planned quantities to be purchased (-$14,885.5 million), the application of lower escalation rates (-$3,631.8 million), and reductions in associated support requirements (-$2,522.6 million).  These decreases were partially offset by a net stretch-out of development and procurement schedules (+$6,814.8 million), a net increase in program cost estimates (+$5,464.2million), and engineering changes to hardware/software (+$4,381.2 million).

New SARs

DoD is submitting initial SARs for the following programs as of the December 2013 reporting period.  These reports do not represent cost growth. The baselines established on these programs will be the point from which future changes will be measured.

 

Program

Current Estimate

($ in Millions)

Air and Missile Defense Radar (AMDR)

$5,832.7

Littoral Combat Ship Mission Modules (LCS MM)

7,299.9

Total

$ 13,132.6

  Summary Explanations of Selected SAR Cost Changes

(As of December 31, 2013)

 A. Nunn-McCurdy Unit Cost Breaches for 2013

For the December 2013 reporting period, there are four programs with critical or significant Nunn-McCurdy unit cost breaches to their current or original Acquisition Program Baseline (see below).  In accordance with the provisions of sections 2433 and 2433a of title 10, United States Code, the Department will notify Congress and provide the required unit cost breach information in the SARs for these four programs.  In addition, for the two of these programs with critical breaches, a certification determination by the Undersecretary of Defense for Acquisition, Technology and Logistics will be made no later than June 17, 2014, as required by law.

Critical Breaches: (Unit cost increases of 25 percent or more to the current APB or of 50 percent or more to the original APB)

Joint Precision Approach and Landing System (JPALS) Increment 1A– The PAUC increased 104.3 percent and the APUC increased 129.0 percent above the current APB, due to the elimination of 10 previously required shore-based training systems.  Also contributing to the unit cost increases were an extension of the development program to include capability improvements, a lower and longer procurement profile, and higher material costs.

Vertical Takeoff and Landing Tactical Unmanned Aerial Vehicle (VTUAV)– The PAUC increased 53.5 percent and the APUC increased 49.3 percent above the current APB and the PAUC increased 55.2 percent and the APUC increased 71.5 percent above the original APB, due to an increased requirement for warfighter capabilities of the system and an overall reduction in the total air vehicle quantities being procured by the Navy.  The increased capabilities of the system allow total procurement quantities to decrease from 168 to 119 air vehicles.

Significant Breaches: (Unit cost increases of 15 percent, but less than 25 percent, of the current APB or of 30 percent, but less than 50 percent, to the original APB)

Airborne Warning and Control System (AWACS) Block 40/45 Upgrade– The PAUC increased 22.5 percent and the APUC increased 19.3 percent above the current APB, due primarily to a reduction in quantity from 31 to 24 aircraft.  There were also unit cost increases associated with a stretch-out of the procurement buy profile caused by Congressional reductions, which resulted in the loss of synergies and required an additional year of interim contractor support.

 Joint Tactical Radio System Handheld, Manpack, and Small Form Fit Radios (JTRS HMS)– The PAUC increased 20.0 percent and the APUC increased 19.2 percent above the current APB, due to a revision in the acquisition strategy for full rate production (including a change from a single vendor per radio to multiple vendors per radio), vehicle integration requirements not previously identified as a funding responsibility of the program, and a change in the Army fielding strategy that fields fewer radios per year.

B. Other Significant Program Cost Changes

Army:

AH-64E Apache Remanufacture– Program costs increased $1,321.2 million (+9.5%) from $13,760.2 million to $15,081.4 million, due primarily to higher labor and material costs for embedded diagnostics, Link 16, and full provisions for an external fuel system (+$1,870.0 million).  These increases were partially offset by lower support costs for transportability kits, helmets, radar frequency interferometer, more efficient engine procurement, and reduced crashworthy external fuel tanks (-$865.5 million).

 Warfighter Information Network-Tactical (WIN-T) Increment 2– Program costs increased $8,969.9 million (+174.6%) from $5,137.4 million to $14,107.3 million, due primarily to a quantity increase of 3,167 nodes from 2,100 to 5,267 (+$6,206.3 million), which reflected the procurement of additional training base assets and a transfer of Army assets from WIN-T Increment 3 to WIN-T Increment  2.  There were additional increases in support for fielding, new equipment training, software maintenance, and initial spares resulting from the quantity increase of 3,167 nodes (+$3,015.9.0 million). These increases were partially offset by the elimination of radio antenna requirements (-$316.6 million).

Warfighter Information Network-Tactical (WIN-T) Increment 3– Program costs decreased $14,174.6 million (-79.2%) from $17,890.1 million to $3,715.5 million, due primarily to a quantity decrease of 2,814 nodes from 3,513 to 699 (-$10,015.3 million) and associated schedule, engineering, and estimating allocations* (+$2,003.6 million).  There were also decreases related to fewer quantities of high cost configuration items being procured (-$905.9 million) and reductions in fielding, new equipment training, hardware end of life (technology refresh), and initial spares resulting from the quantity decrease of 2,814 nodes (-$5,692.6 million).

 Navy:

DDG 51 Arleigh Burke Class Guided Missile Destroyer– Program costs increased $2,789.8 million (+3.1%) from $91,234.4 million to $94,024.2 million, due primarily to a quantity increase of 3 ships from 77 to 80 (+$3,515.6 million) and associated schedule, engineering, and estimating allocations* (+$1,847.2 million).  This increase was partially offset by revised estimates for ship construction and Government furnished equipment associated with the FY 2013-2017 Multi-Year Procurement contract and program efficiencies (-$942.3 million), decreases resulting from Congressional reductions, rescissions, and sequestration (-$706.1 million), a revised estimate to reflect actual funding in the FY 2015 President’s Budget for FY 2017-2019 (-$485.6 million), and the descope of the multi-function towed array and ship's signal exploitation equipment in FY 2015 and beyond.

 E-2D Advanced Hawkeye Aircraft– Program costs increased $1,210.7 million (+5.9%) from $20,455.8 million to $21,666.5 million, due primarily to the net stretch-out of the procurement buy profile delaying 10 aircraft beyond the Future Years Defense Program and extending the end of production two years from FY 2021 to FY 2023 (+$759.1 million).  Also, there were other increases for the addition of fighter-to-fighter backlink, data fusion, integrated fire control, net enabled weapons J11 message, navigation warfare anti-global positional system jam electronic protection, and stores performance assessment requested quality (+$341.3 million).

 Ground/Air Task Oriented Radar (G/ATOR)– Program costs increased $504.1 million (+20.9%) from $2,413.8 million to $2,917.9 million, due primarily to a revised estimating methodology for producibility enhanced initiatives (+$396.2 million) and a stretch-out of the buy profile for procurement of additional low rate initial production assets to satisfy testing requirements for new technology (+$46.0 million).  Also, there were increases due to revised estimates for Government developmental and operational testing (+$33.2 million) and for follow-on block development and reliability growth (+$43.8 million).

 Littoral Combat Ship (LCS) – Program costs decreased $11,332.1 million (-33.4%) from $33,955.5 million to $22,623.4 million, due primarily to a quantity decrease of 20 ships from 52 to 32.  The Department of Defense has determined that no new contract negotiations beyond 32 Flight 0+ LCS ships will go forward.  The Navy has been directed to complete a study to support the future procurement of “a capable and lethal small surface combatant.”  The Navy has also been directed to submit “alternative proposals to procure a capable and lethal small surface combatant,” and the study should consider options for “a completely new design, existing ship designs (including LCS), and a modified LCS.”  This SAR reflects the initial estimate of a 32-ship LCS program.  The results of the study, to be completed in time to inform the FY 2016 President’s Budget, will determine the configuration of the ships (future flight of LCS or different small surface combatant) that will fulfill the small surface combatant requirement.

 P-8A – Program costs decreased $1,865.8 million (-5.4%) from 34,395.0 million to $33,069.2 million, due primarily to a decrease of 8 aircraft from 117 to 109 (-$1,560.4 million) and a revised estimating methodology for labor hours and rates and adjustments to commercial aircraft pricing (-$548.0 million).  There were additional decreases for revised escalation indices (-$255.8 million) and reduced estimates for business base benefits created by the Royal Australian Air Force aircraft procurement (-$184.8 million).  These decreases were partially offset by increases in other support due to updated actuals and a revised interim support strategy (+$289.1 million), revised estimates to reflect the application of outyear escalation indices (+$136.0 million), and a net stretch-out of the procurement buy profile (+$121.7 million).

 Tactical Tomahawk (TACTOM)– Program costs decreased $1,832.1 million (25.8%) from $7,109.0 million to $5,276.9 million, due primarily to a decrease of 1,161 TACTOM missiles from 4,951 to 3,790 (-$1,249.2 million) andassociated schedule, engineering, and estimating allocations* (-$586.2 million).

Air Force:

Evolved Expendable Launch Vehicle (EELV)– Program costs decreased $3,062.7 million
(-4.3%) from $70,685.1 million to $67,622.4 million, due primarily to savings realized in the negotiation and award of the new 2013-2017 Phase 1 contract (-$3,770.7 million), revised cost assumptions based on the negotiated contract (-$1,511.5 million), and net decreases from a change in launch vehicle configuration requirements (-$411.3 million).  These decreases were partially offset by a quantity increase of 11 launch services from 151 to 162 (+$2,505.0 million).

 Joint Direct Attack Munition (JDAM)– Program costs increased $788.0 million (+12.2%) from $6,441.8 million to $7,229.8 million, due primarily to a quantity increase of 30,758 tailkits from 181,830 to 212,588 (+$712.6 million) and associated schedule and estimating allocations*(+$68.0 million).

KC-46A– Program costs decreased $2,181.5 million (-4.2%) from $51,642.1 million to $49,460.6 million, due primarily to lower construction estimates based on site surveys of initial bases (-$715.4 million), funding reductions in FY 2015-2018 given stable program execution and no engineering change proposals to date (-$655.6 million), and the removal of construction planning and design funding from FY 2014-2024 budgeted elsewhere (-$268.8 million).  Additional program cost decreases included the application of revised escalation indices (-$222.7 million), accelerating the procurement buy profile (-$157.7 million), and sequestration reductions (-$142.9 million).

 MQ-9 Reaper Unmanned Aircraft System (MQ-9 Reaper)– Program costs decreased $1,451.8 million (-10.9%) from $13,318.2 million to $11,866.4 million, due primarily to a quantity decrease of 58 aircraft from 401 to 343 (-$962.1 million), associated schedule, engineering, and estimating allocations*(+$66.9 million), and areduction of initial spares and support equipment related to the decrease in quantity (-$432.9 million).  There were additional decreases for the removal of the Airborne Signals Intelligence payload 2C (ASIP 2C) requirement (-$280.1 million) and sequestration reductions (-$142.5 million).  These decreases were partially offset by increases for a warfighter requirement for extended range retrofits and communications requirements (+$138.9 million) and the addition of production line shut down costs that were not previously estimated (+$132.7 million).

Space Based Infrared System High (SBIRS High)– Subprogram costs for the Block Buy (GEO 5-6) decreased $460.9 million (-11.9%) from $3,869.3 million to $3,408.4 million, due primarily to a reduced estimate to reflect a fixed price contract proposal for GEO 5-6 (-$362.4 million) and Congressional and sequestration reductions (-$118.5 million).

 DoD:

F-35 Joint Strike Fighter– Overall life cycle costs for the F-35 program decreased $89.4 billion. Although acquisition costs increased +$7.4 billion (+1.9%) from $391.2 billion to $398.6 billion (see details below by subprogram), operating and support costs decreased $96.8 billion (-8.7%) from $1,113.3 billion to $1,016.5 billion, due primarily to cost data updates including the application of historical cost escalation and an update to the Spare Parts Unit Database, revised labor rates, and updated technical inputs to include increased fuel efficiency.

F-35 Aircraft – Subprogram costs increased +$3.1 billion (+1.0%) from $326.9 billion to $330.0 billion, due primarily to the incorporation of the latest prime contractor and subcontractor labor rates and exchange rates for the Air Force and the Navy (+$5.1 billion).  These increases were partially offset by net decreases for updated cost estimating methodologies, decreases in material costs, and adjustments to the learning curve used for recurring production (-$1.9 billion).

F-35 Engine – Subprogram costs increased +$4.3 billion (+6.7%) from $64.3 billion to $68.6 billion, due primarily to increases for updated exchange rates for the Air Force and the Navy (+$1.7 billion), increases due to actual cost realized from recent low rate initial production contract lots (+$1.7 billion), and increases due to reduced production rates (+$0.2 billion).

* Note: Quantity changes are estimated based on the original SAR baseline cost-quantity relationship.  Cost changes since the original baseline are separately categorized as schedule, engineering, or estimating "allocations."  The total impact of a quantity change is the identified "quantity" change plus all associated "allocations."

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