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IMMEDIATE RELEASE

Release No: 291-06
April 07, 2006

DoD Releases Selected Acquisition Reports

            The Department of Defense has released details on major defense acquisition program cost, schedule, and performance changes since the September 2005 reporting period.  This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the December 2005 reporting period.

 

            SARs summarize the latest estimates of cost, schedule, and performance status.  These reports are prepared annually in conjunction with 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 operation and maintenance (except for pre-Milestone B programs which are limited to development costs pursuant to 10 USC §2432).  Total program costs reflect actual costs to date as well as future anticipated costs.  All estimates include anticipated inflation allowances.

 

            The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (September 2005) was $1,539,048.8 million.  After adding the costs for two new programs ARH (Armed Reconnaissance Helicopter) and JLENS (Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System) and subtracting the costs for final reports on a completed program (LHD 1 Amphibious Assault Ship), a restructured program (TSAT (Transformational Satellite Communications System)), the completed Fire Unit portion of Patriot PAC-3 (Patriot Advanced Capability), and the completed MK 1 portion of SSDS (Ship Self Defense System) from the September 2005 reporting period, the adjusted current estimate of program acquisition costs was $1,517,182.4 million.

 

 

Current Estimate

($ in Millions)

September 2005 (85 programs)

 

$ 1,539,048.8

Plus two new programs (ARH and JLENS)

+10,719.7

 

 

Less final reports on a completed program (LHD 1), a

restructured program (TSAT), the completed Fire Unit portion

of Patriot PAC-3, and the completed MK 1 portion of SSDS)

 

-32,586.1

September 2005 Adjusted (85 programs)

 

 

$ 1,517,182.4

Changes Since Last Report:

 

 

Economic

 

$ +21,194.6

 

Quantity

 

+446.6

 

Schedule

 

+5,627.0

 

Engineering

 

+2,325.6

 

Estimating

 

+2,589.5

 

Other

 

+17.8

 

Support

 

+7,521.9

 

 

Net Cost Change

$ +39,723.0

 

 

Plus initial procurement cost estimates for DD(X) Destroyer    (previous reports limited to development costs per 10 USC §2432)

+27,813.3

 

 

December 2005 (85 programs)

$1,584,718.7

 

 

            For the December 2005 reporting period, there was a net cost increase of $39,723.0 million or +2.6% for programs that have reported previously, resulting in a new current estimate of $1,584,718.7 million.  The net cost increase was due primarily to the application of higher escalation rates (+$21,194.6 million), an increase in support requirements (+$7,521.9 million), a net stretch-out of development and procurement schedules (+$5,627.0 million), higher program cost estimates (+$2,589.5 million), additional engineering changes (hardware/software) (+$2,325.6 million), and a net increase of planned quantities to be purchased (+$446.6 million). Further details of the most significant changes are summarized below by program.

 

            The National Defense Authorization Act (NDAA) for FY 2006 made changes to the Nunn-McCurdy unit cost reporting statute for DoD major defense acquisition programs (10 USC §2433).  The primary change was the addition of 30% and 50% unit cost thresholds against the original baseline estimate approved at System Development and Demonstration (Milestone B).  The existing 15% and 25% unit cost thresholds were retained against the current baseline estimate.  For the December 2005 reporting period:

 

-  DoD has one program with a Nunn-McCurdy unit cost breach of more than 15% but

    less than 25% to the current baseline estimate.  Notification and unit cost breach

    information will be provided to the Congress for this program.

 

GMLRS (Guided Multiple Launch Rocket System)

 

-  DoD has three programs with Nunn-McCurdy unit cost breaches of more than 25%

    to the current baseline estimate.  Notification and unit cost breach information will

    be provided to the Congress for these programs, and the USD(AT&L) will consider

    whether to certify that the programs should continue.

 

ASDS (Advanced SEAL Delivery System) (no certification -- program cancelled)

Global Hawk

NPOESS (National Polar-Orbiting Operational Environmental Satellite System)

 

            -  DoD has 11 programs with Nunn-McCurdy unit cost breaches of more than 30% but

   less than 50% to their original baseline estimate.  Notification and unit cost breach

   information will be provided to the Congress for these programs.

 

ATIRCM/CMWS (Advanced Threat Infrared Countermeasure/Common Missile

      Warning System)

C-130 AMP (Avionics Modernization Program)

Chem Demil (Chemical Demilitarization) CMA (Chemical Materials Agency)

Chem Demil CMA Newport

EFV (Expeditionary Fighting Vehicle)

F/A-18

JASSM (Joint Air-to-Surface Standoff Missile)

JPATS (Joint Primary Aircraft Training System)

JSF (Joint Strike Fighter)

MH-60S

SSN 774 (Virginia Class)

 

            -  DoD has 25 programs with Nunn-McCurdy unit cost increases of more than 50%

to their original baseline estimate.  However, these increases are not Nunn-McCurdy    breaches since NDAA permits the original baseline estimate to be revised to the current baseline estimate as of January 6, 2006.

 

                        AEHF (Advanced Extremely High Frequency)

                        AMRAAM (Advanced Medium Range Air to Air Missile)

                        ASDS (Advanced SEAL Delivery System)

                        Black Hawk Upgrade

                        Bradley Upgrade

                        C-17A

                        CH-47F

                        EELV (Evolved Expendable Launch Vehicle)

                        F-22A

                        FCS (Future Combat Systems)

                        FMTV (Family of Medium Tactical Vehicles)

                        Global Hawk

                        GMLRS (Guided Multiple Launch Rocket System)

                        Javelin

                        JSOW (Joint Standoff Weapon)

                        H-1 Upgrades

                        Longbow Apache

                        LPD 17

                        MH-60R

                        Minuteman III GRP (Guidance Replacement Program)

                        NPOESS (National Polar-Orbiting Operational Environmental Satellite System)

                        SBIRS (Spaced Based Infrared Radar System) High

                        T-45TS

                        Trident II Missile

                        V-22

 

New SARs

(As of December 31, 2005)

 

            The Department of Defense has submitted initial SARs for ADS (Advanced Deployable System), HLR (Heavy Lift Replacement), LHA Replacement Amphibious Assault Ship, and VH-71 Presidential Helicopter Replacement.  These reports do not represent cost growth.  Baselines established on these programs will be the point from which future changes will be measured.  The current cost estimates are provided below:

 

 

Program

Current Estimate

($ in Millions)

ADS (Advanced Deployable System)

$ 1,412.6

HLR (Heavy Lift Replacement)

18,876.0

LHA Replacement Amphibious Assault Ship

3,093.5

VH-71 Presidential Helicopter Replacement

6,547.3

Total  

$29,929.4

 

 


 

Summary Explanations of Significant SAR Cost Changes

(As of December 31, 2005)

 

Army:

 

ACS (Aerial Common Sensor) – Program costs decreased $3,397.2 million (-73.5%) from $4,625.1 million to $1,227.9 million, due to the contractor’s failure to produce a viable alternative solution to the size, weight, power, cooling, and aircraft integration issues and the subsequent termination of the System Development and Demonstration (SDD) contract.

 

ATIRCM/CMWS (Advanced Threat Infrared Countermeasure/Common Missile Warning System) – Program costs increased $885.5 million (+18.8%) from $4,708.9 million to $5,594.4 million, due primarily to quantity increases of  921 A-Kits from 2,650 to 3,571 (+$431.9 million) and 634 Mission Kits from 1,076 to 1,710 (+$1,368.9 million), engineering changes due to implementing ATIRCM corrective actions (+$44.0 million), cost savings from the introduction of the multi-band laser into ATIRCM (-$741.8 million), and the application of revised escalation rates (+$59.6 million).  These net increases were partially offset by support savings resulting from a reduction in the number of spares and storage containers (-$127.6 million) and cost savings resulting from decreases in the initial production facilities, depot standup, production base support, and contractor system engineering program management estimates (-$213.4 million).

 

Black Hawk Upgrade – Program costs increased $2,922.5 million (+14.0%) from $20,847.1 million to $23,769.6 million, due primarily to the incorporation of improvements and increased capabilities (+$1,112.1 million), increased costs due to a stretch-out of the annual procurement buy profile (+$815.3 million), higher cost estimates (+$604.7 million), and the application of revised escalation rates (+$209.3 million).  Program costs also increased due to an increase in spares to support aircraft upgrades (+$152.1 million) and an increase in post production software to support additional software for the upgrades (+$112.2 million).  These increases were partially offset by a decrease in baseline hardware items replaced by upgrades (-$221.5 million).

 

Bradley Upgrade – Program costs increased $6,296.6 million (+233.9%) from $2,691.9 million to $8,988.5 million, due primarily to an increase in the quantity of upgrade vehicles of 1,568 vehicles from 595 to 2,163 (+$5,467.1 million) and increases in initial spares, peculiar support, training devices, and new equipment training related to the increased quantity (+$601.0 million).

 

FBCB2 (Force XXI Battle Command Brigade and Below) – Program costs increased $644.9 million (+35.8%), from $1,801.9 million to $2,446.8 million, due to a quantity increase of 16,278 units from 27,828 to 44,106 required by the Army to support the continuing deployments to Iraq and Afghanistan (+$406.2 million) and revised program office estimates (+$237.8 million).

 

FCS (Future Combat Systems) – Program costs increased $3,208.3 million (+2.0%) from $161,420.0 million to $164,628.3 million, due primarily to the application of revised escalation rates.

 

GMLRS (Guided Multiple Launch Rocket System) – Program costs increased $2,364.2 million (+17.3%) from $13,670.5 million to $16,034.7 million, due primarily to a stretch-out in the annual procurement buy profile (+$952.4 million) and an increase in the program cost estimate (+$332.5 million) because of near-term funding reductions for higher priority programs.  There were additional increases to reflect revised cost estimates for the Insensitive Munitions Rocket Motor (+$452.2 million), the Unitary Warhead (+$171.4 million), the Unitary Electronic Safe and Arm Fuze (+$61.2 million), and unique GMLRS Rocket Pod items (+$62.2 million).  Finally, the application of revised escalation rates also contributed to the increased costs (+$265.3 million).

 

HIMARS (High Mobility Artillery Rocket System) – Program costs decreased $1,334.9 million (-28.6%) from $4,673.0 million to $3,338.1 million, due primarily to a quantity reduction of 303 launchers from 888 to 585 (-$1,408.2 million) and associated schedule and estimating allocations* (-$40.7 million), as well as reduced initial spares and peculiar support related to the decrease in quantity (-$193.6 million).  These decreases were partially offset by revised estimates for other weapon system costs (+$75.7 million) and the application of revised escalation rates (+$69.0 million).

 

Land Warrior – Program costs decreased $8,880.3 million (-68.7%) from $12,934.5 million to $4,054.2 million, due primarily to a quantity decrease of 60,189 systems from 84,970 to 24,781 (-$3,228.1 million) and associated schedule and estimating allocations* (+$1,162.9 million), as well as reduced initial spares, peculiar support, training, and data related to the decrease in quantity (-$689.3 million).  In addition, there was a downward revision in the cost estimate to reflect the Army’s updated requirements for the Land Warrior Ensemble and the Ground Soldier System (GSS) (-$6,687.9 million).  These decreases were partially offset by the application of revised escalation rates (+$511.4 million).

 

Stryker – Program costs increased $955.3 million (+9.2%) from $10,405.5 million to $11,360.8 million, due primarily to a quantity increase of 181 vehicles from 2,439 to 2,620 (+$531.4 million), an increase in initial spares and fielding support associated with the quantity increase (+$193.2 million), the application of revised escalation rates (+$107.3 million), engineering changes (+$73.2 million), and revised estimates (+$68.2 million).

 

WIN-T (Warfighter Information Network–Tactical) - Program costs increased $1,273.8 million (+9.9%), from $12,896.7 million to $14,170.5 million.  This increase is due primarily to the Army’s decision to delay the program development schedule (+$726.3 million), along with an increase in procurement requirements (+$248.6 million) and support for the Army’s current modular force structure (+$609.3 million), and the application of revised escalation rates (+$256.3 million).  These program cost increases were partially offset by estimating refinements that resulted in a decrease in program costs (-$566.7 million).

 

Navy:

 

AIM-9X – Program costs increased $317.1 million (+10.4%) from $3,038.5 million to $3,355.6 million (+10.4%), due primarily to revised production cost estimates for the Active Optical Target Director (+$246.5 million), a schedule change due to a shift of 596 missiles beyond the Future Years Defense Program (FYDP) (+$58.6 million), and the application of revised escalation rates (+$47.5 million).

 

ASDS (Advance SEAL Delivery Systems) – Program costs decreased $463.3 million (-38.6%) from $1,201.0 million to $737.7 million, due primarily to the cancellation of the ASDS acquisition program (-$495.5 million).  This cost decrease was offset by addition of funding for the ASDS-1 Improvement Plan (+$69.4 million).

 

LCS (Littoral Combat Ship) – Program costs increased $388.2 million from $1,313.7 million to $1,701.9 million (+29.6%), due primarily to sea frame pricing increases (+$97.4 million), and increased costs associated with the postponement of Flight I (+$287.7 million).

 

SSN 774 Virginia Class – Program costs increased $1,841.9 million from $93,979.8 million to $95,821.7 million, due primarily to a Congressional increase for Virginia Class cost reduction initiatives (+$154.0 million), revised escalation indices (+$2,422.0 million), the stretch-out of the procurement schedule to FY20 (+$2,149.3 million), and increases in labor hours and rates (+$709.0 million).  These increases were partially offset by savings in inflation that resulted from closing the gap between OMB/OSD and Virginia class pricing (-$2,438.3 million), updated material estimates (-$469.9 million), and overhead rates (-$359.7 million).  An additional reduction was gained by switching from the Navy Working Capital Fund to mission funding at the Naval Foundry (-$344.6 million).

 

Trident II Missile – Program costs increased +$1,020.1 million (+2.8%) from $36,981.8 million to $38,001.9 million, due primarily to new engineering effort associated with adapting the Trident II (D-5) missile to carry conventional payloads (+$466.4 million), revised estimates for D-5 life extension hardware (+$221.6 million), and age driven supportability modifications of flight hardware (+$42.8 million).  There were additional increases for the application of revised inflation indices (+$209.2 million) and higher estimates for D-5 life extension support (+$104.0 million).

 

Air Force:

 

C-130 AMP (Avionics Modernization Program) – Program costs increased $483.9 million (+10.9%) from $4,449.3 million to $4,933.2 million, due primarily to a stretch-out of the annual procurement buy profile (+$143.8 million), refined estimates due to a change in program assumptions (+$363.1 million), increases in initial spares requirements due to additional out-year requirements (+$61.7 million), and the application of revised escalation rates (+$69.8 million).  These increases were partially offset by a quantity reduction of 31 kits from 454 to 423 (-$91.3 million) and associated schedule and estimating allocations* (-$121.7 million).

C-130J – Program costs increased $1,389.1 million (+22.3%) from $6,223.2 million to $7,612.3 million, due primarily to a quantity increase of 26 aircraft from 53 to 79 (+$1,784.9 million) and associated schedule allocation* (-$245.9 million), increases in initial spares, peculiar support, and required training costs related to the quantity increase (+$447.2 million), and the application of revised escalation rates (+$44.0 million).  The increases were partially offset by the elimination of previously included program termination costs (-$650.4 million).

 

F/A-22 – Program costs increased $1,276.3 million (+2.1%) from $61,323.7 million to $62,600.0 million, due primarily to a quantity increase of 4 aircraft from 172 to 176 (+$506.6 million), stretch-out of the annual procurement buy profile to FY 2012 (+$226.1 million), and increases in initial spares (+$447.6 million) and other weapon system support costs (i.e., trainers) (+$94.5 million).

 

Global Hawk – Program costs increased $1,249.7 million (+19.0%) from $6,566.0 million to $7,815.7 million, due primarily to cost growth in sustaining labor, accounting changes, and correction of RQ-4B design deficiencies, as well as changes in estimating methodology (+$710.2 million).  Program costs also increased due to a System Development and Demonstration (SDD) schedule extension (+$147.0 million), incorporation of improvements and increased capabilities (+$148.2 million), inclusion of certain sensor retrofit efforts ($142.8 million), a quantity increase of 3 air vehicles from 51 to 54 and 3 additional sensors (+$163.6 million), an increase in spares requirements (+$95.7 million), and revised escalation indices (+$74.5 million).  These increases were partially offset by a realignment of the buy quantity that eliminated the need for Lot 11
(-$94.6 million) and deletion of certain requirements such as defensive systems and bit fault isolation (-$144.8 million).

 

NPOESS (National Polar-Orbiting Operational Environmental Satellite System) – Program costs increased $5,525.0M (+66.7%) due primarily to technical challenges on the Visible Infrared Imager Radiometer Suite, Conical Scanning Microwave Imager Sounder, Ozone mapping Profiler Suite sensors, and spacecraft design development efforts (+1,626.6 million).  There were additional increases for production cost growth for the above subsystems (+$3,374.0 million) and revised development and production schedule estimates for the above subsystems (+$455.6 million).

 

SDB (Small Diameter Bomb) – Program costs decreased $229.1 million (-12.7%) from $1,809.2 million to $1,580.1 million, due primarily to a reduction in total funding years from 20  to 16 years with a corresponding accelerated annual buy (-$258.6 million).  These decreases were partially offset by the application of revised escalation rates (+$27.3 million) and the realignment of SDB Increment II funds (+$21.7 million).

 

DoD:

 

BMDS (Ballistic Missile Defense System) – Program costs decreased $1,212.7 million

(-1.4%) from $87,123.4 million to $85,910.7 million, due primarily to a restructure of the program as a result of a two-year delay of the first flight of the Airborne Laser (ABL) 2nd aircraft to follow the lethal shoot down scheduled for 2008, delay of the Space-Based Test Bed, delay of Space Tracking and Surveillance System (STSS) until Block 2012, and delay to the European long-range Midcourse Interceptor Site six months to 2011(-$1,291.0 million).  The restructure resulted in a revised program estimate that eliminated previously planned program assumptions and several planned engineering enhancements (-$409.6 million).  The restructure also resulted in revised estimates for program overhead and infrastructure (-$150.0 million).  In addition, there were other reductions and general mandatory distributions (-$243.0 million).  These decreases were partially offset by the application of revised escalation indices (+$960.8 million).

 

Joint Strike Fighter (F-35) – Program costs increased $19,841.3 million (+7.7%) from $256,617.6 million to $276,458.9 million, due primarily to the increased cost of materials for the airframe (+$10,252.9 million), revised inflation impact assumptions and methodology (+$9,872.9 million), revised assumptions regarding the work share between the prime contractor and subcontractors (+$5,519.6 million), the application of revised escalation rates (+$5,442.7 million), impact of configuration update and methodology changes on support (+$4,400.6 million), a change in the subcontracting manufacture plan for the wing (+$3,548.9 million), and a realignment of funding to outyears due to Congressional and Service FYDP reductions (+$130.0 million).  These increases were partially offset by the benefits of additional procurement by partner countries (-$9,243.8 million), a learning curve adjustment to reflect single engine source (-$5,112.5 million), design maturation (-$3,017.3 million), and the cancellation of the F136 engine (-$1,951.0 million).

 

JTRS GMR (Joint Tactical Radio System Ground Mobile Radio (formerly Cluster 1)) – Program costs decreased $1,179.6 million (-5.5%), from $21,632.3 million to $20,452.7 million, due primarily to a restructure of the program which resulted from technical problems and the removal of Army, Air Force, and Marine Corps radios from the program.  Specifically, the reductions resulted in a quantity decrease of 5,385 radios from 109,670 to 104,285 (-$890.7 million) and associated schedule, engineering, and estimating allocations* (-$161.1 million), a revised estimate resulting from the program restructure (-$1,294.4 million), and a decrease in support requirements related to the quantity reduction (-$341.3 million).  These decreases were partially offset by the stretch-out of the annual procurement buy profile (+$625.4 million) and the application of revised escalation rates (+$540.6 million), and revised development estimates ($+454.7 million).

 

JTRS (Joint Tactical Radio System) Waveform – Program costs increased $465.1 million (+35.2%), from $1,321.5 million to $1,786.6 million, due primarily to increased funding provided by both the Air Force and Navy for development of additional required waveforms (+$421.8 million).

 

 

* 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."