John Young Blasts GAO Report

Colin Clark at DoD Buzz has a good article on what he is calling John Young's Valedictory Defense in a 5 page memo (PDF) that slams the recent GAO Assessments of Selected Weapon Programs.

The entire 5 page memo is interesting, and you can pick up a lot of interesting comparisons in Colin Clark's article, but what really jumped off the page for me was the way the John Young memo concluded. I've never been a fan of John Young, but I think he has a very valid point.

Let me offer one more alternative view of the data on the 96 defense acquisition programs. Eight programs (DDG-51, Future Combat Systems (FCS), JSF, V-22, C-17, Virginia Class Submarine, C-130J, and the Family of Medium Tactical Vehicles) account for $220.4 billion, or 79%, of the $278 billion in DoD-measured cost growth. Six of these programs were started in or before 1996. For the DDG-51 and C-130J programs, the cost change was driven by quantity increases, accounting for $59.9 billion of the $278 billion total. In the other cases, the entire national enterprise - acquisition, requirements, budgeting and funding, and industry - performed poorly on these programs, resulting in a cost growth of $160.5 billion - a disturbing 36% over their original estimates. These programs, as well as many others on the list, have failed to deliver to their cost baselines, and this requires us to review and take corrective actions to prevent any reoccurrence. These eight programs, and the entire data set, make clear the importance of initiating programs with a solid analytical foundation, initial systems engineering, realistic cost estimates, and rational requirements. The remaining 86 programs account for a net $57.1 billion of cost growth on a base of $741.8 billion - 7.7% average cost growth.

In light of these facts, I do not think it is possile to conclude that the DoD acquisition process alone is broken. It is crystal clear that programs must be started on a solid foundation of knowledge with realistic cost estimates and requirements. I would suggest it is equally clear that many factors outside the DoD acquisition process are significant contributors to the poor performance of a number of acquisition programs, specifically the annual budgeting and funding process and the requirements process. The DoD budget is generally over-programmed, seeking to buy more programs than DoD can afford and thus underfunding all programs and preventing efficient execution.

I completely agree that there is significant room for improvement. We have implemented a wave of changes seeking to make these improvements - budgeting to independent cost estimates, questioning requirements, implementing configuration steering boards, issuing acquisition decision memorandums which fix requirements and guided contract strategies, conducting enhanced oversight, establishing program management agreements, requiring competitive prototyping, completing independent program reviews, and planning material development decisions at program initiation. Over time, these policies have the potential to improve the acquisition team's performance on defense development and procurement programs. The defense acquisition team cannot successfully control or reduce costs if requirements regularly change, budgets annually churn, independent cost estimates are ignored, quantities are constantly varied, military Service technical certification standards are excessively applied, and programs are formulated on viewgraphs in program budget reviews.

No cost growth is acceptable as any cost growth comes at the expense of the opportunity to buy additional capability for the warfighter or to lower costs for the taxpayer. However i think it is necessary to look more carefully at the highly publicized $296 billion number which has been used to condemn the defense acquisition process. This detailed review makes clear that it is unfair to characterize only the current defense acquisition process as broken based solely on the misleading and out-of-date $296 billion number cited by GAO.

I agree with everything John Young is saying, but I would like to see an independent analysis of whether what has been happening in the DoD acquisition process matches up with what is being said by John Young.

It is a very interesting counter view, and tells a smarter story than the one sensationalized by the media following the GAO report. I think ultimately, John Young's points will prevail both in the White House and in Congress regarding his assessment of defense acquisition (indeed this is a topic in virtually every defense hearing in Congress lately), and the political leaders will shift focus of oversight towards execution and realistic cost estimates leveraging independent analysis for comparisons, and not try to change to process simply for the sake of change.

While there is room for improvement, John Young is right. Requirements planning and initial estimates is where the DoD gets it wrong the most. Get those two right, and the DoD will find programs more often closer to initial budget estimates, except where Congress makes changes (which is never reflected in GAO reports, and Congressional budget process changes that increase costs are always blamed on the DoD).