Latest Selected Acquisition Reports

The Department of Defense has released details on major defense acquisition program cost, schedule, and performance changes since the September 2010 reporting period. This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the December 2010 reporting period.

A news release by the DoD is available here, and the Program Acquisition Cost Summary (Dollars in Millions) as of December 31, 2024 is available here (PDF).

A few thoughts.

1. LCS is very high. That enormous cost needs to be explained. I would like to see the numbers broken up so we can see how much to date for the first 24 in the multi-year contract vs how much the costs are down the road. I ask because I am curious if the budget numbers include design block modification costs for the remaining 31 LCS expected to be purchased, or if the LCS budget estimates are pigeon holed on the existing LCS designs.
2. Joint Strike Fighter is an acquisition tragedy. The estimate for the per unit F-35 is only $25 million more than the F-22, and that is before a single F-35 is operational. This program is also part of Secretary Gates legacy, and it isn't pretty.
3. Why was a 3rd LHA-6 added, and why did building another LHA-6 suddenly cost $4.5 billion, which is much higher than the first two? What is the rest of the story with this program that no one knows about?

The Navy did not have any Nunn-McCurdy unit cost breaches for 2010. In the DoD news release, a few significant change items related to the Navy were cited:

DDG 51 - Program costs increased $8,008.9 million (+9.7 percent) from $80,407.7 million to $88,416.6 million, due primarily to a quantity increase of 4 ships from 71 to 75 ships (+$4,376.1 million) and associated schedule, engineering, and estimating allocations* (+$2,585.8 million), and related outfitting and post delivery for the revised quantity (+$265.8 million). There are also increases in engineering costs for Advanced Missile Defense Radar (AMDR) integration plans for Flight III (+$646.7 million), additional Flight III/AMDR requirements in fiscal 2016 and fiscal 2017 (+$1,558.0 million), and the application of revised escalation indices (+$363.8 million). These increases are partially offset by decreased estimates for ship construction and government furnished equipment associated with multi-year procurement, program efficiencies, and inflation impacts on future ships (-$1,670.3 million).

F/A-18 E/F - Program costs increased $2,888.8 million (+6.0 percent) from $48,091.4 million to $50,980.2 million, due primarily to a quantity increase of 41 aircraft from 515 to 556 aircraft (+$3,105.4 million) and associated schedule, engineering, and estimating allocations* (+$208.6 million), the application of revised escalation indices (+$392.2 million), and an increase in initial spares for the additional 41 aircraft (+$94.1 million). These increases are partially offset by a reduction due to multi-year procurement contract award (-$390.4 million), adjustments for current and prior escalation (-$397.8 million), and decreases in other support costs (-$56.5 million).

Integrated Defensive Electronic Countermeasures (IDECM) Block 4 - Program costs increased $126.7 million (+17.2 percent) from $736.5 million to $863.2 million, due primarily to a quantity increase of 24 ALQ 214 systems from 166 to 190 systems (+$51.2 million), additional funding for ALQ 214 software/firmware improvements (+$63.3 million), and increases in other support costs and initial spares (+$12.2 million).

Joint Mine Resistant Ambush Protected (MRAP) Vehicle - Program costs increased $4,614.9 million (+12.7 percent) from $36,291.6 million to $40,906.5 million, due primarily to a net quantity increase of 3,670 vehicles from 22,882 to 26,552 vehicles (+$2,266.3 million) and associated initial spares and other support (+$2,325.0 million).

Littoral Combat Ship (LCS) - Procurement and construction cost estimates for LCS have been incorporated into the SAR following approval of Milestone B (entry into Engineering and Manufacturing Development) on April 8, 2011. Previous reports were limited to development costs in accordance with section 2432 of title 10, United States Code. Since the December 2009 SAR, development costs increased $1,080.4 million (+3.0 percent) from $36,358.4 million to $37,438.8 million, due primarily to fully funding the required planning and execution of the post-Milestone B program, to include the requirements for developmental/operational testing and live fire test and evaluation (+$822.0 million). There are also increases to complete shipboard trainers (+$189.3 million) and post delivery efforts for LCS-1 and LCS-2 (+$60.9 million).

LHA 6 America Class - Program costs increased $4,498.5 million (+65.9 percent) from $6,826.8 million to $11,325.3 million, due primarily to a quantity increase of one ship from two to three ships.

Trident II Missile - Program costs increased $1,087.3 million (+2.8 percent) from $39,546.0 million to $40,633.3 million, due primarily to the addition of the Joint Warhead Fuze Life Extension Program, which will conduct a one-time refurbishment of the Mk5 Reentry Body during a planned W88/Mk5 Arming, Fuzing and Firing Limited Life Component Replacement (+$668.0 million). Costs also increased due to the addition of the Explosive Handling Wharf #2 project to rebalance the Trident fleet between the east and west coasts (+$700.6 million) and the D5 Life Extension Program restructure (+$93.9 million). These increases are partially offset by the realignment of funding from procurement to operating and support for the replacement of rocket motors for the previously delivered missiles (-$363.2 million).

For the record, the success of naval aviation procurement in controlling costs (except JSF, which is everyone's problem) is a quiet good news story.

IP and Military Procurement

In my latest at WPR, I take an all too brief look at military procurement and intellectual property:

The IP dynamics of military equipment are complicated, and two alternative systems of managing IP issues in military procurement have emerged. The first, adopted by the United States and its allies, relies on robust IP protection for producers at every step of the ladder... The other system, more traditional in some ways, disregards the value of protecting intellectual property in military acquisition. In this system, which can be thought of as the "anything goes" system of IP management, states beg, borrow, and steal whatever technology they can, often attempting to copy or reverse-engineer systems developed in other countries.

As I say, this is a brief and introductory foray into the question. The politics of IP in defense procurement in the US are extremely complicated, as is the legal structure that governs relations with US allies. Nevertheless, I believe that paying closer attention to the IP aspects of military procurement is going to become both rewarding and necessary.

Grafting and the Defense Industry

In my latest WPR column, I try to think through specifically who (if anyone) gets hurt by the migration of retired generals and admirals into the defense industry:

For a variety of reasons, traditional defense suppliers have huge advantages over newcomers, even when the technologies in question are non-traditional, because they already have an understanding of DOD requirements and a feel for the DOD procurement process — and because they employ many, many retired members of the armed forces. New suppliers lack these advantages, even when they have a superior or more-innovative product, and as a result have a hard time breaking into the defense business. This limits innovation to the small number of traditional defense suppliers, which in turn limits potential competition for even those products that civilian firms could theoretically supply.

The increasing number of senior military officers who have taken jobs in private-sector defense firms exacerbates this problem.