The total cost of 77 selected Department of Defense (DoD) major acquisition programs decreased by $4.4 billion (- .3 percent) in 2013, according to a report issued by DoD last week. Total costs for these programs stood at $1.619 trillion as of December 31, 2013.
This small decrease reflects reduced planned quantities (-$14.9 billion), lower escalation rates (-$3.6 billion), and a drop in support costs (-$2.5 billion). Offsetting these declines for the most part were cost increases due to program schedule stretch-outs (+$6.8 billion), net increases in program cost estimates (+$5.5 billion), and higher costs due to engineering changes (+$4.4 billion).
The DoD report also identified two programs that experienced critical Nunn-McCurdy unit cost breaches—unit cost increases of 25 percent or more to the current Acquisition Program Baseline (APB) or 50 percent or more to the original APB: The Joint Precision Approach and Landing System (JPALS) due to the elimination of 10 shore-based training systems and an extension of the development program; and Vertical Takeoff and Landing Tactical Unmanned Aerial Vehicle (VTUAV) resulting from increased warfighting capabilities and a reduction in total quantities.
Two programs experienced significant Nunn-McCurdy breaches—unit cost increases of 15 percent, but less than 25 percent of the current APB or 30 percent, but less than 50 percent of the original APB: Airborne Warning and Control System (AWACS) Block 40/45 Upgrade due to a cut in quantities and a stretch-out in the planned buy schedule; and Joint Tactical Radio System, Hand Held, Manpack, and Small Form Fit Radios (JTRS HMS) resulting from an acquisition strategy revision for full-rate production, added requirements, and a revised fielding strategy (fewer radios per year).
The cost estimates for selected programs are reported in the congressionally-required Selected Acquisition Reports (SAR). SAR estimates of total program costs include actual costs to date and estimated future costs. Program costs include research and development, procurement, military construction, and operations and maintenance costs that are acquisition-related.
DoD prepares these congressionally-required reports annually (with submission of the budget). Quarterly reports are prepared for programs that experience cost increases of 15 percent or more, and schedule delays of at least six months. DoD also submits quarterly reports for a program’s initial and final report, or for programs that are rebaselined during major milestone reviews.
Programs submitting their initial SAR reports are not represented in the total cost growth estimates for a particular year. For this reporting period, initial reports were submitted for the Air and Missile Defense Radar (AMDR) and Littoral Combat Ship Mission Modules (LCS MM) programs.