DoD reports modest increase in the total cost of major acquisition programs

Wednesday, May 29th, 2013

The total cost of 78 selected DoD major acquisition programs, reported in the December 2012 Selected Acquisition Report, increased by a modest $39.8 billion or 2.4 percent since December 2011.  Total costs for these programs stood at $1.661 trillion.

The small increase reflects higher escalation rates (+$21.8 billion), increased planned quantities (+$21.6 billion), and program schedule stretch-outs (+$436 million).  These cost increases were offset lightly by lower program cost estimates (-$2.6 billion) and reductions in support requirements (-$1.7 billion).

The Evolved Expendable Launch Vehicle (EELV) program experienced the largest program net cost increase (+$35.7 billion) due to an increase of 60 launch services (91 to 151) and an extension of the program life from 2020 to 2030.  Other programs experiencing program cost increases included:  Warfighter Information Network-Tactical (WIN-T) Increment 3 ($3.4 billion) due to procurement quantity increases; DDG-51 Arleigh Burke Class Guided Missile Destroyer (+$3.9 billion) due to an increase of two ships and associated costs and the application of revised escalation rates; and Standard Missile-6 (+$3.3 billion) due to an increase of 600 missiles and associated costs.

Among program experiencing cost decreases were:  UH-60M Black Hawk Helicopter program (-$3.2 billion), which incorporated Multi-Year VIII contracting; the Littoral Combat Ship (LCS) program (-$3.5 billion) due to a decision to reduce the total buy by three ships and revised outyear escalation; and the F-35 aircraft program (-$4.9 billion) due to lower contractor and subcontractor labor rates and revised cost estimates that were offset somewhat by higher revised escalation rates.

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. 

Programs submitting their initial SAR reports are not represented in the total cost growth estimates.  Initial reports were submitted in December 2012 for: Airborne Warning and Control System (AWACS) Block 40/45 Upgrade; B61 Modification 12 Life Extension Program (LEP) Tailkit Assembly; Global Positioning System’s Next Generation Operational Control System (GPS OCX); and the Joint Light Tactical Vehicle (JLTV).

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.

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