DoD Weapon Program Costs Increase By $64 Billion

By Marina Malenic

The Defense Department said last week that the cost for its major weapons acquisitions has increased by $64 billion.

The Pentagon on April 14 sent Congress its latest Selected Acquisition Reports, which outline long-term pricing estimates for just under 100 programs. According to the SARs, this approximately $1.68 trillion worth of accounts saw a net cost increase of four percent over the previous year.

SARs summarize the latest estimates of cost, schedule, and performance status. These reports are prepared annually in conjunction with submission of 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.

According to the document, there are seven programs with critical or significant Nunn-McCurdy unit cost breaches: the Chemical Demilitarization-Assembled Chemical Weapons Alternatives (Chem Demil-ACWA) program, with a 39.2 percent cost increase over its baseline, “due primarily to increased construction material based on design evolution, construction material cost escalation, increased staffing level and labor costs, and the addition of cost risk during systemization and operations”; the Marine Corps’ Expeditionary Fighting Vehicle (EFV), due to a decision not to fund the program in fiscal 2012; the RQ-4 Global Hawk unmanned surveillance aircraft (Defense Daily, April 14); the C-27J Spartan cargo aircraft, whose cost increased 18.6 percent due primarily to a reduction in quantity from 78 aircraft for both the Army and the Air Force to 38 aircraft for the Air Force only; Increment 1 of the Army’s Early-Infantry Brigade Combat Team (E-IBCT), whose cost increased 18.5 percent because the program quantity was reduced from nine to three brigade combat teams; the Army’s Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS), whose cost increased 17.9 percent because the development program was extended six months “due to delays in testing resulting from engineering challenges;” and the National Polar-Orbiting Operational Environmental Satellite System (NPOESS), whose cost increased 23.1 percent, due primarily to a decrease in quantity from four to two satellites resulting from a program restructure in which the DoD, the Department of Commerce, and the National Aeronautics and Space Administration will no longer jointly acquire NPOESS.

Other significant program cost changes include:

• The Army’s Family of Medium Tactical Vehicles (FMTV). Program costs decreased 9.2 percent due primarily to the award of a new competitive re-buy contract, acceleration of the procurement buy profile and a change in the model mix.
• The Army’s Patriot/Medium Extended Air Defense System Combined Aggregate Program (MEADS CAP) Fire Unit. Program costs decreased 85 percent due primarily to the department’s decision to remove the production funding for the fire unit from the program and modify the design and development phase to continue as a proof-of-concept effort ending in fiscal 2014.
• The Army’s Stryker combat vehicle program. Program costs increased by 12.4 percent, due primarily to a quantity increase of 237 vehicles from 3,998 to 4,235 vehicles.
• The Army’s UH-60M Black Hawk helicopter. Program costs increased 15.5 percent, due primarily to a quantity increase of 140 aircraft from 1,235 to 1,375 aircraft.
• The Army’s Warfighter Information Network-Tactical (WIN-T) Increment 1. Program costs increased 12.2 percent, due primarily to a quantity increase of 83 communications nodes from 1,777 to 1,860 communications nodes.
• WIN-T Increment 2. Program costs increased 27.1 percent, due primarily to a quantity increase of 630 communications nodes from 2,216 to 2,846 communications nodes.
• The Navy’s DDG-51 destroyer. Program costs increased 9.7 percent, due primarily to a quantity increase of four ships from 71 to 75 ships.
• They Navy’s F/A-18 E/F Super Hornet. Program costs increased 6.0 percent, due primarily to a quantity increase of 41 aircraft from 515 to 556 aircraft.
• The Joint Mine Resistant Ambush Protected (MRAP) vehicle. Program costs increased 12.7 percent, due primarily to a net quantity increase of 3,670 vehicles from 22,882 to 26,552 vehicles.
• The Navy’s Trident II missile. Program costs increased by 2.8 percent, 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.
• They Air Force’s Advanced Extremely High Frequency (AEHF) satellite. Program costs increased 8.6 percent, due primarily to a revised procurement estimate to fully fund the fifth and sixth satellites and an extension of interim contract support due to the launch delay for the first satellite.
• The Air Force’s Family of Advanced Beyond Line-of-Sight Terminals (FAB-T). Program costs increased 15.8 percent, due primarily to complexities with software integration and challenges with hardware qualification, higher manufacturing costs due to loss of learning and production inefficiencies and other increases due to the schedule stretch-out.
• The Missile Defense Agency’s Ballistic Missile Defense System (BMDS). Program costs decreased three percent due primarily to Departmental Efficiency reductions, adjustments to realign to higher priorities, realigned funding for operation and maintenance of AN/TPY-2 radars from research, development, test and evaluation to operations and maintenance and a revised cost estimate for the acceleration of AN/TPY-2 radars.
• The Joint Tactical Radio System Handheld, Manpack, and Small Form Fit (JTRS HMS). Program costs increased 10.9 percent, due to a quantity increase of 6,017 Army radios from 215,961 to 221,978 radios, increased funding to cover shortfalls and additional enhancements.