The Pentagon has submitted reports to Congress outlining cost changes to major acquisition programs while noting that it was the first time in recent history that no programs reached a cost increase threshold that could trigger a forced restructuring.
The Pentagon provided “Select Acquisition Reports” for 78 programs, saying that overall there was a nearly $40 billion, or 2.4 percent, combined increase across all of the programs, attributing most of that growth to increased quantities of planned unit buys, higher escalation rates and the stretching out of development and procurement.
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| The V-22 Osprey. Photo by Boeing |
The Pentagon’s acquisition chief, Frank Kendall, said however that for the first time in years there has not been a breach of the Nunn-McCurdy Act, which mandates congressional notification and possible restructuring if a program encounters cost growth 15 percent above what had been expected. He attributed that to the changes the Pentagon has made in its approach to acquisition over the last several years.
Speaking at an event hosted Thursday by the Center for Strategic and International Studies, Kendall said it was the “first time in my memory that there are zero Nunn-McCurdy breaches, neither critical nor significant in that report.”
In some positive news for the beleaguered F-35 Joint Strike Fighter program, the Select Acquisition Report (SAR) showed a $4.5 billion decrease in the program, lowering its total procurement cost from $395.7 billion to $391.2 billion. Lockheed Martin [LMT] is the prime contractor.
On other notable programs, the SAR showed the Air Force’s Evolved Expendable Launch Vehicle (EELV), for putting satellites into space, doubled to $70 billion because of increased launch services from 91 to 151 and extending the launch manifest from fiscal 2018 by 10 years. The prime contractor is United Launch Alliance, a joint venture formed by Lockheed Martin and Boeing [BA].
The V-22 Osprey tilt-rotor aircraft procured by the Navy for the Marine Corps has risen by just more than $1.5 billion, mainly due to stretching out the planned buys of 51 V-22s from fiscal 2018 to fiscal 2022. The aircraft are built by a partnership of Boeing and Bell Helicopter, a division of Textron [TXT].
The report noted that the Navy’s Littoral Combat Ship has gone down by $3.5 billion. That was because of the removal of three ships from the program of record, lowering the total buy to 52 vessels. Lockheed Martin and Austal USA are the two prime contractors for separate variants of the ships.
Cost increases were reported on the Navy’s Arleigh Burke-class (DDG-51) destroyer program and the EA-18G Growler electronic attack aircraft because of increases in the quantities planned. The Army’s AH-64E Apache re-manufacture program has gone up by $1.8 billion to reflect an independent cost evaluation that was made as the program went into full-rate production, the Pentagon said.