Tackling cost overruns and delays

Acquisition problems have plagued many of our armed services’ most important new weapons systems, including the Air Force tanker, the Osprey, and the Joint Strike Fighter.

In the last few years, for example, the Navy estimated that the two lead ships on the Littoral Combat Ship program should cost $220 million and be built on a two-year construction cycle. These goals ran counter to the Navy’s experience in building new ships, and they were inconsistent with the complexity of design required to make the program successful. The program is now almost four years behind schedule, and program costs have tripled.

Similarly, the Army’s Future Combat Systems’ cost growth is about 45 percent, or $40 billion. It has seen delays of as much as five years.

For too long, the Department of Defense has routinely accepted this kind of performance as a normal way of doing business. In fact, earlier this year, the Government Accountability Office reported that the Department of Defense’s 97 largest acquisition programs are an average of 22 months behind schedule and have exceeded their original budgets by an average of 30 percent, or almost $300 billion.

These problems are not the exception. They are the result of systemic flaws in Department of Defense acquisition procedures. For example, the department has too often relied on unreasonable cost and schedule estimates that cannot be met. It established unrealistic performance expectations that increase costs and cause further delays. It has insisted on the use of immature technologies in cases where it is unknown if they can be achieved. And it has time and again required costly changes to program requirements and production quantities once a project is already well under way.

That’s why I, with Sen. John McCain (R-Ariz.), introduced the Weapon Systems Acquisition Reform Act of 2009. Our bill received unanimous support from the Senate and the House. It was signed into law by President Obama on May 20.

The Levin-McCain bill will require the Department of Defense to take the steps needed to put defense acquisition programs on a sound footing from the outset of the programs. The bill will establish a new, Senate-confirmed Director of Cost Assessment and Performance Evaluation to ensure that senior Pentagon managers are told the truth about the cost of trying to use unproven designs and immature technologies. It will require the Pentagon to rebuild its systems engineering and developmental testing organizations to ensure that design problems are understood and addressed early. It will require the increased use of competitive prototypes to ensure that we select the best systems and prove that they can work before we start building them. And it will establish tough new requirements. For instance, if cost overruns breach the so-called Nunn-McCurdy overage, a presumption of termination will be triggered along with a requirement to justify continuing programs from the ground up. That is the best way to ensure that we don’t throw good money after bad on failing programs.

The Pentagon and the defense industry asked us to drop some of these provisions. We did not do so. These provisions are tough medicine, but the defense acquisition system needs tough medicine. Every unneeded dollar that is wasted on a bloated defense program is a dollar that is not available to meet the urgent needs of our troops and their families. Every month that the delivery of a new capability is delayed is a month that our armed forces have to make do with less capable equipment. If these reforms are successfully implemented, they will help our acquisition programs avoid future cost overruns, schedule delays, and performance problems.

The reforms included in the Weapon Systems Acquisition Reform Act of 2009 will finally address some of the fundamental problems with the way we buy major weapons systems. This bill is an important step toward changing the culture of the Pentagon, so that our acquisition programs serve American troops and taxpayers well by putting major weapons programs on sound footing from the start, controlling costs and reducing delays and performance shortcomings.

Levin is chairman of the Senate Armed Services Committee.