296 Billion Dollars in DOD Cost Overruns: 2009 GAO Weapons Systems Assessments

Author: · May 18, 2011 · Filed Under Cost Estimating, Estimating  - 0 Comment(s)

The full document GAO assessment of Weapons Systems is an update to the 2007 assessment. 

It states “ Our review this year indicates that while the overall performance of weapon system programs is still poor; there have been some modest improvements in DOD’s acquisition outcomes: total cost growth on this year’s portfolio of 96 major defense acquisition programs has decreased marginally compared to the 2007 portfolio.”

Programs started in recent years have more knowledge about technology and design at key points in the acquisition process.

  • Cumulative cost overruns are almost $296 billion in 2009 dollars
  • 64  of 96 active defense programs reported increases in their projected cost since their initial cost estimate.

Sources of the problem:

While there are different ways to measure the extent and nature of cost growth, there is agreement between DOD and us on the sources of the problem:

(1) POOR REQUIREMENTS AND KNOWLEDGE: programs are started with poor foundations and inadequate knowledge for developing realistic cost estimates

(2) ARTIFICALLY LOW COST & SCHEDULE ESTIMATES WITH LOW TECHNOLOGY READINESS LEVELS: programs move forward with artificially low cost estimates, optimistic schedules and assumptions, immature technologies and designs, and fluid requirements

(3) REQUIREMENTS VOLITILITY: changing or excessive requirements cause cost growth

(4) REQUIREMENTS GROWTH and INADEQUATE  VALUE CONSIDERATION OF CHANGES: an imbalance between wants and needs contributes to budget and program instability.

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