DOD RELEASES SELECTED ACQUISITION REPORTS FOR DECEMBER 2002 PERIOD
April 12, 2003

The Department of Defense has released details on major defense acquisition program cost and schedule changes since the September 2002 reporting period. This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the Dec. 31, 2002, reporting period.

SARs summarize the latest estimates of cost, schedule and technical status. These reports are prepared annually in conjunction with 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. Quarterly SARs are also submitted for initial reports, final reports and for programs that are rebaselined at major milestone decisions.

The total program cost estimates provided in the SARs include research and development, procurement, military construction and acquisition-related operation and maintenance (except for pre-Milestone B programs which are limited to development costs pursuant to 10 USC 2432). Total program costs reflect actual costs to date as well as future anticipated costs. All estimates include anticipated inflation allowances.

The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (September 2002) was $1,112,183.1 million. After adding the costs for two new programs (Joint Tactical Radio System (JTRS) Cluster 1 and JTRS Waveform) in September 2002, and subtracting the launcher portion of GMLRS, the adjusted current estimate of program acquisition costs was $1,130,503.1 million.

For the December 2002 reporting period, there was a net cost decrease of $834.7 million or -0.1 percent for those programs that have reported previously, excluding costs for the aforementioned programs submitting initial SARs. For this submission, the initial SAR programs are Excalibur (Family of Precision 155mm Projectiles), GCSS (Global Combat Support System) Army, HIMARS (High Mobility Artillery Rocket System), Land Warrior and SSGN (Trident Conversion).

The net cost decrease of $834.7 million was due primarily to a net reduction in the planned quantities to be purchased (-$48.8 billion) and the application of lower escalation indices (-$13.5 billion). These decreases were partially offset by additional engineering changes (hardware/ software) (+$30.7 billion), higher program estimates (+$23.2 billion), and a net stretchout of the development and procurement schedules (+$7.4 billion). Further details of the most significant changes are summarized below by program.

New SARs
(As of Dec. 31, 2002)

The Department of Defense has submitted initial SARs for Excalibur (Family of Precision 155mm Projectiles), GCSS (Global Combat Support System) Army, HIMARS (High Mobility Artillery Rocket System), Land Warrior and SSGN (Trident Conversion). These reports do not represent cost growth. Baselines established on these programs will be the point from which future changes will be measured. The current cost estimates are provided below:

Summary Explanations of Significant SAR Cost Changes
(As of Dec. 31, 2002)

Army:
Abrams Upgrade (M1A2) – Program costs decreased by $1,660.1 million (-18.3%) from $9,096.1 million to $7,436.0 million, due primarily to a reduction in the Service Extension Program (SEP) retrofit quantity of 378 SEPs (from 419 to 41 SEPs) and associated reductions in initial spares, peculiar support, and other weapon systems costs related to the decrease in SEP retrofit quantity.

ATACMS-BAT (Army Tactical Missile System-Brilliant Antitank) – Program costs decreased $4,085.1 million (-62.7%) from $6,515.3 million to $2,430.2 million because the program was terminated.

ATIRCM/CMWS (Advanced Threat Infrared Countermeasure/Common Missile Warning System) – Program costs increased $1,052.1 million (+36.9%) from $2,851.4 million to $3,903.5 million, due primarily to a quantity increase of 1,626 systems from 1,078 to 2,704 systems (+$386.8 million) and additional trainers and contractor logistics support (+$242.9 million). There were also increases for restoration of funding for Tier 2/3 threats, miniaturization, all band laser capabilities, and incorporation of multi-band fiber optic (+$99.1 million), and an increased cost estimate for ATIRCM hardware (+$53.8 million).

Black Hawk Upgrade (UH-60M) – Program costs increased $1,154.3 million (+8.8%) from $13,183.5 million to $14,337.8 million, due primarily to a reduced procurement rate that stretched the program from FY22 to FY26 (+$593.4 million). There were also increases to incorporate Multi-Functional Displays (MFDs) (+$438.1 million), added capabilities for Dual Digital Flight Controls (+$330.9 million), and the 701D engine (+$98.9 million). These increases were partially offset by the application of revised escalation rates (-$385.3 million).

Bradley Upgrade – Program costs decreased by $1,463.0 million (-34.5%) from $4,245.8 million to $2,782.8 million, due primarily to a 442 vehicle reduction in the quantity of upgrades from 1,037 to 595 vehicles and associated reductions in contractor engineering, initial spares, peculiar support, training devices, and contractor logistics support related to the decreased quantity.

Comanche – Program costs decreased $9,581.9 million (-20.0%) from $47,905.6 million to $38,323.7 million, due primarily to a quantity decrease of 563 aircraft from 1213 to 650 aircraft (-$12,688.6 million). These decreases were partially offset by increases related to a stretchout of the annual procurement buy profile (+$615.8 million), a program restructure that shifted to a Blocking Strategy (+$550.6 million), and cost growth prior to the restructure (+$632.7 million). There were further increases related to aircraft weight growth (+$498.5 million), higher contractor overhead rates (+$289.8 million), increased software integration and testing (+$273.6 million), and additional flight testing (+$267.3M).

FMTV (Family of Medium Tactical Vehicles) – Program costs increased $1,195.7 million (+6.6%) from $18,074.4 million to $19,270.1 million, due primarily to the addition of Embedded Diagnostic Hardware (+$757.0 million), a change in the procurement buy profile in response to budgetary constraints (+$555.1 million), and an upward revision in hardware/engineering change estimates to reflect actual costs extrapolated over the program life (+$356.5 million). These increases were partially offset by the application of revised escalation rates (-$463.5 million).

GMLRS (Guided Multiple Launch Rocket System) – Program costs increased $1,140.7 million (+10.7%) from $10,691.2 million to $11,831.9 million, due primarily to the addition of unique hardware for a Unitary Warhead (+$877.6 million) and higher estimates to accelerate the program (+$558.8 million). These increases were partially offset by the application of revised escalation indices (-$340.4 million).

MCS (Maneuver Control System) – Program costs increased by $296.5 million (+28.5%) from $1,039.3 million to $1,335.8 million, due primarily to a requirements change reflecting the purchase of Standard Integrated Command Post Shelters (SICPS) (previously funded outside the program) and the retrofit of previously purchased hardware to support the change from Version 6.X to Version 7.X software (+$411.0 million). These increases were partially offset by a quantity decrease of 1,095 re-procurement systems from 9,724 to 8,629 systems (-$67.8 million) and associated reductions in other weapon systems costs related to the decrease in re-procurement systems (-$51.7 million).

SMART-T (Secure Mobile Anti-Jam Reliable Tactical Terminal) – Program costs increased $196.5 million (+25.4%) from $774.5 million to $971.0 million, due primarily to the acquisition of Advanced Extremely High Frequency (AEHF) modification kits.

AAAV (Advanced Amphibious Assault Vehicle) – Program costs increased by $982.5 million (+10.2%) from $9,640.3 million to $10,622.8 million, due primarily to higher estimates for the suspension, engine, and drive train (+$573.2 million), impacts of the one-year program restructure on the System Development and Demonstration contract (+$324.6 million), a stretchout of the procurement buy profile for the program restructure (+$158.1 million), and the addition of survivability materials to the vehicle (+$116.1 million). These increases were partially offset by the application of revised escalation indices (-$261.9 million).

DDG 51 Destroyer – Program costs decreased $3,224.0 million (-4.9%) from $66,026.7 million to $62,802.7 million, due primarily to the quantity decrease of 2 ships from 64 to 62 ships (-$1,890.8 million) and an associated estimating allocation* (-$672.4 million). There were additional decreases for the application of revised escalation indices (-$544.9 million) and for cost savings associated with the FY02-05 Multi-Year Procurement contract award (-$330.0 million).

E-2C Reproduction – Program costs increased $423.2 million (+10.8%) from $3,912.5 million to $4,335.7 million, due primarily to an increase of 3 aircraft from 41 to 44 aircraft (+$218.6 million) and associated schedule, engineering, and estimating allocations* (+$31.8 million). There were also additional increases related to the new aircraft for contractor and government furnished equipment (+$74.3 million), technical publications and production support (+$47.4 million), and initial spares (+$38.4 million).

FA-18E/F – Program costs increased $1,959.1 million (+4.0%) from $48,791.1 million to $50,750.2 million, due primarily to additional engineering design for the new EA-18G model (+$1,055.1 million). Additionally, the total quantity increased 4 aircraft from 548 to 552 aircraft (+$198.6 million), along with associated schedule and estimating allocations* (+$41.8 million). Of the previous quantity of 548 F/A-18E/F aircraft, 86 will now be produced as EA-18G aircraft; additionally, the aforementioned increase of 4 will be produced as EA-18G’s for a total of 90 EA-18G aircraft, leaving a total of 462 F/A-18E/F aircraft. Finally, there were increases in initial spares and peculiar support costs related to the addition of EA-18G (+$1,016.9 million).

JSOW (Joint Stand Off Weapon) – Program costs decreased by $2,114.3 million (-29.9%) from $7,073.2 million to $4,958.9 million, due primarily to a quantity decrease of 4,303 BLU-108 weapons (from 16,114 to 11,811 weapons) associated with deferral of Navy and Air Force BLU-108 programs (-$1,193.7 million). There was also a significant decrease in the estimate for contractor manufacturing and support based on actual cost from the full rate production contract (-$938.5 million).

MH-60S (Fleet Combat Support Helicopter) – Program costs increased $644.7 million (+12.0%) from $5,387.5 million to $6,032.2 million, due primarily to additional requirements related to Link 16 and the Airborne Mine Countermeasure upgrades (+$440.7 million). Also, peculiar support for trainers increased by $161.7 million.

SSN 774 (Virginia Class Submarine) – Program costs increased $8,352.1 (+11.4%) million from $73,440.1 million to $81,792.2 million, due primarily to program re-pricing for additional Special Hull Treatment funding and increased construction costs based on actual returns from the first four submarines (+$3,569.5 million). There were additional increases attributed to higher industry inflation rates for labor (+$3,407.9 million) and material (+$720.1 million), increased estimates for Government Funded Equipment (GFE) (+$1,261.5 million), increases in estimates for change orders (+$954.8 million), and a stretchout of the annual procurement buy profile from FY15 to FY17 (+$815.0 million). These increases were partially offset by the application of revised escalation indices (-$1,181.3 million) and multi-year procurement savings for FY14-17 at $150 million per sub (-$1,200 million).

T45TS (Naval Undergraduate Jet Flight Training System) – Program costs increased $739.3 million (+13.3%) from $5,569.6 million to $6,308.9 million, due primarily to an increase of 28 aircraft from 183 to 211 aircraft (+$554.0 million), increases to initial spares (+$ 25.5 million), and other logistics-related elements to support the additional aircraft (+$111.8 million). There was also a delayed budget adjustment associated with contractor claim adjustments (+$41.6 million).

Tactical Tomahawk – Program costs increased by $789.0M (+36.4%) from $2,169.9 million to $2,958.9 million, due primarily to a quantity increase of 671 missiles from 1,725 to 2,396 missiles (+$450.4 million) and associated schedule and estimating allocations* (-$51.8 million). There were additional increases related to a stretchout of the procurement profile (+$233.7 million) and revised missile hardware estimates (+$122.0 million).

V-22 – Program costs increased by $2,021.9 million (+4.4%) from $46,240.8 million to $48,262.7 million, due primarily to a change in scope of the return to flight Blocking requirements (+$756.0 million), a change in material and labor rate estimates (+$1,205.1 million), and a revised estimate of recurring flyaway items (i.e., GFE electronics, engineering change orders, and ancillary equipment) (+$257.9 million).

Air Force:
AEHF (Advanced Extremely High Frequency) Satellite – Program costs decreased $644.4 million (-11.6%) from $5,561.3 million to $4,916.9 million, due primarily to eliminating procurement for two satellites, satellites #4 and #5, from the program (-$969.3 million). This quantity decrease was partially offset by cost increases associated with a six-month slip of the first satellite launch from June 2006 to December 2006 (+$280.7 million).

B-1B CMUP (Conventional Mission Upgrade Program) – Program costs decreased $546.3 million (-34.5%) from $1,581.3 million to $1,035.0 million, due primarily to termination of the Defensive System Upgrade Program (DSUP) portion of the program (overall program quantities decreased by 60 aircraft kits from 120 aircraft kits for both Computer Upgrade and DSUP to 60 aircraft kits for Computer Upgrade only).

C-17A – Program costs increased $1,343.1 million (+2.3%) from $58,998.3 million to $60,341.4 million, due primarily to additional funding for FY08-09 flexible sustainment (+$1,526.7 million) and for FY08-09 systems engineering project management, contractor furnished equipment and mission support (+$225.7 million). These increases were partially offset by the application of revised escalation rates (-$703.9 million).

EELV (Evolved Expendable Launch Vehicle) – Program costs increased $1,370.0 million (+7.2%) from $18,914.5 million to $20,284.5 million, due primarily to assure access to space by funding two viable launch service providers (+$539.0 million), and launch services adjustments to include mission assurance (+$527.5 million) and commercial market price variations (+$287.2 million). There were additional increases for payload weight growth (+$275.0 million) and a stretchout of the annual procurement buy profile (+$132.3 million). These increases were partially offset by the application of revised escalation rates (-$411.0 million).

F/A-22 – Program costs increased $2,063.9 million (+3.0%) from $69,721.4 million to $71,785.3 million, due primarily to updated cost estimates for engine (+$734.3 million) and airframe (+$3,006.8 million) recurring costs, additional risk (+$1,263.0 million), and reduced production cost savings (+$572.2 million). There were additional increases for increased Engineering and Manufacturing Development (EMD) cost (+$876.0 million), a stretchout of the annual procurement buy profile (+$415.5 million), additional funding for system modernization (+$1,958.2 million), and the application of revised escalation rates (+$359.5 million). These increases were partially offset by a quantity reduction of 63 aircraft from 341 to 278 aircraft (-$6,869.4 million) and associated weapon system support costs (-$443.6 million).

GBS (Global Broadcast Service) – Program costs increased $94.0 million (+14.6%) from $645.7 million to $739.7 million, due primarily to a net increase of 303 receive suites from 748 to 1,051 receive suites (+$98.7 million) and associated schedule and estimating allocations* (+$14.2 million). In addition, there were increases to facilitate Internet Protocol development (+$15.8 million) and Defense Emergency Response Funds (DERF) to facilitate two-person lift development (+$7.0 million). These increases were partially offset by a decrease in the estimated cost of Army receive suites (-$41.5 million).

Global Hawk – Program costs decreased by $1,031.7 million (-15.1%) from $6,846.6 million to $5,814.9 million, due primarily to a directed reduction in program requirements and capabilities (-$478.9 million), a downward revision in program cost estimates to reflect actuals, contract negotiations, and overhead rate changes (-$402.4 million), and the application of revised escalation rates (-$159.6 million).

JASSM (Joint Air-to-Surface Standoff Missile) – Program costs increased $887.6 million (+28.1%) from $3,163.2 million to $4,050.8 million, due primarily to a quantity increase of 6 developmental test/operational test missiles for JASSM-Extended Range (ER) (+$6.8 million) and 640 procurement missiles (from 3700 to 4340 missiles) (+$433.0 million). There were also increases for JASSM-ER development and additional capability engine/fuel costs (+$438.6 million).

JDAM (Joint Direct Attack Munition) – Program costs increased $1,890.0 million (+48.9%) from $3,865.4 million to $5,755.4 million, due primarily to quantity increases of 30,874 from 43,292 to 74,166 tail kits to the Navy and 59,332 from 92,679 to 152,011 tail kits to the Air Force in support of Operation Enduring Freedom.

NAS (National Airspace System) – Program costs increased $344.6 million (+31.0%) from $1,112.7 million to $1,457.3 million, due primarily to a quantity increase of 2 systems from 90 to 92 systems (+$13.3 million), technology refresh (+$58.4 million), and additional airfield automation (+$41.9 million). There were also cost increases due to additional requirements, site installation/site adaptation and program extension (+$229.2 million).

Navstar GPS (Global Positioning System) – Program costs increased $920.1 million (+15.5%) from $5,937.2 million to $6,857.3 million, due primarily to a quantity increase of 4 satellites from 33 to 37 satellites (+$288.4 million), the addition of space modification costs not previously reported in the SAR (+$149.6 million), and additional requirements for Flexible Power (+$301.0 million). The costs for the User Equipment segment of the program increased to support additional Military code (M-code) requirements (+$150.8 million).

WGS (Wideband Gapfiller Satellites) – Program costs increased $667.2 million (+76.1%) from $876.9 million to $1,544.1 million, due primarily to a quantity increase of 2 satellites from 3 to 5 satellites (+$634.3 million), a radio frequency (RF) modification associated with satellites #4 and #5 to support Airborne Intelligence Surveillance and Reconnaissance (+$63.2 million), and restoral of launch and flight support services for satellites #1-3 in FY 2004-2007 (+$18.6 million). These increases were partially offset by a decrease associated with contract savings through the use of existing hardware, which resulted in a revised estimate for Primary Injection Points for Gapfiller broadcast service (-$19.9 million).

DoD:
BMDS (Ballistic Missile Defense System) – Program costs increased $15,679.4 million to $62,896.5 million, due primarily to the engineering changes associated with adding Blocks 2008 and 2010 BMD capability and associated Mission Area Investment costs (+$17,997.4 million), and an increase to achieve Block 2004 Initial Defensive Capability (+$1,451.5 million). These increases were partially offset by engineering changes associated with the net realignment of Patriot Advanced Capability (PAC-3) and Medium Extended Air Defense System (MEADS) development funds to the Army (-$2,026.2 million), various DoD and Congressional reductions (-$554.2 million), and economic and estimating changes for inflation rate adjustments (-$1,194.1 million).

JSF (Joint Strike Fighter) – Program costs decreased by $26,721.9 million (-11.8%) from $226,458.3 million to $199,736.4 million, due primarily to a decrease of 409 Navy aircraft (from 2,866 to 2,457 aircraft) (-$25,434.9 million), associated decreases in initial spares and support requirements (-$3,956.3 million), as well as the application of revised escalation rates (-$3,404.4 million). These decreases were partially offset by increases in outyear costs due to production affects from lower aircraft quantities (+$2,623.7 million), the addition of International Commonality Effort (+$1,270.0 million), refined engine program to optimize interchangeability (+$1,157.8 million), and revised estimating methodology from parametric to bottom-up (+$451.4 million).

JSIMS (Joint Simulation System) – Program costs decreased $362.1 million (-28.0%) from $1,293.3 million to $931.2 million, due primarily to the elimination of outyear funds (-$411.8 million), revision of funding expenditures (-$19.4 million), and Congressional reductions (-$12.6 million). These decreases were partially offset by increases for the provision of funding to the Joint Warfighting Center to establish a Software Support Facility (+$75.6 million).

* Note: Quantity changes are estimated based on the original SAR baseline cost-quantity relationship. Cost changes since the original baseline are separately categorized as schedule, engineering, or estimating “allocations.” The total impact of a quantity change is the identified “quantity” change plus all associated “allocations.”