Department of Defense Announces Selected Acquisition Reports

Washington, D.C.—(ENEWSPF)—November 15, 2010. The Department of Defense (DoD) has released details on major defense acquisition program cost, schedule, and performance changes since the June 2010 reporting period. This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the September 2010 reporting period.

SARs summarize the latest estimates of cost, schedule, and performance 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 section 2432 of title 10, United States Code). Total program costs reflect actual costs to date as well as anticipated future costs. All estimates include anticipated inflation allowances.

The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (June 2010) was $1,672,097.9 million. After subtracting the costs for one final report (Predator) and adding the costs for one new program (HC/MC-130 Recapitalization), the adjusted current estimate of program acquisition costs from the June 2010 reporting period was $1,677,521.9 million. For the September 2010 reporting period, there was a net cost increase of $1,783.4 million (+0.1 percent), due primarily to a higher estimates for the SSN 774 (Virginia Class) and Chemical Demilitarization-Assembled Chemical Weapons Alternatives (ACWA) programs.

	Current Estimate ($ in Millions)

June 2010 (94 programs)	$ 1,672,097.9

Less final report on one programs (Predator)	-3,321.3

Plus initial report on one program (HC/MC-130 Recapitalization)	+8,745.3

June 2010 Adjusted (94 programs)	$ 1,677,521.9

Changes Since Last Report:
Economic	$ 0.0
Quantity	-897.4
Schedule	+118.8
Engineering	0.0
Estimating	+2,562.5
Other	0.0
Support	-0.5
Net Cost Change	$ +1,783.4

September 2010 (94 programs)	$1,679,305.3

For the September 2010 reporting period, there were quarterly exception SARs submitted for five programs. The reasons for the submissions are provided below.

Army:

Excalibur— The SAR was submitted to report a “critical” Nunn-McCurdy unit cost breach. That is, the program acquisition unit cost increased 199 percent above the current baseline estimate and 211 percent above the original baseline estimate, due primarily to a reduction of Block I (Increments Ia and Ib) munitions from the Army Procurement Objective of 30,388 down to 7,050 projectiles. While unit costs increased, program costs decreased $867.1 million (-35.1 percent) from $2,469.6 million to $1,602.5 million. This reduction was in direct response to the Vice Chief of Staff (Army) Precision Fires Capability Portfolio review.

Navy:

SSN 774 (Virginia Class)— The SAR was submitted to rebaseline the report from a development to a production estimate following approval of full rate production (Milestone III) in September 2010. Program costs increased $1,813.4 million (+2.0 percent) from $91,393.9 million to $93,207.3 million, due primarily to an extension of the development program through fiscal 2027 that includes test and evaluation for future blocks, capability enhancements for Block V, and a reduction of total ownership cost initiatives (+$1,028.6 million). There were additional increases for the full funding of advance procurement and economic order quantity (+$450.3 million) and a stretchout of the procurement profile (fiscal 2018 ship to fiscal 2020) (+$579.7 million).

Air Force:

C-17A— This was the final SAR because 92 percent of the aircraft (205 out of a total of 223) have been delivered on the program. The C-17A has logged almost two million flight hours to date and meets the statutory requirement for termination of reporting. The Air Force is planning on production shutdown and post-production sustainment transition activities.

SDB II (Small Diameter Bomb Increment II)— This was the initial SAR following Milestone B approval authorizing the program to enter the engineering manufacturing and development (EMD) phase in August 2010. The EMD phase contract was awarded to Raytheon Missile Systems for $450.8 million. Low Rate Initial Production (Milestone C) is planned for August 2013.

DoD:

Chemical Demilitarization-ACWA— The SAR was submitted to report a “significant” Nunn-McCurdy unit cost breach. That is, the program acquisition unit cost increased 21.7 percent above the current and original baseline estimates. Program costs increased $910.9 million from $8,352.3 million to $9,263.2 million (+10.9 percent) to reflect increased construction requirements and improved definition of construction scope at Blue Grass Chemical Agent-Destruction Pilot Plant (BGCAPP), increased requirements and staffing levels to support explosive destruction technology (EDT) operations at BGCAPP, increased labor costs associated with higher wage rates and overtime estimates at the Pueblo Chemical Agent-Destruction Pilot Plant (PCAPP), and addition of cost risk during systemization and operations at the PCAPP.

New SAR

(As of September 2010)

The DoD has submitted one initial SAR on the following program for the September 2010 reporting period. This report does not represent cost growth. The baseline established on this program will be the point from which future changes will be measured.