The Department of Defense (DoD) has released details on major defense acquisition program cost, schedule, and performance changes since the December 2018 reporting period. This information is based on the comprehensive annual Selected Acquisition Reports (SARs) for the first quarter of FY 2019, as updated by the President’s Fiscal Year (FY) 2020 budget submitted to Congress on March 11, 2019.
The reports are here.
SARs summarize the latest estimates of cost, schedule, and performance status. These reports are prepared annually in conjunction with submission of 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 acquisition cost estimates provided in the SARs include research and development, procurement, military construction, and acquisition-related operations and maintenance. These totals reflect actual costs to date as well as future anticipated costs. All estimates are shown in fully inflated then-year dollars.
- The prior current estimate of program acquisition costs for programs covered by SARs for the reporting period for December 2017 (83 programs) was $1,917,840 million. The current estimate for December 2018 (87 programs) is $2,018,684 million.
- Quantity changes account for the majority of the $101,000 million increase (+$51,000 million), in addition to scope changes (+$18,000 million) and revised indices (+$11,500 million).
- 16 of the 20 programs with quantity changes are either equal to or underrunning their current baseline costs, as well as 60 of the 84* SARs reporting Unit Cost this SAR cycle overall.
As indicated, DoD is submitting initial SARs for the following programs: the Navy’s Expeditionary Sea Base (ESB) and Advanced Anti-Radiation Guided Missile – Extended Range (AARGM-ER) programs, and the Air Force’s VC-25B and Presidential and National Voice Conferencing Integrator (PNVC Integrator)* programs. The Current Estimate ($ in Millions) for these new programs are:
- ESB $5,188.1
- AARGM-ER – $4,071.3
- VC-25 – $5,180.2
- PNVC** – $349.6
For the December 2018 reporting period, there are two programs with significant Nunn- McCurdy unit cost breaches to their current or original Acquisition Program Baseline (APB) (Unit cost increases of 15%, but less than 25%, to the current APB or of 30%, but less than 50%, to the original APB).
In accordance with the provisions of sections 2433 and 2433a of title 10, United States Code, DoD will notify Congress and provide the required unit cost breach information in the SARs for these two programs.
(1) Offensive Anti-Surface Warfare Increment 1 (Long Range Anti-Ship Missile) (OASuW Inc 1 (LRASM)) (Navy) – This program had a significant Nunn-McCurdy unit cost breach against APUC, relative to the program baseline approved by the Navy in March 2016, as a result of purposeful design changes made to address capability gaps with the understanding that per-unit costs would increase. Additionally, there was a realization of actual costs in Lots 1-3 and a Secretary of Defense Program Decision Memorandum that increased procurement quantities from 184 (PB 2019) to 374 (PB 2020). An updated APB was approved on February 7, 2019, which cleared the breach in this SAR. However, the Navy is reporting the breach for transparency purposes.
(2) F-15 Eagle Passive Active Warning Survivability System (F-15 EPAWSS) (Air Force) – This program has a significant Nunn-McCurdy unit cost breach of 24.34% against Program Acquisition Unit Cost (PAUC) primarily due to the removal of F-15C costs and quantities. The program is currently reevaluating cost and schedule impacts and expects to update the APB at the Milestone C for the program later this year.