GAO Reports Big Drop In Pentagon Weapons Costs As Obama Changes Take Hold

The Government Accountability Office (GAO) released its 11th annual assessment of major defense acquisition programs last week, reporting that the long-term cost of the programs had declined $152 billion between 2011 and 2012. Most of the projected savings resulted from program cancellations and restructurings, as 14 programs exited the portfolio and only four entered. In a marked improvement over prior years, eight of the ten biggest weapons programs remaining in the portfolio exhibited long-term cost reductions totaling $5 billion.

The major acquisition programs portfolio now consists of 86 programs projected to cost a cumulative $1.6 trillion in fiscal 2013 dollars to purchase — about five months of federal spending at current rates. Money for development and production of the top ten weapons programs accounts for two-thirds of the portfolio’s total long-term cost. Using GAO’s numbers, which exclude missile-defense programs, the top ten programs are: the F-35 fighter ($336 billion in 2013 dollars), the Burke-class destroyer ($103 billion), the Virginia-class submarine ($85 billion), the F/A-18E/F fighter ($59 billion), the V-22 rotorcraft ($59 billion), the D-5 submarine-launched ballistic missile ($55 billion), the KC-46 tanker ($45 billion), theFord-class aircraft carrier ($35 billion), the P-8 patrol aircraft ($34 billion) and the Littoral Combat Ship ($32 billion).

Among these ten programs, naval shipbuilding stands out as the biggest contributor to cost savings between 2011 and 2012. The Burke-class destroyer, Virginia-class submarine and Littoral Combat Ship produced long-term cost savings of $1.6 billion, $1.4 billion, and $1.4 billion respectively without any changes in the planned quantities to be acquired. Among the aircraft, the F/A-18E/F fighter, V-22 tiltrotor, KC-46 tanker and P-8 patrol plane all exhibited projected cost savings between 2011 and 2012. The projected acquisition cost of the biggest weapons program, the tri-service F-35 fighter, was essentially unchanged — arguably an achievement in light of repeated restructurings and no change in quantities.

GAO says that the defense department has spent $805 billion to get the portfolio of 86 major programs to its current state — about half of the projected long-term price-tag. And although most of the long-term cost reduction reported between 2011 and 2012 was due to cancellations and cutbacks, the agency sees real progress resulting from various acquisition reforms implemented over the past four years. In particular, it singles out the Obama Administration’s “Better Buying Power” initiatives for fostering greater emphasis on affordability and technological maturity in making milestone decisions. GAO warns the Pentagon still has a long way to go in improving acquisition processes, but it concludes the Obama years have seen significant progress in how the military goes about buying weapons.