Americas Defense Meltdown - IT Acquisition Advisory Council

Thomas Christie • 203design review found that the requirements could be met for the first increment of theprogram, including the five production aircraft, but at a cost of $3.7 billion, an increaseof more than 60 percent from the initial estimates of $2.3 billion. That review alsorevealed that nearly 2,000 design changes (including a new tail, transmission androtor blades) would be needed to meet the specifications for the second incrementof aircraft. Furthermore, the costs for that increment of 23 VH-71 aircraft had risenfrom $4.5 billion to $7.5 billion. In sum, the costs of the total 28-aircraft programhad risen from the initial estimates of $6.8 billion to $11.2 billion, an increase of 65percent in little more than two years.There are cases, albeit rare, where the acquisition review and decision processfaces up to hard realities and imposes much-needed discipline by cutting its losses onquestionable programs. After more than a decade of research and over $600 millionspent, the Navy announced in March 2008 that it was terminating the Extended-Range Guided Munition (ERGM), a high-tech projectile designed to be fired fromNavy destroyers up to 50 miles offshore in support of ground troops. The system hadrepeatedly failed to perform as advertised in field tests according to the Navy withthe guidance system, the rocket motor, and tail fins all flunking demonstration tests.ERGM was another classic case of a system entering Engineering and ManufacturingDevelopment (EMD), as it did in 1996, with unproven technology. Originally scheduledfor full production and deployment in 2001, the Navy finally decided that theexpected costs to salvage the effort were simply too high to justify going further.Air Force Fighter Forces – Smaller and Much OlderThe Air Force faces an equally daunting task in building its six-year investment planwith sufficient funding for all its critical modernization programs. In putting togetherthe Program Objective Memorandum (POM) for FY 2010-2015, the Air Force hasstruggled to accommodate a host of expensive RDT&E and procurement programscritical to its plans to modernize its existing and aging forces. Several of these highpriority investment programs continue to suffer cost growth and schedule delays,creating a huge procurement bow wave and severely limiting the Air Force’s abilityto sustain and operate its combat and support forces. The list is indeed daunting andcalls into question previous decisions that have led to this plans/reality mismatch, toinvoke a phrase coined by Chuck Spinney in the early 1980s.The Air Force’s modernization funding (RDT&E plus procurement) request inthe FY 2009 budget totals $63 billion, but does not reflect its oft-expressed desire toincrease these accounts by $20 billion on average over the next 20 years in order toacquire and field a modern force that service officials call the Required Force. The AirForce indeed faces severe aging problems in its tactical air forces with the average ageof its fighter/attack aircraft exceeding 20 years and growing, about twice that desiredand more than twice the 10-year average age these forces enjoyed in the 1980s and