Arms Systems Running Far Over Budget : GAO Report Finds Huge Cost Overruns in Major Programs

The Pentagon is seeking large funding increases for 20 major weapons programs, many of which have had technical problems and huge cost overruns, according to the draft of a General Accounting Office report.

Although the report draws no conclusions and makes no recommendations, it depicts significant problems in some of the nation’s most important weapons programs just as they are to enter full-scale development or production, milestones that will require sharp funding increases.

The report, which was leaked to the news media, indicates that overall the 20 weapons systems have experienced cost increases of $20.3 billion.

13 Behind Schedule

Thirteen of the 20 programs are behind schedule, nine have posted cost increases, eight are unchanged in cost and three show cost reductions, according to the GAO draft.

The report was requested by Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee, in connection with funding reforms recommended by the commission on defense procurement, headed by former Defense Secretary David Packard.

On the Packard commission’s recommendation, Congress is considering multi-year funding of procurement programs if they achieve two critical milestones, full-scale development and full-rate production. Currently, most programs are funded on a yearly basis, which critics say causes an unstable and uncertain environment in defense contracting.

Nunn’s committee is scheduled to conduct a hearing on the GAO report Thursday. The report was leaked by the Project on Military Procurement, a private watchdog group that is often critical of the defense acquisition system.

Report Subject to Change

GAO officials confirmed that they had released the draft report to the Pentagon and to the Senate committee for comment. They cautioned that the report is subject to change before the final version is issued later this week.

Included in the report are sharply negative comments on the Lockheed Aquila drone aircraft, a small, remotely piloted plane to observe and report enemy targets, that has been under development for the Army since 1974. The report states that the program cost of the Aquila, which has not yet entered full-scale production, has soared from $563 million in 1978 to $2.02 billion in 1987 at the same time that the quantity of aircraft scheduled for procurement has declined from 780 to 376.

“Throughout the full-scale development, the Aquila has experienced technical problems, which, together with funding shortages, has more than tripled the cost and delayed fielding by nearly seven years,” the report said.

In addition, an infrared sensor that permits the Aquila to see at night “is in trouble,” the report said. If the sensor problems are not fixed, the Army may have to find another aircraft to fulfill its mission, it said.

A Lockheed spokesman said that in recent operational tests conducted by the Army, the Aquila performed well and met all of its requirements. He had no comment on the GAO’s cost figures. He added that the infrared sensor was developed at Ford Aerospace & Communications, which is working with the Army to fix its problems.

The draft report is also critical of Hughes Aircraft’s Advanced Medium Range Air-to-Air Missile, known as the AMRAAM, which increased in cost from $3.4 billion in 1979 to $7 billion by December, 1985, the report said. The secretary of defense has certified under law that the cost will not exceed $7 billion.

Production to Proceed

The report said that the Air Force plans to begin production of the missile, for operational use before all of the required software and hardware is available. Testing of the missile with all the required software and hardware will not even begin until three months after a production decision is made, the report said.

“This increases the risk that missiles will be produced that do not fully meet requirements and require costly modifications,” the report said.

“It is noteworthy that the practice of manufacturing and testing concurrently was responsible for the present problems in the electronic countermeasures of the B-1 bomber,” the watchdog Project on Military Procurement group commented.

A Hughes spokeswoman said that the company could not comment on the report because officials there have not seen it, but she noted that Air Force officials have praised the performance of the missile in test flights.

An Air Force spokeswoman told United Press International that it does not comment on GAO draft documents. “When the GAO produces a final report and (the Defense Department) provides comments, then we can discuss allegations that might be in it,” she said.

ASAS’s Costs Soar

Another troubled program that stands out in the report is the All-Source Analysis System, an Army effort to provide an automated system to collect and display information about enemy forces. The cost of the program has risen from $1.2 billion in 1984 to $2 billion, because of poor cost estimates, improved capability and changed requirements, the report said.

ASAS is 18 months behind schedule. The GAO found that there have been six major revisions of the acquisition strategy for ASAS since June, 1984.

Officials at Martin Marietta, prime contractor for ASAS, said that they were not in a position to comment.